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Monday, April 7, 2008

Housing/Subprime Roundup — April 7, 2008

Items of Interest:

NY Times/Metrics: In the Shadow of Foreclosures
NY Times:
In the Shadow of Foreclosures -- In the subprime mortgage squeeze, some regions are feeling the pain more acutely than others.

Although many Southern metropolitan areas have high percentages of subprime mortgages, homeowners in those areas have largely been able to pay their bills, so subprime foreclosure rates are low.

Not so in the Rust Belt, where subprime mortgages are less common but foreclosure rates are sky-high, mostly a result of rising unemployment.

And overbuilding in regions of Florida, California and other states with housing bubbles lured overeager residents to become speculators, buying up many homes with the expectation that their values would rise. Getting subprime loans was all too easy...

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Reuters / Yahoo:
Foreclosures come to McMansion country -- LEESBURG, Virginia -- Million-dollar fixer-upper for sale: five bedrooms, four baths, three-car garage, cavernous living room. Big holes above fireplace where flat-screen TV used to hang.

The U.S. housing crisis has come to McMansion country....
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Amazon: The Trillion Dollar Meltdown Bloomberg
Brace for $1 Trillion Writedown of 'Yertle the Turtle' Debt -- Be it ever so devalued, $1 trillion is a lot of dough. That's roughly on a par with the Russian economy. More than double the market value of Exxon Mobil Corp. About nine times the combined wealth of Warren Buffett and Bill Gates. Yet $1 trillion is the amount of defaults and writedowns Americans will likely witness before they emerge at the far side of the bursting credit bubble, estimates Charles R. Morris in his shrewd primer, "The Trillion Dollar Meltdown." That calculation assumes an orderly unwinding, which he doesn't expect.

"The sad truth," he writes, "is that subprime is just the first big boulder in an avalanche of asset writedowns that will rattle on through much of 2008." Expect the landslide to cascade through high-yield bonds, commercial mortgages, leveraged loans, credit cards and -- the big unknown -- credit-default swaps, Morris says.

The notional value for those swaps, which are meant to insure bondholders against default, covered about $45 trillion in portfolios as of mid-2007, up from some $1 trillion in 2001, he writes. Morris can't be dismissed as a crank. A lawyer, former banker and author of 10 other books, he knows a thing or two about the complex instruments that have spread toxic debt throughout the credit system. He once ran a company that made software for creating and analyzing securitized asset pools. Yet he writes with tight clarity and blistering pace...
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zero hedge

Calculated Risk

Mish's Global Economic Trend Analysis

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia