Items of Interest:
Jeremy Grantham: "I'm officially scared!" -- The bearer of the bad tidings today is money manager Jeremy Grantham, chairman of GMO, who has just published the July edition of his quarterly newsletter entitled "Meltdown! The Global Competence Crisis".
In terms of strategy, Grantham summarizes his view in what he believes should be investors' motto: "Don't be brave, run away. Live to fight another day."
Specifically, as far as house prices are concerned, Grantham looks at the ratio of US median house prices to family income and states: "In order for house prices to reach normal from here, they must either decline 17% immediately or experience four flat years while income catches up, or some combination." Even more worrying, however, is the normal tendency for bubbles to overrun on the downside...
Reactions to Alan Greenspan's interview yesterday --
"Alan Greenspan and Brett Favre: two men desperately in need of a friend to throw an arm over their shoulder and walk them away from open microphones."
— Jeff Macke
"What goes on with Alan Greenspan? He planted the seeds of the structural imbalances during the 1998 Asian contagion. Tilled them anew after the tech bubble. Squeezed homeowners into ARMS. And rode off into the sunset whispering recession, nationalization and economic hardship?" — Todd Harrison
Credit Crunch Reaches Critical Mass - Let's look at a few examples of the credit crunch in action.
Bloomberg is reporting MGM, Dubai Fall Behind on $3.5 Billion Loan for Las Vegas Plan. . .
Title Companies Complain "Banks Deprived Us Of Cash" -- Title companies are shutting down in Arizona, California, and Texas. Tonight's story is United Title of Texas shuts down statewide.
- Hank Paulson's Fannie Gamble - Lawrence Lindsey, Wall Street Journal
- How Long Can the U.S. Economy Continue to Grow? - The Economist
- More Arrows Seen Pointing to U.S. Recession - Peter Goodman, NYT
- Are Covered Bonds a Safe Way to Finance Mortgages? Not Likely - BusinessWeek