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The Cover of BusinessWeek as Lending Implosion Bellwether
  (February 13, 2007)

Two readers alerted me to the bellwether aspect of this week's BusinessWeek cover, which boldly states: "It's a Low, Low, Low, Low-Rate World: why money may stay cheap longer than you think."

Astute reader B.G. Cooke asked:
Have you seen the cover of the recent Businessweek magazine (low, low, low rates)? Wouldn't you say that that is a contrarian indicator?
While frequent contributor U. Doran characterized the cover as a "Mega Historic Mkt call."

Let's consider the lending and low, low rates which most directly affect typical Americans: mortgage lending and interest rates. Here is a graphic depiction of recent events in this astonishingly permanent world of low, low rates:

So, yes, I would have to agree that this BusinessWeek cover is the high water-mark of cheap, readily available money, at least in the mortgage market. As you probably know, Newsweek ran a cover on "the housing boom" in mid-2005, which eerily marked the top of the bubble, and The Economist is famous for running covers announcing the demise of the dollar, just before the dollar rallies strongly.

I suggest starting your research on Domino 1 (subprime lender implosions) at Aaron Krowne's Mortgage Lender Implode-o-Meter.

Congratulations, BusinessWeek, for nailing the top of the "low, low rates" and cheap, easy money mortgages.

For more on this subject and a wide array of other topics, please visit my weblog.


copyright © 2007 Charles Hugh Smith. All rights reserved in all media.

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