A place for residents of Marin County, CA and others to express their views regarding the real estate bubble and in particular the Marin real estate market
Thursday, August 02, 2007
Mill Valley's Redwood Trust, Inc. Stock Getting Crushed
But it's all ok because the Marin IJsays "they're different". What a relief.
Well, there is some truth here. I have researched Redwood Trust more than once and their business plan is not dependent on churning or repackaging subprime paper. But I suspect tightening of the credit market generally will affect the volume of higher-quality paper RT tends to handle. Loans to RT to purchase these "quality" loans will be harder to get. Thus business will probably slow, which affects their earnings, and so on.
The company has a cash cushion but earnings on that would typically not match their mortgage inventory. The stock price will likely struggle to recover until these conditions improve. It is certainly not a bright outlook.
I don't know whether the Fed will cut rate next week or not even though Cramer begged for a rate cut on CNBC. However, the 10-year treasury will probably go back up to the recent high which is above 5%. What does this mean for the housing? Go figure.
The Fed controls short term rates, but they don't control the 10-year T-Bill. And all the other central banks are still RAISING rates. With our massive deficit, I don't see how they can cut rates right now. The 10-year would go through the roof, and housing would still crash & burn.
The price gains are not sustainable. Let the FB's take their medicine, and let everyone else get into a house without having to resort to suicide financing.
It feels like there's a huge amount of momentum behind the RE and credit bubbles now. Even the MSM is starting to catch on.
Wow. Cramer calls his Armegeddon? So where are all the people that called us "chicken little" a few months ago? Why aren't they calling Cramer up and blasting him with accusations of "the sky is falling?" and how that is just utter nonsense. Hmmm.
I know I'm overusing this term at present, but, sorry, it's the first word that pops in my head when I think about the housing bubble and people like Crammer.. total sleazeball..
He talks about the 14 million people about to lose their home to foreclosure as he begs the Fed to lower rates... piss off Crammer... what about the 60 million who can't (or refuse) to buy due to the bubble and have to put their lives on hold because of this BS..
No, what he's really doing is serving as the mouthpiece for his Wall Street pigs who got caught with their hands in the cookie jar and were over-exposed / leveraged in RE and want a little rate relief to stall the inevitable, so they can get out and leave someone else, preferrably middle income joe, holding the bag..
That Bears-Sterns bond guy deserves credit for saying what needed to be said a while ago, so shut the hell up Crammer and go pump a few more stocks..
No, what he's really doing is serving as the mouthpiece for his Wall Street pigs who got caught with their hands in the cookie jar and were over-exposed / leveraged in RE and want a little rate relief to stall the inevitable, so they can get out and leave someone else, preferrably middle income joe, holding the bag..
Exactly, well said.
People forget that as long as they think of their house as an "investment" then they have to accept responsibility for the fact that investments sometimes go negative (even housing despite all its artificial props to keep prices up). Deal with it.
But it's all ok because the Marin IJ says "they're different". What a relief.
9 comments:
Well, there is some truth here. I have researched Redwood Trust more than once and their business plan is not dependent on churning or repackaging subprime paper. But I suspect tightening of the credit market generally will affect the volume of higher-quality paper RT tends to handle. Loans to RT to purchase these "quality" loans will be harder to get. Thus business will probably slow, which affects their earnings, and so on.
The company has a cash cushion but earnings on that would typically not match their mortgage inventory. The stock price will likely struggle to recover until these conditions improve. It is certainly not a bright outlook.
I tried to short this last year, but my broker wouldn't let me. Something about this not being a marginable security.
Being domiciled in MV was one of the big strikes against it.
oh well...
but my broker wouldn't let me
Get a new broker.
I don't know whether the Fed will cut rate next week or not even though Cramer begged for a rate cut on CNBC. However, the 10-year treasury will probably go back up to the recent high which is above 5%. What does this mean for the housing? Go figure.
The Fed controls short term rates, but they don't control the 10-year T-Bill. And all the other central banks are still RAISING rates. With our massive deficit, I don't see how they can cut rates right now. The 10-year would go through the roof, and housing would still crash & burn.
The price gains are not sustainable. Let the FB's take their medicine, and let everyone else get into a house without having to resort to suicide financing.
It feels like there's a huge amount of momentum behind the RE and credit bubbles now. Even the MSM is starting to catch on.
For those who are interested, here is the link where Cramer begs Bernanke to lower rates and describes the current financial mess as "armageddon":
http://tinyurl.com/2gvtae
Wow. Cramer calls his Armegeddon? So where are all the people that called us "chicken little" a few months ago? Why aren't they calling Cramer up and blasting him with accusations of "the sky is falling?" and how that is just utter nonsense. Hmmm.
I know I'm overusing this term at present, but, sorry, it's the first word that pops in my head when I think about the housing bubble and people like Crammer.. total sleazeball..
He talks about the 14 million people about to lose their home to foreclosure as he begs the Fed to lower rates... piss off Crammer... what about the 60 million who can't (or refuse) to buy due to the bubble and have to put their lives on hold because of this BS..
No, what he's really doing is serving as the mouthpiece for his Wall Street pigs who got caught with their hands in the cookie jar and were over-exposed / leveraged in RE and want a little rate relief to stall the inevitable, so they can get out and leave someone else, preferrably middle income joe, holding the bag..
That Bears-Sterns bond guy deserves credit for saying what needed to be said a while ago, so shut the hell up Crammer and go pump a few more stocks..
No, what he's really doing is serving as the mouthpiece for his Wall Street pigs who got caught with their hands in the cookie jar and were over-exposed / leveraged in RE and want a little rate relief to stall the inevitable, so they can get out and leave someone else, preferrably middle income joe, holding the bag..
Exactly, well said.
People forget that as long as they think of their house as an "investment" then they have to accept responsibility for the fact that investments sometimes go negative (even housing despite all its artificial props to keep prices up). Deal with it.
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