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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?


To: TH who wrote (101857)3/3/2009 1:35:37 PM
From: Hawkmoon  Respond to of 110194
 
Fire away with your questions. My buddy is an absolute expert in this new mortgage monkey.

Ok.. so you take a loan out on a depreciating asset. And if people think that home prices have another 30-50% to fall (which brings them into the long term home price trend), they make out and the bank is stuck with an asset that has depreciated below the loan amount.

What's the systemic risk here?

Hawk