Sunday, Mar 04, 2007
2nd Sign of Mass fallout
Timesonline: US triggers $11bn HSBC fall-out
Wait until A&L come clean. This is going to get really ugly, really quickly folks.
Posted by lvmreader @ 01:06 AM (5096 views) Add Comment
6 Comments
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1. talking rot said...
I think this article is quite informative. I like the "... HSBC admitted it had seriously underestimated the number of people in America who were defaulting on second home loans in portfolios ..." bit. Does this mean that second home owners are suffering?
There's a famous saying along the lines of "What happens in the US comes here 1 year to 18 months later. There are some similarities between the US and UK home market but there are also some staggering differences (such as tax regiemes etc). Who thinks this is a prediction for the UK and if so, why?
2. sold 2 rent 1 said...
The Brits have stretched themselves in the speculative market as much the Yanks.
The difference is that the second homes are in Spain, Florida and Dubai, as well as BTL in the UK.
When the credit crunch comes, the same defaults will happen here
3. monty said...
Does A&L have any US subprime interests?
As far as being a predictor goes, it will depend on the scale of the subprime market here, the extent to which the lenders have hived off the debt into the mortgage backed securities markets and insured that debt. Some of the players have larger stakes in subprime than others. It will eventually have an effect on the UK market, not least of all the evaporation of easy credit, but this will take some time.
4. inbreda said...
"What happens in the US comes here 1 year to 18 months later"
Given that the asset bubble is a global phenomenon, in a newly globalised econonmy, with the information superhighway and extra-quick communications, I would revise this to 6 months
5. lvmreader said...
@Monty,
The whole reason banks could lend as much as they did was because of the Mortgage Backed Securities Market,the Credit Default Swap Market and the Collaterised Debt Obligation Market. These markets constituted one end of the continuum and the home loans were the other.
I think you will find that the "time this will take" started 5 years ago. I agree with inbreda, we will see dramatic results here in 6 months or less.
And, by the way, a weak currency, will raise import costs and effectively IS inflation.
6. dohousescrashinthewoods said...
Inbreeda, I too have a sense it will be 6 months, but I'm not sure why.
Having seen the article posted about the over-seasonal doubling in supply it starts to look like it might be reasonable.
Negative indicators now, wobble in the Summer, falling in Autumn.
Say it takes 3 months for things to work through and 3 months +/-3 for people to react, then if the bubble is now pricked, we should see it start to move in Summer (whereupon experts will assure us it's a soft landing) and gather pace into Autumn, whereupon people will start using the Recession word here as they are now in the US, (despite the US spending the last 6 months cooing about a soft landing).