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Post by unlawflcombatnt on Mar 1, 2007 3:18:22 GMT -6
Subprime and "near" subprime mortgages are now 50% of the mortgage market, not the 6% falsely claimed by financial propagandists, according to economist Nouriel Roubini Current financial propagandists have claimed only 6% of the market is affected by subprime mortgages. This is false for multiple reasons. To start with, subprime mortgages were historically defined as those given to borrowers with FICO scores less than 660. The definition has been conveniently narrowed in some cases to apply only to those with FICO scores less than 620. Clearly this reduces the number of loans that fall into the subprime category. Roubini widens the category to include "near" subprime mortgages, which share many of the same characteristics of sub-prime mortgages, including no documentation and no down payment. Roubini discusses this further at his blog at: www.rgemonitor.com/blog/roubini/180573/
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Post by jeffolie on Mar 1, 2007 14:59:21 GMT -6
I totally agreed with RGE's view.
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Post by unlawflcombatnt on Mar 1, 2007 19:17:18 GMT -6
I totally agreed with RGE's view. I do too. And Roubini has a pretty good record of being correct on his predictions over the last year. The subprimes are no exception.
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Post by jeffolie on Mar 1, 2007 20:12:27 GMT -6
Here the question is whether the damage can be contained. Will trouble for subprime lenders spread to the holders of the collateralized debt? And will more creditworthy borrowers start to default, too, creating a cascade effect for the debt-holders? It's not comforting that the reserves that banks put aside to cover bad loans are at their lowest level since 1990, a fact first reported by the Wall Street Journal. Reserves cut into profits. They also are an essential safety net. Bad downturns almost always involve banking crises. www.azcentral.com/business/columns/articles/0228biz-talton0228.html
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Post by unlawflcombatnt on Mar 1, 2007 22:03:28 GMT -6
That's a great article. I hadn't heard that Freddie Mac announced on Tuesday it would stop buying back the riskiest loans. That certainly seems like something that would spook the markets. And if China stops buying our debt, that by itself would cause huge problems.
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Post by beachbumbob on Mar 2, 2007 7:11:40 GMT -6
when these instruments are NOT discussed in the finanancial media, that tells you how bad it is....whens the last time you heard Cramer, Krudlaw or any of the others talk about CDO, subprime exposure or derivatives???
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