Wednesday, December 8, 2010

The only double-dip I like, is chocolate ice cream...

There is chocolate and then there is "chocolate."  I like mine down at the local ice cream parlor, double dip, and give me a spoon because I can't handle it any other way.  However, there is some movement just this last Monday on another double dip and I think it will take more than a spoon to get through.  Maybe a shovel, or a backhoe.

There are recessions and then there are "recessions."  In the article posted at, the journalist reports that Moody's, one of the largest credit agencies in the world that measures the credit worthiness of insurance companies and countries, has down graded a number of mortgage backed securities.  This tells me that the double-dip recession is more of an eventuality than the competing theory being spread by the Fed.  The party line, that is still being toed and also the reports coming from Bernanke and the Fed are that some time in 2011, housing prices are going to bottom out and at most there will be only a further loss of 5% in home values.If that were truly the case, why would you need to down grade these tranches of mortgaged back securities again?

Moody's has had this 5% line for months now and most of these securities have been down graded ages ago.  My guess, is that the rosy picture of a bottom is not an accurate picture of what is to come.  Certainty does not exist, but when the guys that have money in the game are putting money down on the bear, then the bull may not be as strong as some have been telling us.

The bear side of this recession is putting a line at 20% and that could take 2 or 3 more years to hit bottom.  2014 is a long time to wait for your house to bottom out, or your paycheck to bottom out, or a lot of things to bottom out.  If you want to believe Bernanke and his Bull about the economy recovering and your housing values rising, then by all means, start buying homes again and investing.  As for me and my money, I am betting on the house and its bears.  Speaking of bears, I love cinnamon bears in my chocolate ice cream.

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