tag:blogger.com,1999:blog-8914063486189106024.post4928981738523776417..comments2022-12-05T01:49:09.035-05:00Comments on The Rollins Financial Blog: "Well, Who Are You Gonna Believe, Me Or Your Own Eyes?" - Chico Marx in Duck SoupRollins Financial Advisors, LLChttp://www.blogger.com/profile/02086309052329953428noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-8914063486189106024.post-30240865249347005482008-07-03T14:36:00.000-04:002008-07-03T14:36:00.000-04:00"As far as the banks and subprime, isn't it partly..."As far as the banks and subprime, isn't it partly a question of the unknown downside for the secondary market that is the problem?"<BR/><BR/>The simple answer is "yes".<BR/><BR/>There is no market for the security, so "accountants" that are not knowledgeable, think the value of the underlying asset is zero. "If we don't know how much someone will pay for it, how can we give it a price?"<BR/><BR/>In the end, as the market recovers and credit crisis is resolved, the investments will be given a value. The issue will then be the banks/mortgage companies will have to "write up" the investments, and someone will comment that they are inflating their earnings.<BR/><BR/>Time will tell if the "rules of accounting" will change. Which way is wrong?Rollins Financial Advisors, LLChttps://www.blogger.com/profile/02086309052329953428noreply@blogger.comtag:blogger.com,1999:blog-8914063486189106024.post-53635456226339029322008-07-02T17:44:00.000-04:002008-07-02T17:44:00.000-04:00Joe, A good injection of cold hard facts helps sta...Joe, <BR/>A good injection of cold hard facts helps stay the panic. Thanks for putting some perspective on this market. Over immersion in the news is enough to send me into spasms. I appreciate your views on the financials. As far as the banks and subprime, isn't it partly a question of the unknown downside for the secondary market that is the problem? No one knows what is the real value of the MBSs, so like the housing market, the unknown drives the perceived value down and the risk ratio up.<BR/><BR/>Housing is so interwoven with our sense of well-being, both physically and mentally, I think the fact that just about everyone has lost some value in such a large asset strikes at our personal economic confidence. Gas going so high so fast and food prices following the same upward path, while real estate plunged, has combined to take a toll on consumer confidence. I agree that the economy is not nearly as bad as the press says and that our day-to-day spending and activities has probably not changed much, except that Whole Foods is empty compared to six months ago. Interesting that Whole Foods may prove to be pure luxury in the minds of the consumer. I don’t think anybody has stopped eating.<BR/><BR/>Hopefully the credit tightening will not last too long. Lenders can't stand all that pent-up money sitting around and investors will get hungry again on the backside. We don’t need any more of the nuclear loans but some relaxing of mortgage requirements would be of some help to the housing industry.<BR/><BR/>Again thanks for the market perspective. The market stinks, but we're still I’m in. Beats the alternatives.Gerry Davidsonhttps://www.blogger.com/profile/04928242865654135733noreply@blogger.com