BIGGER OR BIGGEST REAL ESTATE BUST

"The Next Real Estate Crisis"
"By April 2009, hundreds of thousands of option ARM mortgages will begin resetting, bringing on a fresh wave of foreclosures."

- Business Week, June 5, 2008

Here's what will happen:

Beginning in April 2009, hundreds of thousands of U.S. homeowners who took out "option adjustable-rate mortgages" (ARMs) will start to see their monthly payments skyrocket as those interest rates begin to reset.

You see - at this very moment, there are roughly $500 billion worth of option ARM loans outstanding in the U.S. These loans were especially popular during the height of the real estate boom, as they allowed buyers to enjoy low initial payments that would then "adjust" after several years.

But, hey, at the height of the real estate bubble, everyone assumed that home values would continue climbing, so there was nothing to worry about, right?

Wrong.

The real estate boom hit its peak in April 2004... and the majority of option ARM loans are due to begin resetting after five years. In other words... in April 2009.

In December 2008, investment fund manager Whitney Tilson told the 60 Minutes television program that he expected as many as 70% of these loans to default.

He also predicted that over the next four years, more than 8 million Americans will lose their homes to foreclosure.

And he estimated that the total damage from the collapse of the sub-prime lending market is already approaching $1 trillion... but the coming collapse of the Option ARMs and Alt-A loans (which were made to borrowers with low credit scores) could mean another $1.5 trillion in damage.

Let me put that another way...

We're already $1 trillion in the hole... and we're still not even halfway through this disaster

And it all begins to unravel in April 2009 - just a few weeks from now - when those Option ARM loans begin resetting.

Because here's what will happen:

* As we've seen consistently over the last year... the U.S. Government will step in and attempt to "bail out" the U.S. homeowner and prevent the onslaught of massive foreclosures...

* In order to do this, the government will be forced to throw even more money into the system... in what could end up being the most costly bailout to date...

* Once this begins, the stock market will take a nosedive - with the Dow heading to 6,500 or lower...

* Finally - and most incredibly - this latest huge increase in the U.S. money supply will put the United States in danger of having its own credit rating slashed!

"Here's how I did with your last two trades: AXPMQ, bought 11/12 for $2.50, sold 11/13 for $4.20 for a 68% one day gain. XJZMM, bought 11/11 for $1.56, sold 11/13 for $2.43 for a 56% gain in two days… Take care, Ryan..." In fact, Moody's warned in January 2008 that "the U.S. is at risk of losing its top-notch triple-A credit rating."

And in August, The Kiplinger Letter reported, "The idea of the U.S. losing its AAA debt rating isn't far-fetched anymore. Standard & Poor's credit rating agency says the U.S. is taking on a huge risk."

A downgrade of the U.S. credit rating would spell immediate financial disaster - instantly crippling the new administration's ability to revive the economy...

And not to mention - the overall financial chaos created will help send investors fleeing from stocks once again and back into "safe havens" such as U.S. Treasuries.