As a boy, I always wanted to be part of something noble. But as a young man, I ended up being part of the Matrix instead. It has taken me nearly 15 years since leaving the Matrix to become part of something noble. My work in Public Media has taken me to that place and Jack and Amy at KETC Channel 9 in St Louis have given me that opportunity.
This video will, I hope show you what I mean. This is the great work of our time. Helping to give people back their power.
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It's not over yet - get ready for the Prime Crisis (David Hirst - The Age)
Now, as subprime fades, the prime mortgages come into play and they will extinguish subprime's significance. From $US300,000 homes, we move into the $US1 million range, now worth perhaps half that and falling. That is the cause of Dimon's grief and warning.
A defection from prime to foreclosure has begun and JPMorgan's books show the trend. Dimon and others clearly fear that this will be the driving force behind balance sheets of financial institutions in the US and the world for years to come.
As last week's run on the now bankrupt IndyMac so graphically illustrated, Alt-A is the mortgage class to watch next. This, the class between subprime and top prime, triple A, is now showing all the hallmarks of a rerun of the subprime debacle. IndyMac distinguished itself as an Alt-A provider. By early next year, we will see subprime fading from the charts only to be replaced by Alt-A foreclosures.
As we begin act three, as nervous fingers reach to the hot stove to remove the pudding, we will find the proof. That is just part of the climax. If we concur — and I do — with Bridgewater Associates' statement that subprime will soon be behind us, we must now attempt the near- impossible task of determining what is in the remaining mix.
Dimon is almost desperately signalling that Alt-A is not the only cause of coming pain by saying even prime mortgages will see significant deterioration.
As observers digested his comments over the weekend, they began looking at other classes that have shown evidence of falsification and exuberance that were evident on the upswing.
The obvious classes are commercial real estate, as mentioned, construction loans, leveraged loans, credit card and car debt, high-yield corporate debt and emerging market sovereign debt.
All this to the backdrop of scarce political leadership, the twin problems of war and oil in the Middle East and a mood on Wall Street best summed up in an email I received at the weekend from a senior staffer at one of the majors who, of his office, quoted Stalin's line: "It takes great courage to be a coward in the Red Army."
But the daddy of all the problems is still housing.
Until we see that illusive bottom, all talk about recovery and catastrophe is but talk.
So the show just must go on. It could be a very long third act indeed.
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