Guardian UK: Markets plunge in fresh US housing crisis

[marmar]

Markets plunge in fresh US housing crisis
· Fears over solvency of $5tn mortgage backers
· FTSE in 'bear territory' - 20% down from 2007 peak

Phillip Inman
The Guardian, Saturday July 12, 2008




A deepening housing crisis in the US, escalating oil prices and fears that retailers, holiday companies and banks face a bleak future dragged down stockmarkets on both sides of the Atlantic yesterday to levels not seen since last year.

US worries grew last night when federal officials took over California mortgage lender IndyMac after a run on the bank by depositors, who withdrew over $1.3bn in 11 business days, had left its insurance fund with a $4bn-$8bn deficit.

IndyMac is the second-largest financial institution in US history to close.

Declines in the value of Britain's top 100 companies reached more than 20% since their peak, heralding the start of a bear market and sustained selling not seen since the stockmarket collapse of 2003.

Wall Street's concerns centred on the twin mortgage groups Fannie Mae and Freddie Mac, and concerns that American families faced a further squeeze on their spending after oil prices rose to a record $147 a barrel. Fannie Mae and Freddie Mac, which have been deserted by investors since the sub-prime lending crisis hit last year, account for almost three-quarters of new home loans in the US.

...(snip)...

"It's the worst of both worlds," said Matthew Kaufler, portfolio manager at Clover Capital Management in Rochester, New York, which oversees $2.7bn. "Watching two government-sponsored entities evaporate before our eyes from an equity perspective, and the damage that does to investor confidence on the one hand; and watching the price of oil, which is clearly meaningful from a consumer and business perspective, continue to escalate upward creates other pressures." .....(more)

The complete piece is at: http://www.guardian.co.uk/business/2008/jul/12/stockmarkets.subprimecrisis

[pretzel4gore]

1. george bush at work....

we morans need to 'get a brain'...

[CJCRANE]

2. Bush is asleep at the wheel

what do people expect?

I've been telling my co-workers for at least a year that the economy won't improve until there's a Democrat in the WH, but they call me "pessimistic".

Maybe they'll change their tune next week if the stock markets continue to plunge...

I told one of them that if you see a storm coming and warn people, that's not being pessimistic, that's being realistic.