Newest Estimate: Subprime Woes May 'Wipe Out' 30% to 50% of Home Sales in 2007/2008

Discussion in 'Economics' started by ByLoSellHi, Mar 9, 2007.

  1. ...breaking on CNBC.

    Will update with a link when I find it.
  2. Its at least 20%, even if it affects nobody else.
  3. silk


    The foreclosures will start hitting big time this summer. That will drop home prices another 5%+.

    Common sense suggests this will drag an already slowing economy into recession.

    If some other cycles come together at same time it could get super ugly. Great depression II seems plausible.

    China could have a big hiccup. If we go into recession they could go from growing +10% to minus 5%+ real fast. China hasn't seen a recession in how many years?

    Will be an interesting Summer.

    hMNN.., THINK.
  5. Until the next phase when subprime mortgage-backed bonds are downgraded, the smart vultures have a quick feast:

    Who's Profiting from the Subprime Bust
    As the market in shaky mortgages collapsed, some hedge funds raked in profits by betting on a decline in the ABX subprime index
    March 8, 2007, 6:06PM EST
    by Matthew Goldstein

    There has been a lot of pain in the market for mortgages to people with shaky credit histories. Small, so-called subprime lenders are filing for bankruptcy. Shares of big lenders New Century Financial (NEW), NovaStar Financial (NFI), and Fremont General (FMT) are getting crushed, as concerns about rising customer defaults mount. But through all the misery, some savvy hedge funds are posting big gains.

    How's that? The hedge funds raking in fat profits from the meltdown in the subprime market have cleaned up by betting on a decline in the ABX subprime index, which measures the cost of insuring against defaults on subprime bonds. The index, created by London-based Markit Group, tracks 20 asset-backed bonds with a low investment grade credit rating. Beginning last fall a number of hedge funds began shorting the index—betting on a decline—either as a way to minimize their exposure to subprime bonds in their portfolios, or simply to profit from an anticipated sector rout. The ABX short bet came up a big winner when the index plunged in February, leading to a 34% decline for the year...