Good post HLS, it’s great to have an industry insider posting here. It’s obvious from a lot of recent posts that a lot of are only just now connecting the dots.

“Subprime bonds were risky to begin with, but Wall Street got VERY creative and carved them into tranches. So there were A rated bonds that were the “best” of the worst.
The rating agencies rated these bonds incorrectly!”

More specifically, WS used the ratings to describe how the cashflows were to be allocated to the different tranches in the event of defaults at various levels and not about the composition of the individual loans in the tranches.

I have said here before, but a lot of posters here need to start looking at the macro picture instead of focusing on what is happening in SD alone because that is not seeing the forest for the trees and will lead to individuals lacking conviction and becoming knifecatchers over the next couple of years.

recommended reading:
Tanta at Calculated Risk (HLS, if you are really in the biz and don’t know who she is…well…)

Mish Shedlock

People need to start opening their eyes. It’s the magnitude of the credit debacle that makes me insist that it doesnt make sense to buy a house right now regardless of what your financial circumstances are and especially not because of one’s emtional state over this issue.

I tolerate posts from the SD Realtors of this site, because that is their job to appear unbiased about the RE market here in SD. But I won’t hesitate to tell someone my real opinion.