Monday, December 24, 2007

Some big surprises

Locked out of my office this morning, even the receptionists didn't come in here at the office hotel. Watching SquawkBox over breakfast. Everybody's psyched about the good consumer spending numbers, then somber about predictions that there might be as much as $100 bln in defaults in option ARM mortgages coming up 2008ff.

Hello! WTF do you expect? If consumers are taking their credit cards to the mall, you know darned good and well they're not servicing their all too-complex mortgages. Two years ago they were taking debit cards tied to HELOCs to the mall. Brilliant.

It's been prima facie evident for years that people have been borrowing too much. There are no surprises here. It's just another opportunity for actors with strong balance sheets to swoop in and grab assets. The problem is, the assets suck. Big-assed houses built off in the middle of fucking nowhere that are exactly the wrong thing for a society that needs to move away from driving big SUVs to malls. Unlike the excess of telecom capacity that we worked off from 2003 forward, this time the assets are just wrong, and should be torn down.