Sunday, August 24, 2008

The Credibility Gap

Yesterday on the flight to D.C. I was catching up on my WSJ reading. I was on August 6th and read the article on FirstFed. It was very unsettling, even though I had seen the accompanying graphics on Calculated Risk earlier in the month.

This got me to wonder, why does an issue have a larger impact on me when I am physically holding a paper with a chart of the data, as opposed to reading it on the internet?

I don't really know the answer, but imagine it has something to do with human nature. Often a problem becomes much more "real" when you or someone you know is directly affected by it.

Or could it be, that I had the time to sit and read every word of the article (as opposed to my usual skimming online) and absorb the true impact of what they were saying? Perhaps on the internet, there is just too much information vying for our attention. Which, in the end, results in nothing keeping our attention? To be fair, I was on deadline that week (hence the unread WSJ).

In any event, this is a pretty big deal (which many bubble bloggers already know about). In my immediate circle of friends and family I know of at least 3 folks with ARMs due to reset in the next two years. While many are calling bottom for the low end in Sacramento, I think the party is just getting started on the higher end.


Random note about queuing: At work I am surrounded by Operations Research folks, so queuing is very serious business. I use use LIFO when it comes to my reading stack. That way, all the articles anticipating an event don't need to get read, since I am reading how it was resolved before I even get to the earlier articles. As obsessive as I am about my WSJ reading and housing stats, I am actually a pretty laid back in most other respects.

5 comments:

Sold in '05 said...

"While many are calling bottom for the low end in Sacramento, I think the party is just getting started on the higher end."

Just to finish that thought... Therefore the bottom is NOT in for the low end. The higher end collapsing will, much like a pile-driver, relegate the current low end even further down the price ladder into areas which today contain only truly decrepit hovels.

If things play out the way they look like they are moving in the overall economy, normal working folks (if they can keep their jobs) who don't feel the need to live in pretentious gated golf course developments may be able to do so for less than $200k, and the rest of us will be able to live the high life for under $300k.

sacramentia said...

"I know of at least 3 folks with ARMs due to reset in the next two years."

Can they make the reset payments or is it going to put them under.

Buying Time said...

They were all planning to refi before they reset. In at least 2 of the cases I don't think they have enough equity. And in both those cases their household incomes have actually gone down since they originally qualified.

I don't know if they will be put under though.

Ed said...

I know it hurts when it someone you know...but...

If they have no other assets, and they didn't plan for an income decrease, then they had no business signing onto an ARM to begin with.

Jacob said...
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