Can We Officially Label This As The Bursting Of Mortgage Bubble?

Over the last few weeks more and more companies that have dealt with mortgages have been hammered hard. Even those with no direct exposure to the sub prime loan market have been hit as the global sentiment turns against lenders. Countrywide, the largest US lender could face bankruptcy if liquidity worsens. Northern Rock in the UK has seen its share price halve since the start of the year. The Federal Reserve along with the European Central Bank has tried to alleviate the credit squeeze by increasing the amount of cash that's available in the system, with the Europeans releasing 180 billion Euros.

These actions have done little to ease the tension with the market now in the red for the year. Investors have had very little in way of reason to buy other then the fact that the market fell across all industries, thus making some of those equities a potential value buy. The finger of blame is pointing to the loose lending standards from banks and mortgage companies. First in the dock are the hybrid instruments which allowed borrowers who were overleveraged to enter the real-estate market writes Betonmarkets' Michael Wright. 'Flipping' houses became a very profitable venture for a couple of years. As long as the market kept going up, more people jumped on the bandwagon. Many of these people had no means of paying for the debt they were taking on, but due to crafty financing were able to get loans. The only risk was that these investors had to 'flip' this house quick, before the much higher interest rate was going to kick in. As soon as the market bubble burst and these houses lost value, many of people found themselves owning houses that: a)were worth way less then they paid for them just a few months prior b)the higher mortgage kicker was coming quick, and hence the defaults

The fallout from this bubble will not be limited to financial markets. The U.S. economy and with it, the rest of the world, has the possibility of feeling the negative consequences for quite some time. All this will possibly be reflected in the equities markets, starting with the SP500. The one thing that markets hate is indecision, more than anything they fear the unknown. Right now, nobody knows who is exposed to what. Banks are raising their overnight lending rates and hedge funds are having to sell safer equities to fund their margin calls. This crisis could spread like a virus to all areas of the economy. The one glimmer of hope was an emergency rate cut from the Fed, but this now seems unlikely. Voting member Governor William Poole recently indicated that their job is still not done on beating their primary enemy, inflation. With Betonmarket.com you can take advantage of this possibly profitable situation. A no touch which pays out when a certain level isn't touched during the duration of the term seems like the more conservative and thus possibly most appropriate option.

A no touch 100 points higher than the current price of the S&P 500 pays 11% over 20 days. This means that As long as the S&P 500 doesn't rise 100 points over the next 20 days, you will win. It could rise 98 points, or chop around wildly, but you still win as long as it doesn't rise 100 points.