It's time to pull up those socks, tighten that belt and stock up on Maggi mee. I am sure most of you have heard of the sub-prime loan problem in the US. If you think 'sub-prime crisis' refers to low-grade steak substitutes at Jack's place, here's the simple explanation. Big bank lends money to small bank or money lenders. Money lenders offer loans to ordinary people with poor credit history to buy houses. Ordinary people can't afford to pay installments. Small bank can't pay big bank back. Everyone up the line is screwed.
Here's how chialat it really is. The following figures are the actual bad debt losses for the banks most affected by sub-prime loans. The total sum exceeds USD60 BILLION.
Citigroup: $18bn
UBS: $13.5bn
Morgan Stanley $9.4bn
Merrill Lynch: $8bn
HSBC: $3.4bn
Bear Stearns: $3.2bn
Deutsche Bank: $3.2bn
Bank of America: $3bn
Barclays: $2.6bn
Royal Bank of Scotland: $2.6bn
Freddie Mac: $2bn (So cute the name!)
Credit Suisse: $1bn
Wachovia: $1.1bn (Macam Dracula's bank)
IKB: $2.6bn
Paribas: $439m
Yikes. US recession? Asian crisis? No more trips to Bangkok? The other question - these banks got so much money to lend meh?
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