I finally have some “real” meat on the bones people agreeing with my stance. Bill Gross of Pimco wrote:

“”The right places to look for contagion are therefore not in the white-washed Bear Stearns hedge funds, but in the subprime resets to come and the ultimate effect they will have on the prices of homes — the collateral that’s so critical in this asset-backed, and therefore interest-sensitive financed-based economy of 2007 and beyond,” he wrote.

“The flaw, dear readers, lies in the homes that were financed with cheap and in some cases gratuitous money in 2004, 2005, and 2006,” he wrote.

“Because while the Bear Stearns hedge funds are now primarily history, those millions and millions of homes are not. They’re not going anywhere…except for their mortgages that is. Mortgage payments are going up, up, and up…and so are delinquencies and defaults.”

Pimco sees subprime homes, comnsumers

Check out Lennar’s 2nd Quarter numbers… ouch:

Revenues of $2.9 billion – down 37%
– Loss per share of $1.55 (includes a $1.33 per share charge related to FAS 144 valuation adjustments and write-offs of option deposits and pre-acquisition costs)
– Homebuilding operating loss of $351.7 million (includes $329.1 million of FAS 144 valuation adjustments and write-offs noted above)
– Financial Services operating earnings of $14.2 million – down $20.4 million
– Homebuilding debt to total capital improved to 31.6% from 33.5% (net homebuilding debt to total capital of 29.6%)
– Deliveries of 9,568 homes – down 28%
– New orders of 8,056 homes – down 31%; cancellation rate of 29%
– Backlog dollar value of $2.8 billion – down 56%

“As we look to our third quarter and the remainder of 2007, we continue to see weak, and perhaps deteriorating, market conditions,’’ Chief Executive Officer Stuart Miller said in the statement. “We currently expect to be in a loss position in our third quarter.’’

Homebuilding operating loss of $351.7 million (includes $329.1 million of FAS 144 valuation adjustments and write-offs noted above)

The only bright spot is that they have managed to hold their cash position: Homebuilding cash 2007/234,256 2006/164,157