by Bill McBride on 8/19/2015 09:58:00 AM
Wednesday, August 19, 2015
Note: CR is on vacation, and I will return on Sunday, August 23rd.
In December 2007, most analysts were still dramitically underestimating the probably losses for lenders and financial institutions.
Here is an article from the WSJ quoting a crazy blogger: How High Will Subprime Losses Go?
The global race is on to find the best phrase to describe the housing and credit mess. The U.K.’s Telegraph quotes an economist who says it “could make 1929 look like a walk in the park” if central banks don’t solve the crisis in a matter of weeks.Many people thought I was crazy. But losses for lenders and financial institutions ended up over $1 Trillion.
The report cites the recent prediction from Barclays Capital that losses from the subprime-mortgage meltdown could hit $700 billion. That would top Merrill Lynch’s recent estimate of $500 billion. The Australian newspaper notes that a $700 billion “bloodbath” — potentially leading the U.S. economy into “the blackest year since the Great Depression” — would top the GDPs of all but 15 nations.
Back in the U.S., the Calculated Risk blog sidestepped the colorful language and went straight for the big number: “The losses for the lenders and investors might well be over $1 trillion.”
And if you look at the post the WSJ referenced, the first paragraph starts: "Within the next couple of years, probably somewhere between 10 million and 20 million U.S. homeowners will owe more on their homes, than their homes are worth."
I was a grizzly bear!