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When America sneezes the whole world crashes a cold ;)
Comments
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Was sent a press release today at Big Bank from Standard and Poors to say that they are looking at downgrading certain MBSs and CDOs.
In effect that means that in the US there'll be less money available to mortgagees, if the downgrade happens which is more than likely.0 -
Was sent a press release today at Big Bank from Standard and Poors to say that they are looking at downgrading certain MBSs and CDOs.
In effect that means that in the US there'll be less money available to mortgagees, if the downgrade happens which is more than likely.
NEW YORK, July 10 (Reuters) - U.S. stocks slid on Tuesday as the subprime mortgage crisis escalated, undermining banking shares while Home Depot Inc. and other housing-related companies lowered their outlooks. Standard & Poor's roiled financial markets when it said it may cut ratings on $12 billion of subprime-related debt on forecasts of more delinquent and defaulted U.S. home loans.
http://today.reuters.com/news/articleinvesting.aspx?type=usMktRpt&storyID=2007-07-10T203328Z_01_N10370623_RTRIDST_0_MARKETS-STOCKS-UPDATE-11.XML0 -
Well, well, well...
And thought it was worth posting this one too. It's roughly two years since the Independent proclaimed rising house prices as "good news". I'd applaud this awakening if it weren't so hypocritical.
Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
Not that surprising - a couple of Bear Stearns' CDO funds are looking at 5p in the pound and are under investigation by the SEC (maybe they should have set up shop in London - £50 fine and a "don't do it again old chap"...).0
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S&Ps excuse seems to be that the AAA rating they have been giving to some tranches of CDOs is not the same thing as the AAA rating that they give to UK Govt Bonds (Gilts) for example.
Apparently it was in 7 point type in page 254 of the T&Cs (not a joke although quite funny)! It seems S&P are as bad as your credit card provider.0 -
Sub-prime mortgages are set to grow faster than mainstream mortgages, independent market analyst Datamonitor has said.
The group said that by 2011, the marketplace would reach £31.5bn, compared with £24.6bn in 2006.
then this!
Further growth in sub-prime lending may have dangers for the housing market and the wider UK economy.
Sub-prime borrowers are more likely to default on their loans. This, in turn, could cause financial difficulties for lenders.
That is exactly what is happening at present in the US, where problems in the sub-prime lending market have led to a slowdown in the wider housing market. Datamonitor said UK sub-prime lenders should learn lessons from the US and be careful with their lending policy.
http://news.bbc.co.uk/1/hi/business/6288738.stm
I don't know if to laugh or cry!0 -
That sounds a lot like a straight line on a piece of paper type of prediction to me.
Big sell off in credit default swaps today. According to the pointy heads, that is the area of concern that could actually sink big banks. Nobody knows.0 -
That sounds a lot like a straight line on a piece of paper type of prediction to me.
Big sell off in credit default swaps today. According to the pointy heads, that is the area of concern that could actually sink big banks. Nobody knows.
What are these?"Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
"I think I'll become an alcoholic," said Betty.0 -
Credit default swaps are a sort of insurance policy a bank (or other loan originator) can buy against default. They pass the credit risk on to another party at a cost.
In some cases (e.g. GM just before their debt was downgraded) the total value of CDSs exceeds the total value of the debt. According to ISDA the total notional principal value of CDSs was $34,500,000,000,000 on 31st Dec 2006.
According to the CIA, world GDP is $46,760,000,000,000 or $65,950,000,000,000 depending on the exchange rate used.
I have seen predictions that CDSs already have a greater notional principal value than the first GDP figure.0 -
How do these differ from selling on the debt as a CDO?
Who would sell CDSs given the market seems to be imploding, since they, presumably, take on the risk of default?
What does this mean in real terms? It seems to be boggling my mind.I have seen predictions that CDSs already have a greater notional principal value than the first GDP figure."Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
"I think I'll become an alcoholic," said Betty.0
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