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Thread: FAS 157 is stupid

  1. #31
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    Because they've had the swindle pointed out to them, it doesn't mean congress or whoever will do anything aboutit.

  2. #32
    Ultimate Member herosrest's Avatar
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    Something will be done about it - something all ready is done.

    'Mark to Market' accounting was the theoretical answer to a problem of over-valuation. It is a serious and considered remedy. It is a mistake. It is disaster.

    What wasn't understood or foreseen is that 'everything' is devalued - if it is valued by current market price. That current price is always a devaluation because the 'pricing' is always for a 'profit'. The devaluation is a function of the exercise - it is unavoidable and during a recession or economic blip it works adversely to crash all valuation which amplifies across the entire economy. It is a paper concept, an arbitrary practice and in USA it is wiping out 30% o everything. Not because everything is over valued but because 30% or so is an industry markup for new build property. It is insane! A concept basing valuation on pricing is flawed fatally before it even walks of the thesis paper.

    To sort it out needs these......... ________

    All trading around the globe, including finance, must be licensed, recorded, tracked and monitored by a single entity.

    Regulation becomes plain sailing because everyone knows what is taking place. Global Regulation, Analysis to Spot problems abuse and simple mistakes. Raising the flag quietly and assessing the impact of innovations. There must a rigid, unavoidable process to measure and record all dealing across the globe. lt is the only lesson to learn. Self regulation will then mature because there is nowhere to hide. The data can remain anonymous unless flagged and then simple discussion and compromise via compliance can smooth issues and problems. Grown up behaviour, grown up rules. Maturity.
    Common sense transparency.

    Problems at AIG were ultimately the product of human nature towards secrecy, they had a good thing going and hid it. A trade secret. Well that concept of business secrecy is now a busted flush.

    In a global Market, there need to be Global Controls. That does not mean a Financial Policeman on every corner and climate of fear. Government and administration simply need to KNOW in measured terms what is going on and what is going where. Simple argument isn't it - until you run into these clever children who need to sneak everything 'cos' they never grew up. There are a bunch of idiots rolling around business finance with heads high and reputation intact for the cods wallop they have brought about. l can't believe they get away with this bullying but that's life. Governments need a simple, reliable, robust means of keeping an eye on what occurs. Not the Gestapo just diligent awareness. AND some common sense, reliable, rock solid accounting rules. Not the Mumbo Jumbo which occurs now.

    People who do not want that control are or plan to break the law. It's very simple logic.

    Finally, the legacy headache AIG has bequeathed the world can be resolved with a pricing model the corrects the errors inherent to the 'Financial Products Group'. The business was under pricing a valuable and desirable asset . A cap and trade model for new business with 'efficient' costs will sort out the headaches and could well save that corporation. The business was good, its implementation and practise stank. Secrecy and self interest kept it off the radar. Even now, not one single person who can tell the whole tale and its implications, has. Flying blind in the 21st Century........... cap and trade - this business model will turn around the AIG quagmire. The product is good.

    It is incredible how quickly and quietly that economy - economics - scales of efficiency becomes a world of largesse, slush and hypocrite's hype.

    Profit is theft, it is something for nothing. That must never be forgotten. Profit's tool is price. Price does not an economy make or economics work, profit is a percentage, a very daft way to value anything.

    Last edited by herosrest; 03-17-2009 at 08:17 PM.

  3. #33
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    I'm sure you could tell us these things in a lot less words than you are doing.
    It leads to an overflow of information, causing much of it to be forgotten then misunderstood.
    Could you please sumarise it for us.
    The thread title was sufficient, FAS 57 is stupid.
    We'll believe ya.

  4. #34
    Ultimate Member herosrest's Avatar
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    That's the cleverness of intelligence, over whelming blurb that factualises above and beyond common sense. It is the sveldte of the CON. Which is the game still playing out now.

    People who really should have known better, but thought no one cared, have gotten everyone, every person in hock for like $40-50,000. That is each, not per family....... and they expect it will all blow over. People will end up dangling from lamposts. You simply cannot rob 300 million people blind of tens of thousands of dollars - whoever you are. Once they work it out, you are just another horse thief - Body guards and foreign travel won't protect. There are enough nut jobs that financial chaos will be the least of problems.

  5. #35
    Ultimate Member herosrest's Avatar
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    U.S. Treasury Readies Systemic Risk Financial Regulation Blueprint The U.S. Treasury is expected to propose within days the creation of a "systemic risk regulator," probably the Federal Reserve, to oversee banking and market problems that could threaten the economy.

    On both sides of the Atlantic, "tunnel vision" is out, and the "big picture" is in when it comes to financial regulation which is the next frontier for policy-makers beginning to look beyond rescuing the financial system and toward fixing it. Some U.S. and EU regulators want to revamp the oversight apparatus so the financial system never again falls to pieces with no clear view in government of the foundations crumbling. That was the sense Monday after a 20-nation meeting of finance ministers near London, where British Prime Minister Gordon Brown predicted "massive change" in oversight.

    The U.S. Treasury is expected to seek not only a stronger Federal Reserve, but tougher capital standards for banks and better derivative market clearing and settlement mechanisms. Proposals for better consumer protection and more aggressive oversight of hedge funds and credit rating agencies are anticipated, as are new ways to unwind big companies whose outright failure could do wide-scale economic damage. The Treasury was unlikely to make proposals on all these topics in one legislative package, congressional aides said.

    チャットモンチチャットモンチチャットモンチチャットモン____チャットモンチチャットモンチチャットモンチチャットモン
    Revising mark-to-market rules would come back to haunt us But what happens when that house can't be sold? What if it's in a neighborhood ravaged by job losses and foreclosures? Does it still have value? Let's say you want to cash out all or part of the value in your house. One way you could do that is take a home-equity loan.

    "Hah, hah, hah," says the man at the bank, "Home equity? You're underwater on your mortgage. You're paying more than your home is worth right now. And if you want to sell it, get in line, everyone wants to sell. No one is buying."
    You've just found out something that has a lot of value to you isn't worth that much, if anything, to anyone else. You're in exactly the same position as the banks holding mortgage securities.

    The banks are in the midst of a financial crisis and their assets -- all those mortgage securities and other junk -- are doing them no good. Mark-to-market is forcing them to write that stuff to zero and get some real assets, preferably cash, into their coffers.
    チャットモンチチャットモンチチャットモンチチャットモン____チャットモンチチャットモンチチャットモンチチャットモン

    The single guarantee, is, a disjointed, watered down and muddied mish masup of compromise around the world as everyone waits a myriad of experts to sort it all out.

    The data is the answer - if you have it in timely fashion and it is trustworthy. No need for armies of regulators, no need for tomes of law and rules. Simple, actual analysis, Real time of what is going on. Where it is coming from, where it is going to and what it is all about. That is how you sort the troubles. With light heart, bright eyes, cheery smiles and a REGIME that engenders and enforces honesty. THAT'S the way to do it.


    ooooh look! - What a brilliant idea!

    Capital asset derivative securities and liabilities - AIG's li'l hand grenade, can be easily resolved, it is a worthwhile product. A properly priced product, offered under cap and trade business model with a levy to address the legacy deficits will sort that li'l problem

    Valuation accounting. Any business trading property assets which are in trust must adhere to the lenders insurance rebuild valuation which is constant and not subject to markets and is the contractual basis underlying derivative finance. A true and rock solid valuation that cannot be manipulated by traders for profit. What can be assessed into a valuation based on this bottom line is land value, locale, maintenance, 'mark up' for market and maintenance and taxes. Too simple isn't it - way too simple. It puts all those loose headed Real Estate types and financial wizards in straight jackets of honesty - arguing for fees and profit instead of jerking value. Just to plain simple, isn't it. But then it isn't a traders rule is it.

    <<<<

    A Global solution! Please!



  6. #36
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    It's 3.51am and I'm craving for something sweet.
    But not a lolly, or chocolate, I want a large slice of French lemon tart, or an assortment of French pastries and a caffe au lait, or cappuccino or two. Followed by a Louis the 14th cognac and a fine Cuban cigar.
    How will we get these things if everything closes down because too many people lose the jobs and or their money, because of unscrupulous bastages that think they are the only people who should have these things, no one else matters.
    I hope that there addresses are posted online, so we know who the criminals are that destroyed the world with greed.
    If things fall apart, it will give us a pastime, finding them, and teaching them about responsibility.
    No doubt they'll be living in guarded compounds, or on yachts where they're harder to reach.
    You can see why the French revolution, turned into the terror. For the aristocrats.

  7. #37
    Ultimate Member herosrest's Avatar
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    Well, you know that Frech passion. Everything goes just a tad far.
    Let them eat cake! She had some class, that young Antoinette.
    Democracy does not require law and rules, raw, it is the mob, willed to do as it pleases.
    Final majority. An awsome contemplation, i should imagine.


    It scared the bottoms out of the rest of Europe, like............ erm, right up until today.
    The commie capitalist, is same. Wot a load of 'Waddle', we put up with.
    Last edited by herosrest; 03-18-2009 at 01:25 PM.

  8. #38
    Ultimate Member herosrest's Avatar
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    For BD - Drivin' along, man. ..... yey yobs!

    Hardly anyone knows the information, detailed below. It is vital that this information should reach interested party's *.
    ( * -Yes the spelling is correct. Think about IT )

    The BIRTH OF BRITISH SKA
    Ska went to England with the immigrants of the early 1960's and was initially known as 'Bluebeat'. The first international ska hit was 'My Boy Lollipop' by Millie Small. It was recorded in England in 1964 for Island Records and featured a young English Mod Rod Stewart, just beginning his own music career on Harmonica. Ska gained popularity amongst the Mod scene and several hits followed including 'Guns of Navarone' by the Skatalites, 'Carry Go Bring Come' by Justin and The Dominoes, and 'Rudy, A Message to You' by Dandy Livingstone.

    ____

    http://www.youtube.com/watch?v=mww3pIFqC0U
    http://www.youtube.com/watch?v=DvInAcF-PPc

  9. #39
    Ultimate Member herosrest's Avatar
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    l have said for quite a while now that a 30% or so devaluation was taking place. lt was not meant, it was not understood, it was a mistake. It was evil at play.The reason that a 30% devaluation is more than an economic hic-cup is this. 30%-ish, is like a quarter of everything, everything is valued 30% less. Nothing, anyone can do, even printing all the money there could ever be, will replace that scale of destruction. It is unstoppable. The first 30% was lost over 18 months or so and is really kicking in now - don't believe me, just look around where ever it is you live. A kind of cascade of deflation flowing through every type of enterprise, world wide now.

    Accounting rules, nothing else but them, ensure that the Banks, initiate a further round of devaluation. It will be a further 30% and will work through everything again but take only 14-15months. 30% applies to time as well. The point of it all, no-one anywhere, will be able to get at their capital. It is being 'VANISHED'. PLAIN AND SIMPLE - IT IS VANISHING. The result of accounting rules. The rules did not sort a mess out - they created it. They are the work of morons - who lost the plot!


    Hedge Funds Reel From Margin Calls Even on Treasuries - Ivan Ross, founder of Westport, Connecticut-based hedge fund Tequesta Capital Advisors, received a call from his bankers on Feb. 22 demanding he put up more money or risk losing his loans. Ross was unable to meet the margin call as the market for mortgage- backed debt seized up, preventing him from selling securities to raise the cash. Four days later, lenders liquidated his $150 million fund.

    ``Because it's impossible in this environment to move among dealers, you're at the mercy of counterparties,'' said the 45-year- old Ross, who has managed hedge funds for 13 years, including a stint handling mortgage-backed debt for billionaire George Soros. ``To the extent they want to shut you down, they can.'' The demise of Tequesta revealed the deathtrap for hedge funds caught in the credit maelstrom of banks selling mortgage-backed bonds as fast as they can while demanding more collateral from clients who use the securities to back loans.

    Carlyle Fund - On Feb. 24, London-based Peloton Partners LLP gave up a ``night and day'' effort to stave off demands from banks, including Goldman Sachs Group Inc. and UBS AG, for as much as 25 percent collateral for securities that once required 10 percent, according to investors in the fund. Peloton, run by former Goldman partners Ron Beller and Geoff Grant, liquidated the $1.8 billion ABS Fund, its largest.
    Click

    Goldman Sachs Partners Borrow to Cover Margin Calls" - Tough times on Wall Street are reaching all the way to the highest levels of the most storied former investment bank—Goldman Sachs—as partners there are being forced to borrow money to cover margin calls, according to sources within the firm.

    Several Goldman Sachs partners have leveraged their Goldman Sachs stock to buy alternative investments such as hedge funds & private equity, and they have done so through their Goldman Sachs brokerage accounts.

    But Goldman stock has declined in value by more than 50 percent since last spring, meaning that Goldman Sachs is in the awkward position of making margin calls on its own partners, who can't meet those calls because their alternative investments are underwater and they don't have enough cash on hand.



  10. #40
    Registered User mireland's Avatar
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    Quote Originally Posted by herosrest View Post
    Well, you know that Frech passion. Everything goes just a tad far.
    Let them eat cake! She had some class, that young Antoinette.
    Democracy does not require law and rules, raw, it is the mob, willed to do as it pleases.
    Final majority. An awsome contemplation, i should imagine.


    It scared the bottoms out of the rest of Europe, like............ erm, right up until today.
    The commie capitalist, is same. Wot a load of 'Waddle', we put up with.

    NO GIRLIE PICS!

  11. #41
    Ultimate Member herosrest's Avatar
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    Hm....., i admit i didn't think that issue through. H'mmm............. French liberty, rebellion, riots, cake, Waterloo......................... Trafalgar............. must be time for a Pims, eh what. (humblest apologies! It v'ont 'appon agen! - The French Revolution, that is.

    ps. She is revolting.

  12. #42
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    If everything is worth 30&#37; less, why does everything seem to cost 30% more.

  13. #43
    Ultimate Member herosrest's Avatar
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    Price is a tool that produces profit, it is a minor, minor subset of value - it is however Prime to greed and trading.

    Diminishing return will cause attempts to maintain profit.
    Valuations will decline to maintain profit.
    Profit is not a measure of value. Profit is profit, it is not even wealth.
    Part of the current account - It gets invested and vaporises.

    Economists who accept and spout price theory as basic economics are not actually economists - they are organ monkey's who never paid attention during class or they climbed up out of trading pits.


    Here's an odd thought that really sums it up. When an asset is valued, the last thing on anyones mind is what that asset cost. This is an interesting thought. Further, the one thing you can guarantee - that valuation will have nothing, what so ever, to do with setting a price. The market will determine price. Now, there is a train of thought, a direction, a good sell........... the whole concept falls into place and works................ successfully. OK, that's how we'll run the economy........... it is of the school playground, from street fruit and veg stalls. The concept is corrupt. It works AND must be ruled with 'iron fist' or total compliance - "TRUST".

  14. #44
    Ultimate Member herosrest's Avatar
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    Swiss Re Writes Down $1.07 Billion on Credit Swaps - The portfolios ``consist largely of mortgage-backed securities,'' Swiss Re said in the statement, with the ``majority of the exposure'' to prime and mid-prime securities. There is ``exposure to subprime and asset-backed securities in the form of collateralized debt obligations,'' the reinsurer said.
    Swiss Re Press Release - November, 2007 -"The unprecedented and severe ratings downgrades undertaken by the Rating Agencies in October and the lack of any truly liquid market for these securities has resulted in a significant and material reduction of the value of the underlying assets."


    Regardless of INTENTION - FAR, far, beyond purpose -
    the 'Mark to Market' shown above is the real truth of Fair Value accounting.
    These re-valuatios have swept around the world - which as shown in the numbers above has been de-valued by 30&#37;.
    This was an over sight it was unintended, the scale of it is immense.
    This has never happened before. lt is insane..
    Quote Originally Posted by herosrest View Post
    Mentioned in 'The Decisive Factor', RAAF pilot Turnbull pointed a stick at a plane, did a mumbo jumbo dance and was dumb founded when the plane crashed. CLICK - Japanese aircrew's story from that mission! Crew History
    This crew of had been involved in an attack by 18 G3M2 Nell bombers on Clark Field, December 12, 1941. They bombed from lower altitude due to cloud cover and the Nell piloted by Harada was hit in its left engine by anti-aircraft fire and force landed near the target.

    Back at their base, they were listed as missing in action and according to naval custom given a one rank promotion and listed as killed in action. Instead, the crew had all survived the landing. As the Japanese Army overran the Philippines, the crew were liberated. It is unclear if they were captured, or lived with Filipino people during that period.

    Officially, the men were dead, but here they were back with their promoted rank. They represented a bad example to the other services and 'no surrender' doctrine. Segregated from other aircrews for morale purposes, this crew was continually placed in the most vulnerable position on missions against Australian targets. But, despite the fury and danger of the battles in which it patricipated, the crew just kept coming back to base alive.

    Mission History
    Admiral Takajiro Onishi issued an instruction that the bomber crew was to fly over Port Moresby, with no escort, and a last order: “Do not return”. The crew shared cigarettes and drinks, then took off from Lae Airfield.

    At 12:45 (local time) a message was received from the bomber back at Rabaul: “Finished bombing. All bombs hit mark”. Fifteen minutes later, another message came on the radio: “We will go in. All around is clear. Thank you for your kindnesses during our lifetime. Banzai for the Emperor (Tenno heika).”



    Quote Originally Posted by herosrest View Post
    What an interesting World we live in.____ Roger W. Ferguson____ New York Times Topic____Swiss Re, whose financial services division is run by Roger W. Ferguson Jr., a former governor of the United States Federal Reserve, said that it incurred the losses, which it called deeply embarrassing, when it sold two credit-default swaps as protection against declines in the value of investments mainly backed by mortgages. > This explains a lot....... :-) - Swiss Re valued the ABS CDOs to zero and the sub-prime securities to 62 percent of their value, bringing the market value of the portfolio to 3.6 billion francs, the company said. The re-insurer "remains committed'' to its share buyback program and reiterated its targets for earnings per share target of 10 percent and return on equity of 13 percent "over the cycle.'' > Now they can buy back the shares at a much cheaper price.....On Monday November 19th 2007, Swiss Re, the world's largest reinsurer, announced that it had lost 1.2 billion Swiss francs (or $1.07 billion U.S. dollars) on two credit default swap contracts in October after the U.S. sub-prime mortgage crash and Collateralized Debt Obligation ("CDO") devaluations roiled debt markets worldwide. The losses occurred on two credit-default swap contracts that the Swiss Re financial services division sold to protect its clients against declines in investments backed mostly by mortgages.
    __________________Toomre Capital Markets LLC wonders why Swiss Re was taking on such large notional swap contracts since they are so far removed from Swiss Re's primary business of re-insuring traditional property and casualty risks. Lars Toomre previously worked in the American Re Financial Products group (part of the Munich Re group) and does not recall any traditional insurers with such large notional amount needs.
    April 4, 2008 ______ __Chief Is Selected at TIAA-CREF
    TIAA-CREF inc, the 90-year-old pension fund giant, said Thursday that it had named Roger W. Ferguson Jr., the former Federal Reserve vice chairman, to succeed Herbert M. Allison Jr. as its chief executive and president. Mr. Ferguson, 56, will take over April 14 when Mr. Allison, 64, retires, the company said. The company also promoted Ronald L. Thompson, who has served on its board since 1995, to chairman. TIAA-CREF is trying to expand beyond its core Client&#232;le of teachers and doctors by overhauling itself and introducing new products. Mr. Ferguson left the Fed in April 2006. He then became chairman of the Swiss Re America Holding Corporation and was responsible for Swiss Re’s proprietary asset management unit.


    Credit Swaps Thwart Fed's Ease as Debt Costs Surge An excellent article from Mar, 2008 -"The unwinding of structured credit is eating away at the fabric of the corporate bond market,'' said Suki Mann, a credit strategist at Societe Generale SA in London. ``The increase in credit-default swaps is making it far too expensive to borrow.''
    The economics of the swap market - Skimming a few paragraphs is enough to understand what swaps really amount to.



    During July-August, 2007, markets of the U.S. lost 7% of their value, or about $1 trillion in 6 weeks, it continues.
    Total value of the U.S. major stock markets (the Wilshire 5000) was roughly $18 trillion. The troubles had hit
    - new accounting rules were in effect.

    In 2007, subprime mortgage was 15% of all mortgages and worth $1.5 trillion, very roughly.
    About 10%--approximately $150 billion--was in arrears. Half in default to foreclosure and sale.

    That is about $75 billion. Half to two-thirds of that will be realized on liquidation, leaving a loss of $30-$40 billion
    - one-thirtieth, of what was knocked off the stock market in 6 weeks.

    That a subprime mortgage default problem, was THE problem, was an economy with truth.
    Last edited by herosrest; 03-19-2009 at 05:43 PM.

  15. #45
    Ultimate Member herosrest's Avatar
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    CLICK ARROW FOR THE TECH STUFF:
    Norwalk, CT, March 17, 2009 - NEWS RELEASE - The FASB today issued two proposed staff positions (FSPs) intended to provide additional application guidance regarding fair value measurements and impairments of securities. Proposed FSP FAS 157-e, Determining Whether a Market Is Not Active and a Transaction Is Not Distressed, provides guidelines for making fair value measurements more consistent with the principles presented in FASB Statement No. 157, Fair Value Measurements. Proposed FSP FAS 115-a, FAS 124-a, and EITF 99-20-b, Recognition and Presentation of Other-Than-Temporary Impairments, provides additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on securities.

    Statement 157 provides a framework for measuring fair value and a definition of fair value that contemplates an orderly transaction between market participants, not a forced or distressed sale. In the current economic crisis, many constituents have requested additional authoritative guidance to assist them in determining whether a market is active or inactive, and whether a transaction is distressed. Proposed FSP FAS 157-e would provide this application guidance.

    Proposed FSP FAS 115-a, FAS 124-a, and EITF 99-20-b on other-than-temporary impairments (OTTI) is intended to provide greater clarity to investors about the credit and noncredit component of an OTTI event and to more effectively communicate ...... ...... ...... ??? ??? ??? ...... ...... ...... separate display of losses related to credit deterioration and losses related to other market factors on the income statement. Market-related losses would be recorded in other comprehensive income if it is not likely that the investor will have to sell the security prior to recovery.

    If approved, both FSPs would be effective for interim and annual periods ending after March 15, 2009.


    WORTH KEEPING AN EYE ON!
    Quote Originally Posted by herosrest View Post
    Swiss Re Writes Down $1.07 Billion on Credit Swaps - The portfolios ``consist largely of mortgage-backed securities,'' Swiss Re said in the statement, with the ``majority of the exposure'' to prime and mid-prime securities. There is ``exposure to subprime and asset-backed securities in the form of collateralized debt obligations,'' the reinsurer said.
    Swiss Re Press Release - November, 2007 -"The unprecedented and severe ratings downgrades undertaken by the Rating Agencies in October and the lack of any truly liquid market for these securities has resulted in a significant and material reduction of the value of the underlying assets."


    Regardless of INTENTION - FAR, far, beyond purpose -
    the 'Mark to Market' shown above is the real truth of Fair Value accounting.
    These re-valuatios have swept around the world - which as shown in the numbers above has been de-valued by 30%.
    This was an over sight it was unintended, the scale of it is immense.
    This has never happened before. lt is insane..


    During July-August, 2007, markets of the U.S. lost 7% of their value, or about $1 trillion in 6 weeks, it continues. Total value of the U.S. major stock markets (the Wilshire 5000) was roughly $18 trillion. The troubles had hit - new accounting rules were in effect.

    In 2007, subprime mortgage was 15% of all mortgages and worth $1.5 trillion, very roughly. About 10%--approximately $150 billion--was in arrears. Half in default to foreclosure and sale. That is about $75 billion. Half to two-thirds of that will be realized on liquidation, leaving a loss of $30-$40 billion -
    one-thirtieth, of what was knocked off the stock market in 6 weeks.

    That a subprime mortgage default problem, was THE problem, was an economy with truth.

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