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Strategies & Market Trends : The coming US dollar crisis
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To: axial who wrote (16241)1/11/2009 8:35:48 PM
From: RockyBalboa  Read Replies (1) of 71455
 
Default rates are one thing. They tell you squat about the ultimate loss severity unless you apply a rule of thumbs estimate of like, 10-20% on loans or senior bond and prime mortgage, 50% on subprime, 80% on structures and subordinated debt etc.

Loss given default figures are a completely different animal. In depression-like times like today, the loss severity for the average default may be higher than normal (because there is little money around to pick up failed assets or pay for two-legged goodwill from failed banks).
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