You will be relieved to know that this whole subprime thing is WAY overblown. I have it on good authority. I know what you are thinking. Really, good authority. Oh yeah? How about the Bank of England? Yeah, that Bank of England. See, this “mark-to-market” thing, bad idea.
While market-based estimates and the write-downs announced by firms may be unduly pessimistic, if such concerns persist there is a risk they could become self-fulfilling.
[...]
In that environment, firms may find that previous mark-to-market loss estimates have been overstated and some writebacks of reported losses may occur.
Bank of England Votes for Mark to Model [FT Alphaville]
Give me a blank spreadsheet and I can mark to model. I know risk when I see it.
As Elvis said: blah, blah, blah blah…
Look at the market – look at those financial names. Subprime is last years news and nobody cares today.
What do BoE models say about the real value of tullip bulbs or pets.com?
If they feel the ABX is oversold then…
Britain’s housing market is starting to fall. I don’t think the reasons are the same as in the U.S., but clearly there is some kind of bubble popping. I think the Brits, having gone through the Northern Rock panic, want to avoid any more bank runs, and this is one of their maneuvers to contain panic.
Having said that, I think this is a bad decision following another bad decision, which was to keep secret for 30 years BoE loans to banks.
Secrecy and denial. Not what you usually think of when you think of admirable British traits. Well, maybe denial.