How much subprime losses remain to be written-down?

Discussion in 'Economics' started by crgarcia, Jan 28, 2008.

  1. There had been lots of writedown recently, some gross estimates?
  2. Yeah it will be about $10 trillion for the current debt, add in this years deficit of $450 million and the future unfunded SSA obligations of $36 trillion. It's upwards of $46 trillion.

    All those foreign suckers who have lent to the USA and continue to do so are actually lending to a subprime borrower.

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    The next subprime event that will make history.

    In 2005, unfunded Social Security and Medicare obligations totaled $36 trillion. When public debt and other traditional federal liabilities are included, the total U.S. federal debt is over $46 trillion.
  3. Digs


    From USA banks the write down ( provision only, not actual write offs) is about $140 BN. In accounting you provide for a loss via provision, after its confirmed as BAD you write it off as a BAD DEBT. BAD is when there is foreclosure or bankruptcy by the debtor.

    This guy says provisions could blossom to $1 Trillion

    This guy says USA investment houses stopped buy mortgage junk around 2003, and most of the paper is now held by Asian or Arab banks.

    My question, is how much of these mortgages packages where allowed to be borrowed on 10 to 1, thats 10x times the orginal value of the sub prime/Alt A/Prime mortgage pools. I have heard 10x is light, some as high as 50x. Yikes !!!

  4. These are not losses but accounting entries for tax purposes, reducing income.

    Real estate mortgage and collateral ( property ) doesn't not disappears. Its a tangible commodity.
  5. Digs


    .."Real estate mortgage and collateral ( property ) doesn't not disappears."..

    The physical house does not disappear, but the VALUE does. What are you drinking ???
  6. Assuming the "value" is rising again ( for whatsoever reason )...implications for balance sheet accounting / statements of profit and loss ?
  7. Financial statements will be favorably impacted if actual results are better than the estimated results used to book the writedowns.
  8. Daal


    yes they are losses in the form of charges against book value
  9. 46 Trillion over 30 to 75 2008 dollars..
    As long as the GDP grows 3-5% a year we are ok.

    Just like signing a 10 year 100 million $ sports contract. Seems like a lot but by the end of the term it is a long as there is revenue growth......this is why owners have no problem doing this

    A trillion dollars in year 2060 will be then GDP will be over 100 trillion. Tax revenue is about 18% of GDP. In year 2060 tax receipts will be 20 trillion dollars.
  10. That would betrue if we weren't continually addidng to the debt.
    #10     Jan 29, 2008