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Originally Posted by FLAMESRULE
From what I know its the entire sub-prime mortgage lenders that are hurting in a big way. They are giving mortgages (and very large ones) to people that can't afford A mortgage let alone a big one for a short period, lower interest rate (hence the sub-prime). Eg. Prime is 6%, they get the first 3 years at 3% and then the last 27 years at 7%. When the banks come calling for the higher mortgages they cant pay. I hope these guys all go bankrupt. Its horrible and bad business.
These companies then collapse, which in turn causes the hedge funds and others to collapse. This causes the capital markets to really tighten up because so many of them are tied into hedge funds. I think the banks are trying to make capital more available for companies in terms of mergers, acquisitions, spending, etc. This should stop/limit the bleeding across the entire market.
I have been slaughtered lately and it still boggles my mind how a financial sector issue can absolutely crush resource companies.
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Also, with the large mortgages, a slight turn in the economy and/or house value and folks realize that they owe more than what their house is worth as they borrowed 100% of a very high price.
So they walk away from their house. Forclosures are up 4X from this time 24 months ago, and if millions of americans are leveraged up like this it is like building a house from a deck of cards, a few negative economic indicators can bring the house down.
Now I don't really know how this will translate to Canada other than some selling pressure on equity markets. Overall I think Cgy has seen the majority of its appreciation in the burbs. This city is grown out and away from DT as much as it can without Cgy building some kind of tech center or something say south of Fish Creek Park.
If you are looking at investing, try thinking through how the city will look 10 years from now. For example I bought couple condos in developments just south of 22X because there will be a hospital going into Cranston and a tech center is being contemplated. The area north of Stampede park should be cool as well, UofC is planning a satillite facility out there and there will be quite a few condo developments with retail on the bottom.