Monday, Apr 21, 2008
The trillion-dollar mortgage time bomb
CNN: The trillion-dollar mortgage time bomb
how will this affect the UK?
Posted by mark @ 09:16 AM (470 views) Add Comment
2 Comments
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1. plato said...
mark : Just reading this article at the time of posting.
This is Nuclear. The Chain Reaction Follows. Then the Fall-Out. Unavoidable Financial Chaos Looms.
2. uncle tom said...
There's a problem with the numbers.
If the total cost of the US problems is a trillion dollars (which is often reported) and the UK banks share is 5% (also reported more than once) then UK banks have a £25bn problem to deal with - very painful to deal with, but not impossible.
That problem would not be evenly spread - some UK banks would have a much larger share (relative to their size) than others.
Given the need to restore confidence, a bank would love to be able to state categorically that it was clear of the problem - that all dodgy paper had been liquidated, written off or quarantined. If they could afford to do so, they would.
The banks have had more than enough time now to sanitise their operations, re-appraise risk, and identify holdings that have potential problems.
If the scale of the problem is correct, we should be seeing the banks with the least exposure declaring final write-downs.
But that's not happening...