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New Writedown Risk: Alt-A

New Writedown Risk: Alt-A






The bloggers over at Calculated Risk have reported on a story making the rounds in the Internet. This story involves S&P’s downgrade of Alt-A Residential Mortgage Backed Securities (RMBSs). The crux of the matter is that S&P misjudged how much collateral in the underlying value of the homes there was to protect these securities from significant downgrades. The 2006 and […]

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Chart of the day: consumer credit growth

Chart of the day: consumer credit growth






UPDATE: The latest chart on U.S. consumer credit growth is here. I have been focusing on debt as a primary contributor to the slump the U.S. is experiencing. We’ve seen skyrocketing Debt-to-GDP and Mortgage Debt. Now, I want to look at consumer credit. The Fed releases a monthly statement showing consumer credit, both revolving and non-revolving debt. These statistics date […]

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UK housing prices down a record






MarketWatch is reporting today that Nationwide has said that UK home prices are down a record amount. House prices fell for the seventh consecutive month, dropping 2.5% from April, and were 4.4% lower than they were in May 2007, Nationwide said. The string of seven monthly price declines is also the longest since 1992, during the housing crash of the […]

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Regionals have CRE and Construction exposure






I am wary of regional banks for good reason. KeyCorp came out with a disastrous earnings report yesterday and was promptly whacked by the market. The regionals have way to much exposure to commercial real estate (CRE) and construction loans. And in the next leg down of this downturn, that is where losses may be centered. This past weekend, Barron’s […]

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Regionals are exposed to credit crisis






The US regional banks are certainly the next set of financial institutions in the US that are going to get hit by the credit crisis. While these banks did not have significant exposure to the CDOs and RMBSs and other types of derivative instruments that have caused the majority of writedowns to date, they do have large exposure to the housing and construction industry.






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Case-Shiller shows home price plunge






The S and P/Case-Shiller Home Price Index for the U.S. housing market came out yesterday and the news was not good. MarketWatch said: Home prices in 20 major U.S. metropolitan areas have dropped a record 14.4% in the past year, Standard & Poor’s said Tuesday. The 20-city Case-Shiller home price index fell 2.2% from February to March. This is the […]

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Chart of the day: OFHEO House Price Index

Chart of the day: OFHEO House Price Index






Although I prefer the S&P/Case-Shiller House Price Index to look at U.S. house prices (see residential property posts), the OFHEO index has more data, going back to 1975 (instead of 1987 as the 10-city Case-Shiller does). Ultimately, they both tell the same story: accelerating declines in house prices in the US. From a real (inflation-adjusted) perspective, housing price losses in […]

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Chart of the day: Home Prices versus Inflation

Chart of the day: Home Prices versus Inflation






When looking at the 20 biggest markets in the US, home prices have risen at a rate far above the rate of inflation since Jan. 2000. Prices would need to fall 26% nationally to move back to the trendline. However, looking at the 10 biggest markets, using data back to 1987, the inflation trendline shows that prices actually need to […]

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Latest additions to Credit Crisis Timeline






2008 05 19 Crédit Agricole boosts risk controls after writedowns hit €3.3bn2008 05 19 Subprime Losses Top $379 Billion on Balance-Sheet Marks: Table2008 05 19 Banks Keep $35 Billion Markdown Off Income Statements2008 05 19 AIG to raise roughly $20 billion in capital2008 05 20 Credit Crisis Will Extend Into 2009, $170 bn in additional writeoffs2008 05 20 Wachovia, Fifth […]

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UBS warns on non-US property losses






Surprise, surprise. Consider this a holiday surprise as many are out in the U.S. for Memorial Day and in the UK for the Bank Holiday. Multiple sources were reporting that UBS warned in its 985-page capital raising prospectus late on Friday that it anticipates potential further losses in its non-U.S. property portfolio. Well, I could have told you this was […]

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Ed’s Forum: Memorial Day Makeover






Dear Readers, In honor of Memorial Day and the Bank Holiday in the UK, I have given my blog a bit of a makeover. The look and feel is quite different. Hopefully, you find it easier on the eyes and better for navigation. The title has changed from “Ed’s Forum” to “Credit Writedowns: Ed’s Forum” to reflect the subject matter. […]

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George Soros warns UK on economy, oil and inflation






George Soros talked to the Telegraph, and in an article released today, sounded very downbeat about the prospects for the UK economy. M. Soros also said that their were many fundamental supports for the price of oil, including supply ad denand as well as inflation arguments. But ultimately speculative fervour has driven the price in a parabolic move to levels […]

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