I hope this isn’t becoming the monkey on my back, much like Jeff joked the Trinity Vote had become his, but here goes anyway…
Paul Krugman, the renowned economist, has very interesting op-ed in today’s NY Times entitled Innovating Our Way to Financial Crisis. In it he posits "How bad is it? Well, I’ve never seen financial insiders this spooked — not even during the Asian crisis of 1997-98, when economic dominoes seemed to be falling all around the world. This time, market players seem truly horrified — because they’ve suddenly realized that they don’t understand the complex financial system they created."
It builds on my post from last Thursday and makes me wonder, moreso, what will happen locally in 2008. The Wall Street Journal reports today that "…an analysis of more than $2.5 trillion in subprime loans made since 2000 shows that as the number of subprime loans mushroomed, an increasing proportion of them went to people with credit scores high enough to often qualify for conventional loans with far better terms." So, it’s not just shaky borrowers with unverified income who are into the juice, so to speak. It could be the people down the block who paid 500+ thousand for that McMansion and had to get a jumbo loan, at rates that will reset in 2008. Who knows?
Now, here’s the interesting adjunct to all the above. We put an old vacuum and an old 900Mhz cordless phone up for grabs on the DFW Freecyle.org group last Friday. I was inundated with emails all weekend and they were both gone by Saturday morning. But, I’m still getting emails and today one came for the phone, on company email from a Senior Loan Officer at a Mortgage lender here in town. Are things that slow that a senior mortgage lender needs a 10 year old, used phone?
