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23 posts tagged with "Subprime"
At the end of last week's letter on the whole mortgage foreclosure mess, I wrote:
"All those subprime and Alt-A
mortgages written in the middle of the last decade? They were packaged and sold
in securities. They have had huge losses. But those securities had representations
and warranties about...
Trouble, oh we got trouble, Right here in River City!
With a capital "T" That rhymes with "P"
And that stands for Pool, That stands for pool.
We've surely got trouble!
Right here in River City,
Right here! Gotta figger out a way
To keep the young ones moral after school!
Trouble,...
I admit that of late my writings have had a rather dark tone. There are certainly a number of severe long-term problems that we must deal with, and they're going to serve up a lot of economic pain. But the Thanksgiving weekend with the kids has me in a reflective mood, and one that has only served...
"A tournament, a tournament, a tournament of lies.
Offer me solutions, offer me alternatives and I decline.
It's the end of the world as we know it and I feel fine.
(It's time I had some time alone.)"
- Lyrics from R.E.M., 1987
Flying last Tuesday, overnight from Cape Town in South Africa to...
My Dad used to tell me there is no accounting for standards when looking at something that seemed odd. Today, we have faulty standards for accounting that are ripping apart the fabric of the world's economy. How can a security that has a high probability of full repayment be downgraded from AA to...
This week we look at the housing market in some detail. When can we expect it to turn around? Part of the problem is that a new wave of foreclosures is coming due, and this time it is not subprime. And that means more problems for the large financial companies. Also, as predicted here, consumer...
It seems that with each passing month the estimates for losses in the international banking system keep rising. This time last summer the largest estimates (from credible sources), if memory serves me correct, were around $400 billion, give or take a few months. By the end of the year it was in the...
My essay in Outside the Box last Monday seemed to ignite a lot of response in the blogosphere. My basic contention was that the Fed had to act to facilitate the sale of Bear to prevent a meltdown in the markets. Many agreed, but others said Bear should have been left to hang, pointing out that a...
Today we drop back to take a look at the economy and its long term effect on our portfolio returns. I am in Orlando this week, speaking at the Newport Advisor Conference sponsored by the Newport Group. The attendees are primarily investment advisors focused on larger retirement accounts and...
As the World Turns is a popular soap opera playing on American TV. It focuses, as do most soaps, on the lives and foibles of its characters, with plenty of dramatic flair. We are watching a different type of soap opera today which we could call "As the Subprime Turns. And the world is watching. It...
The market certainly seemed pleased with the new jobs number. The glass is more than half full - or is it? Fed Vice-chairman seemed to suggest that the economy was getting better and the Fed might not need to make any further rate cuts. Is it now "One (Cut) and Done?" This week we look at what...
"Of his bones are coral made:
Those are pearls that were his eyes:
Nothing of him that doth fade,
But doth suffer a sea change
Into something rich and strange"
(The Tempest - Shakespeare)
The term "sea change" has come to mean a profound transformation ever since Will Shakespeare used it in...
The unemployment numbers came in today, and if you look under the hood of the data, it is worse than the headline loss of 4,000 jobs. Should the Fed cut the interest rates in two weeks? Will it make a difference? Are we headed into recession (as predicted here in my January 2007 forecast issue)?...
End of the World or Muddle Through? This week I try to explain in simple terms the very complicated story of how we went from some bad mortgage loan practices in the US to the point of world credit markets freezing up. There is a connection between the retirement plans of Mr. and Mrs. Watanabe...
In the early fall of 1998, I remember being on a flight to Bermuda from New York. I was upgraded and sat next to a very distinguished looking gentleman. He was going to a conference about re-insurance and I was going to speak at a large hedge fund conference. We hit it off, and began a very...
As predicted in this letter early this year, the credit markets have finally begun to tighten, as a major re-pricing of risk is underway as a direct result of the subprime markets. The subprime virus seems to be spreading, despite the view a few weeks ago that there would be no "contagion" in...
This week I am already in Maine and getting ready for a weekend of fishing with my son Trey, so I am going to take off a week from writing the letter. I spoke this morning to the Maine chapter of the Chartered Financial Analysts in Portland. The question of the day was about the subprime...
This week we continue to look at an alphabet soup of problems: RMBSs, CDOs, Alt-A, BBB and - a new acronym to put on your radar screen - the very useful CDS. When does an AAA rating not mean an offering is ready for prime time? What type of contagion are we seeing from the Bear Stearns blow-up?...
Is the subprime mortgage market collapsing before our eyes, or did we avoid a disaster as Bear Stearns stepped up to the plate with $3.2 billion to help its ailing funds? As we will see from the data, the problems in the subprime world are not over. The Fat Lady has not sung. But will the...
At the risk of being all subprime, all the time, this week we look at what I think are the real risks for the economy as a result of the subprime debacle. How can one side say it is a contained risk (and in one sense it is) and not a problem for the economy while another side says it will drag...
