On a day when the Canadian Imperial Bank of Commerce announced it dumped $1.1 billion in shareholders’ money on crap securities based on worthless mortgages, I scooped the above chart from Mish’s Global Economic Trend Analysis. Yeah, I know it’s just a mess of numbers, but they have a stunning story to tell.
This is a chart depicting the financial performance of a pool of mortgages worth almost half a billion dollars, which is in serious trouble. The securitized mortgage-backed security, if you can believe it, is full of loans all rated AAA just months ago. It’s one year old, and in the course of that year, it’s lost $16 million. But that’s just a small early indication of future misery.
Of greater importance – 22% of the mortgages are in foreclosure; 31% are delinquent by 60 days or more; and a further 27% are delinquent by 90 days or more. As Mish points out, this is why Standard & Poors Rating Services just pulled the plug on 1,326 Alt-A residential mortgage-backed securities, slashing their ratings. This affects a stunning $34 billion in residential home loans.
It’s this kind of garbage that ‘smart’ bankers around the world, including on Bay Street, bought into. So, shame on them. Shame on the lenders and brokers who extended credit to people unfit to have it. Shame on the public greed that moved buyers to snap up assets they could not afford. Shame on those who sold them. Shame on the rating agencies who blessed this junk with triple-A ratings that led unwary investors on into the cesspool.
This, by the way, is why the world as we know it is unravelling. The one little half-billion-dollar fund gives a small example of the debt and credit crisis into whose jaws we have but started to descend.