Survive and thrive during the coming economic crisis

Online Since 1995      

[Update 9-22-07]

Mortgage Meltdown Update - Run on the Bank!

What's going on in these pictures? Why are all these people standing in long lines for hours in the hot sun? What you're seeing hasn't been seen since the last depression of the 1930s. It's an old-fashioned run on a bank!

Despite assurances from no less than the Bank of England, depositors in the troubled Northern Rock Bank in England lined up and withdrew over $4 billion in cash in only three days! How could this have happened and more importantly will bank runs occur in the U.S.?
 

The New Alchemists

Way back in the middle ages alchemists boasted that they could turn common metals such as lead into pure gold. Of course they failed and their claims were proven entirely false.

Today the alchemists of old are back. They can be found in most any brokerage house anywhere in the developed world. These modern-day wizards claim to have mastered the lost art of alchemy by being able to turn worthless junk mortgages into pure gold!

Though the mortgage applicants have bad credit ratings, little or no down payments and spotty or non-existent incomes that didn't stop the banks from granting them big fat mortgages. They just lowered the lending standards.

Next they sold off the mortgages to the brokerage firms who performed the real magic. They took a bunch of worthless sub-prime mortgages and packaged them into mortgage bonds. Then they pressured their analysts to bless the bonds with their very best investment ratings.

According to the new alchemists because the mortgages were from different areas of the country, and since real estate prices have never before fallen nationwide, these bonds could be rated very highly.

It was this geographic diversification that made these bonds such a solid investment - or so the story goes.

"Hey - why don't we give mortgages to homeless people?
What could go wrong?" - Comic Bill Maher

Problem is - the unthinkable is now happening. For the first time since The Great Depression real estate prices are now falling all over the country and these bonds, once highly rated and respected (many carry the highest single bond rating - AAA) are fast becoming worthless scraps of paper. Banks all over the world who eagerly snapped them up are trembling as they watch their assets vaporize.

These new alchemists are just like the alchemists of old - liars and frauds. In truth, you can't turn junk into gold just by gathering it together. All you end up with is a lot of junk.

So what happens now? Will there be bank runs in the U.S.? It's entirely possible. Despite comments to the contrary from both Wall Street and the White House, the bursting of the sub-prime real estate bubble is a genuine threat to our national economy.

The amount of money involved is truly staggering. We're talking about trillions of dollars worth of collapsing mortgages. As adjustable rate mortgages are reset to higher payments, many owners will just walk away from their new homes - abandoning them to foreclosure.

Banks will be forced to reluctantly foreclose and carry the properties on their books unable to sell them due to the collapse of the real estate market. As the months pass the value of these properties will tumble putting even more pressure on already troubled banks.

One thing is for sure. This mess will not be resolved for some years to come. Residential real estate markets will continue to decline for some time. Adjustable rate mortgages will continue to reset their payments upward through 2009.

Mover that time mortgage defaults and foreclosures will continue to increase. As more and more properties are dumped onto an already saturated market, real estate prices will continue to decline all over the country.

Despite the greatest buyers market in history - this is NOT the time to buy a home. Hold on for two or three more years and you'll be able to snatch up highly desirable properties for 20 to 50 percent less than today's prices.

Two years ago we were told the sub-prime mortgage mess wouldn't affect mortage lenders. Now many are reeling their stocks crashing. Then we were told it would never affect Wall Street, now we see investment brokers writing off multi-billion dollar sums.

Then we were told that no matter how bad the crisis gets, real estate prices will fall only in local areas - never on a country-wide basis. Now we see prices falling in over 20 major metropolitan areas.

Now everyone is getting into the act. The Senate is conducting hearings, the White House is monitoring the situation closely and making weekly announcements, local real estate markets are collapsing and the banks are only just beginning to feel the effects. Foreclosures are at all-time record levels.

No one knows how much money has been lost. Estimates run into the hundreds of billions.

Will this madness throw us into a deep and long-lasting recession?

How will you protect yourself and your family? Will you thrive and profit from the coming hard times or will you suffer terribly like all the rest? Order our report today!

Entire Site is © Copyright 2006, Ariza Research, All rights reserved - ABP - www.hardtimesgazette.com