I had an inkling that I remembered the talk of rising interest rates in the blogosphere goes back quite a bit. More below...
Atrios, March 30, 2006:
ARMs
CNN's doing a little bit about the impact of rising interest rates on adjustable rate mortgages. I'm guessing we're hitting the point where a fairly big wave of ARMs are becoming untethered from their initial loocked-in rates. Also, interest rates on variable rate home equity loans are heading up...
Somewhat related, the real danger to the economy going forward is the softening construction market.
Atrios, Friday, Sept. 1, 2006:
Neutron Bomb
This is going to be bad:
There was plenty more going on behind the scenes they didn't know about, either: that their broker was paid more to sell option ARMs than other mortgages; that their lender is allowed to claim the full monthly payment as revenue on its books even when borrowers choose to pay much less; that the loan's interest rates and up-front fees might not have been set by their bank but rather by a hedge fund; and that they'll soon be confronted with the choice of coughing up higher payments or coughing up their home. The option ARM is "like the neutron bomb," says George McCarthy, a housing economist at New York's Ford Foundation. "It's going to kill all the people but leave the houses standing."
Because banks don't have to report how many option ARMs they underwrite, few choose to do so. But the best available estimates show that option ARMs have soared in popularity. They accounted for as little as 0.5% of all mortgages written in 2003, but that shot up to at least 12.3% through the first five months of this year, according to FirstAmerican LoanPerformance, an industry tracker. And while they made up at least 40% of mortgages in Salinas, Calif., and 26% in Naples, Fla., they're not just found in overheated coastal markets: Through Mar. 31 of this year, at least 51% of mortgages in West Virginia and 26% in Wyoming were option ARMs. Stock and bond analysts estimate that as many as 1.3 million borrowers took out as much as $389 billion in option ARMs in 2004 and 2005. And it's not letting up. Despite the housing slump, option ARMs totaling $77.2 billion were written in the second quarter of this year, according to investment bank Keefe, Bruyette & Woods Inc.
Calculated Risk, December 19, 2005
Calculated Risk, Friday, December 29, 2006. You still don't hear talk of the way mortgage equity withdrawls fuel the overall economy.
I could go on, and quote posts from The Big Picture, Angry Bear, Bondadd (and his posts here at Daily Kos) and others.
In addition, if you were plugged into the Wall Street Journal, (and could stand their editorial stance), as well as Marketwatch and picked into the Federal Reserve Bank web pages, you'd get an inkling of what's going on.
But if you were looking at CNBC, or CBS, or - heh - Fox, you'd have gotten nothing, nada, zilch about all of this, at least in any kind of context. True, CNN was publishing this story back in 2006; but did they stay with it, say, as much as Tammy Faye Bakker's death? As much as Lou Dobbs bashed immigrants? Of course not. And forget about the rightie blogosphere. I managed to watch the Sunday News on ABC and CBS; CBS devoted probably 2 minutes to the story. There was nothing on ABC.
Even now, it is likely that some folks will clean up on this mess, making huge fortunes.
And only the place it'll be reported and analyzed in a way that you can use is in the progressive blogosphere.
Update: Here's something you're not going to read in the MSM, unless it's in the "crackpot" category:
LISTENING to economist Peter Schiff you'd think the US should just fold the tent and call game over...
The disturbing thing is he's been right so far...
Schiff is scathing about the mortgage fallout that has caused the current global market shake-up. Sub-prime mortgages -- money lent to low-creditworthy borrowers -- were "crap", but packaged up and sold around the world.
Now that the loans are being called-in and borrowers can't pay-up, Schiff predicts dire repercussions for the US. "America is going to lose access to the world's credit markets. If someone here wants to borrow money now they are going to have to borrow from another American."
... "The economic statistics put out by the US Government are propaganda, pure and simple," Schiff writes.
"Issued by government agencies, interpreted by spokespersons for the Government and the financial community ... the information we get has been manipulated to mould a public understanding favourable to the agenda of the powers that be." Schiff's prediction of economic doom has everything to do with the US mortgage and housing meltdown, a prophecy he made in the book before the latest market turmoil.
Given the fact that the folks running things aren't reality based, none of this would surprise me.