Comments on: Subprime Meltdown Has About Run its Course

By: Ian

Ian — Thu, 18 Jun 2009 11:36:59 +0000

Would anyone like to offer their opinion as to why this subject is not widely reported in the mainstream media? On the tail end of the subprime problem one would think there would be much more interest in this. Is it psssible that we (Australians) have developed a false sense of security, considering we came out of the GFC relatively unscathed?

By: G Bear

G Bear — Fri, 05 Jun 2009 10:16:36 +0000

There is a widely held misconception about re-financing mortgages as if it solves plenty of problems. It might for those that do, but there is a counter party to that risk who either accepts that rate risk themselves or passes it onto someone else.Thats the balance of the market.

Sure it might get diluted, booked away in profits or in deferred losses, fudged away somehow as the accounting rules change, but ultimately for a while some institution earns less interest for a risk that should demand more and eventually the cost comes to the fore, as it did with sub-prime.

Easy money made it easy to run from the market but there are fewer places left to hide and by the end of next year there will almost be none for the fools and the rip-off artists!

By: Gerry

Gerry — Fri, 05 Jun 2009 05:44:40 +0000

If unemployment levels were stabilised in the US and were not still rising,the coming impact of next wave housing loan and resetting issues etc might not be too severe..but...unfortunately they are still rising. I think the stress tests had perceived "green shoots" imput factored in as well as crossed fingers.

By: Dan

Dan — Thu, 04 Jun 2009 22:30:44 +0000

Jeremy, even if banks did take this information into account during their stress tests, does that mean a whole new bunch of Americans won't end up living out of their cars or in tent cities? I wonder if the economy fall out is going to be avoided - and if so, how is this to be achieved?

By: Gobi

Gobi — Thu, 04 Jun 2009 19:28:31 +0000

Against this backdrop of bad news, we need to also keep in mind that housing affordability have been rising, soon it will be at historical height, so the basic demand and supply says there will be lots of supplies but at the same time demand will pick up too, and things will not falter too badly the second time around.

By: Biker Pete

Biker Pete — Thu, 04 Jun 2009 13:57:59 +0000

Who in their right mind would refinance for 100 years, Jeremy? I mean ALL my loans are for a max of thirty years and frankly, I doubt I have 28 left. Years, not loans. Hey, it's a great party! We are all going to pass on... lighten up... . It's my kids' kids problem. "You've got to... spend a little... bend a little..." Wanders off... feeling no pain... . "I'll have a bottom of wine, please... Mz Dentist Lady."

By: Jeremy

Jeremy — Thu, 04 Jun 2009 12:31:34 +0000

I'm not suggesting for a minute that I have faith in financial institutions and regulators, but theoretically if these banks have been stress tested, it would have included this information. The banks with a dire reset schedule have been told to build up reserves for that and now they're at various stages of doing so. Some better, some worse. So defaults might go up but banks have better reserves to refinance these loans rather than write them off. So some people might end up mortgaged until they're 100 and that's their own fault, but for those of us that stayed out of that party, it's OK? No?

By: Dan

Dan — Thu, 04 Jun 2009 11:25:14 +0000

Doug, the graph says it all as you show. I've been reading this information for several months now here and there but never so succinctly.