Not exact matches
But the real emergency affects mainly debtors — mortgage debtors with
negative equity, companies loaded down with junk bonds (many
of them taken to buy back corporate stock and increase dividend payouts to increase the
price at which managers can cash
out).
High levels
of negative equity kept one
out of five homeowners frozen in place and unable to sell, driving down inventories, especially among lower
priced homes.
At issue is whether Lehman's crisis was merely a temporary «liquidity problem,» that time would have cleaned up much like BP's oil spill in the Gulf; or, did the firm suffer a more deep - seated «balance sheet problem» (
negative equity), as Federal Reserve Chairman Ben Bernanke claims — a junk balance sheet, composed
of assets that not only had no buyers at the time, but had no visible likelihood
of recovering their market
price even after the $ 13 trillion the Treasury and Federal Reserve have spent to bail
out Wall Street.
Hi Rob: Inflation has two opposing effects on stock
prices: one is the positive effect on earnings as you point
out (revenues rise as
price of goods and service rise and a portion
of it, if not all, falls to the bottom line) but the other is the
negative effect
of a higher discount rate demanded by investors to invest in
equities.
CoreLogic shows that many home
prices are finally coming
out of negative equity after for so many years, yet committing to go through it allover again can be scary.
One - third
of U.S. mortgages taken
out in the U.S. in 2005 and 2006 were in
negative equity positions before house
prices dropped, and at least half
of the mortgages had less that 5 per cent
equity, making them extremely vulnerable to even a small drop in
prices.
Negative equity is keeping many potential sellers
out of the market, which keeps a lid on inventory and complied with the reduced flow
of REO properties has led to much tighter market conditions for lower
priced properties, particularly in the hardest hit markets, according to CoreLogic Economist Sam Khater.