Yikes! Lately it seems like it takes something along the line of a big drop in the Chinese market or an exotic macro problem to make the market fall fast and furious. Not this time.
Stocks plummeted on Thursday, with the Dow industrials tumbling more than 300 points, on signs of further weakness in the housing market and deteriorating conditions for corporate buyouts....
...The daily drumbeat of bad news on housing on Thursday came from two of the largest home builders, as D.R. Horton Inc and Beazer Homes posted quarterly losses.
Financial shares took a beating on growing evidence that problems in the subprime mortgage market are spreading, making financing the corporate buyouts that drove the market's spring rally more difficult."
This drop was all about the American dream - your house. Apparently all those billions of dollars in loans to people with no money down and questionable finances wasn't such a good idea after all. What will turn a bad situation into a near crisis is the fact that the homes backing up these loans aren't worth anywhere near the housing boom peak.
This past week marked the point where even the economic optimists realized this problem isn't just about subprime loans, and it probably won't stay neatly contained in the housing sector.
Yikes! Lately it seems like it takes something along the line of a big drop in the Chinese market or an exotic macro problem to make the market fall fast and furious. Not this time.
Stocks plummeted on Thursday, with the Dow industrials tumbling more than 300 points, on signs of further weakness in the housing market and deteriorating conditions for corporate buyouts....
...The daily drumbeat of bad news on housing on Thursday came from two of the largest home builders, as D.R. Horton Inc and Beazer Homes posted quarterly losses.
Financial shares took a beating on growing evidence that problems in the subprime mortgage market are spreading, making financing the corporate buyouts that drove the market's spring rally more difficult."
This drop was all about the American dream - your house. Apparently all those billions of dollars in loans to people with no money down and questionable finances wasn't such a good idea after all. What will turn a bad situation into a near crisis is the fact that the homes backing up these loans aren't worth anywhere near the housing boom peak.
This past week marked the point where even the economic optimists realized this problem isn't just about subprime loans, and it probably won't stay neatly contained in the housing sector.
LINK