Option ARM timebomb set to explode....

mbga9pgf

Because you silly little bulls have such fantastic arguements to counter why option arm isnt going to cause big problems...

A picture says a thousand words

Snooze

mbga9pgf wrote: »

silly little bulls

Made me laugh that did. :beer:

R

chucky

kennyboy66 wrote: »

I wondered how long it would be before you posted a graph.

do you like mine from January 2007?

chucky

mbga9pgf wrote: »

Because you silly little bulls have such fantastic arguements to counter why option arm isnt going to cause big problems...

A picture says a thousand words

what makes you think that banks haven't already done write-downs on these Option ARM's?

mbga9pgf

No. Its not the most recent one chucky. But nice try!!!

Data was from 2007. All that fiddling from government pushed the debt time bomb to the right. And also unfortunately compressed. Interesting point is, longer they leave it, the worse it gets! Neg am, which nutter thought that through!

mbga9pgf

chucky wrote: »

what makes you think that banks haven't already done write-downs on these Option ARM's?

Because if they had, they would have come clean with their booked assets. Want to suggest why they havent, or more succinctly, why the government hasnt made them reveal their assets on their books?

You do realise Option arm alone is forcast to create bigger losses at peak than subprime did, right?

julieq

Ah well, lucky we have prudent savers to bail us out again :B

System

I just find it very hard to believe that they'll start resetting and banks will say "Oh no what's happening! Didn't see this coming!"

mewbie_2

StevieJ wrote: »

Does that include the auditors

Enron had auditors.

chucky

mbga9pgf wrote: »

Because if they had, they would have come clean with their balance sheets. Want to suggest why they havent, or more succinctly, why the government hasnt made them reveal their balance sheets?

i'd rather not listen to the armchair economists on here - i'd rather take Bloomberg's word for it (from last week) rather than some random blog off the internet...

have you seen what Barclays, JP Morgan etc... are saying - i thought that they never knew about it??

seeing that you guys are in the know on these Option ARM stuff - i'm surprised that they didn't let you guys know what was going on
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZKwTlyVwvxo

About 40 percent of borrowers with option ARMs are already delinquent, and “many” of the others will start missing payments before their obligations change, the Barclays mortgage- bond analysts wrote in a July 24 report. Recasts of securitized option ARMs will peak at about $6 billion a month in mid-2011 and include “volumes lower than feared” overall, they said.

investors and some analysts including at Barclays and JPMorgan Chase & Co. have said the U.S. government’s effort to have more bad mortgages reworked will delay some defaults.

The Barclays analysts, who wrote that about 88 percent of option ARMs packaged into securities in 2007 will eventually default, said that after a rally in prices they no longer suggest owning related bonds, “a trade we have been recommending for months.”

Typical prices for the most-senior option ARM bonds from 2007 have jumped about 40 percent from March lows to 46 cents on the dollar, according to their report. JPMorgan analysts in New York including John Sim and Chris Flanagan wrote in a July 24 report that prices for so-called super-senior securities may reach the “mid-to-high 50” cents on the dollar.