Sub-Prime Housing Problems Limited to Just 7 States

This graphic, via Keven Depew of Minyanville, is simply hysterical . . .

Here are those 7 states:



Five Things: Subprime Mortgage Problems Isolated to Just Seven States   
Kevin Depew
Jun 26, 2007 12:17 pm

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What's been said:

Discussions found on the web:
  1. KP commented on Jun 26

    Now THAT is funny!

  2. Stuart commented on Jun 26

    In light of all this and now S&P issuing a warning about Alt-As, who in their right minds would be buying Treasuries or holding any asset denominated in USD. What is keeping the greenback afloat?????

  3. Bluzer commented on Jun 26

    >What is keeping the greenback afloat?????

    Lets see…
    The Bank of Japan
    The Chinese Trade Authorities
    The Russian Central Bank
    The Kingdom of Saudia Arabia
    United Arab Emirates
    Reserve Bank of India
    The Federal Reserve
    Bank of England

    not necessarily in that order…

  4. brion commented on Jun 26

    “who in their right minds would be buying Treasuries or holding any asset denominated in USD.”?

    Aren’t long term treasuries the place to be when the indexes get clipped 40%, 50%? (gulp)

  5. Leisa commented on Jun 27

    IF you really want to be a geek to can look at the shelf registrations for these CDO’s and find out how they are doing the credit enhancement/support. ONe of the ways in which the blue ribbon ratings for the higher credit rated tranches was garnered was by the quality of the credit support. Meaning….If you had 100M in collateral you only issued 800K in bonds. That is one form of credit support. Or, you could have one of the insurers come in (which they have and it is listed) to offer credit enhancement.

    Here’s an example from a 2003 Accredited Home Lenders:

    Credit Enhancement

    The credit enhancement, with respect to each class of notes, provided for the benefit of the noteholders consists solely of:
    • over-collateralization,
    • cross-collateralization to a limited extent,
    • a reserve account,
    • excess interest, and
    • the note insurance policy. The note insurance policy will guaranty to the noteholders: • payment of current interest due on each payment date.”
    Further, you can look at the periodic statements (S-9’s?, I’m too lazy to look) that show the overall performance and delinquency, and status of overcollateralization. You will see on some of these that there is an overcollateralization deficit.

    What’s the point of credit enhancement? It is a cushion for the upper tranches (and the lower to some extent) when the dreck comes to pass. The problem? The default models v default reality is a wee bit off. If one were to look at the prossectus, the issuer is required to list the past default history. The past default history is based on a very different underwriting; accordingly current defaults have outstripped that model. Therefore, credit enhancement has a mighty big shark bite taken out of it. NOt only are the lower tranches getting impaired (if not wiped out) the upper tranches are not longer supported which may result in a re-rating.

    NOw one bought into these lower tranches to get about 200 bp more interest. A perfect example of risk not being fully rewarded/priced.

  6. Stuart commented on Jun 27

    contagion. This is not going to end well.

    June 27 (Bloomberg) — MISC Bhd., the world’s biggest owner of liquefied natural gas tankers, postponed a planned dollar- denominated bond sale because of fluctuations in debt yields sparked by losses linked to U.S. subprime mortgages.

    Kuala Lumpur-based MISC, a unit of Malaysian state-owned oil company Petroliam Nasional Bhd., hired Citigroup Inc. and Deutsche Bank AG to sell $750 million of 10-year bonds, an e-mail sent to investors earlier this week showed.

    “Given the current market volatility, MISC has decided to put their transaction on hold pending more stable market conditions,” according to an e-mail sent to investors today by one of the sale’s arrangers.

    Investors have increased their aversion to riskier investments on concern that losses at two hedge funds run by Bear Stearns Cos. could become more widespread. Credit-default swaps based on $10 million of debt included in the iTraxx Asia ex-Japan Index of 50 companies jumped to $15,750 yesterday, from $10,750 a week ago, according to Morgan Stanley.

    “Increased event risk has caused some paring of risky asset positions and some bond issues have been pulled in this hostile climate,” said Tim Condon, head of research for Asia at ING Groep NV in Singapore.

    Rotterdam-based Arcelor Mittal, the world’s biggest steelmaker, and US Foodservice, a unit of Dutch supermarket company Royal Ahold NV, postponed their bond sales yesterday.

  7. ManhattanGuy commented on Jun 27

    Anyone here expect a rate cut inclination in the Fed speech tomorrow?

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