Martin Weiss Takes a Closer Look at the Next Big Bankruptcy In This Issue of Money and Markets
Jupiter, Fla., (PRWEB) November 28, 2007 -- Martin Weiss takes a closer look at the collision between mortgages and bankruptcy. Dr. Weiss examines the reasons why the U.S. could fall into a recession.
Countrywide financial is the GM and Ford of the mortgage industry, originating $340 billion in loans in the first nine months of the year. It's the company that can make or break the entire housing and mortgage industry. If it goes broke, few stock or real estate investors will be able to escape the consequences. And Countrywide has already laid off about 12,000 employees, a number that could soon rise to 20,000 as mortgage originations plummet.
And investors who bought Countrywide's shares at its recent peak in February have lost four fifths of their capital. The company admits it has a whopping $27 billion of delinquent subprime mortgages held by some of the nation's largest banks.
Under the headline "More to Come," the Wall Street Journal, predicted last Friday November 23, that "the subprime loan crisis could accelerate as rates on loans reset."
The Mortgage Bankers Association estimates that 1.35 million homes will enter the foreclosure process this year and another 1.44 million in 2008. But even that dire estimate understates the impact of mortgage-rate resets now on the way.
What will happen when politicians twist the arms of mortgage companies like Countrywide to temporarily freeze their interest rates at current levels to help subprime borrowers keep their homes?
The impact on lenders is obvious. A big hit to already-sinking cash flow as all subprime borrowers, are allowed to continue making payments at the current rates.
What happens when the U.S. economy sinks into a recession?
The housing bust and mortgage meltdown seen so far has been deepening even without higher unemployment and even without falling incomes. In a recession, the Fed could pump in a lot more money overall, but only to avoid mortgage company bailouts like a plague.
"A U.S. recession is unavoidable. And the only weapon the Fed has left to fight, lower interest rates and more money pumping, is driving the dollar into a tailspin. That's why, despite temporary rallies in the one and corrections in the other, financial stocks are likely to continue sinking, while gold, oil and foreign currencies are likely to continue rising," Dr. Weiss advises.
Martin D. Weiss, Ph.D., founder and president of Weiss Research, Inc. and a leading advocate for investor safety, is a nationally recognized expert on domestic and international financial markets. With more than 35 years of experience, including many years in Latin America and Asia, Dr. Weiss has helped empower millions of investors to make better financial decisions through his monthly Safe Money Report and daily Money and Markets.
Dr. Weiss' keen understanding of foreign markets and the global economy has earned him a reputation for thoughtful, in-depth analysis that investors can rely upon to make informed financial decisions. Regularly called upon by the media for his independent investing guidance, he has been featured in publications nationwide, including The Wall Street Journal, The New York Times, Chicago Tribune, Investor's Business Daily, and Forbes and has also appeared on CNN and CNBC.
Throughout his career, Dr. Weiss has been an advocate for consumers and investors in the insurance, banking and brokerage industries, dedicating his time and resources providing analysis and data for Congressional testimony, constructive proposals for reforms in the securities industry and legislation for full financial disclosure as well sound accounting and fiscal policy. In November 2004, he launched the Sound Dollar Committee, a nonprofit organization dedicated to building a network of investors seeking to protect the nation's future by demanding honesty in government accounting, a balanced budget and sound economic policy.
Dr. Weiss is author of The New York Times best-seller, The Ultimate Safe Money Guide, which gave baby boomers a road map to grow their wealth safely. It was listed on the New York Times Business, Wall Street Journal, and BusinessWeek best-seller lists, as well as the Barron's Roundup for 2002.
Dr. Weiss holds a bachelor's degree from New York University, a Ph.D. from Columbia University and is fluent in eight European and Asian languages.
Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.
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