Losses reported by banks and financial institutions are not new, but they were not booked until now. How much remains?
Does anyone really know? I doubt it. No one is going to know how big the losses are until all that are going to default have, the houses have come back and then been resold. I don't think that process is very far along yet. You've got to get far enough into it that you can see the end to get a fair estimate as to what the total losses are. OldTrader
Wait until the economy actually really slows down like a true recession, and then you will see the blood... :eek:
Daddyeaux is right. This is very serious. Like one big house of cards. The problem is going to be the erosion of collateral values. Soros goes over this in detail in his book Alchemy of finance. The problem is the pricing of issues. If a sale has not gone off in quite sometime and there are no bidders for a long way down, it starts like a domino effect, then erodes the whole market. Foreclosures are a very big problem because it leaves tons of illiquid assets on the banks balance sheets, which are supposed to be "valued". Think of it this way, the bank lends you stock, you blow out and they take it away from you at a certain price, without being able to liquidate the position, the stock gets halted, then opens gapped down 70-80%. We are right now, right before the GAP. The market is already halted. We are all waiting for the open and no one knows how bad it will be. This is just the begining. p
How much money was lent out in subprime loans in the last couple of years? More than $1 trillion. That is how much losses remain. Nobody with any sense is going to pay back his junk loan. Just give the home to the bank and walk away.
the Attorney General of NY waited until the fiscal year for mutual funds ending Oct. 31, was over before he opened investigations concerning appraiser-banker collusion charges about inflation of RE values.. notice how banker-originator stocks were smeared today... hardly a coincidence.. the fix is in.... the ultimate laugh is AAA paper is trading at 81.75, ....I mean this is comedy club material
You have to remember that subprime is a very small portion of the whole housing market. The real problem would be if the prime borrowers defaulted and landed in bankruptcy. Even if someone defaults on their loan, they're still on the hook until they claim bankruptcy. When there's a massive number of bankruptcies, there will be some real problems.