The Credit Crunch

(Source: Economist)

The August 4th - 10th issue of the Economist is one of the better magazine covers I've seen in awhile - in any magazine category. The art direction and layout is always top notch but I think the current issue is particularly strong with a terrific cover illustration. Pick up a paper copy for the full visual impact. Despite what the geeks tell you - paper is still pretty good technology in my book. (re: geek. see definition #1)

Scene: Full Metal Jacket, bath room scene.

American Home Mortgage, sits down on a toilet, puts the barrel of a M16 assault rifle into his mouth and pulls the trigger.

Close up: Blood and grey matter splattering on white tile. Gun powder smoke floats into the frame and twists.

Backstory:
“No realistic alternative” For past several weeks, the credit markets have ganged up on and bullied American Home Mortgage to the inevitable breaking point. Structured like a REIT, AMH was America’s 13th largest lender and despite many business and operational proficiencies were forced into committing seppuku. The reason for this is simple: AMH was no longer were worthy of being given credit – not even the no documentation, no income verifying, no credit check variety of a subprime loan.

Eat or be eaten:

As terrible as it is to hear that 7,000 AMH employees will loose their jobs, when companies like AMH are swallowed up by market forces – the contrarian mind wants to know what the wake up call means and what new business opportunities now exist?

For a deeper perspective than I'm capable of providing, check out the following articles:

Economist: “A good time for a squeeze”
New York Times: “Without Cash, Instant Profits Were No Help”
New York Times: “Mortgage Lender Says It Will Close”

Posted at August 3, 2007 06:10 PM

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(Source: Economist) The August 4th - 10th issue of the Economist is one of the better magazine covers I've seen in awhile - in any magazine category. The art direction and layout is always top notch but I think the current issue is particularly strong with a terrific cover illustration. Pick up a paper copy for the full visual impact. Despite what the geeks tell you - paper is still pretty good technology in my book. (re: geek. see definition #1) Scene: Full Metal Jacket, bath room scene. American Home Mortgage, sits down on a toilet, puts the barrel of a M16 assault rifle into his mouth and pulls the trigger. Close up: Blood and grey matter splattering on white tile. Gun powder smoke floats into the frame and twists. Backstory: “No realistic alternative” For past several weeks, the credit markets have ganged up on and bullied American Home Mortgage to the inevitable breaking point. Structured like a REIT, AMH was America’s 13th largest lender and despite many business and operational proficiencies were forced into committing seppuku. The reason for this is simple: AMH was no longer were worthy of being given credit – not even the no documentation, no income verifying, no credit check variety of a subprime loan. Eat or be eaten: As terrible as it is to hear that 7,000 AMH employees will loose their jobs, when companies like AMH are swallowed up by market forces – the contrarian mind wants to know what the wake up call means and what new business opportunities now exist? For a deeper perspective than I'm capable of providing, check out the following articles: Economist: “A good time for a squeeze” New York Times: “Without Cash, Instant Profits Were No Help” New York Times: “Mortgage Lender Says It Will Close”