Mortgage Market Troubles Could Cost Financial Firms And Investors Up To $400 Bil

New York Times:

Every time economists and Wall Street executives think they have acknowledged the full extent of the losses from the meltdown in real estate mortgages, more bad news turns up.

Merrill Lynch said yesterday that it would take a charge for mortgage-related securities on its books that is $3 billion more than the $5 billion it expected just two weeks ago. And a report from the National Association of Realtors showed that sales of existing homes in September fell twice as much as economists had expected, to their lowest level in nearly 10 years

Read the whole story: New York Times

Comments

[HouseOfRoberts]

"The loss in total real estate wealth is expected to range from $2 trillion to $4 trillion, depending on how far home prices fall, according to several economists.
That would be significantly less than the losses suffered by investors in the stock market collapse earlier this decade, which erased more than $7 trillion, or about 40 percent, of market value."
The difference between the two is the stock market collapse was due to investor flight as confidence in the integrity of corporations' accounting methods plummeted. When the confidence returned, so did the investors. The housing crisis is due to lack of responsibility by the lenders who invented gimmick loans like interest-only and ARMs, giving gullible people false hope that they, too, could join Bush's phoney "ownership society". Now, so many distressed properties will be on the market at the same time, the landlord-class property owners will enjoy the buyers' market, and rent the same properties back to the same income class that formerly owned them.
"Investors also bid up Treasuries as they sought the safety of government-backed debt."
Safety? LOL!