A Subprime Mess

Well it's hard to miss the news coverage about the subprime problem. I'm not sure if it's a "crisis" yet or not but there have been a couple of good articles lately. The first is an article in the New York Times that looks at Countrywide Financial Corporation and how it was a major player in the run up to where we are today.

The second is a commentary by Lawrence Summers in the Financial Times that presents some "vital questions" we should be asking regarding how we respond to this issue. The title, "This is where Fannie and Freddie step in", gives a hint at where Mr. Summers leans but the questions are educational in themselves.

I posed a question about to my money manager and got the following bit of information:

Pimco bond managers were in here today and noted
$1 trillion in mortgages will be reset in next 24 months,
or 20% of mortgage market, with increases in [the]
200 bp to 300 bp range.

All combined, these give me a healthy respect for the problem.