Remember all those headlines about billionaire hedge fund dudes just months ago? Yeah well the clever ones have cashed out and the wannabes are left holding the can, as always. Meanwhile the Texas teacher retirement funds. . . well sod them.
Greed and fear, no truer words said.
[quote]Experts were wrong on subprime loans
August 13, 2007
THE Federal Reserve Chairman, Ben Bernanke, was wrong.
So were the US Treasury Secretary, Henry Paulson, and the chief executive officer of Merrill Lynch & Co, Stanley O’Neal.
The subprime mortgage industry’s problems were contained, they all said. It turns out that the turmoil was contagious.
The $2 trillion market for mortgages not backed by government-sponsored agencies is at a standstill. That is just the beginning. Other types of mortgages are suffering. So are firms and banks that package the debt for investors. The ripples were felt in Europe and Asia, where central banks offered cash to banks amid a credit crunch. And some corporations, from countertop makers to railways, are blaming the mortgage meltdown and housing slump for earnings that fell short of analysts’ estimates.
Even a mobile-phone company, Dallas-based MetroPCS Communications Inc, says it is feeling the pinch from customers facing foreclosure. And experts such as William Ford, former president of the Federal Reserve Bank of Atlanta, say the chance of a recession is growing.
“Housing created a lot of ancillary economic activity and jobs, and now we are in the reverse process,” says Paul Kasriel, chief economist at Northern Trust Corp in Chicago and a former Fed economist.[/quote]