On Mar 11, 4:23*pm, nonse...[at]mynonsense.net wrote:
- quote -

The dollar losses of foreclosures are not what nearly brought down the
financial system.

Various large financial companies had highly leveraged positions,
based on the value of mortgages. The figure I have heard bandied about
is 30 to 1 average. This put fatal strain on balance sheets - a lack
of capital, or a liquidity crisis. Linked positions also changed
dramatically. In chain reactions, companies such as AIG were liable
for CDS they had written.

To aggravate matters, these positions were not disclosed. This created
a crisis in confidence, no one wanted to lend, and money stopped
flowing. That is what nearly brought down the financial system - it
stopped financing. Lies compounded upon lies. Even money market funds
became suspect, and T-Bills became the safe haven.

If you sum this over the five or so years expected for
this crisis, thats like ten percent of households.
In some minority neighborhoods its at will be almost
half of all houses.

On 2009-03-11, nonsense[at]mynonsense.net <nonsense[at]mynonsense.net> wrote:
- quote -

1) Not every household has a mortgage.
2) Many mortgages that are in trouble, are not yet in foreclosure
3) Some mortgages that are in trouble, end up with a short sale (also
a loss to the bank) but no foreclosure.
4) Many foreclosures are already completed, resulted in loss to
lenders, but are not counted as foreclosures.


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As of Jan 09, only one in every 54 households is experiencing
foreclosure. Thay is hardly 2%, how can that cause an entire system to
fail ?