Inevitable Market Crash

An editorial published on Seeking Alpha takes a look at the declining market and draws the conclusion that no one wants to hear: there’s no stopping it. This is particularly alarming for those in strong housing markets such as Utah. Here is an excerpt:

Friends, this is the tech wreck all over again. This is just a rehash of the same sorry lies and greed run amok that we witnessed from 2000 – 2003. These bigwig CEOs are all in CYA mode. Don’t be surprised to see some very high profile corporate names going down in flames and some very big executives going off to jail.

The key to the subprime mess is that housing prices are declining, and if the asset that you have pledged to secure a loan goes below the value of the loan, you can’t refinance. If you can’t refinance, you can’t repay the loan. If you can’t repay the loan, you default.

These rate cuts are not going to boost housing prices, and that’s what needs to happen if you are going to stem the subprime bleeding.

The reality is that housing and the subprime market is in a death spiral; nothing can stop it from crashing. There isn’t a force on earth that can turn this housing bear market into a bull market.

Is this editorial driven by realism or pessimism? Can the financial crisis really be so far out of hand that we cannot pull out of it? It will be interesting to see which of all the speculations circulating will actually prove correct. Should the worst occur, a Utah Home Equity Loan could be a lifesaver.