patrick.net

Food and sex has everything to do with markets, economics, and the bubble phenomena.

Exactly.

Besides, the bubble theory has been talked to death already. That is getting boring too.

We could talk about stranglets AKA black swan particles.

Run away!!!

In ways I understand how Ozman (or anyone for that matter) feels when they come here for a much needed fix of bubblenomics. However, when raising stone idols you reach a point where it is more upright than horizontal!

While not perfectly perpendicular, our monument to the credit/housing bubble is nearing it's completion. From here, it would take more effort to restore it to it's crude original state than to check for plumb for all eternity. It's only natural that talk among the natives turns to food.

C'mon Ozman,

There must be some 'favourite' mouth watering fair from down under that you want to tell us about.

How about those fruit and creme filled crepes available at the Freemantle markets? Or maybe a banger on a bun with a black and tan at the pub?

Do you put a slice of beet on your burgers, or is that only offered to tourists?

Karima,

I can't speak for others but of all the issues that I face the Reverse Mortgage is the one I'm the least sure of. If one had not adequately planned for retirement and had no living heirs there's little to debate.

However that doesn't describe the vast majority. Most of us (or our folks) have done "some" preparation for retirement and have children or someone they care about. Since the President of the Mortgage Brokers Association seems heel bent on making sure there isn't one dime of "equity" left untapped, it looks like we (as potential heirs) are fighting the flow. I fear as they become even more popular (as folks live longer) and continue to use it fund lifestyle there won't be anything left for long term care and final expenses.

The examples "I've" seen exhibit seniors with all kinds of credit card debt. I understand much of that is due to the cost of medications but judging by the steady flow of elder piloted motorhomes I suspect there may be more to it. Additionally as RE prices continue to cool will lenders be as eager to extend credit? Will terms be as generous? Again, more questions than answers.

I dunno, "...go back to decent lending standards..." seems a mighty big stretch to me.

It would take a complete breakdown of investor confidence in MBS and CDO markets to dry up demand for these mortgage products. Even after I/O and no-doc markets go back to their original sizes, we still have down payment sizes ranging from 1% to 19% that the orginators can flog to death like they have I/O and no-docs, before we reach sane lending standards again. How long that will take can be a very long time indeed.

The back story of these securitized packages of mortgages is that sophisticated computer models ensure the risk is all managed away. Reminds me of LTCM. It worked until it didn't; and when it didn't, it didn't in a real big hurry. Pretty much right up to the blow up, LTCM investors kept holding out hope that it would straighten out.

The reaction in the MBS and CDO markets to collapsing subprime risk models wasn't, "oh crap, maybe the models for no-doc (Alt-A), 2% down, 5% down, etc. tranches aren't so good either". It was a "flight to quality" retrenchment from NINJA tranches into less risky but still unconventional products that are still not really suited for mainstream consumers but are marketed as mass-consumption financing vehicles.

I can see this stretching out for many years, even more than a decade, before capitulation and the rush for the exits, and these products become financial toxic waste. Any bail out would only devalue them further, too.