Weekly Commentary: Infestation

2025-10-18 04:30:18 ET

I'll resort to technical jargon: "Terminal Phase Excess" is fertile breeding ground - a veritable cloning factory - for cockroaches.

Before we delve into bugs and larvae currently gnawing away at the Bubble's periphery, a brief jaunt down memory lane. From economist (and actor) Ben Stein's August 12, 2007, New York Times op-ed, "A Market Crisis Disconnected From Reality" - which articulated the conventional view following the June subprime eruption.

"The total mortgage market in the United States is roughly $10.4 trillion. Of that, a little over 13%, or about $1.35 trillion, is subprime - certainly a large sum. Of this, nearly 14% is delinquent, meaning late in payment or in foreclosure. Of this amount, about 5% is actually in foreclosure, or about $67 billion. Of this amount, according to my friends in real estate, at least about half will be recovered in foreclosure. So now we are down to losses of about $33 billion to $34 billion. The rate of loss in subprime mortgages keeps climbing. In time, perhaps it will double, maybe back to $67 billion… But by the metrics of a large economy, it is nothing. The total wealth of the United States is about $70 trillion. The value of the stocks listed in the United States is very roughly $15 trillion to $20 trillion. The bond market is even larger… My point is this: I don't know where the bottom is on subprime. I don't know how bad the problems are at Bear. Yet I do know that the market reactions are wildly out of proportion to the real problems that have been revealed or even hinted at… This economy is extremely strong. Profits are superb. The world economy is exploding with growth… Some smart, brave people will make a fortune buying in these days, and then we'll all wonder what the scare was about."...

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