[The once and future king]

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Not where i live. Subprime hasnt' hurt my local market hardly at all. Fall and winter are always slow here. Meh, not impressed.

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Subprime isnt about local. Subprime will effect every aspect of the American economy and probably put the entire American economy into recession. Well the credit crunch will.

Also this isnt just about subprime. Look at how AAA tranches(securities on supposedly good credit) are performing on the ABX as one commentator puts it:

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To return to the point I have made again and again: the AAA tranche attaches at 30%, which means there have to be 30% of LOSSES (not defaults) before the AAA is affected. On the assumption that 100% of all mortgages defaulted, and the collateral (i.e. the houses) sold off with a 30% loss, the AAA would be unaffected.

For the AAA to be affected, not only do there have to be a massive number of defaults, but the 'loss given default' has to be massive as well. The only way for that to happen is for house prices in the US to collapse by 50% or more.

In other words, the ABX index is pricing in collapse in the US housing market on an UNIMAGINABLE scale.

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