More Sub Prime Housing Bomb
From Fleck, the subprime housing game is over.
Tick, Tock, the question is when? And will the repercussions be as serious as when LTCM and the russian ruble imploded in a 1998 derivatives unwind?
"In the dark-matter universe, risky BBB tranches (of home-loan-backed securities have been annihilated, and now the A tranches are weakening.
Supposedly, the real pain will start when the higher-rated AA and AAA tranches start to weaken.
But really, one won't need access to dark-matter market quotes to know that trouble is at hand.
It will be obvious when stocks like Washington Mutual and other housing-finance-related stocks start sinking."
When will folks be forced to connect the dots? Unknowable though the answer may be, my friend in London provided a clue, via a recent e-mail:
"You and I and a select group of others have been all over subprime for months now. But today (last Wednesday) is the first day where equity managers have been in to us, asking questions about subprime.
Until today, most of the equity managers knew something bad was happening in subprime, but were prepared to assume it was not going to be a problem for the wider credit market, the economy, and so on. . . .
"Slowly but surely, people are starting to get it, and slowly but surely, I am starting to think that the tipping point in credit...
via a subprime-generated shambles in CDO (collateralized debt obligation) land... is closer than anybody imagines..."
Tick, Tock, the question is when? And will the repercussions be as serious as when LTCM and the russian ruble imploded in a 1998 derivatives unwind?
"In the dark-matter universe, risky BBB tranches (of home-loan-backed securities have been annihilated, and now the A tranches are weakening.
Supposedly, the real pain will start when the higher-rated AA and AAA tranches start to weaken.
But really, one won't need access to dark-matter market quotes to know that trouble is at hand.
It will be obvious when stocks like Washington Mutual and other housing-finance-related stocks start sinking."
When will folks be forced to connect the dots? Unknowable though the answer may be, my friend in London provided a clue, via a recent e-mail:
"You and I and a select group of others have been all over subprime for months now. But today (last Wednesday) is the first day where equity managers have been in to us, asking questions about subprime.
Until today, most of the equity managers knew something bad was happening in subprime, but were prepared to assume it was not going to be a problem for the wider credit market, the economy, and so on. . . .
"Slowly but surely, people are starting to get it, and slowly but surely, I am starting to think that the tipping point in credit...
via a subprime-generated shambles in CDO (collateralized debt obligation) land... is closer than anybody imagines..."
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