ARMageddon? Neh .. not until Christmas, anyway.

Cramer: “We have Armageddon… will someone please come on TV and tell the truth about how bad it is?”

In case you’re wondering when the madness might end, take a look at this chart (source: Agora Financial). It shows the total dollar amounts (in billions) of ’07 and ’08 ARM resets:

ARM Resets 2007 and 2008

So, it looks like the fun is just beginning. But hell, who cares – our SUVs still work, and they get us to Wal-Mart. And there’s still tons of cool stuff on the shelves for us to buy with our platinum Visas.

Whee!! Euros or gold, anyone?

7 thoughts on “ARMageddon? Neh .. not until Christmas, anyway.”

  1. The chart assumes the Fed doesn’t reduce rates, which the smart money says they will have to reduce rates soon before it starts dragging down the economy. Having said that, I have no sympathy for either the borrows who overextended on an ARM or the banks crying mercy. The smart banks minimized or sold off these high risk mortgages.

    The free market is a beautiful thing, it weeds out stupid people and companies. Unfortunately the Fed will have to come-to-the-rescue again to prevent the stupidity from spreading…

  2. The Fed is in a nasty place.

    They can raise rates and cause a bloodbath on Wall Street – hardly palatable especially in light of current volatility. This, of course, would reverberate broadly throughout the economy.

    Alternatively, they can lower rates and possibly send the dollar off the cliff it’s been teetering on… it’s been in freefall over the last couple of years anyway due to several factors, including our unlimited appetite for debt, our adventures in the middle east, etc… This too would create great pain in the economy but it’s probably the “best” option despite the high likelihood it will bruise the dollar very badly.

    Frankly I think they’ll sit still tomorrow and pray – but I’m no economist.

  3. The chart assumes the Fed doesn’t reduce rates, which the smart money says they will have to reduce rates soon before it starts dragging down the economy. Having said that, I have no sympathy for either the borrows who overextended on an ARM or the banks crying mercy. The smart banks minimized or sold off these high risk mortgages.

    The free market is a beautiful thing, it weeds out stupid people and companies. Unfortunately the Fed will have to come-to-the-rescue again to prevent the stupidity from spreading…

  4. Exactly, but consumers are more worried about mortgages than the dollar. Instead of letting the free market take care of these idiots, we’re going to bail out the mortgage holders and banks with an interest cut…All politics are local…

  5. The Fed is in a nasty place.

    They can raise rates and cause a bloodbath on Wall Street – hardly palatable especially in light of current volatility. This, of course, would reverberate broadly throughout the economy.

    Alternatively, they can lower rates and possibly send the dollar off the cliff it’s been teetering on… it’s been in freefall over the last couple of years anyway due to several factors, including our unlimited appetite for debt, our adventures in the middle east, etc… This too would create great pain in the economy but it’s probably the “best” option despite the high likelihood it will bruise the dollar very badly.

    Frankly I think they’ll sit still tomorrow and pray – but I’m no economist.

  6. Exactly, but consumers are more worried about mortgages than the dollar. Instead of letting the free market take care of these idiots, we’re going to bail out the mortgage holders and banks with an interest cut…All politics are local…

Leave a Reply

Your email address will not be published.