Bids Drying Up for Alt-A Paper
April 10th, 2007Via: Business Week:
At least five Wall Street analysts downgraded shares of American Home Mortgage Investment Corp. after the home lender said its mortgage loans are fetching lower prices from investors.
While it has been well publicized that investors are shying away from “subprime” mortgage debt — or home loans to people with bad credit — some people hoped the weakness would stay contained in the subprime market.
On Friday, the Melville, N.Y.-based mortgage lender said it tried in March to sell a pool of Alt-A home loans, which carry better credit than subprime loans and worse credit than prime. Far fewer bidders offered materially lower prices for the loans, the company said.
Because of a cooling market for mortgage debt and a spike in payment defaults among Alt-A borrowers, American Home Mortgage Investment said it now expects profit of $3.75 to $4.25 per share this year. The company, which operates as a real estate investment trust, previously predicted $5.40 to $5.70 per share in 2007 profit.
Analysts from Citigroup, Friedman Billings Ramsey, Lehman Brothers, Keefe, Bruyette & Woods and Bear Stearns cut their investment ratings on American Home Mortgage Investment’s stock before Monday’s trading began.
INFLATION AND DICTATORSHIP; sound familiar? Jah Vohl!
What could happen if the banks cannot sell their mortgage paper, and the US cannot sell their bonds?
http://www.321gold.com/editorials/orlandini/orlandini041007.html
“As I see it, the US Fed will have no choice but to monetarize US debt. Monetarization occurs when you print dollars to buy your own bonds and is very inflationary. ”
What could happen if congress denies war funds to the president?
http://www.321gold.com/editorials/orlandini/orlandini041007.html
“Well, if he isn’t willing to negotiate and he isn’t willing to take no for an answer, then what’s left? I have a thought on the subject and I am going to share it with you even though I may be way off. Bush is bound and determined to do things his way and I don’t see him changing at this late stage. He does have one alternative: if Congress doesn’t give him what he wants he could declare martial law, suspend the US Constitution and Congress along with it, and virtually rule as a Dictator. At the same time he could/would introduce some sweeping Patriot Act like changes including travel restrictions, confiscation of certain assets like gold and silver, a prohibition on the transfer of funds overseas, limiting freedom of the press (even more than it already is), and much more. There would be no fourth Amendment rights, no right to legal council, no right to bear arms, and so on… In short, Guantanamo would come to the US.”