Thursday, Jul 12, 2007
Subprime Goes Prime
Bloomberg News: U.S. Foreclosure Filings Jump to Record in First Half (Update3)
This story says that there will be 1.8 million foreclosures in the U.S. by the end of the year. 58 will be subprime. That means 42 percent -- or about 750,000 PRIME borrowers -- are facing foreclosure.
Posted by bangybongo @ 07:18 PM (141 views) Add Comment
3 Comments
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1. lvmreader said...
I have said it before and I will say it again: "Dorothy, Kansas, Bye bye"
No seriously, there was never any demarcation between prime and subprime. Anyone who believed that was either lying or just really, really dumb.
When Amaranth imploded following bets on natural gas, it affected oil and the equity price of a DVD manufacturer - neither of which were that directly exposed to natural gas as it happened.
What is needed in the markets now is a Credit Surveillance function based on Signals Intelligence and Correlations (SIGINT).
2. Whiteknight said...
Absolutely. No difference between prime and subprime whatever. Just a quick label to "compartmentalise" the problemsin peoples minds and try to stem the contagion effect with a trick of words.
No amount of words will contain this one. There are just a lot of very, very , very badly mispriced credit instruments out there.
The reason that Credit Surveillance will be required is so that some financial institutions can work out whether they are actually insolvent in 3 months instead of taking the best part of a year to assemble a map of the correlations and trades they have modelled so glibly.
Any bets on which major financial institution goes under or "gets absorbed" first?
3. p. o. o. r said...
This is when interest rates are still low - Surely they are going to have to raise interest rates in the USA to protect the currency - which is going to make the problem a lot worst. Now as the majority of Americans go on their hols in America, it will be interesting to see how the tourism business is hit over the summer months. America. How soon will we catch the cold from America - or will the UK be immune...?