I am serious. Steven Beard, an analyst interviewed on Market Place this morning, said that the data on existing home sales, which showed a modest increase in sales in February, could mean that the crisis in mortgage backed securities is over. Excuse me, but do the "experts" on Market Place have any clue what they are talking about? This release shows house prices in the Midwest and West falling at more than a 20 percent annual rate over the last three months. Okay kids, what happens when house prices plunge? That's right, people default on mortgages. They have homes that are worth less than they owe. Rational people often decide to give their $300k home back to the bank rather than pay off a $400k mortgage. In other words, February's data on existing existing home sales should have told any real expert that we are likely to see much greater problems in the mortgage market in the future. Where does Market Place find these "experts?"
--Dean Baker
