Wednesday, July 25, 2007

The mortgage market issues, thoughts and hopes

Two thoughts or hopes:

---The biggest catalyst of yesterday's market rout appeared to be Countrywide Financial's results and the comment of its CEO, Angelo Mozilo, that home prices were falling "almost like never before, with the exception of the Great Depression". This was like manna from heaven for the bears. The market should be reminded that Mozilo always talks in extremes. He's blunt, animated, at times profane, at times entertaining, and seems to love the attention he gets from being provocative. Yesterday he got the attention of the market and his name on the front page of the NY Times. Let's hope that his comments get put in perspective today, and of course that it turns out over time that they should be.

---Whenever financial stress hits an area of the banking system there are calls for increased regulation. Often that is a rational response to the issue but unfortunately in implementation the pendulum can swing too far. The implementation can be driven by politics and then handed to overzealous bureaucrats. For a current example of our regulators in action, with history as a guide, see Tom Brown's piece "Long is Wrong" at Let's hope that whatever regulatory action evolves is not destructive.


Anonymous Will C. from Maine said...

Those are constructive comments but for now it seems to be look out below time.

1:22 PM  

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