Japanese Banks Take £5.3 Billion Subprime Hit

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

http://business.timesonline.co.uk/tol/busi...icle2926165.ece Edited November 25, 2007 by gruffydd

[eric pebble]

http://business.timesonline.co.uk/tol/busi...icle2926165.ece

Wow!! This news is being buried.....

[Goldfinger]

Don't you love the Japanese really? First they suffer for us for almost two decades, and now they have planned to suffer even more.

Love it.

[Dubai]

Is there a mathematician in the house? I know it's only simple algebra, but I can't be ar$ed or get my head around the numbers involved.

The reason I ask is that this "sub-prime" thing seems to be growing arms and legs, and happened quite suddenly. Now, forgive my ignorance, but surely the bottom line is that people were borrowing money to pay for a house and then not being able to pay it back.

So, a lot of the loans were paid out to "sub-prime" applicants. i.e. there was somewhere between every, and no, chance of being fully repaid.

We're being told that all these gazzillions of lost dollars are because a lot of americans stopped paying back money they owed. This is causing financial chaos throughout the entire world.

But... the lenders still have the property. Also, I bet a lot of these loans were subject to insurance, (although that's a little irrelevant, as it's still a loss).

Can anyone that has a handle on the numbers calculate exactly how many people would have had to default (on an average loan) in order to create all these losses? And what level of "loss" on the property would need to be accepted in order to justify the money being written off? And (finally), what happens to the written off money when some defaulters do start to pay back rather than declare bancruptcy? Even bancruptcy won't relieve you of your obligations to cough up in the states, I believe.

Perhaps I've been missing the point for ages, but there's something not quite right about all these "sub prime losses".

[Its time to buy]

Can anyone that has a handle on the numbers calculate exactly how many people would have had to default (on an average loan) in order to create all these losses? And what level of "loss" on the property would need to be accepted in order to justify the money being written off? And (finally), what happens to the written off money when some defaulters do start to pay back rather than declare bancruptcy? Even bancruptcy won't relieve you of your obligations to cough up in the states, I believe.

Perhaps I've been missing the point for ages, but there's something not quite right about all these "sub prime losses".

I think institutions were betting on the value of these subprime mortgages using extreme leverage - working on paper thin margins. It only took a few defaults to put these trades going the wrong way, sending them deep into the red.

Everyone thought subprime mortgages were a one way bet - blinded by greed for high returns.

[Dubai]

I think institutions were betting on the value of these subprime mortgages using extreme leverage - working on paper thin margins. It only took a few defaults to put these trades going the wrong way, sending them deep into the red.

Everyone thought subprime mortgages were a one way bet - blinded by greed for high returns.

Sorry, the picture at the bottom of your posts makes it difficult to concentrate.... can you run that by me again (perhaps a little more simply)?

[Its time to buy]

Sorry, the picture at the bottom of your posts makes it difficult to concentrate.... can you run that by me again (perhaps a little more simply)?

Imagine this the last ten years tulips have gone up 20% a year, each year.

I m from the AAA+ rating agency, and i have a tulip contract you can invest in for the next 12 months. I put a AAA rating on them in going up 20% next year.

You agree, all's well in the economy, you believe the guy on the BBC who also expects tulips to increase in price by at least 10%

You are so sure this is a one way bet, you bet the farm on it, and borrow money too from your family, use life savings, friends, sell your kidney etc.... and buy as many contracts you can afford.

12 months later, the trade goes wrong, I ve over valued the tulips by 400% because everyone else was doing it, instead of going up in value, they ve gone down in value. You've lost everything.

[Dubai]

Imagine this the last ten years tulips have gone up 20% a year, each year.

I m from the AAA+ rating agency, and i have a tulip contract you can invest in for the next 12 months. I put a AAA rating on them in going up 20% next year.

You agree, all's well in the economy, you believe the guy on the BBC who also expects tulips to increase in price by at least 10%

You are so sure this is a one way bet, you bet the farm on it, and borrow money too from your family, use life savings, friends, sell your kidney etc.... and buy as many contracts you can afford.

12 months later, the trade goes wrong, I ve over valued the tulips by 400% because everyone else was doing it, instead of going up in value, they ve gone down in value. You've lost everything.

Ohhh I see. I did miss the point!

I'll get my coat.

[Dubai]

But before I go I must say it beggars belief that anyone could think that people could afford such rises when salaries are virtually at a standstill for the majority. And as for the so-called experts betting on that.... mind boggling.

[Flat Bear]

Is there a mathematician in the house? I know it's only simple algebra, but I can't be ar$ed or get my head around the numbers involved.

The reason I ask is that this "sub-prime" thing seems to be growing arms and legs, and happened quite suddenly. Now, forgive my ignorance, but surely the bottom line is that people were borrowing money to pay for a house and then not being able to pay it back.

So, a lot of the loans were paid out to "sub-prime" applicants. i.e. there was somewhere between every, and no, chance of being fully repaid.

We're being told that all these gazzillions of lost dollars are because a lot of americans stopped paying back money they owed. This is causing financial chaos throughout the entire world.

But... the lenders still have the property. Also, I bet a lot of these loans were subject to insurance, (although that's a little irrelevant, as it's still a loss).

Can anyone that has a handle on the numbers calculate exactly how many people would have had to default (on an average loan) in order to create all these losses? And what level of "loss" on the property would need to be accepted in order to justify the money being written off? And (finally), what happens to the written off money when some defaulters do start to pay back rather than declare bancruptcy? Even bancruptcy won't relieve you of your obligations to cough up in the states, I believe.

Perhaps I've been missing the point for ages, but there's something not quite right about all these "sub prime losses".

I am not laughing at you Dubai as you are one of the few people in this particular circle that has actually looked at the facts and worked it out for yourself.

Ofcourse this current global market squeeze is not only because a few poor black people in some of the poorer US states went into arrears on their mortgages the idea is just silly. Some of the commentators say it was just the trigger and because these loans were complicated by packaging into various products and dispersed into the global financial markets as assets which now have dubious value all such products have come under suspiction.

But as you say it doesnt add up. It is easier for people to understand and for others to pass the buck from the real reason which involves financial mismanagement and incompetance by governments and the banking industry which has created a debt monster of unparalled proportions.

Just about everyone and his dog knew there would be a period of credit tightening and there has been numerous threads on this forum including the pined Dr Bubb thread started in Dec 2005.

What is actually happening is the unwinding of the "carry trades" which as many people predicted would become a messy affair. Japan will begin to see some large losses which will spook them into panick mode where liquidity will dry up even quicker.

The credit squeeze is only just begining and history will probably see the US sub prime fiasco as just the trigger that spooked the markets into a full blown credit crunch that will take over 2 years to fully unwind.

So you may still see aggresive loan advertisements for some time as this liquidity dries up there will be pockets of excess liquidity that had been negotiated before the squeeze began or from credit lines that have remained opened due to technical reasons.

[i_godzuki]

Maybe it's me but what I get from this article is that the Big Three Japanese banks have very little exposure to subprime and, compared to the size of its economy, 5.3bn is no great shakes.

What the article also fails to mention is that most of the falling profits are down to domestic lending to poor people in Japan at extortionate rates by subsidaries of big banks. This year. the goverment capped what interest they could charge, spurrinig smaller profits which are now showing up. It's subprime related, but not as we know it.

Of course, none of which helps the terminaly unsexy Japanese stock market which is down 18% this year despite limited subprime concerns and booming exports. That's a bugger for me as I've got some Nikkei tracker trusts.

[eric pebble]

Sorry, the picture at the bottom of your posts makes it difficult to concentrate.... can you run that by me again (perhaps a little more simply)?

Seriously though -- I have posted here on this --- The Media are NOT talking about the root cause of all the problems unwinding as I type -- The Root Cause is the fact that the "housing market" has been turned into a giant pyramid selling scam -- principally by the lenders lending [FRAUDULENTLY - see below] anyone who breathes increasingly absurd amounts of "money" so that they can join the Pyramid Scheme/Scam........ it is that simple! All pyramid scams end in tears.........

[Fishy]

Is there a mathematician in the house? I know it's only simple algebra, but I can't be ar$ed or get my head around the numbers involved.

The reason I ask is that this "sub-prime" thing seems to be growing arms and legs, and happened quite suddenly. Now, forgive my ignorance, but surely the bottom line is that people were borrowing money to pay for a house and then not being able to pay it back.

So, a lot of the loans were paid out to "sub-prime" applicants. i.e. there was somewhere between every, and no, chance of being fully repaid.

We're being told that all these gazzillions of lost dollars are because a lot of americans stopped paying back money they owed. This is causing financial chaos throughout the entire world.

But... the lenders still have the property. Also, I bet a lot of these loans were subject to insurance, (although that's a little irrelevant, as it's still a loss).

Can anyone that has a handle on the numbers calculate exactly how many people would have had to default (on an average loan) in order to create all these losses? And what level of "loss" on the property would need to be accepted in order to justify the money being written off? And (finally), what happens to the written off money when some defaulters do start to pay back rather than declare bancruptcy? Even bancruptcy won't relieve you of your obligations to cough up in the states, I believe.

Perhaps I've been missing the point for ages, but there's something not quite right about all these "sub prime losses".

I think i remember reading that 1 & 1/2 million Americans were at risk of defaulting....

Lets take the average loan to be 200,000USD, that gives an eye popping 300,000,000,000 in losses!!! Of course these won't be full losses, as the property should be reclaimed and once auctioned off, some of the money paid back.

Now, whether the 1 & 1/2 million figure is correct (or the 200K mortgage) is another matter, but as property prices spiral downwards in the US, any leveraged position holding these CDOs must be sh1tting themselves!

[christhpc]

Don't you love the Japanese really? First they suffer for us for almost two decades, and now they have planned to suffer even more.

Love it.

I've been causing the Japanese to suffer for exactly one decade today. Maybe I should cook dinner.

[cells]

Japan is going to learn that ******ing with the market isnt a good idea,

artifically low yen borrowed for speculation! what if those hedge funds go pop, having borrowed billions from japanise banks.

I think japan could potentially be destroyed as a nation with this HPC, if the yen carry trade was $2 trillion Strong and 25% of that results in defaults. Japanise banks would take a $500 billion hit

japan will have no choice but to bail the banks out, and take that loos as a national debt!

i guess they can afford it, after all they have some $1trillion in national reserves

[Guest Bart of Darkness]

Don't you love the Japanese really? First they suffer for us for almost two decades, and now they have planned to suffer even more.

Love it.

Must be something in the national character (no coincidence that they invented "torture" gameshow Endurance).

[Vespasian]

And the PS3 is crap, and why did Sony push that minidisc for so long? Plus, they are killing whales again

[Goldfinger]

Must be something in the national character (no coincidence that they invented "torture" gameshow Endurance).

Totally. It's perverted, really, what our Japanese friends suffer for us just to keep us happy & spending.

What would happen if they ever wake up and realize how incredibly stupid they have been?

Edited November 26, 2007 by Goldfinger