More seriously, this piece by Landon Thomas of the New York Times>
Here are 10 things that I predict will flow from its collapse (many of which have already hit the beleaguered housing market):
1. The capital that exists from direct lenders such as community banks, savings institutions and large commercial banks will fall short of potential demand and focus on bread-and-butter loans, leaving most borrowers out in the cold.
2. Exotic loans of any kind will be completely out of favor, leaving many borrowers and many properties unfundable.
3. Home sellers will become active lenders, but only those who have equity. Seller financing will help some transactions.
4. Second homes, expensive houses and certain types of investment property will be penalized and difficult to fund.
5. Small boutique lenders will enter the business, capitalizing on market voids, funding specialized but secure niches.
6. Investment banks will take care of unleveraged high-net-worth customers, but terms will be unfavorable so this market will further shrink.
7. Sovereign wealth funds are not the solution, because many were burnt on mortgage-backed securities.
8. Those that do lend will revert to back-to-basics underwriting: perfect credit, large down payments, proof of income, personal character and good family upbringing.
9. Housing industry lobbyists will make the mortgage liquidity problem their number one policy issue in the next two years. They will argue that the sky is falling and it is.
10. The trend will keep the housing market starved for capital, prolonging the slump.
Like so many parts of our American culture, the accessibility to unlimited and poorly scrutinized debt helped turn Americans into a sloppy group of consumers, which spawned greedy Wall Streeters, out of control lenders and starry-eyed investors.
]]>In a related article, market participants offer some comments that point to a very serious and potentially very expensive (for the tax payer) problem to fix. Some key quotes:
“There is a real panic about these companies on Wall Street right now, and sometimes a blaze like that grows almost without reason,” said Tom Lawler, an economist" - “There wasn’t really any new news to set off this crisis. The stocks just started falling, and didn’t stop.
“If people lose faith in Fannie and Freddie, then the whole system freezes up, and nobody can buy a house, and the entire housing market can crash,” said Paul Miller of the Friedman, Billings, Ramsey Group in Arlington, Va" - “There’s a fine line between having faith and losing it, and sometimes it’s unclear when it has disappeared. But when investors cross that line, bad things happen very quickly.
“This is the last thing we need right now,” said Brett Barry, an agent at Realty Executives in Phoenix. “The market is like an elevator with the cable cut lose. It is accelerating downward.”
Infographics on Freddie Mac & Fannie Mae from the New York Times:
“There is no silver bullet,” said the official, Steve O’Connor, a senior vice president of the association. “There is no single solution to the housing crisis. It will take multiple tools to turn the housing market around, and it’s going to take time.”
“You are in this death spiral of dilution,” said David Ellison, the chief investment officer of FBR Funds, a mutual fund company based in Arlington, Va. “It’s this toxic math.”
"Kundig’s projects seamlessly integrate architecture and landscape, and pay uniquely meticulous attention to detail and the materials used, which are often left in their natural, raw state. His ingenuity lies in the experiential nature of his work, the use of kinetic architectural features, and the reinvention of structural elements that are often overlooked, such as doors, windows, and stairs."
Brookings released a report that ranks the carbon footprint of the nation’s top 100 metropolitan areas. For the first time, the report quantifies a metropolitan area’s carbon footprint based upon carbon emissions from highway transportation and residential energy consumption and lists metropolitan areas by total metric tons of carbon emissions per capita in 2005. The report offers recommendations on how the federal government should step up its support of metropolitan efforts to shrink their carbon footprints.