SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: philv who wrote (37886)8/5/2005 1:41:06 PM
From: GST  Read Replies (1) | Respond to of 110194
 
Markets are underpricing credit risk -- I think that is at least part of the answer. High risk mortgage loans are being priced is if they were low risk. These are likely to repriced as defaults snowball -- just my take on it.



To: philv who wrote (37886)8/5/2005 2:43:44 PM
From: Umunhum  Read Replies (2) | Respond to of 110194
 
<I can't understand why interest rates would rise on defaults. Any thoughts?>

Let's say you were loaning money out for people to buy cars. A year or two down the road you find out that you are losing money because of all the foreclosures you have to make. Are you going to continue loaning money out at the same rate?

Or as Mish thinks, are you going to loan money out at a lower rate???


HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News