You know that the sub-prime lending fiasco has reached a fever pitch when New York Times' correspondent Gretchen Morgenson takes time away from her favorite windmill of executive compensation to pen a wordy piece about the sub-prime market.
Her florid, rambling prose aside, it's worth reading just for this one bon-mot:
Like worms that surface after a torrential rain, revelations that emerge when an asset bubble bursts are often unattractive, involving dubious industry practices and even fraud. In the coming weeks, some mortgage market participants predict, investors will learn not only how lax real estate lending standards became, but also how hard to value these opaque securities are and how easy their values are to prop up.
Owners of mortgage securities that have been pooled, for example, do not have to reflect the prevailing market prices of those securities each day, as stockholders do. Only when a security is downgraded by a rating agency do investors have to mark their holdings to the market value. As a result, traders say, many investors are reporting the values of their holdings at inflated prices.
Sunday, March 11, 2007
Another bellweather of stormy seas in the US housing business
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3 comments:
Morgenson is a hack.
It's true, she is. And a whiny, left-wing hack at that.
As always, she's using this issue as a riding crop for her favorite hobby horse: how much she hates Wall Street.
Still, the housing industry is one of the threads I follow, and relevant news items, even ones written by hacks have some value.
I thought it was very well reported - even if the prose was overwrought. I don't hang out on the NYT business page enough to tell who the left wing hacks are. I gave up on them after they took over the entire rest of the newspaper except for the sports section (and I'm not too sure about the sports section.)
Usually, I just look at the front page for the NYT Laugh-Line du jour.
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