IS THE TRUTH COMING OUT?

Exerps ftom Bem Bernanke's testimony yesterday.
Mortgage woes 'exceed forecasts'

Ben Bernanke has been applauded for cutting rates, Losses from sub-prime mortgages have far exceeded "even the most pessimistic estimates".

He went on to state that "With house prices still soft and many borrowers of recent-vintage sub-prime ARMs still facing their first interest rate resets, delinquencies and foreclosure initiations in this class of mortgages are likely to rise further."

Each of the first two quarter of 2007 has seen 320,000 foreclosure notices sent out compared to 225,000 under normal circumstances, and about 50% of the people end loosing their homes. Now things are different because of the subprime loans.

Finally, Ben said: "That ratio may turn out to be higher in coming quarters because the proportion of sub-prime borrowers, who have weaker financial conditions than prime borrowers, is higher."
This exactly what I have been saying all along in my blogs! The teaser cut that took place last Tuesday is only the beginning. More rate reductions must follow in order to accomplish two goals:
1. Allow borrowers to refinance and,
2. To entice buyers to come back in the market.

Anything short of future rate cuts will lead to a recession, on the other hand if the rates get too low foreign investors may pull their deposits from our banks and further depress the dollar that hit its lowest mark today against major currencies. One Canadian dollar is worth one US dollar today, the Euro trades at $1.45, and a British pound fetches $2.00.
Traveling overseas becomes a risky proposition unless you made Forbes list of the 400 richest people or you have an expense account.

773-562-6972 is my number.