(Published by South China Morning Post, 21 Nov 2007) In my Concrete Analysis piece in April, I clearly underestimated the impact of the subprime mortgage meltdown and its effects on the broader credit markets. Estimates of the expected credit losses attributable to the subprime mortgage market have grown appreciably in recent months. A recent Goldman Sachs research note estimates the potential losses at US$400 billion, or three times the size of the savings and loan crisis in the United States in the 1980s. While the loss in absolute terms may not seem very large given the size of the US financial markets, the amount of leverage related to investors holding mortgage-backed securities should not be underestimated.
Archive for 2007
(Published by South China Morning Post, 22 Aug 2007) A year from now, this will be the year many will remember as when they expected another big global financial market adjustment following ‘Black Monday’ in 1987 and the Asian financial crisis in 1997. As with all such corrections, the adjustments have different roots and varying degrees of impact. The United States Federal Reserve on Friday last week surprised the market by reducing the rate at which it charges banks to borrow from it – the discount rate.
(Published by South China Morning Post, 30 May 2007) In August 2003, Hong Kong improved the personal data collection of consumer credit information by collecting positive credit data for all unsecured loans from banks and other financial institutions. In Hong Kong, positive credit data comprises all available and utilised credit lines from each consumer’s credit cards and unsecured personal loans.
(Published by South China Morning Post, 11 Apr 2007) Never have I received more e-mails or telephone calls about what has been going on in the sub-prime mortgage market in the United States than in the past month or so. Let me try to put things in simple English. First, what is sub-prime mortgage lending? Simply, it is the lending to borrowers who do not qualify for loans from traditional mortgage lenders, typically banks. In the US, the use of consumer credit bureaus is quite advanced and transparent.