This is a great read on Yahoo.com: http://biz.yahoo.com/ft/071104/fto110420071335381700.html?.v=1 The Bank of England suggests that on the basis of industry data some $700bn-worth of bonds backed by subprime loans are now in circulation in the world's financial system, with another $600bn of bonds backed by so-called "Alt A" loans, or those with slightly better credit quality. Merrill Lynch analysts, for example, calculate that mid-quality ABX debt is on average now trading at 40 cents in the dollar. But these analysts say that Merrill Lynch itself has only written this type of debt down to 63 cents in the dollar - and UBS is still assuming this debt is worth 90 cents. "Simple math would imply that UBS needs an additional $8bn write-down [on its $15.4bn holdings] if the ABX pricing is correct," Merrill says.
All contained. All these problems won't effect the economy. Everything is great. Sub-prime and credit problems are okay. We have everything under control. Signed, Hook, line, and sinker
LOL yes....snake oil salesmen from Washington DC and Wall Street have their work cut out to prove all is right.
This is all pretty humorous... ABS's are derivatives of mortgages, CDO's are derivatives of ABS's.. Huh?? I wonder how much the US sold these things to european banks... maybe enough to offset the interest on the national debt for awhile Can we say "Nick Leeson" while we're at it.......