On Nov 7, 2007, at 7:29 PM, Jordan Hayes wrote:
>> the standard estimate is that there are about $200 billion in
>> mortgage losses, mostly subprime, out there ...
>
> Numbers I have seen:
>
> - Total size of the mortgage market in the US: about $10T
> - Percentage of that which is ARM, presumably subject to reset
> now or soon: about 25% ($2.5T)
> - Percentage of ARM loans that are "subprime": about 50%
>
> So we're talking about $1.25T of subprime, and losses are going to be
> $200B?
Don't take it up with me; take it up with the following:
<http://www.ft.com/cms/s/1/16e6c4e8-8c4a-11dc-b887-0000779fd2ac.html>
Bank of England mark-to-market analysis Oct 15 $ 100b RBS Greenwich fundamental analysis 160 Moody's Economy.com fundamental analysis 225 RBS Greenwich mark-to-market, early Nov 238 disclosed writeoffs by major banks 28
total Tier-1 capital 2,000
[a mark-to-market analysis tries to estimate losses based on market values of similar traded instruments, which is a stretch, since no one really knows how these asset classes all relate to each other; the fundamental analysis estimates losses based on likely default rates given reasonable economic assumptions]
So, the losses are big, but still relatively small next to bank capital. Doug