From Editor Dave Shirmeyer, Shirmeyer Rate Market Report
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{By Hypocrisy.com Management: The following is from the daily report Dave Shirmeyer of Sigma Research, Inc who writes for mortgage originators such as loan brokers. Dave feels the individual loan originator has been criticized in an unbalanced way in the current crisis and the comments he has agreed to share with us from todays report gives you a sense of his view of current market conditions and his frustration with some of the big players}
Friday, 1/25/07 4:30 PM
There has rarely been, if anytime, that I have experienced markets as these. This week is one for the books; what makes it so is that for all of the ink, all of the talk and all of the conjecture; it all boils down to one thing. No one has a clue as to what is happening, and more importantly, what will happen next. There are opinions that would fill a NY phone book, but there are no convictions past the next news conference, the next shoe to drop in the totally disrupted credit markets, the next huge loss reported by a bank, OR what the Fed is thinking. Not even the Fed knows what it thinks and it is getting maddening to have to plow through it. I’m mad as hell and I won’t take it any longer! What is coming from pundits and analysts is mostly worthless jabber. This is a $100 trillion economy and we have a measly $300B of sub prime problems and maybe another $150B of losses that have or will be taken by banks and financial institutions around the globe; yet markets are acting as if the end times are just around the corner. If it wasn’t banks and Wall Street this would not matter much. Nevertheless it does and we have to work through it, as nauseating as it is at times.
The financial system from top to bottom needs a complete colostomy. Let the bond insurers Ambac and MBIA fail! Let them fend on their own and let the mess work its way out of the system with losses from local governments to the top of the financial food chain, Wall Street and money center banks. Maybe once and for all a clean plate will set the tone for more logical financing. Toss out all the young “financial engineers” that have developed “models” and created the sub prime mess. The bottom line in it all is that greed, and I mean greed from wealthy investors and naive investors in bonds and rating agencies that sucked up fees by the bucket but didn’t know anything. Then, take the current Fed and send them to class on how to manage the monetary system.
While the complete failure of the financial system—the only left is complete insolvency—is bad enough, large mortgage lenders are for reasons difficult to delineate, making the origination of new mortgage loans more costly while lining their pockets at the expense of consumers. There have been more changes in policies in the past two weeks than in the past two years coming from wholesalers—most of them from firms that took massive hits in the sub prime market.