Where has the money gone?
$340 billion in delinquencies requires $700 billion bail-out. Will the wonders of accounting ever cease?
“Alt-A mortgage backed securities is smaller — about $US600 billion for loans made between 2005 and 2007, compared with about $US1000 billion for sub-prime.” London Financial Times reported in The Australian
Percentage of Loan defaults from NY Times
Form those two sources I conclude:
- 12%-27% of subprime in default or $120- $270 billion
- 6% – 12% of Alt-A are in default or $36 – $72 billion
Even if I take the highest numbers ($270B+$72B) I still get a $360B shortfall from the proposed bailout of $700B.
Anyone have any idea where the missing 1/3 trillion dollars has gone?
[UPDATE:] I finally realised where the money has gone. They are looking forward and I was only looking at the now. I think $700 billion may look like a steal or a pipe dream in the months to come. But hey with a large cash balance to invest the fusion portfolio will be buying.
Related posts:
Day Two Hundred
Belgian-Dutch group Fortis was nationalized and British mortgage lender Bradford & Bingley faced the same fate.
Fortis is the first major European bank to buckle since U.S. mortgage defaults triggered global financial turmoil in August last year.
Last week the IMF declared Australian Bank were safe.
Excellent prediction from back in April, Standard & Poor’s recently placed an estimated price tag on this worst case scenario — $420 billion to $1.1 trillion of taxpayer’s money. read more
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