The Stock Market today

I had lunch with my wife and a friend today at Casadorez in Mason. [It was very good!]
We discussed the stock market and the housing market and why this bad turn in the markets had to happen.
I've been lending to businesses for nearly 15 years and was recently the Senior Commercial Lender here in Cincinnati. When I took the job in 2005 my initial instructions where to remove anything that had to do with the previous owners and to get a handle on the loan portfolio. The job of due diligence on my part and that of the staff was tedious to say the least. Documents missing in every file, missing credit evaluation records, etc. it was a mess! Loans where made that would make the rookie credit analyst stop and ask some serious questions. These loans where done because: rates were high, property values were high and appraisals were easily accommodating. When I reported the delinquencies and the condition of these loans to headquarters I was told to get them refinanced somewhere else or stay closely "on top of them" so that we wouldn't had a failing portfolio. I was told by a Senior Credit Officer when I took the job that the acquisition of this "thrift-bank" was the worst he had ever seen.
I was left to clean up the mess while trying to build a new commercial lending platform. A few months in to the job, auditors came in and notified the bank that they were looking to downgrade 25% of this newly acquired mess. So for the next 4 months I worked to mitigate, refinance, sell and litigate these horrible credits.
The mess we're in today was predicted! Whenever my family would go to visit my wife's family in South Florida, I was and still am, amazed at how high the prices of properties have gone up. The reasons vary but one is that the speculation market was out of control!
The construction of high rises in downtown Miami was crazy. I would laugh out loud and tell friends of how the now highest building in Miami was an empty condo and hotel. [Still is! The Four Seasons Tower on Brickell]. I did say years earlier: this must correct itself. These markets in Florida, California and Arizona cannot support this outrageous growth.
Example: My Brother and Sister-in-law bought a beautiful 4 bedroom, 3 bath home in western Dade County 3 years ago. The purchase price was around $300K. A little over a year later their neighbor was selling the very same home as theirs for $700K plus! Mortgage and real estate brokers were calling, leaving cards and presenting mock proposals at their door!
Only problem for my in-laws was they could never sell; because every piece of property in Florida was going upjust as rapidly as theirs. They were smart and stayed. Tens of thousands, cashed out on their new found equity riches. They bought very expensive cars, boats, second homes, jewelry and went on shopping sprees. They traveled, bought season tickets to the Heat games and Broadway shows...it was insane! Some, traded in that equity for much bigger, more expensive homes. That was the biggest mistake of all! Lenders couldn't push they money in to their purses fast enough. They couldn't close the loans fast enough. They couldn't close two at once...but, I'm sure they tried. They too were getting very rich!
Once, a lender of mine, informed me that an appraiser that he worked with, would get him an appraisal at the number we needed! In other words: If the borrower wanted $400K and we could only lend maybe $350K: the appraisal would come in at $500K or 80%: what every we needed. Didn't matter the price...I was appalled and that lender was subsequently let go.
This was happening all over South Florida and the rest of the country.
The market place had to correct this greed; and it is. Only thing, some believe that the government can fix it: it cannot. There must be sacrifices and casualties of this greed. People should and will loose homes (not primary homes but second and third homes), lenders will fail and investors will bail. We will be OK only if everyone bites the proverbial bullet and stands down. It's time to rest.
Today, I said at lunch that the market is going down to 8,000 before it turns North. It will be a slow recovery but, we will recover...........This afternoon it closed at 8,579!
Tomorrow is another day.....right?
What do you think?