How can US sub prime losses be so great?

RayWolfe

Yea, we can all pick out outrageous stories from the press - most of which will turn out to be somewhat less than 100% correct - but no one seems to know the real value of the defaults.
It cannot be 700 billion dollars. Can it?
It could be a few billion and the rest is panic.

RayWolfe

Interesting article here:
http://www.citywire.co.uk/personal/-/news/markets-companies-and-funds/content.aspx?ID=314700&re=3759&ea=83519
Nothing that we don't already know but a good precis
... but still no real values.

sabretoothtigger

Do they really charge a few thousand on empty houses for taxes then or is that just some states

StevieJ

RayWolfe wrote: »

Yea, we can all pick out outrageous stories from the press - most of which will turn out to be somewhat less than 100% correct - but no one seems to know the real value of the defaults.
It cannot be 700 billion dollars. Can it?
It could be a few billion and the rest is panic.

As far as I am aware there is no market for the investments backed securities because nobody wants to buy them, this means that no market value can be attributed, so the they are classed as zero value.
The US government is hoping that once some normality returns to the market, these investments will be in demand again and increase in value.
I think the value of these securities is out of kilter with the actual mortgage defaults.

1echidna

Ref IMF report of 8th August 2008 http://www.forbes.com/2008/03/31/subprime-costs-writedowns-markets-equity-cx_md-0331markets21.html Subprime losses to date are $170 billion and could reach one trillion dollars. One thing about US law which is different from here is that it is possible to walk away from a mortgage debt without the mortgage provider being able to pursue other assets. It does spoil a credit rating for a period of some years though.

Martha2

Thank you to everyone who has replied to my query. It's been interesting and enlightening to read the comments.

M2