There were $85 billion in mortgage securities downgraded in third quarter of 2007, $237 billion in the fourth quarter, $739 billion in the first quarter of this year, and $841 billion in the second quarter of 2008."
Meredith Whitney, (who by Fortune's own admission is a lousy analyst) graces the cover is quoted as warning a standing-room only crowd of money managers that:
That was back in May. Today we get this from Ben Bernanke:
"What's ahead is much more severe than what we've seen so far...While my loss estimates are much more severe than those of my peers, my biggest concerns is that they're way too low."
"Although we have seen improved functioning in some markets, the financial storm that reached gale force" around this time last year "has not yet subsided, and its effects on the broader economy are becoming apparent in the form of softening economic activity and rising unemployment," Bernanke said in a speech to a high-profile economics conference here..."A jump in inflation, in part the product of a global commodity boom, and the result has been one of the most challenging economic and policy environments in memory," he said.
Maybe it's because I live on Florida's Emerald Coast and work in the real estate development/construction industry, but many of the contractors, subcontractors and laborers that I have spoken to give me an indication that the problems are just starting to mount. Their teaser rates are just now beginning to end, their interest reserves are just now expiring and their home and car loans are just now coming due. Just a few years ago these guys were raking in $10,000 a week and went on a spending spree purchasing $46,000 trucks and furnishing their bachelor pads. Just based on my conversations with these guys, the Banks can expect additional losses as the real estate industry continues to implode.