Subprime Debt Values in a Recession

Amusing picture, via John Hussman:


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Discussions found on the web:
  1. red95king commented on Feb 11

    Did you know Einstein wasn’t all that great in math (reletively speaking lol).

    Einstein had a lot of help from his mathematician friend Marcel Grossmann.

  2. bt commented on Feb 11

    Einstein was referring to German subprime, so it won’t matter here. That is how permabulls would rationalize it :-)

  3. Ross commented on Feb 11

    Actually the formula expressed on the chalk board is approximately what was actually done!

  4. Stormrunner commented on Feb 11

    Einstein’s miracle of compound interest working both sides of the equation, the up as well as the down.

  5. Francois commented on Feb 11

    V = 0 ?

    Lucky cookies!

    Imagine if V < 0? Ouch!

  6. DavidB commented on Feb 11

    Oh come on. It doesn’t take a genius to figure THAT out!


  7. Bob Misko commented on Feb 12

    The underlying asset will always determine the value of the financial instrument. Even if the house falls down, the land is worth something. My guess is $.25 – $.30 on the dollar as a ballpark to the loan value. Wait a couple of years (2010) and walk into your local bank. By that time they will realize the “value” of these properties and be happy to talk to you.
    Happy investing.

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