This is a 60 minutes clip of an interview with Whitney Tilson. Tilson’s a Harvard Business School grad who writes for the Financial Times and Motley Fool. The interview is talking about the number of defaults that are expected to hit this year because of two kinds of loans called “Alt-A’s” and “Option ARMs”. The Option ARMs are the ones with low teaser rates and low, or no, money down. There is supposed to be a big, BIG, wave of resets this year. You have to go to 3:30 in the clip to see the graph that they use. According to the interview, there’s about 1 Trillion US in the Alt-A loans and 500 Billion in Option ARMs with Tilson predicting 50% or more defaults after the reset.
Thoughts? Predictions? Time to break out the shotgun and convert everything to gold?