Dr. Housing Bubble 01/12/08

[Crewleader]

False Prophets of Housing: Making Sense of Housing Information Last Week. BofA buying Countrywide Deal.

For most societal changing events, there comes a time when you realize we have reached a tipping point. Not any tipping point, but a point where it is impossible to go backwards. I believe we have hit that stage with housing. Imagine a graph that grows exponentially from cracks in the housing market to a full on panic. In the last presidential debates, candidates from both leading parties rolled out plans on fixing the economy and addressing the growing problems with the housing market. From more rate freezes to rebates, to tax cuts, all these ideas are being bandied about for political capital. Yet this credit bubble is larger than they are. This past week we had a market that fluctuated up and down with rumors flying all over the place. Let us examine the Countrywide deal.

The timeline goes like this:

Monday: Stock price is hovering around $7.6 and the market awaits for further information regarding the company. It is known that they will be reporting their earnings on January 29th and all eyes are on the largest originator in the country for signs of the housing market.

Tuesday: Stock plummets to $5.12 on news that delinquencies are rising and so are foreclosures. It is becoming clear that the company is not going to have stellar forth quarter earnings. Rumors start circulating that bankruptcy may be the only option for the company.

Wednesday: Continued worries about the company send the stock down to $4.43. It is now only a matter of time before it ends up in the graveyard with other mortgage companies. At least this is what appears to be the case. Most recognize this pattern since they saw it happen with New Century Financial and also American Home Mortgage.

Thursday: After starting the day trending lower the stock shoots up to $8.58 on rumors that Bank of America is in advanced talks for taking over Countrywide. The New York Stock Exchange contacted Countrywide because of “unusual” activity in the lenders stock.

Friday: It is formerly announced that BofA will be buying Countrywide for $4.1 billion in stock. Shareholders of Countrywide will be receiving 0.1822 of BofA stock for the deal. Countywide shares plummeted back down to $6.33 on this news. Something smells fishy about the deal and raises the eyebrows of many according to Seattlepi:

http://www.doctorhousingbubble.com/false-prophets-of-housing-making-sense-of-housing-information-last-week-bofa-buying-countrywide-deal/

[keep_it_real]

1. HousingPANIC should spin off BenefitsPANIC

http://housingpanic.blogspot.com/2008/01/psst-ya-got-400000-cause-thats-what.html