Is the US headed for a melt-down of the financial system?

[Guest guest]

Dear list members,

 

As the following story highlights, the US mortgage lending system is

in trouble. The extent of the problems differs. It is true that the US

financial system has become highly leveraged. The mortgage debts

alone equal around $8 trillion. Now there is the risk that a portion

of this debt may default. Some think the amounts will be as low as $65

billion, others think $2 trillion are at risk. Despite that, many

market participants believe the US financial system can accommodate

significant defaults and that the real effect will be a slowing

economy with a rising unemployment rate. In other words, many are of

the view that an outright financial crisis is not in the cards.

Hopefully it is true.

 

If so, the challenge for financial market participants becomes to

price in new assumptions about the profile of interest rates and

corporate earnings leading to a downward revision in share prices.

This is pretty much what we could expect to see in the US economy this

year.

 

The SAMVA USA chart suggests a temporary setback to housing, wealth

and financial stability in the country. The aspects at present are

espcecially tough with regard to housing, with transit stationary Ketu

at 22° Leo in the 2nd house, aspecting natal Venus, as 4th lord of

fixed assets, at 23° 51' Sagittarius in the 6th house of financial

stability, as well as the most effective point of the 6th house and

the 2nd house. This aspect creates substantial strain for housing

related matters, wealth and financial stability. As that were not

enough, transit stationary Rahu is aspecting the most effective point

of the 4th house, exacerbating the problems for the mortgage market.

 

Moreover, these problems are emerging in the sub-period of Jupiter,

which is the 6th lord of financial stability, suggesting that

financial stability issues become a concern at this time. The good

news is that Jupiter is well placed natally in the fifth house of the

chart. Secondly, it receives a positive natal aspect from L1 Moon in

H11 to the Moon, suggesting the usual American werewithal, including a

time-tested ability to produce income to help the country deal with

such a situation.

 

From 23 March to 1 April, transit Venus, as 4th lord, passes over the

natal nodes and then into the aspect of stationary transit Ketu in the

2nd house. This could be a time when the mortgage crisis comes to some

form of head.

 

Also of note is the affliction of transit Jupiter by natal Saturn, as

8th lord of obstacles and endings, in the fifth house. This suggests

real problems for financial stability. Jupiter also afflicts Saturn in

transit, suggesting its indications spill over to other sets of

problems, including for the US administration, given the natal and

transit aspects of Saturn to natal Sun. Also, in the coming week, an

exalted transit Mars, as 10th lord, is now passing into the aspect of

both transit and natal Saturn as 8th lord of obstacles. While Mars may

gain some support from the natal Sun at 23° 45' Capricorn, this would

undoubtedly not be an easy week for the administration or trade

related matters.

 

So, there is plenty going on, and most of it stressful. In short,

based on this chart we can expect an adjustment in asset prices and a

tough time for the economy. The aspects also indicate a tough time for

the US Presidency.

 

Finally, the question can be answered, if a melt-down of the financial

system in the US likely at this time. The fact is that the US has gone

through such a crisis before in the 1930s, when the Rahu-Ketu period

was operating and all the astrological bases were loaded. The

situation was the most difficult the country has faced at that time,

excluding the bloody civil war. Astrologically, the situation does not

look quite so bad at this time, although it is clearly bad. Many

precautions have been put in place to safe-guard the financial system,

and to secure financial intermediation despite problems with credit

defaults. In view of the above, we can be cautiously optimistic that

the system will not malfunction, even if defaults become a major problem.

 

Best wishes,

 

Thor

 

 

Pimco Says Subprime Woes May Spread to Alt-A, Jumbo (Update1)

By Mark Pittman

March 16 (Bloomberg) -- Pacific Investment Management Co., the fund

manager that first predicted a collapse in U.S. home prices almost two

years ago, said today that losses on subprime mortgage will spread to

other ``aggressively underwritten'' loans.

 

Defaults could spread to borrowers with so-called ``Alt-A'' or jumbo

mortgages, according to a report distributed to clients today by the

mortgage group at Newport Beach, California-based Pimco, which

oversees about $668 billion. Alt-A's are loans to borrowers with good

credit scores who fail to meet other criteria for top- rated

financing. Jumbo mortgages are loans of more than $417,000.

 

``It is likely that the poor performance we have seen in subprime

loans will carry over to some degree into the most aggressively

underwritten loans in the Alt-A and possibly Jumbo prime markets,''

Pimco said in the report. ``We do not believe that prime loans will be

materially affected.''

http://www.bloomberg.com/apps/news?pid=20601087 & sid=aLx3Rj4SPBd0 & refer=home

[Guest guest]

Dear list members,

 

Here is one top analyst who thinks the US mortgage debt is headed for

a veritable meltdown. So, there are clearly differing views on this issue.

 

Best wishes,

 

Thor

 

Top investor sees U.S. property crash

Wed Mar 14, 2007 12:59PM EDT

By Elif Kaban

 

MOSCOW (Reuters) - Commodities investment guru Jim Rogers stepped into

the U.S. subprime fray on Wednesday, predicting a real estate crash

that would trigger defaults and spread contagion to emerging markets.

 

" You can't believe how bad it's going to get before it gets any

better, " the prominent U.S. fund manager told Reuters by telephone

from New York.

 

" It's going to be a disaster for many people who don't have a clue

about what happens when a real estate bubble pops.

 

" It is going to be a huge mess, " said Rogers, who has put his $15

million belle epoque mansion on Manhattan's Upper West Side on the

market and is planning to move to Asia.

 

Worries about losses in the U.S. mortgage market have sent stock

prices falling in Asia and Europe, with shares in financial services

companies falling the most.

 

Some investors fear the problems of lenders who make subprime loans to

people with weak credit histories are spreading to mainstream

financial firms and will worsen the U.S. housing slowdown.

 

" Real estate prices will go down 40-50 percent in bubble areas. There

will be massive defaults. This time it'll be worse because we haven't

had this kind of speculative buying in U.S. history, " Rogers said.

 

" When markets turn from bubble to reality, a lot of people get burned. "

 

The fund manager, who co-founded the Quantum Fund with billionaire

investor George Soros in the 1970s and has focused on commodities

since 1998, said the crisis would spread to emerging markets which he

said now faced a prolonged bear run.

 

" When you have a financial crisis, it reverberates in other financial

markets, especially in those with speculative excess, " he said.

 

" Right now, there is huge speculative excess in emerging markets

around the world. There will be a lot of money coming out of emerging

markets.

 

" I've sold out of emerging markets except for China, " said Rogers,

long a prominent China bull.

 

Even in China, the world's fastest expanding economy, Rogers said

stocks were overvalued and could go down 30-40 percent.

 

But he added: " China is one of the few countries in the world where

I'm willing to sit out a 30-40 percent decline. "

 

The last stock market bubble to burst was the dot-com craze which

sparked a crash from March 2000 to October 2002.

 

When the last bubble burst in Japan, said Rogers, stock prices went

down 85 percent despite the country's high savings rate and huge

balance of payment surplus.

 

" This is the end of the liquidity party, " said Rogers. " Some emerging

markets will go down 80 percent, some will go down 50 percent. Some

will most probably collapse. "

 

http://www.reuters.com/articlePrint?articleId=USL1470530620070314

 

SAMVA , " cosmologer " <cosmologer wrote:

>

> Dear list members,

>

> As the following story highlights, the US mortgage lending system is

> in trouble. The extent of the problems differs. It is true that the US

> financial system has become highly leveraged. The mortgage debts

> alone equal around $8 trillion. Now there is the risk that a portion

> of this debt may default. Some think the amounts will be as low as $65

> billion, others think $2 trillion are at risk. Despite that, many

> market participants believe the US financial system can accommodate

> significant defaults and that the real effect will be a slowing

> economy with a rising unemployment rate. In other words, many are of

> the view that an outright financial crisis is not in the cards.

> Hopefully it is true.

>

> If so, the challenge for financial market participants becomes to

> price in new assumptions about the profile of interest rates and

> corporate earnings leading to a downward revision in share prices.

> This is pretty much what we could expect to see in the US economy this

> year.

>

> The SAMVA USA chart suggests a temporary setback to housing, wealth

> and financial stability in the country. The aspects at present are

> espcecially tough with regard to housing, with transit stationary Ketu

> at 22° Leo in the 2nd house, aspecting natal Venus, as 4th lord of

> fixed assets, at 23° 51' Sagittarius in the 6th house of financial

> stability, as well as the most effective point of the 6th house and

> the 2nd house. This aspect creates substantial strain for housing

> related matters, wealth and financial stability. As that were not

> enough, transit stationary Rahu is aspecting the most effective point

> of the 4th house, exacerbating the problems for the mortgage market.

>

> Moreover, these problems are emerging in the sub-period of Jupiter,

> which is the 6th lord of financial stability, suggesting that

> financial stability issues become a concern at this time. The good

> news is that Jupiter is well placed natally in the fifth house of the

> chart. Secondly, it receives a positive natal aspect from L1 Moon in

> H11 to the Moon, suggesting the usual American werewithal, including a

> time-tested ability to produce income to help the country deal with

> such a situation.

>

> From 23 March to 1 April, transit Venus, as 4th lord, passes over the

> natal nodes and then into the aspect of stationary transit Ketu in the

> 2nd house. This could be a time when the mortgage crisis comes to some

> form of head.

>

> Also of note is the affliction of transit Jupiter by natal Saturn, as

> 8th lord of obstacles and endings, in the fifth house. This suggests

> real problems for financial stability. Jupiter also afflicts Saturn in

> transit, suggesting its indications spill over to other sets of

> problems, including for the US administration, given the natal and

> transit aspects of Saturn to natal Sun. Also, in the coming week, an

> exalted transit Mars, as 10th lord, is now passing into the aspect of

> both transit and natal Saturn as 8th lord of obstacles. While Mars may

> gain some support from the natal Sun at 23° 45' Capricorn, this would

> undoubtedly not be an easy week for the administration or trade

> related matters.

>

> So, there is plenty going on, and most of it stressful. In short,

> based on this chart we can expect an adjustment in asset prices and a

> tough time for the economy. The aspects also indicate a tough time for

> the US Presidency.

>

> Finally, the question can be answered, if a melt-down of the financial

> system in the US likely at this time. The fact is that the US has gone

> through such a crisis before in the 1930s, when the Rahu-Ketu period

> was operating and all the astrological bases were loaded. The

> situation was the most difficult the country has faced at that time,

> excluding the bloody civil war. Astrologically, the situation does not

> look quite so bad at this time, although it is clearly bad. Many

> precautions have been put in place to safe-guard the financial system,

> and to secure financial intermediation despite problems with credit

> defaults. In view of the above, we can be cautiously optimistic that

> the system will not malfunction, even if defaults become a major

problem.

>

> Best wishes,

>

> Thor

>

>

> Pimco Says Subprime Woes May Spread to Alt-A, Jumbo (Update1)

> By Mark Pittman

> March 16 (Bloomberg) -- Pacific Investment Management Co., the fund

> manager that first predicted a collapse in U.S. home prices almost two

> years ago, said today that losses on subprime mortgage will spread to

> other ``aggressively underwritten'' loans.

>

> Defaults could spread to borrowers with so-called ``Alt-A'' or jumbo

> mortgages, according to a report distributed to clients today by the

> mortgage group at Newport Beach, California-based Pimco, which

> oversees about $668 billion. Alt-A's are loans to borrowers with good

> credit scores who fail to meet other criteria for top- rated

> financing. Jumbo mortgages are loans of more than $417,000.

>

> ``It is likely that the poor performance we have seen in subprime

> loans will carry over to some degree into the most aggressively

> underwritten loans in the Alt-A and possibly Jumbo prime markets,''

> Pimco said in the report. ``We do not believe that prime loans will be

> materially affected.''

>

http://www.bloomberg.com/apps/news?pid=20601087 & sid=aLx3Rj4SPBd0 & refer=home

>