"With the advent of the securitization market in the early 1980s, lenders gained liquidity and the ability to manage credit risk off balance sheet, accelerating the decline of equity levels in homes," she said.
In fact, the lure of a declining supply of equities and the conviction that more companies will be bought at huge premiums is probably the stock market's principal support at present.
Moody's cited the impact of the severe decline on equity markets as the impetus for the move, but traders showed little concern.
A second reason is the decline of private-equity firms, which in the carefree credit-bubble era that ended in 2007 were outbidding even strategic buyers who were able to generate instant cost-savings or revenue growth.
Managers are aware of the near-term risks of subprime investment returns and are monitoring the deterioration in certain underlying debt and the equity markets as well as the impact of the declines on equity portfolios and hedge fund holdings.
Our healthcare system is broken, our education is sub-optimal (to be charitable), our energy policy is a sham, we are facing an economic decline of massive magnitude and declining equity and real estate markets, we have two wars with no end in sight and a number of pressing national security issues to boot.
As the institutions' share of equities rises, so the option to sell declines and the case for raising a stink gets stronger.
Year to date, U.S. defense stocks, as measured by FactSet Research Systems, have dropped 34.5%, a shade better than a decline of 35.2% for the U.S. equities market as a whole.
Correction: January 20 , 2001 Saturday A front-page chart yesterday showing the decline in the percentage of equity held by homeowners in their houses carried an incorrect scale.
The choice of equities would prove inferior only if either a major sustained decline in return on equity occurs or a ludicrously low valuation of earnings prevails at the end of the 20-year period.
