Stage 5 is when the market really gets it… now entering stage 3

Bill Fleckenstein’s article today on sub-prime loans and what they will do to our economy is really worth reading.

“…serious issues are developing, and that large companies like New Century Financial, Accredited Home Lenders and NovaStar Financial will, in his words, “hit the wall” very soon…”

“…Normal homes sold for $1 million in value. In this new seven-home development, (homes) sold for $1.3 million to $1.5 million each… now most of the seven homes are vacant — worth no more than $900,000. Thus, all the lenders are sitting on losses of $400,000 to $600,000. This is just one of many that are happening daily.”

Chicken Smith View:
Place another tick mark on the “Recession to start in 2007” column. Folks, it’s not just a bunch of Chicken Littles running around saying this. This is coming from those inside the sub-prime lending field. I bet you even a secretary at one of these lenders can see that nothing good can come out of this.

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