New Century collapse resembles dot COM bust in year 1999-2000 – what effect does mortgage bubble burst have on economy, equities and gold
Sam Adelton
Mar. 9, 2007

Mortgage banking and brokerage companies are in the middle of total collapse. The faulty and negligence driven underwriting principals have finally started back firing. The biggest question is where was Federal Reserve and regulatory when people were receiving calls in their homes and cell phones from mortgage reps trying to provide cash in their pockets?

New Century and some other lenders have stopped accepting loan applications from prospective borrowers. They are trying to negotiate with the creditors. When the cat is out of the bag, people will realize it is just tip of the iceberg.

The financial services sector, mortgage bankers, brokers are all in deep trouble. The bubble burst in real estate and especially in mortgage banking is very serious.

After the bubble bursts, most of the mortgage bankers and brokers are in trouble. Some are hoping like in eighties (Savings and Loan fiasco) Federal Reserve will save them again.

The economy is deeply affected as people are falling behind in paying their mortgage payments. The ripple effect is serious. In those circumstances, people stop eating out, spending anything unless absolutely essential. The underemployment expands and unemployment rises. The gold normally jumps up only to find deflation is the worst enemy of Gold market.

New Century collapse resembles dot COM bust in year 1999-2000 – what effect does mortgage bubble burst have on economy, equities and gold
Sam Adelton
The economy is deeply affected as people are falling behind in paying their mortgage payments. The ripple effect is serious. In those circumstances, people stop eating out, spending anything unless absolutely essential.
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An excellent opportunity to buy Yen and sell equities as Asian stock rally spurs carry trades
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Yen’s artificial weakness was great for the stock markets. Bank of Japan bought Dollar and sold Yen for a long time. That entire Dollar went into buying US Bonds and Notes. That helped keeping the interest rates low.
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How will the world be if Dow falls to 2000 by December 2012?
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There will be no real credit available. The banks will be scared to death to give a loan to anyone. Simply put, you are back in old days – pay for what you buy in cash.
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The collapse in Wholesale Sales compared to last month’s data – a confirmation of deflation driven deep recession – where will Dow go?
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The collapse in Wholesale Sales is very significant. The whopping drop has drawn attention to many smart money players. Some are realizing for the first time that deflation is in the cards.
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Close to 100 K Nonfarm Jobs points to stagflation changing to deflation driven recession
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Underemployment has finally transformed into rising unemployment. The stealth effect of deflation is finally here. The low nonfarm job growth and the declining rate of the same is the result of slowdown in manufacturing and construction sector.
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