Perhaps one out of five new topics that Goto starts assert, in effect, that our economy is going into the toilet and RAS will be the first to go.
I don't in any way deny that there are some huge problems in our economy at the moment. We've been on a no course correction needed collision course with economic disaster from the day Bush took office. The problems are evident at many levels, from cooked unemployment numbers that only count you as unemployed if you are collecting unemployment to cooked inflation numbers that can't possibly be tracking the actual cost of living to the systematic devaluation of the dollar against other currencies and an incredible rate of deficit spending. We survive all that (most of us, anyway) because we live in a robust capitalist economy that manages to adjust to just about every stupidity that we throw at it.
The mortgage crisis puts a new wrinkle in all that. Things really could get really bad. The question, for GOTO and his band of Chicken Littles, is how much difference will it make to RAS and mortgage REITs. I note here that, at the worst of the Great Depression, over 80% of the population remained employed. Those that owned houses continued, for the most part, to pay their Mortnages. The same would, by and large, be true now.
There isn't going to be a run at the bank at RAS. Just continuing payments. Will things every be so bad as to justify a 20% yield, I don't think so. The current dividend should be maintainable through some major mayhem. RAS should be going up right now. I suppose its just a matter of time.
I am just wondering if you think that the gov is cooking the books on inflation and unemployment, would you be in favor of letting the gov run our health care? Personally I would never want to see the gov in control since I have had first hand experience with the gov and health care. I have seen a friend of mine be bankrupted because of how poorly the gov runs its workmen's comp. As I heard others say, you would have the compassion of the IRS and the efficiency of the post office if the gov ran health care.
Participation rate is a canard that (mostly Repulbican) politicos have rolled out as an excuse to cook the unemployment rate numbers. Participation rates increase when there are more and better jobs available. They decline when you can't get a job no matter how much time or effort you put into finding one. They decline particularly rapidly when the unemployed become homeless and lack even the fundamentals required to find a job (clean clothes, a phone number, and an address).
There will always be comfortable people who look down and say "oh, they're lazy". That will pretty much always be a lie. Its a remarkably short distance from a high paying job with a mortgage and a family to homelessness. You can, as the unemployment rates do, count such people as nonparticipants. You can also, as Roosevelt's programs did in the 1930's, count these people as needing a job and break.
I'm not trying to be political here. I'm just describing reality that exists in lots of industries.
As an example, seven years ago there were tenure track positions open at colleges and universities across the country. Today, largely as a function of a shift in federal policies that doesn't push back against such things, adjunct and temporary labor is increasingly dominating the college job landscape. Many of these people are creating full time jobs out of thin air for eight months of the year by teaching at multiple universities on a per course basis without benefits. Four months a year they have to get by on whatever the can save in the eight months, largely because there is little other work available. This isn't something new with Bush. It is just one more employment practice that has exploded without push back under Bush.
Prevaricate however you want. You can't change the fundamental reality on the ground. Its measurable in lots of ways. I just used the numbers you provided.
I agree completely. Another problem here is that everyone talking has a different time outlook for their RAS stock. I agree that over the next year the stock is a bargain at these prices. The div will remain or get higher, and the real rise in the stock will come after the first of the year. Short term, it will fluctuate, and I don't really see much sense in all the arguing, if you plan to hold the stock long term. Institutional buying will take this thing to its proper level after the first of the year.
I expect volatility in RAS price all the way back up over the next three years, but blowing out the existing short position is likely to make it particular volatile over the next 3 to 6 months. I still think we could briefly see some very prices during that time.
Right now the sky is falling. Will it hit us on the head? I don't think so. Let's be practical. If the financials cease to have value everything eventually everything ceases to have value. So the question is this: will everything cease to have value? Will peoples homes cease to be their most valuable asset? Will they still have a job and an income? Will they want to go on vacation, buy a boat or car,purchase Christmas gifts and eat out? I think so. So the world won't end but for a while now it is looking like it might. It won't. Buy the financials and collect these once in a generation dividends. You couldn't do it a year ago and I don't think you will be able to a year from now.
>>>from cooked unemployment numbers that only count you as unemployed if you are collecting unemployment>>>
Now that's just plainly incorrect. Have you every looked at how UE numbers are done, or is this just a wild guess?
I know exactly how they are calculated. There are hundreds of ways that people don't get counted as unemployed, but only a few through which they are. I know. I've not been counted through several different paths at this point. We've been seriously cooking these numbers ever since Reagan, and more so since W came in.
A more reliable indicator of unemployment is the percentage of the population that is employed. Those numbers remain way down from the end of the Clinton administration.
Well, as you may have noticed today, I'm sometimes not on for long periods. Today, for instance, was one of my teaching days. I often don't get to read or post at all on teaching days, as I'm generally running for about 16-18 hours straight starting at about 7:30am.
In any case, I gather you don't value my analysis. Oh, well. Can't please everybody.
Your assessment is a breath of fresh air and correct. RAS will not be the first to go just to please the agenda of gotstogo. A major portion of RAIT Securitization Holdings are in Europe and they are quite lucrative. Fee rich. They will continue to deliver good earnings and RAIT has already written down 90% of their subprome debt. So, a major portion of their revenue is immune to anything that happens to the Subprime debacle here in the United States.