Post by unlawflcombatnt on Mar 13, 2007 15:05:37 GMT -6
SUBPRIME MELTDOWN & WHY IT WILL SPREAD TO OTHER SECTORS.
The meltdown of New Century's subprime business topped the news in the continuing crash of the subprime mortgage industry. However, Corporate propagandists continue minimizing the likely damage from this, as well as tenaciously denying the possibility spread to other sectors of the economy. In reality, there is good reason to believe it will spread. Just focusing on New Century alone shows the likely problems. New Century has financing agreements with many top Wall Street firms, including Morgan Stanley, Citigroup, Barclays Bank, Bank of America, Credit Suisse Group, and Morgan Stanley.
In addition, Lehman and Bear Stearns have been aggressively buying subprime mortgages and repackaging them for sale to investors. Morgan Stanley and Merrill Lynch have been purchasing subprime mortgage lenders outright.
Also, the subprime crash will affect other subprime lenders who are in fields far from finance. This includes General Electric, whose WMC Mortgage unit is the 5th largest subprime lender in the nation. It also includes General Motors, which owns 49% of GMAC (GMAC owns the 12th largest lender in the subprime sector.
Analyst Bose George, with Keefe, Bruyette & Woods, an investment bank focused on the financial services sector, sums it up by saying... "that New Century's woes are certain to spread to other subprime lenders.'There's no real sign why or how things will get better (for subprime lenders) in the near term,' he said. 'Since all these guys are funded by Wall Street, perception is obviously huge. If lenders feel they could lose money on (loans to the sector), they'll pull them. The fear in the market does kind of feed on itself.' ..."
Clearly the subprime meltdown will not be "compartmentalized", since many financial institutions and investors have a stake in the subprime mortgage market.
The meltdown of New Century's subprime business topped the news in the continuing crash of the subprime mortgage industry. However, Corporate propagandists continue minimizing the likely damage from this, as well as tenaciously denying the possibility spread to other sectors of the economy. In reality, there is good reason to believe it will spread. Just focusing on New Century alone shows the likely problems. New Century has financing agreements with many top Wall Street firms, including Morgan Stanley, Citigroup, Barclays Bank, Bank of America, Credit Suisse Group, and Morgan Stanley.
In addition, Lehman and Bear Stearns have been aggressively buying subprime mortgages and repackaging them for sale to investors. Morgan Stanley and Merrill Lynch have been purchasing subprime mortgage lenders outright.
Also, the subprime crash will affect other subprime lenders who are in fields far from finance. This includes General Electric, whose WMC Mortgage unit is the 5th largest subprime lender in the nation. It also includes General Motors, which owns 49% of GMAC (GMAC owns the 12th largest lender in the subprime sector.
Analyst Bose George, with Keefe, Bruyette & Woods, an investment bank focused on the financial services sector, sums it up by saying... "that New Century's woes are certain to spread to other subprime lenders.'There's no real sign why or how things will get better (for subprime lenders) in the near term,' he said. 'Since all these guys are funded by Wall Street, perception is obviously huge. If lenders feel they could lose money on (loans to the sector), they'll pull them. The fear in the market does kind of feed on itself.' ..."
Clearly the subprime meltdown will not be "compartmentalized", since many financial institutions and investors have a stake in the subprime mortgage market.