RECENT NEWS
Mondo Visione  Sep 12  Comment 
The United States today filed a civil complaint in federal court in Brooklyn, New York, against Paul Mangione, former Deutsche Bank head of subprime trading. In its complaint, the United States alleges that Mangione engaged in a fraudulent scheme...
Wall Street Journal  Sep 12  Comment 
Federal prosecutors accused the former head of subprime mortgage trading at Deutsche Bank AG of misleading investors about loans backing $1.4 billion in securities issued in 2007, according to a fraud complaint filed in Brooklyn federal court.
Financial Times  Sep 11  Comment 
Civil suit filed after a decade claims misleading characterisation of $1.4bn in loans
Benzinga  Sep 8  Comment 
Why is it that credit card losses continue to rise at a time when employment data shows a healthy labor force? Analysts at Morgan Stanley attempted to answer that question in a research report on Friday, noting it's a "tale of two...
guardian.co.uk  Sep 4  Comment 
Ten years ago the culprit was sub-prime mortgages. Personal credit is out of control in Britain now. We seem to have learned absolutely nothing When Provident Financial lost £1.7bn in share value a little over a week ago, a handful of people...
Financial Times  Sep 1  Comment 
Peter Crook surrenders a year of salary and bonuses after leaving subprime lender
Financial Times  Aug 30  Comment 
UK subprime lender suffers turbulent few months after profit warning hits shares
Financial Times  Aug 28  Comment 
Switch comes after share price slide and accounting errors
Financial Times  Aug 25  Comment 
Tables turn on doorstep subprime lender as it faces money worries of its own
Financial Times  Aug 23  Comment 
Many of the subprime lender’s customers rely on repeat loans




 

What happened blaicasly was because of assuming that a trend was permanent. In the financial world, this is a form of mental disorder. Trends are why anyone could be a day-trader and make money, for a while. Their impermanence is why anyone that didn't get out of that in time lost their shirts. The subprime loans were designed to churn the loans. You had loans that were fixed for usually two years, then would become variable. The whole intent was for the borrower to refinance in two years, again generating all of the bank's new-loan fees. The trend for real estate to appreciate rapidly was counted on to continue to keep this attractive for the borrower. Borrow 100 with 5k in costs to pay off a loan of 95, wait two years, borrow 105k with 5k in costs to pay off a loan of 100, wait two years, borrow 110k with 5k in costs to pay off a loan of 105 but then the trend didn't cooperate by giving a home value of 110k, and the balloon broke. People still had the same house they did, but now a loan for more than they originally paid for it, and they can't get refinancing, and can't sell it for what they owe. Trends are temporary. People that think otherwise will eventually lose money. Now, how do you know when a trend is coming to an end? There's a story about the Crash of '29 about a broker who was getting a shoe shine, and the shoe shiner gave him a hot tip on a stock. He realized that when shoe shine boys were giving stock tips, the market was about to crash and he got out. During the day-trader era, there were stories about bus drivers and janitors making huge money in day-trading, just before that went south. How many times have YOU seen people offering to help people get loans in their answers right here on Yahoo, offers totally unconnected to the question being asked? It was a trend. Now it's not.

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