firstly what i came to know is there is no middle men involved,
secondly bank where giving loans to customer with the intention that even if there is a default they could take the property and resell as the value of the property would rise(asset bubble). when the was more defaulters the supply of the property increase with very less buyers. this futher decreased the asset value.now those banks are in a deep shit i would say
RE:add on ... zaheer hashim
by Abhay T on Feb 06, 2008 05:22 PM Permalink
There is a middle man. But they are not exactly like real individuals. They are other kind of banks ( like Northern Rock) that heavily depend on credit from other bigger Banks! e.g HSBC may grant a loan to Norther Rock considering its excellent credit record and Northern rock sells mortgages to customers.
looks like to sponsor this financial crises US will hv to CREATE war between any 2 nations around the world ( wonder who will be the scapegoates !)and sell weapons,destroy cities/towns....so you get immidiate money from sale of weapons,and countinuous money for rebuilding of destroyed cities and towns.
RE:WAR IN HORIZON?
by TP on Feb 07, 2008 02:56 AM Permalink
Man, you have analysed the situation very well. I agree. But with Bush going out, you cannot say that for sure.
Primarily, the process of subprime mortgage crisis itself is wrong. There are no middle men as the article inclines me to understand. Instead the middle men are banks themselves. It would have been better if the writer would have done some more research before publishing.
Secondly, the figures are all wrong and all are only indicative values. The exact would be known only after the banks will announce their yearly audited reports. Furthermore, the loss is not limited to monetary. There is intra-bank confidence loss which is non-quantifiable.
RE:Please get the details right
by Abhay T on Feb 06, 2008 05:31 PM Permalink
1. There is a middle man. But they are not exactly like real individuals. They are other kind of banks ( like Northern Rock) that heavily depend on credit from other bigger Banks! e.g HSBC may grant a loan to Norther Rock considering its excellent credit record and Northern rock sells mortgages to customers. 2. The figures are not just indicative. These are the real losses known so far. Obviously, this could be only a tip of the iceburg. For example, as per todays news UBS has written off more losses and it is now down to $18.4bn!
You can find clearer picture on news. bbc. co. uk/ 1/ hi/ business/ 7073131.stm
I smell a fish here,all the FIIs who invested in Indian stocks are the ppl who have forwarded subprimeloans and also bought back secutities of other simillar institution.The real estates are bought by their kith and kins for free (Bush is sponcering it with the relief package )...This same very FII's hv donated to the parties for election.It is like I owe 100 bucks ,dotate 2 bucks 4 election ,get a relief package of 98 bucks 4 clearing my loan of the house and after election sell the house which I had earlier bought(?) by investing 2 bucks !!.......what a JOKE
RE:subprime subprime
by Manish Verma on Feb 06, 2008 04:55 PM Permalink
hey pankaj! didn't want to do it myself. ur thought-process looked interesting.
Once in a while this market crash should happen. then poor people will get their loans subsidised. In Telugu there is a saying " Dhara Hecchuta Thagguta Korake' ( Prices increase only to fall).
RE:jane do yaar. Atleast people got houses
by v raj on Feb 06, 2008 04:15 PM Permalink
santhi.. loan emi pay cheyakapote.. bank will sold houses.. idi anta pedda aata..
RE:jane do yaar. Atleast people got houses
by shanthipriya on Feb 06, 2008 04:18 PM Permalink
Okariki Modam Okariki Khedam........ Happiness for some and sorrow for some
RE:jane do yaar. Atleast people got houses
by v raj on Feb 06, 2008 04:19 PM Permalink
enti quotations meeda quotations kodutunnavu.. telugu navalalu chadivee alavatu bagundaa
Anyone still optimistic that US can avoid recession with all the fed rate cuts and economic stimulus packages must be in utopian heights. FOR A COUNTRY WHICH THRIVES ON PLASTIC MONEY, HIDING THE RECESSION REALITY IS NO BIG DEAL. ICICI AND HDFC HAVING SUBPRIME PAPERS WORTH 12 BILLION DOLLARS UNDER THE CARPET IMPLIES THAT US HAS ALREADY ENTERED INTO RECESSION PHASE. THE MAGNITUDE OF THIS CRISIS IS SUCH THAT IT IS GOING TO WIPE OUT SOME OF THE BANKS AND FINANCIAL INSTITUTIONS. INDIAN STOCK MARKETS WILL GO TAILSPINNING TO SEE THE ABYSSMAL DEPTHS OF 4K TO 8K BY THE END OF THIS YEAR. THIS CATASTROPHE OF 2008 WILL BE REMEMBERED IN THE HISTORY OF WORLD ECONOMIES AS THE ECONOMIC ARMAGEDDON. MARK MY WORDS - PROF AJ DARUWALA
RE:US HAS ALREADY ENTERED RECESSION
by rexberry on Feb 06, 2008 03:58 PM Permalink
isiliye even after settlement of my ICICI credit card... ICICI is telling me to pay 29rs every month... but as you mentioned i m bit circumspect regarding indian stock market coz even the fed interest rate cut didnt help market to reach its earlier heights.....any relation wid bejan daruwalla???
RE:US HAS ALREADY ENTERED RECESSION
by OldKid on Feb 06, 2008 03:57 PM Permalink
Slowly rising from ashes will be Reliance bank IPO. Peace will prevail in 2009.. Amen !!...LOL.. kya kunnas bola baap... mazaa aa gaya
RE:US HAS ALREADY ENTERED RECESSION
by Saths on Feb 06, 2008 04:07 PM Permalink
Yes US is already in recession. Jobs have evaporated. Houses are on sale literally in every street. In some parts of the country(US) house prices are slashed by more than a half. People are walking away from their homes letting it go in to foreclosure and declaring bankruptcy at will. The FED rate cut will help and should help US economy and only US economy. Generally India people are the most greediest and that includes me. If you enter the stock market then book profits time to time and don't hold it to get 1000% return in one year. If you do so then only god can save you. In any market a 20% appreciation is more than enough to book profits. Remember one thing that getting things done in India is not really a walk in the park. Several companies have taken some big steps have unveiled several big project plans. Execution is very critical and failing to do so will spell doom for these companies. So be very careful and book profits with less greed.
RE:US HAS ALREADY ENTERED RECESSION
by TheOneAndOnly on Feb 06, 2008 06:44 PM Permalink
US Housing Boom was to circulate More Money in the Economy (GDP) to create a feel good factor about the Invasion of IRAQ.
The Same is being done even in Indian - as usual a couple of years lagging behind USA.
Indian Realty and Infrastructure Industry also will Doom very soon.
All NRIs who bought plots & flats at huge rates have just paid back the Big Bucks they earned over years.
Believe in Life Giving and Life Saving Industries Like Agro, Food, Retail And Pharma Industries. Even BioTech Might not be a good bet, excluding some innovative companies.
RE:US HAS ALREADY ENTERED RECESSION
by srinivas ragunathan on Feb 06, 2008 04:29 PM Permalink
Veru well said. Sane people shud follow this advice and get out with the decent returns they have already made. But greedy never listen and kill the golden goose !
RE:US HAS ALREADY ENTERED RECESSION
by on Feb 07, 2008 11:12 AM Permalink
Professor, you are predicting this as an economist or an astrologer? If as an economist,don't forget that USA has a GDP of $11,000Bn as against 700Bn of India and 1900 Bn of China.The writer has quoted just 80Bn as losses of various Banks in the above table.It may look a big amount for us Indians, and the Banks like SBI, but for the Banks here in USA,it is no more than one time newspaper news.The trouble with us Indians is that we try to reach at conclusions sooner than realities.When recently we Rupee appreciated against Dollar by five Rs or so, everyone is talking of $ slide & US recession, But they forget that when Manmohan Singh presented his first Budget as FM,Rupee slided by more than 10 Rupees to a Dollar.US economy is not as fragile as that of Asian Countries. Sahiwal
Can some one add as to who are the major institutions who distributed the loans and which are the big names who bought the subsequent securities and lost.what happens finally to the the people who have distributed the loans and issued the securities. Are they not legally required to pay back the securities issued .
RE:sub prime and what it is.
by Fab Reens on Feb 06, 2008 04:00 PM Permalink
That's what the report says above that the banks relied on credit rating agencies and automated the process of doling out loans. Bond insurers too relied on the same evaluation data. In turn, credit rating agencies relied on data supplied by the banks. Nobody anticipated what would happen if the rates go up and home prices come down! Now the rates may have been lowered, but are people ready to buy at inflated prices. NO. So this vicious cycle would continue until (as usual) the pendulum would swing far out in the other direction and then correction would set in. Meanwhile, economy will be whacked out of shape. Don't forget credit card loans are going to be a major factor too as people have borrowed against inflated home prices.
Now time for ICICI, HDFC and other indian bank who gave home loans to IT guys who are lossing jobs becuase may IT guys purchased costly 2/3 BHK flats without evaluting market prices
Message for all is dont buy costly homes without evaluating/justfying the price
RE:now time for ICICI bank
by dhanasekar on Feb 06, 2008 04:02 PM Permalink
u r right sir. These guys don't even bargain the price and by closing the eyes buy the flat. They r the real culprit to the raise of real estate.
RE:now time for ICICI bank
by rexberry on Feb 06, 2008 03:50 PM Permalink
@rahul i think even the real estate price is overhyped... there shud be a correction in real estate price first
