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102 Comments
- fusuke31, on 12/18/2007, -1/+72This British comedy duo explains Subprime much better:
http://www.youtube.com/watch?v=SJ_qK4g6ntM - Splitt3rxx, on 12/18/2007, -9/+54when I first saw that headline I thought they were talking about the graphics in crysis...
- mrbubbleboy, on 12/18/2007, -0/+43One of the best summaries of the subprime meltdown i have seen...and I have seen a lot. Added to my favorites.
- WorkingDead, on 12/18/2007, -1/+21The other main issue is that the federal government and the Fed are trying to nerf the hit the banks are going to get stuck with by redistributing that loss of value to the general populace and even the government itself. The banks will probably be ok. We most likely wont be.
- ZenFountain, on 12/18/2007, -2/+19"What started as lending few thousand dollars to an unemployed man in a string vest has become as high grade structured credit enhanced leverage fund."
Crisis in a nutshell. - inactive, on 12/18/2007, -3/+18It really bothers me when people whine about "plunging property prices". They're only "plunging" back to what they were before greed and an artificial bubble inflated them to insane, unrealistic levels. I bought my house for 115k ten years ago. Last year it appraised for 300k. I'm paying property tax on a 300k house, even though it's still the same 115k house that I had a decade back. You'll pardon me if I'm not exactly freaking out over the thought of it's appraisal shrinking back down to 150k or so.
- Akyan, on 12/18/2007, -0/+14LOL, the BBC don't need mirrors. They handle probably many times the total digg effect traffic in normal course of the site running.
- ForbesBingley, on 12/18/2007, -2/+15For anyone who's ever watch John's Bird & Fortune will know, they're nearly always spot on. Watch the video clip Fuseke31 dropped in...
- ai42, on 12/18/2007, -4/+15Why is it that the British get it but we don't?
- inactive, on 12/18/2007, -0/+10Not a complete picture, but very good nonetheless. Good reading for anyone not clear on why this mess is the mess that it is...
- sagat, on 12/18/2007, -0/+10That is just a superb article, if Digg had more of these and less stupid "5min" and "break" videos we would all be a lot smarter.
- Berkana, on 12/18/2007, -2/+12Quote:
Traditionally, banks have financed their mortgage lending through the deposits they receive from their customers. This has limited the amount of mortgage lending they could do.
In recent years, banks have moved to a new model where they sell on the mortgages to the bond markets. This has made it much easier to fund additional borrowing,
But it has also led to abuses as banks no longer have the incentive to check carefully the mortgages they issue.
___________________________________
This may or may not be accurate, depending on what they mean by "traditionally". But one thing has been clearly demonstrated; when money can be created as debt, there is no limit to how much money the banks can make because there is no limit to debt.
Remember this?: http://digg.com/business_finance/Our_Debt_based_Mo ... - listrophy, on 12/18/2007, -0/+10Agreed. They added the exact amount of interactivity to add information without confusing things. It's amazing to see something like that without using a completely overkill flash animation.
On a side note, as a renter looking to buy in the next year or two, I fail to see how this "crisis" is bad for me. Anyone care to point out a fallacy in my thinking? - Sajentine, on 12/18/2007, -0/+10Now this is one of the best explanations I've seen on this issue to date.
- synthpop, on 12/18/2007, -0/+9here's a simpler model: insatiable bank greed+"homeowner" stupidity=*****
- catalysis, on 12/18/2007, -0/+8If the banks wanted to lock in people for 5-years at low interest, they can but they obviously won't without government forcing them. This is to bail out the borrowers at taxpayer expense. Socializing peoples' bad financial decisions.
- dreicher, on 12/18/2007, -1/+9The British are in as bad, if not worse, of a housing bubble than the U.S. In the U.S., we call them "Stated Income Loans" - the British equivalent of "Self Cert". Google "Northern Rock". Here's a good article to get you started. http://news.bbc.co.uk/2/hi/programmes/file_on_4/70 ...
- Stonekeeper, on 12/18/2007, -0/+8Bird & Fortune. Awesome stuff.
- DasCrackbaby, on 12/18/2007, -7/+15OMG look at all that *****' data.
Graphs n' ***** up in this *****. - imightbewrong, on 12/18/2007, -1/+9thank you for posting that!!
- digggggggggg, on 12/18/2007, -1/+9"Dodgy debts that probably be defaulted on" -> "High-Grade Structured Credit Strategies Enhanced Leverage Fund"
You just can't make this stuff up. - bsmang, on 12/18/2007, -1/+8Good graphs.. they show things in full... zero-to-whatever. None of this grabbing a small slice at the top of the graph and blowing it up to make little tiny variations look huge.
- Bridea, on 12/18/2007, -0/+6Great article.
- Scorps111, on 12/18/2007, -1/+7dont you meen this http://www.youtube.com/watch?v=Z5VeNwG3xms&feature ...
- Azuroth, on 12/18/2007, -0/+5It depends on your credit score, and how well you can document your assets. Banks "should" tighten their requirements for mortgages, but as long as you fit the traditional 10-20% down, 2-2.8 annual income:purchase price ratios, you should be golden.
- inactive, on 12/18/2007, -3/+8i was like they better not call it sub prime
- Prosequi, on 12/18/2007, -1/+6They could very well be reporting on their own market:
"Concerning the United Kingdom, the trends anticipated in the previous issues of GEAB are being confirmed. Consistent with the impact of Great-Britain's rising interest rates, Halifax (5) declared that home prices fell by 1% in December 2006. The last rate rise came as a surprise to British economic and financial players (6) and will accelerate the downward trend of UK's home prices, likely to be influenced too by the US depression...Like everywhere else, the sudden increase in household insolvency (+55.4% over one year) and in Individual Voluntary debt Arrangements - IVA (+117% over one year) – are clear indicators (8)."
http://www.leap2020.eu/Burst-of-Europe-s-real-esta ... - inactive, on 12/18/2007, -2/+7Greed
- dreicher, on 12/18/2007, -0/+5Property taxes are paid annually on the assessed value of your home. Typical rates are 1 - 1.5% and go to the state and local government. It's not like a sales tax - you are essentially paying rent to the government on your land.
- Otto, on 12/18/2007, -1/+6I don't get it. What's your point?
It's Cleveland, and it does have a lot of predominantly black areas, many of which got screwed over with sub-prime loans. - MerryMortician, on 12/18/2007, -1/+5seriously.. I jumped right into OBVIOUSLY they haven't played it on very high yet.. ... then clicked the link and realized i suck.
- Scorps111, on 12/18/2007, -4/+8Love how it says Black Areas when you scroll down to HOW SUB-PRIME LENDING AFFECTED ONE CITY
- Phoster, on 12/18/2007, -1/+5You do know we had booms and busts before we had the fed right? Ones that were even worse than what we have now.
- kernel16, on 12/18/2007, -1/+5It was all an interesting read till I clicked the foreclosure mapping by dots, WOW!
- Thex1138, on 12/18/2007, -0/+4It's funny how corporations call these arrangements 'models'. Things like tax models, finance models, payment models...it's all to do with how far they can bend the rules...
- Otto, on 12/18/2007, -0/+4No. You pay property taxes based on the assessed value of the property. Also, they can reassess, and usually do, on a yearly basis.
What you paid for a property is between you and the seller. Nobody else really cares, much. - crunchyeyeball, on 12/18/2007, -0/+3Ummm, according to netcraft ( http://toolbar.netcraft.com/stats/topsites ), the BBC is the 9th most visited site on the web, with more daily visits than eBay, Google News, Wikipedia or Microsoft. I think it's safe to say they are immune from the Digg effect. Nice try though.
- orangetiki, on 12/18/2007, -3/+6What you expect with over inflated prices ( thanks mostly to so many "flippers" out there ) and the Banks and that whole adjustable rate mortgage Monetary-Ass-rape they pulled off. Too many hands in the pot. I hope the whole real estate market falls. BAD. I'll keep on renting and save my cash Thank you very much.
- kreneskyp, on 12/19/2007, -0/+3the government said to be more lenient in their decision making process. they didnt say offer balloon loans and other shady mortgage plans. The government is not at fault here. Its the lenders fault for making deals they should have known were bad. Its the purchasers fault for buying beyond their means or not understanding the terms of the loan.
- Otto, on 12/18/2007, -0/+3Assuming you have enough funds to get a traditional mortgage, you probably won't be hurt much by this. Even if you bought recently with a traditional mortgage in an area where the prices had not skyrocketed, you'll probably still be fine.
- Angostura, on 12/18/2007, -0/+3Yes, but if you actually read the text, it explains how and why this was a factor in Cleveland, the example they are using.
- quickricky, on 12/19/2007, -0/+3This reminds me of what happened to Japan. They still haven't recovered. The bubble days are over. America is now going to experience a long, slow depression.
- ScottMitchell, on 12/18/2007, -0/+2Assuming the "slowdown" doesn't impact your sector of the economy, you should be fine. Not a good time to be a Realtor or mortgage broker or banker or builder. The killing in this sector might spill out into associated areas: home furnishing, construction, home improvement, etc.
It is high time that we, as a nation, take our economic lumps rather than trying to assuage them with hamfisted economic policy that just ends up delaying the inevitable. - ScottMitchell, on 12/18/2007, -0/+2The housing bubble is very global. There were similar runups in house prices in Australia and many countries in Europe over the past decade. In fact, the US housing bubble started later than the other participants'.
- floejoe, on 12/18/2007, -0/+2Renting a house or an apartment? As more people get evicted there will be less apartments available which should drive the rental cost up.
- dadioflex, on 12/19/2007, -0/+2You may be able to pay for it but you may still enter a negative equity situation where the current value of your home is worth less than the outstanding debt. I honestly wouldn't get too offended about people's assumption that you won't be able to pay your jumbo loan. I'd worry more that it might make more sense to default and declare bankruptcy regardless of your ability to pour money into a hole.
- ScottMitchell, on 12/18/2007, -1/+3In California they have a law that limits the amount that the appraised property value can increase per year, and it's relatively low, like 1.5%. And since property tax is like 2% of that, that means per year your tax bill cannot rise more than 0.02%. IIRC it was installed back in the 80s when you had retirees who were getting pinched out of their paid for homes because of the skyrocketing land values.
- Frnnkdlxx, on 12/18/2007, -1/+3Isn't the derivatives bubble, (created from trading debt's debt!) about 1,050 trillion. We need to figure out what that next number is, let alone how we're going to pay for it
- dadioflex, on 12/19/2007, -0/+2Yeah and we've probably been paying the silo committee 600 million euros a year to preserve the guillotines.
- dadioflex, on 12/19/2007, -0/+1HINT: you probably shouldn't try to profit from a global financial ***** if it's taken you this long to understand the situation.
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