With the Fed jumping in on Friday to calm the markets it would be easy to be fooled into thinking the worst of this financial irresponsibility is over…it’s only just begun!

I wrote an article a few months back with a graph outlining just how far into the future the recasting of these adjustable rate mortgages, interest only mortgages, and Option ARM loans actually takes place. (Click the link above). Today I’m reminded of that when reading a post by Gary Kaltbaum on Tradingmarkets.com where he points out the time line for the recasting of all the adjustable rate mortgages.

He produced a graphic you’ll see below showing the shear volume of subprime and other adjustable rate home mortgages that are still yet to adjust. You’ll notice that the bulk of them don’t adjust until the first 6 months of 2008. As a matter of fact, over $500 Billion worth of ARMs will adjust by this time next year.

That’s a half a Trillion dollars!

Here’s a chart of the same date presented so you see the time line starting in January of 2006 moving out month by month…

My chart doesn’t paint as bad a picture first half of 2008 as Gary’s, but it does show this meltdown will be with us far into the future. The effects of the mortgage meltdown will reverberate through the world economy for an even longer time after the loans are long since gone.

Yet the stock market pundits are mitigating the effects on the markets and the economy saying “the worst it over” since the Fed stepped in last Friday with a discount rate cut or saying the home builder sector of the market is relatively small.

Don’t buy it!

Believe me folks, in the words of The Carpenter’s ….“it’s only just begun!”

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