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Excerpt:
Originally I considered the sub-prime mortgage defaults to be 'product failure' rather than 'industry failure.' In August 2007, sub-prime defaults were a small percentage of the U.S. residential market. The total of sub-prime mortgage loans outstanding was $1.5 trillion, even after several years of explosive growth, and delinquencies among sub-prime loans were 13% - indicating trouble with about $195 billion of this risky debt. Losses appeared to be 'containable' within the context of the $10 trillion residential mortgage system. I was not alone in my judgment. The contagion of fear that traveled through global financial markets arose with stunning speed and power was initially transmitted by a limited amount of ill-advised U.S. housing debt...
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