Friday, March 16, 2007

Some More Info on Subprime:

Below are two links providing more information for those trying to better understand the subprime problem.

Challenging and Emerging Risks in the Home Mortgage Business

Comments of the Center for Responsible Lending

One can't underestimate the effects this could have. If many of these subprime loans prove unsustainable without the hope of refinancing, this could increase defaults, which could decrease home prices, which could spread the default risk up the credit quality ladder. Meanwhile, mortgage insurers will be affected, along with banks, which pretty much spreads out to everywhere. Consumer demand, which has been so reliant on asset monetization, can drop. That branches out to affect the whole economy. I wonder if Japan 1990 started this way... If anyone knows of a good book describing the run-up and consequences of the Japanese depression, please do share.

Comments on SFK Earnings tomorrow after I listen to the Conference Call.

1 comment:

Anonymous said...

Here's a book for you on that subject: The Bubble Economy by Christopher Wood.

It's been about 8 or 9 years since I read it but I remember being very impressed by it. Wood's book and another one that I can't remember were two of my main sources for a paper I wrote on the topic of Japan's Bubble. If you don't have time to read it, you can just read the chapter on Japan in Devil Take the Hindmost by Chancellor. In fact, you can get a ton of further sources by following Chancellor's citations, including the book I couldn't remember above. In any case I recommend reading Devil take the Hindmost since it's very entertaining as well as useful to the investor.

Hope that helped and I enjoy your blog which I found thru the MSN Berkshire Board where I lurk occasionally.