Transcript(for convenience purposes only – we do not guarantee accuracy).
WE ARE BACK WITH DREW MATUS, SENIOR ECONOMIST AT LEHMAN BROTHERS. WE WERE JUST TALKING ABOUT SUBPRIME. IT HAS BEEN A PROBLEM WE HAVE BEEN TALKING ABOUT ALL YEAR. TREASURY AND THE BUSH ADMINISTRATION WEIGHED IN ON IT. THEY SAID THEY’ RE GOING TO TRY TO FREEZE, OR STOP THESE RESETS ON SUBPRIME MORTGAGES. HOW MUCH WILL THIS HELP THE ECONOMY AVOIDS A RECESSION? >> IF THEY CAN AVOID PUSHING THE BLOOD OF THEIR HOMES, THEY WILL AVOID THE FORECLOSURE PROCESS ON THOSE HOMES. THE BIGGEST CONCERN WE HAVE FOR THE ECONOMY IS THAT WE HAVE A LOT OF HOMES THAT ARE GOING THROUGH FORECLOSURE. THE BASE WILL TAKE THEM AND AUCTION THEM. WHEN YOU OPTION THAT, YOUR RESETTING THEM AT A PRICE THAT COST THE NEIGHBORHOOD THAT THEY ARE IN. SUBPRIME IS SCATTERED THROUGHOUT HIGH AND NEIGHBORHOODS, AS WELL AS LOW AND NEIGHBORHOODS. — HIGH-END TO LOW END NEIGHBORHOODS. >> THIS IS JULIE HYMAN. THERE HAVE BEEN SOME CRITICS WHO HAVE SAID THAT THIS IS NOT GOING TO HELP THAT MANY PEOPLE. IT’ S NOT GOING TO AFFECT THAT MANY HOMES. THEREFORE, IT MIGHT NOT HAVE AS BROAD EFFECT. >> IS A QUESTION OF — DO YOU SIT BACK AND DO NOTHING, OR DO YOU DO MORE? IN THIS CASE, YOU TRY TO DO MORE. PRESIDENT BUSH WAS RIGHT — THIS IS NOT ABOUT THE U.S. GOVERNMENT BAILING OUT PEOPLE. THIS IS ABOUT TRYING TO TAKE A COMPLICATED PROCESS AND FIGURING OUT HOW TO DO WHAT WE USED TO DO IN THE PAST IN A DO, MUCH MORE COMPLICATED PROCESS. >> THIS IS ELLEN BRAITMAN. WE HAVE BEEN OVERING WHAT IS HAPPENING IN FLORIDA AND ORANGE COUNTY, WITH THESE POOLS OF MONEY, WHETHER IT BE PENSION MONEY OR STATE GOVERNMENT MONEY INVESTED IN STRUCTURED INVESTMENT VEHICLES. IT SEEMS LIKE FOLKS THAT WERE NOT READING THE MOST ARCHEAN STORY ON THE FINANCIAL PAGE NO OTHER SAYS OF THEIR MONEY IS INVESTED IN THIS. HOW WILL THIS UNDERMINE CONFIDENCE? WHAT KIND OF RIPPLE EFFECT COULD WE SEE? >> THIS IS WHAT STARTED IT ALL. THE WHOLE CRISIS STARTED IN AUGUST. PEOPLE LOOKED AT THE FUNDS THEY WERE HOLDING THAT ARE SUPPOSED TO BE 100% SAFE. THEY REALIZE THEY HAVE EXPOSURE TO ASSETS THEY WERE NOT COMFORTABLE WITH. THIS IS THE LATEST IN WHAT WILL PROBABLY BE A LONG LIVED PROCESS OF DISCOVERY, AND PEOPLE FINDING OUT WHAT THEY’ RE HOLDING. >> TALKING ABOUT THE BLOOMBERG, L.A. TIMES POLL, A CONSUMER CONFIDENCE IS FALLING. WHAT KIND OF EFFECT IS ENERGY PRICES HAVING OF THE CONSUMER? WHAT ABOUT THE OIL PRICES, OR THE GAS PRICES? >> IS MUCH MORE ABOUT PRICES AT THE PUMP FOR THE AVERAGE CONSUMER. GASOLINE IS ONE OF THOSE THINGS THAT WE BY FREQUENTLY. BECAUSE WE BUY IT MORE FREQUENTLY, IT TAKES SOME OF THE DISPROPORTIONATE THE VALUE TO EVERYTHING ELSE GOING ON. THE PRICE OF EVERYTHING ELSE MAY BE GOING UP BY 10%, BUT IF PEOPLE REALIZED GAS IS GOING UP 10%, IT WILL HAVE A REAL EFFECT. TO THE EXTENT THAT IT CONTINUES TO RISE, PARTICULARLY AT THIS TIME OF YEAR, IT COULD BE DISPROPORTIONATE TO ANY OTHER TIME OF THE YEAR. >> WHAT IS YOUR OUTLOOK FOR REAL INFLATION? >> LONGER TERM, WE AGREE WITH THE FED. ONE YEAR FROM NOW, WE WILL BE AT WHAT WAS 75 INFLATION, INCLUDING FOOD AND ENERGY. THE PROBLEM FOR NOW — WE WILL BE AT 1.5 — 1.75 INFLATION. >> IS IN A LIMITED AREA OF STRENGTH? — IS EMPLOYMENT AN AREA OF STRENGTH? IS THIS A BRIGHT SPOT? >> WE ARE MORE OPTIMISTIC. IT IS SIMPLY BECAUSE WE HAVE NOT SEEN THE HIGH LEVEL OF LAYOFFS WE HAD ANTICIPATED, GIVEN THE WEAKNESS IN CONSTRUCTION. THE OTHER ASPECT IS THAT THE AREAS THAT ARE ADDING JOBS ARE AREAS THAT TEND TO ADD JOBS OVER LONG PERIODS OF TIME. HEALTH CARE, LEISURE, THESE ARE THINGS THAT ARE REACTING TO TRENDS, THEY’ RE NOT LIKELY TO REVERSE THEMSELVES SOON. >> TELL ABOUT THE TOP END? WALL STREET IS CUTTING A SLEW OF JOBS. IS THIS GOING TO NEGATIVELY IN FACT – NEGATIVELY AFFECT THE ECONOMY? WAS IT DOES HAVE AN IMPACT. PEOPLE WHO DRIVE CONSTRUCTION — PEOPLE WHO DRIVE THIS ECONOMY ARE THE TOP FIFTHS.
Tags: Mortgage Bubble, Mortgage Defaults, Mortgage Delinquencies, Mortgage Implosion, Mortgage News, Mortgage Resets, Subprime Bailout, Subprime Implosion, Subprime Mortgage, Subprime Mortgage Industry, Todays Economy
