Saw this post on piggington, and it seems appropriate to paste here... does this seem accurate?

"Industry insider perspective, FWIW.
All of the banks have these toxic loans on board. And they all knew that they were crap. But real estate works in cycles, and the first rule is you never leave money on the table during a boom market--you'll need it when things go bust, as they always do.

But the big banks and mortgage financial giants are not going out of business and will not need a bailout. During down times they just prune their operations, and if its really bad they will prune away everything except an information hub.

Because they are not in the home business, they are in the number tracking business. That's all they need to do, track these records until they reach some sort of decision point (foreclosure, pooling for MBS, etc), capture the releveant information and route it to processors and decision makers. It makes no difference if they are routing info inhouse, or if they are outsourcing. They just track the records.

The only difference with this cycle is that the boom was very big, so the inevitable correction will be big as well. As will the scale of the layoffs and pruning."

Fed's Bies on Housing:

Fed's Bies says high potential for housing correction
| Reuters

NovaStar starts the conference call with a warning that anyone expressing opinions about the company will be cut off and disconnected from the call. This doesn't bode well. The natives are getting restless and banging their spears.

Ooops. Try this:

Novastar Live Link

Sorry to have been so, um, brutal about it, JBR, I didn't mean to be mean to you. I had just finished a long post wherein I shared some things that I learned over a long career of wanting to know just exactly how shit works in this business I'm in and what we get paid for this part and what happens if what we thought would happen when we bought the loans doesn't happen and so on, in very concrete ways. I learned a lot of what I know by crawling around on my hands and knees in the file room digging out the files in question and piecing the story together from the documents and stuff like that. So, not to be too tedious, I have grey hair and it stands on end when I see risks on all sides and no plausible-sounding exit strategy.

Then some puppy pipes up with the wildly original claim (I thought that stuff went out of fashion the day the NASDAQ died) that it isn't really a business about loans and payments and checks and buildings and desks and people and manila folders, not to mention houses. It's really an "information business"! You can just route data to "processors" (who are they, btw?) and, you know, shit will get done. Maybe you'll have some manager you didn't "prune" who can tell whether it got done right or not. Or maybe you don't care, because it's all in the pricing, dude.

"It makes no difference if they are routing info inhouse, or if they are outsourcing." Another wild-eyed innocent who has never heard of identity theft, or has never encountered a situation in which one's own employees, reasonably compensated, pulled the company out of the soup it fell into by relying on lowest-bid contractors who couldn't care less about anything but next quarter-end.

They should send people like that to Iraq to manage the reconstruction funds. Oh, wait . . .

realist - that is pretty scary.

But it is just more proof of how deep this pool of global liquidity runs. There is more pressure on the people needing to lend the money to make a deal than those needing to borrow. Maybe once we dry a little of that liquidity up by destroying equity then the scales will re-balance.

BTW - I work for a company that was bought out by one of these private equity companies (rich people & institutions pony up... then they go to an investment bank & leverage even more... then buy companies right and left).

The corporate management teams (fee driven I'd bet) have unbelievably deep pockets... wanna hire a couple additional expensive engineers poof you got 4-5 instead... wanna add a multi-million dollar machine poof you got two with an option to buy one more (just in case one brakes down). I've never seen anything like it.

And they are cloning plants just like this one in Asia & Europe simultaneously from the same pockets... the complete antithesis of 'bootstrap'.

But they have made no secret of their plans - they are either going to flip the operation to somebody else or IP the damned thing... I give them five years max.

It is 'Flip This House' on an industrial scale.

And the banks (like in the article) are falling all over themselves to lend them the money to do this. The juice is NOT coming from earnings.

'Unbelievable' doesn't begin to describe it.