Does anyone have a good estimate on the entire sub-prime

[malaise]

mortgage costs.

[Aloha Spirit]

1. No, nobody does. I'm not even being sarcastic.

Sorry!

[Snarkoleptic]

2. I don't know, but here are a couple of fast facts-

The $700 Billion bailout buys mortgage backed securities at 65 cents on the dollar.
The current market for such securities varies from 20 to 35 cents on the dollar.
My friends, we are being screwed!!

Also I worked for a big-time subprime wholesale lender and we all knew that the shit was hitting the fan in late 2005.
We had a managers meeting in mid-2006 where the EPD (early payment default) figures were 5.5% for our company and 6.8% across the industry. EPD are borrowers who miss one of their first 3 payments. In short, there was a huge profit incentive for buyers to purchase a home they never intended to pay for.
Now don't go thinking I'm blaming the whole deal on borrowers. The vase majority were true to their word.

The whole subprime chain of responsibility breaks down like this...
The Federal Reserve...for lax monitary policy (in hopes of having the housing sector spur the economy)
Wall Street...for their greed in greenlighting a mindbending expansion of exotic products (esp. in subprime and Alt-A)
Bond Rating Firms...who were asleep at the switch and consistently mis-rated CDO's and MBS's as 'investment grade'
Lenders...for responding to Wall Streets open floodgate by reducing underwriting standards to a cursory overview
Investors...for using the lenders easy money to play a risky game of specualtion in real estate
Borrowers...many buyers lied about their income, job history, and intent to occupy the property (Lenders turned a blind eye to this as well)

[Old and In the Way]

4. You got it.

Great post, should be a thread in itself.

I'd say this...this whole economy since 2000 has been predicated on easy money. The manufacturing sector has been outsourced since the 90's. Clinton/Gore knew this. I think they were going to go after green energy and a retooling of our whole infrastructure. Big Oil got this and had Bush-Cheney installed to counter this. The only viable sectors to grow was real estate and war. To do the former, they had to make it attractive to borrow cheap money. They succeeded. We're now screwed. Getting poor people a home wasn't the crime. Creating a market to trade phantom financial instruments was the real problem.

[malaise]

9. Thanks very much

Nice post.

[snot]

3. i gather from what i've read elsewhere on du

that the mortgages themselves are only the start of the problem -- that certain impt. institutions -- we don't know which -- were basically placing large, unfunded bets on them, which greatly magnify the potential losses to those institutions and their stockholders.

[Old and In the Way]

5. The paper on top of real assets is estimated at $50-70 TT dollars.

More than the GDP of the entire world. That's a problem.

[snot]

6. jeez f'ing cryste. the saddest part is,

i'm starting to think the pirates are needed to keep the rest of us focussed.

[grahamhgreen]

8. world gdp is 150 trillion - but the filthy rich will suffer the most (don't worry - they still have

more than we'll ever see) if we don't bail them out

[Old and In the Way]

11. Don't think so

GDP (purchasing power parity):
GWP (gross world product): $65.61 trillion (2007 est.)
GDP (official exchange rate):
GWP (gross world product): $54.62 trillion (2007 est.)

https://www.cia.gov/library/publications/the-world-factbook/print/xx.html

[grahamhgreen]

7. 561 trillion to 1 quadrillion dollars

in derivatives on the mortgages.

I'm not joking.

700 billion will not make a dent in it.

[Old and In the Way]

10. That's 10x the estimates I've heard.

I do know the 2007 GDP is:

GDP (purchasing power parity):
GWP (gross world product): $65.61 trillion (2007 est.)
GDP (official exchange rate):
GWP (gross world product): $54.62 trillion (2007 est.)

according to the CIA factbook.

[grahamhgreen]

12. Sorry - 681 trillion

http://www.google.com/search?q=%24681+trillion&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a

[Old and In the Way]

13. wow....I can't even get my head around that number.

that's a lot of virtual capital.