Friday, July 27, 2007
Traders no longer believe “subprime” problems can be contained
The US housing market is looking increasing weak with the number of unsold properties reaching its highest level since the end of the nations last housing recession in 1992. Losses in high-risk lending known as subprime could reach $100bn according to estimates by the Federal Reserve. After a subprime market wobble earlier this year traders has satisfied themselves that the "subprime" problem was contained and a sense that risk could be contained by spreading the risk ensued, boosting markets. However, as with cyclic behaviour, optimism has faded and fears of a credit crunch due to subprime problems is forcing investors to sell healthy investments to cover their losses.