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FRED
08-08-06, 11:30 AM
Countrywide Pulls on the Reins (Registration Required) (http://online.wsj.com/google_login.html?url=http%3A%2F%2Fonline.wsj.com% 2Farticle%2FSB115500035515029425.html%3Fmod%3Dgoog lenews_wsj)
August 8, 2006 (Wall Street Journal)

Angelo R. Mozilo, chief executive of Countrywide Financial Corp., the U.S.'s biggest home-mortgage lender, rarely misses a chance to remind people that he has been in the business for more than 50 years. Now he has a sobering message for investors about the near-term outlook for housing and mortgages: Buckle your seat belts.

"I've never seen a soft landing in 53 years," Mr. Mozilo told analysts in a conference call last month.

AntiSpin: We're working on an iTulip.com Devil's Dictionary of Economics and Finance terms for our readers, modeled after curmudgeon Ambrose Bierce's Devil's Dictionary, available online here (http://www.alcyone.com/max/lit/devils/). Bierce, for example, defines "Peace" as follows: "In international affairs, a period of cheating between two periods of fighting." In Bierce's style, we define a "home" in the US as "A dwelling owned by a bank and occupied by dreamers."

During the terminal stages of every asset bubble, those profiting from it always haul out the old "soft-landing" chestnut to placate the soon to be despondent market participants, if only to draw out the period of their dreamy state, during which a few more bucks can be extracted from them. Also, usually around this time, when evidence of a damaging collapse begins to appear obvious to all, The Bubble Spoiler appears on the scene. The Spoiler isn't some back-water blogger but rather some highly credentialed, well known and respected old timer. The blogger comes early in the bubble cycle with the unwelcomed message, as in the case of iTulip.com on the stock market bubble in 1998 and housing bubble in 2002. The Spoiler, on the other hand, shows up at the end. His role is to announce to those who only listen to the voice of authority that the party is officially over.

In the case of the stock market bubble, to Greenspan's statement, "But bubbles generally are perceptible only after the fact. To spot a bubble in advance requires a judgment that hundreds of thousands of informed investors have it all wrong," in early 1999. Paul Volcker played The Spoiler in September. He rejoined with, "The fate of the world economy is now totally dependent on the U.S. stock market, whose growth is dependent on about 50 stocks, half of which have never reported any earnings." Today we are treated to an equally stark reminder of how markets work, delivered by The Spoiler for the housing bubble, mortgage mogul Angelo R. Mozilo.

So stick a fork in it. This housing bubble is done.