Quote:
Originally Posted by Texpat  Countrywide Financial Chief Executive Angelo Mozilo told CNBC's Maria Bartiromo that there's been an "overreaction" to the subprime lending shakeout, though he believes the problem may get worse before it gets better.
"The severity of the impact can be materially helped by a very rational regulatory and legislative environment," Mozilo said. "There's been a rush to judgment and an overreaction. If everyone steps back and looks at the issue in a calm rational manner, this crisis, which appears to be a crisis, will pass rather quickly."
Mozilo said he's mostly concerned for first-time homebuyers: "The only way that lower income and minorities can get into middle income is through buying a home," he said. "And there is a real rush to judgment in cutting off the programs that many of these people have historically used for many years to get into their first home."
He said that much of the problem is tied not to this group, but to investors and speculators who used more exotic mortgages to buy investment properties. "They are not new products or exotic products, but some of them have been sold to people they shouldn't have been sold to." "Clearly an Overreaction"
Now, he explains, there are first-time home buyers who need to refinance because their interest rates are resetting to higher levels. "They can't get refinancing because the rules changed on them after the game started," he said. "This is clearly an overreaction."
Mozilo also said the fallout from subprime lending -- the business of making loans to people with poor or spotty credit histories -- will largely be shouldered by the "monoline" lenders such as New Century, Novastar, and Accredited Home Loans and less so at more diversified lenders.
"It’s a mistake to apply what's happening to them to the more diversified financial services companies like Countrywide, Wells Fargo and others," he told CNBC. In fact, "this will be great for Countrywide because at the end of the day, all of the irrational competitors will be gone." Countrywide Job Cuts, Earnings - News - MSNBC.com
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All is well. Its just an overreaction?
This little hiccough in the US financial markets is a bit more than the usual ups and downs on the global finance and stock markets we have seen over the past few decades. Its a wake-up call to the rest of the world that the everlasting strength of the $US is not so unshakable after all. Every currency in the world is gaining against the $US. Doesn't that tell you something like the world is starting to lose faith in the strength of the $US? And for good reason too. Its just paper money that cant be backed up with actual goods and services to export to earn foreign currency exchange. Hell, why does the USA need foreign exchange currency anyway when they can just keep printing $ bills to pay off their world debt that is denominated in $USs as its the worlds default trading currency at the moment. USA cant pay their international debt off in goods and services at the current exchange rate, so if the rest of the world is silly enough to take pallet loads of US paper money in exchange for real goods (and loans) shipped into the USA, --- more fool them!
Gold went out on the early 70's as the worlds universal denominator of a countries currency value.Mainly because the USA was virtually bankrupt under the gold standard. Then the $US took over as the world standard of currency valuation and has remained so to this day. It was a con then back in the 70's and it is a much, much, bigger con now. But the the rest of the world has been reluctant to let go of the $US hegemony because they have so much invested in it. In effect, the USA has been enjoying the fruits of labor and production all around the world, not through increased production in USA (which has been declining), but through the hegemony of the $US.
Saddam Hussein refused to trade his countries oil in $USs and chose $Euro instead. And look what happened to him. Iran has been moving along the same lines and so is now a prime US target for regime change. The big money people in the USA are really clutching at anything to hang on to the golden goose that has brought them so much wealth in past decades. Even if it means the average working class Joe has to pay for it through a lower standard of living, if not higher taxes.
But the rest of the worlds countries are not so dumb as the American public, and there will be a gradual shift away from investment in the declining $US. The big holders of US debt in $USs like China and Japan wont want to spook the market by unloading too much too soon, But they will slowly divest themselves of this declining asset.
Its not all bad news for average Americans tough. A lot of jobs that were going overseas will become viable again with a lower valued $US. The big companies might not like it so much, but at least its going to mean that some more families have a breadwinner to put food on the table and pay the rent.