Monday, October 01, 2007

The container is still leaking

It was a couple of months ago now that Hank Paulson, Secretary of the US Treasury made that famous quote telling us that the subprime problem was "largely contained", or something to that effect. I blogged it on 8/3, right here on StockGeometry, and while the I article I linked to at the time has gone dead, I've found the exact quote again on an page. Specifically, he said;

"...that the market impact of the U.S. subprime mortgage fallout is largely contained and that the global economy is as strong as it has been in decades."

I bring this up today because of new reports from Switzerland where banks are now coming clean about their exposure to the problem, and the losses they're experiencing. On a combined basis UBS and Credit Suisse are going to be writing down close to 5 Billion dollars worth of assets. For UBS this will be the first quarterly loss in 9 years.

But this doesn't affect real people, right? The problem is contained? Tell that to my mother-in-law, who has about 25 thousand euros invested in a Credit Suisse bond fund. That's about 1 years worth of retirement income for her, and she's madder than a wet hen right now because she can't get even an account manager on the phone. Those guys were probably cleaning out their desks last Friday and while sympathy may be difficult, those are real people too.

The container is still leaking.

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