evenflow1969
Gold Member
The rules were rolled back for residential loans and we are now adding to it by applying this in the buisness market. I hope the great recession is not repeated. i will still be converting as much of my money to metals and taking possesion of them to hedge my bets. I sure as hell will not be looking for any McMansions soon! I hate to sound like a seventies or eighties conservative but they were right about the loans then and they are right about them now!Really difficult to construct with all the papaer work involved and the industry is not exactly transparent.People can report numbers but the reality is we likely do not know. I hope it does not spread but the last time it happened it did. I see no reason why it would be different this time. I feel like just belivig that North American Rep and say keep it at 80/20 and we do not have to worry.I've thought about that, but I'm not sure. Because many of these loans probably shouldn't be made in the first place, their existence is only increasing risk. Just like sub-prime mortgages. Holy crap, the failure rate for small businesses is so high, I don't know how many of those loans would help. If the low-end lenders collapse, then, maybe the ripple effect wouldn't be too bad. Investors would be hurt, though.Wrong those of us that have dealt with under wrting in the past understand the swings they go through. They go from we will buy any thing to we wil buy next to nothing. Take away small buisnesses ability to get investment cash or operating cash and it will have secondary effects.Outstanding mortgages are currently about $14.7 trillion.
If people lose confidence in that market, start suffering defaults, that's a big deal.
If the small business loan market is $500 billion (I have no idea the actual size) and starts having problems
that could be an annoying hit to profits, without having any secondary effects.
I didn't find enough specifics below, maybe you can?
https://www.federalreserve.gov/releases/z1/20180308/z1.pdf
I haven't really thought through this end of it. This might end up being an educational thread...
.
If the low-end lenders collapse, then, maybe the ripple effect wouldn't be too bad. Investors would be hurt, though.
For sure. Unsophisticated investors can get hurt buying low quality loans, but unless the lenders get stuck with a bunch of this crap on their books and default to their bank lenders, causing these banks to reduce other lending to the economy, I don't see it spreading very far.
You have any numbers on the amount of this "sub-prime business loan" securitization?
$10s of billions? $100s of billions? Who is securitizing this crap?
I hope it does not spread but the last time it happened it did. I see no reason why it would be different this time.
Why is it different? Magnitude.
A tiny market, basically sub-prime securitized small business loans.....tiny market.
US residential loans.....biggest market in the world.