MetaFilter posts tagged with sub-prime

McMansion ghettos

stbalbach — Fri, 29 Feb 2008 08:02:30 -0800

The sub-prime mortgage crisis is giving way in some places to crime ridden McMansion ghettos, perhaps the beginning of a larger long term trend in demographics: "many low-density suburbs and McMansion subdivisions, including some that are lovely and affluent today, may become what inner cities became in the 1960s and ’70s—slums characterized by poverty, crime, and decay."

Two hedge funds that predicted sub-prime crisis see corporate debt as next casualty

janetplanet — Thu, 15 Nov 2007 13:16:26 -0800

Two hedge funds that predicted sub-prime crisis see corporate debt as next casualty Two hedge fund firms that racked up huge gains betting on the subprime mortgage meltdown have begun winding down those trades and looking elsewhere. They're now betting against corporate debt using derivatives.

Cui bono?

Pastabagel — Thu, 20 Sep 2007 09:41:30 -0800

On Tuesday, the Federal Reserve cut interest rates by 0.5%. Wall Street aggressively demanded the cut to stop the sub-prime mortgage contagion from triggering a credit crisis among large US and foreign investment banks and the collapse of their over-leveraged hedge funds, which ultimately threatened to drag the US economy into recession. The market rallied this week in response to the Fed's move. But there is no free lunch. Oil rallied also, to an all-time high of $81/bbl. The rate cut shattered the dollar, sending it to new lows against the Euro and to parity with the Canadian dollar. The falling dollar puts pressure on China, whose dollar-pegged currency has attracted the ire of many US politicians, causing China to threaten the US with the "nuclear option" of diversifying its foreign currency reserves away from the dollar. Meanwhile, Saudi Arabia refuses to cut its interest rates in lockstep with the US for the first time ever, signaling that it may break its long standing dollar peg as well. In other words, foreign investors who currently own roughly 50% of the publicly-owned portion of the US national debt may flee the US bond markets. Result? We'll probably slide into recession anyway. But there is a silver lining: it turns out that many of those large investment banks and hedge funds were making far more money than anyone thought all along. Confused? Some background: Currency carry trade - how currencies are related to one another How interest rates, inflation, exchange rates, and trade deficits are interrelated How interest rates and bonds are related Peviously 1 2 3 4

Sub-prime blues

Adamchik — Mon, 05 Mar 2007 11:05:57 -0800

For those of you who haven't been following The Mortgage Lender Implode-O-Meter and other purveyors of financial and real estate schadenfreude, the sub-prime mortgage market is in some serious trouble. The stock charts of the likes of New Century Financial and Fremont say a lot, although BusinessWeek and MarketWatch have been helpful in explaining. Is there really fraud in 70% of early payment defaults? I know traders are given to hyperbole, but Goldman Sachs and Merrill Lynch as "almost junk"?