U.S. Stocks Tumble, Led By Financials as Mortgage Slump Worsens

[Purveyor]

By Nick Baker

March 13 (Bloomberg) -- U.S. stocks tumbled the most since a global rout two weeks ago, erasing three days of gains, after delinquencies on all types of home loans rose and retail sales climbed less than forecast.

Bear Stearns Cos. and Lehman Brothers Holdings Inc., two Wall Street firms that repackage mortgages into securities, led declines among all 88 financial stocks in the Standard & Poor's 500 Index on concern a home lending crisis is spreading across the economy. Homebuilders slumped the most since November 2005, while Moody's Corp., which rates collateralized debt obligations, had its biggest drop in a year.

The declines cut short a recovery in the stock market since its biggest plunge in four years Feb. 27. The Dow Jones Industrial Average lost more than 200 points and the S&P 500 Index recorded its first decline in four days.

``These things basically raise concern about whether we're slipping into a recession,'' said Kevin Bannon, who oversees $120 billion as chief investment officer at Bank of New York Co. ``If this really does turn into a nasty downturn in housing, no one really knows what the implications for the economy will be.''

---end of excerpt---

http://www.bloomberg.com/apps/news?pid=20601103&sid=a_4gvoogt8fo&refer=us

At 4:07p est DJIA down 242.66 NASDAQ down 51.72 S&P down 28.65

[ayeshahaqqiqa]

1. Do you see it going up anytime soon?

As I understand it, we're only at the beginning of the mortgage debacle.

[Purveyor]

2. I'm no pro but I don't see an 'upside' anytime soon.

It was not only the subprime mortgage delinquencies that spooked the market but 'prime' mortgage delinquencies are also on the rise.

I had to chuckle at CNBC leading with "did wall street miss the meltdown". I don't think wall street ever called a sell-off correctly.

I remember reading that before the 1987 crash, only 5 bokerages had a sell signal for the market.

[olddad56]

11. definitely more downside than upside. (with the entire economy)

[ayeshahaqqiqa]

17. I'm glad I always have followed my great grandmother's advice

"Never invest in the stock market--they are crooks," she told me. She took a bath in 1929, from what the family has told me.

[HereSince1628]

3. It isn't looking pretty for the mortgage lenders and home builders

Accredited Home Lenders stock was off 64%, several others were off more than 20% today
Stocks of the big home builders like Pulte Homes were off in the neighborhood of 5% today.

So will Uncle Ben Bernanke step in with a Fed interest rate cut before the end of the 2nd qtr?

[DaveJ]

4. Maybe people are waking up to the fact that 30-40+ year mortgages are...

Ridiculous. The paradigm is that mortgages should last the rest of your life, but young people are beginning to say "'f' that" and rationally refusing to sign their names on those kind of enslavement contracts, especially for property with overinflated prices. Maybe they'd rather be homeless. I think houses should cost little enough that they can be paid off in 10 years, as ridiculous as that sounds, and I'm sticking to it.

[Double T]

6. Agree with you 1000%. Less is more when it comes to homes........

with smaller square footage and rational reasonable price tags. The wall street criminals have done this to themselves and it is payback, which will be a bitch. Banks want to own you from cradle to grave and it is time to change the rules with mortgages, credit cards and the like.

[phantom power]

7. I think the bigger issue is fixed rate versus variable rate.

I'll go out on a limb and predict that most foreclosures these days are being caused by variable rate mortgages re-setting to much higher rates.

[tammywammy]

18. I tend to agree with that

Some people went with an ARM to get the lower interest rate, and purchase more house. They could barely afford their mortage at the lower rate, so when interest rates went up, they were screwed.

I think also, that a lot of people just bought more house than they should have. People getting into $200K houses when they should have looked at a $100K.

[HereSince1628]

10. It's not just the cost of homes. An average car costs as much as the 1st house

I ever got a mortgage for. In 1976 I signed on to purchase a 16 year-old 2 bedroom house in Carbondale Illinois for $15,400. I put 20% down. Compare that to the last car I bought--a 1998 Ford Escort wgn. it cost $14,500. And an Escort wagon isn't even as good as an average car.

In 1976 I also paid for the Dr. and hospital delivery and 2 days in the hospital for my wife and daughter out of my pocket or about $750, just over 1 months wages before taxes. I also had a troublesome wisdom tooth pulled for $24. At the time my auto payment on a 24 month loan for a new
pick-up was just under $51 a month.

It's got damned expensive to live. And houses that can be paid off in now 10 years usually come with pop out extensions for the living room and 4-8 small wheels to position them in the trailer park.

[InkAddict]

12. If lenders would now examine the probabilities that

one would have stable continued employment in this country over the course of the loan, no one would get approved for a mortgage. On top of that, maintenance of the property costs so much that one can't begin to care for the "moneypits" without additional adventures in borrowing.

[olddad56]

15. I've read that,

adjusted for inflation, the price per sq. ft. of a house today isn't much different that it was in the 70s. I can't verify that, but if so, it says a lot about the value of the dollar.

[The_Casual_Observer]

5. Soft landing.

:dunce:

[Double T]

9. Don't think so.

[JNelson6563]

8. Excellent discussion of it all

Each and every day, right here in DU's LBN.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x2765420

One stop shopping. :toast:

Julie

[SpiralHawk]

13. "You noisy proles should have invested in WAR PROFITS." - Commander AWOL

"What a bunch of noisy dummies you proles are. Shut up and sit down, so that my cabal of elite republicon
cronies and I can enjoy counting up our Massive War Profits. Oh yeah, too bad about your kids in uniform. And too bad about your homes, and stuff like that. Life's a bitch when you are not an elite republicon crony."

- Commander AWOL

[Porcupine]

14. It's too bad we couldn't create jobs and save money too......

http://www.apolloalliance.org/

Well we could if the financiers of Wall Street were willing to invest as much money in energy and transportation improvements as they are willing to invest in waste and pollution.

I don't agree with every point on the Apollo Alliance program but investments in energy efficiency have proven payoffs. Every dollar that is NOT spent blowing greenhouse gases up a smokestack is a dollar that can be spent elsewhere. If people have jobs installing and maintaining solar, wind, and efficiency improvements then they will have money to spend on consumer goods.

Replacing our road-based transport system with a public transit system would create a great many long term jobs first installing new systems and then running them. The population in general would benefit from an increased quality of life and lower energy costs.

[Xenotime]

16. So much for the "correction"

Better start looking up when you walk down the street. There were a lot of people who lost money and more is on the way.