Chuck Ponzi February 21st, 2007

One of the big stories of the day was the trouncing Novastar subprime lender received today. As of the current moment, the stock is down more than 39% so far today.

Since the housing bubble is the manifestation of the credit bubble, we’re likely to see a lot more of these. However, if you’re waiting for this to trickle through to the housing market, it won’t immediately. Sellers still haven’t figured out that without subprime, very few can afford their homes. When Option ARMS start getting pulled, that’s when we’ll see the bloodbath.

Until then, you’ll have to make do with the current stock skewering we are seeing now.

Bloomberg reported:

NovaStar’s “earnings were indicative of the challenging nonprime environment and proved that no company will likely go unscathed,” Scott Valentin, an analyst at Friedman, Billings, Ramsey & Co., wrote in a research report today.

Indeed.

On the Yahoo stock message board, the following message was posted describing the sentiment:

These mortgages are on the street.

It is a huge disaster and rate cuts only help those wjho will refi, not those stuck in option arm trash.

Thank alan Greenspan as you are evicted form(sic) your home.

First he crashes the stock market, now housing.

it will be a bleak 2007 and 2008 for millions of families.

Unfortunately, it was all preventable. Thanks for the loose lending practices. One thing is for certain; the rich will get richer, and the poor will get poorer. Thanks, Sir Alan. Thanks, indeed.

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