“The housing market surely will double dip,” Whitney told “Worldwide Exchange.”
Government programs to support housing have been “murky” and when the modifications caused by them come to an end, a lot of supply may come to the market and that’s when the real-estate market is likely to go down, she explained.
The Federal Reserve can’t make banks start lending again because the business model financial institutions used before the crisis is broken, Whitney also said.
“I don’t think there’s much the Fed can do to get banks to start lending again. That’s a structural problem, the model is broken,” Whitney told “Worldwide Exchange.”
Before the financial crisis erupted in 2007 banks were able to offer customers low-priced mortgages because they were making money on securitizing these mortgages and selling them on, she explained.
But now that the securitization market is effectively closed, the prices of mortgages for consumers have not risen to compensate banks for that loss of revenue, so banks have been playing defense for the past two years, Whitney added. cnbc.com/id/35887306
Ye see in Ireland we’re far too cute to ever let that happen here, sure Nama will just hold the over supply off the market preventing prices from falling and wait for long term economic value to return, then they’ll sell in 2017 and make a fortune for us.
We’re fierce cute hoors here the Yanks can be little silly when it comes to this type of stuff.
This is stellar stuff. If she is right (and she has always been right) then there will be a second serious dip in the US as mortgage interest rates ratchet up. This will price property down long term in the US all over again and will kick out a major crutch of the “recovery story”. Whether it is actually justified on price grounds (US houses are now back in gold or deutschemark terms to what they were in the mid 90s) is irrelevant. It will scare the hell out of people all over again and will kill the recovery story worldwide.
When asked would she invest any new money in European banks, she replied
“Not in a million years!, it’s tough to say but…European banks are so much
worse off than even American banks” and this lady knows her banks.
Analyst to rival Moody’s and S&P with own rating agency
By Aline van Duyn in New York
Published: November 19 2010 01:46 | Last updated: November 19 2010 01:46
Meredith Whitney, a Wall Street analyst who shot to prominence with bearish calls on banks before the financial crisis, plans to set up a credit-rating agency to go head to head with Moody’s Investors Service and Standard & Poor’s.
Ms Whitney said in an interview with the Financial Times that her new agency would use the same business model as established agencies, in which issuers of debt pay for ratings. She maintainted that she would be able to manage potential conflicts of interest, saying: “If you run a good business and you have compliance in place, there should not be problems.”