Financial Woes
So how bad will the fallout from the sub-prime market be? It's hard to say, but I came across a couple of stories today that indicate it won't be nice.
First, you have to watch Jim Cramer lose it. It's almost funny how worked up the guy gets.
On a more serious note, this news:
American Home Mortgage Investment Corp. became the second-biggest residential lender to file for bankruptcy protection this year, adding to signs that late payments have spread to homeowners with good credit records.
The company sought federal court protection from creditors in Wilmington, Delaware, today, saying it had assets of more than $100 million and debts of more than $100 million owed to more than 100,000 creditors. The filing comes after the company announced Aug. 2 it would halt operations and slash staff.
American Home specialized in mortgages for people who fall just short of top credit scores. More than half a dozen competitors have declared bankruptcy this year as defaults spilled over from ``subprime'' borrowers with the worst repayment records to those with more reliable payment histories.
All this leads me to an excellent post at the Agonist where Numerian lays out the issues and possible effects of the sub-prime collapse. Read the whole thing if you want a good understanding of the situation.
I'm no expert on the markets, but the feeling I have is that this is going to be ugly.
