Those looking for clues to the extent of the spreading fungus should understand that there really is no comprehensive data to allow anyone to know how many subprimes actually rest in individual institutional portfolios.
In my opinion, this is the biggest issue the markets face right now. We simply have no idea how many bad loans are out there. Just as importantly, we don't know where they are. As a result, the entire financial system is being held hostage by the fear that the next shoe could drop at any minute. This acting as incredibly strong resistance to any upward moves in the market.
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This from Bloomberg is a bit unsettling, to put it mildly:
http://www.bloomberg.com/apps/news?pid=20601109&sid=aEUtlgwzL_qc&refer=home
from Roubini's site.
Bonddad, the fact that no one knows how many bad housing loans are out there, or where to find them, makes me think of hamburger meat.
Rather, the hamburger meat as described in "Fast Food Nation" by muckraking author Eric Schlosser. He's the guy who came up with the unforgettable quote "There's shit in the meat!"
In the old days, hambuger meat was made from the ground-up flesh of one cow. Or maybe parts from several, cut up by butchers who were closer to craftsmen than industrial robots. And the meat was generally safe.
Now, burger meat comes from massive slaughterhouses, where too-fast production lines mean that low-skilled workers sometimes rip the intestines of the cow and spill its shit onto the burger flesh, or fail to carve out tumors and pus-filled abcesses because there's no time to spare. Then the tainted meat gets mixed into huge vats, so one contaminated cow can infect the ground round that goes into thousands of packages in all sorts of stores.
That's just what happened with "sub-prime" (read: "junk") mortgages, isn't it? Bad product infecting the good. No care taken with the raw material, just get it pumped through the system. There's shit in the CDOs! And now the financial system has come down with food poisoning.
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