Hubba Hubba, Who Do You Trust?
A scary factoid... 40% of ALL mortgage loan originations in 05 and 06 were subprime and or nearprime Alt A...
and Noriel Roubini has a valid point... what about all the home equity, credit card and car loans out there?
I am already seeing the toys of excess: fancy cars, motorcycles, boats and yachts for sale cheap and in many cases at a dealer with a REPO sign on them.... and there are a bunch of McMansions going into default and/or attempting short sale as we speak...
This thing is only going to get worse... and the Nattering One believes in what he has been saying all along... that the ultimate problem will be the derivatives and their unwind...
Instead of TRUSTS upon TRUSTS upon TRUSTS which was the leveraged instrument of choice used in the 20's... which caused 1st the utilities sector, then the stock market and finally the unregulated banking system to collapse...
Its going to be the CDO of the CDO(squared) of the CDO(cubed) held by some unregulated hedge fund leveraged at 20 to 1 and purchased with university, insurance company, local of state municipality or pension fund money...
This party could end very rudely and the potential exists to make Orange County BK (1994), LTCM (1998), Enron and Dot.com all to look like drops in the bucket.
An excerpt from RGE Monitor:
"But the problem is not just subprime and nearprime (Alt-A) that, by themselves, accounted for 40% of originations in 2005-2006. It is also a problem with home equity loans, piggyback loans and also a problem for a significant part of near-prime and "prime" ARMs that are resetting to the tune of $1 trillion alone this year. So, the contagion will soon spread to those parts of the mortgage market too.
More importantly, the contagion will further spread to other components of consumer debt. While everyone is now obsessed with subpime mortgages - while most analysts ignored the problem for almost a year - no one has even started to talk about a much bigger subprime problem: in the last few years in addition to an explosive growth of subprime mortgages we also saw a massive a growth of subprime auto loans and subprime credit cards."
and Noriel Roubini has a valid point... what about all the home equity, credit card and car loans out there?
I am already seeing the toys of excess: fancy cars, motorcycles, boats and yachts for sale cheap and in many cases at a dealer with a REPO sign on them.... and there are a bunch of McMansions going into default and/or attempting short sale as we speak...
This thing is only going to get worse... and the Nattering One believes in what he has been saying all along... that the ultimate problem will be the derivatives and their unwind...
Instead of TRUSTS upon TRUSTS upon TRUSTS which was the leveraged instrument of choice used in the 20's... which caused 1st the utilities sector, then the stock market and finally the unregulated banking system to collapse...
Its going to be the CDO of the CDO(squared) of the CDO(cubed) held by some unregulated hedge fund leveraged at 20 to 1 and purchased with university, insurance company, local of state municipality or pension fund money...
This party could end very rudely and the potential exists to make Orange County BK (1994), LTCM (1998), Enron and Dot.com all to look like drops in the bucket.
An excerpt from RGE Monitor:
"But the problem is not just subprime and nearprime (Alt-A) that, by themselves, accounted for 40% of originations in 2005-2006. It is also a problem with home equity loans, piggyback loans and also a problem for a significant part of near-prime and "prime" ARMs that are resetting to the tune of $1 trillion alone this year. So, the contagion will soon spread to those parts of the mortgage market too.
More importantly, the contagion will further spread to other components of consumer debt. While everyone is now obsessed with subpime mortgages - while most analysts ignored the problem for almost a year - no one has even started to talk about a much bigger subprime problem: in the last few years in addition to an explosive growth of subprime mortgages we also saw a massive a growth of subprime auto loans and subprime credit cards."
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