Jul. 26th, 2007

peterbirks: (Default)
It was nice to catch up with the first episode of Heroes last night, which BBC2 is finally broadcasting. There's no point in me getting satellite TV -- there's far too much that I want to watch on terrestrial that I don't get round to watching. If I was that desperate, I could download it. But the first episode was fun and I'll watch the second one tonight.

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Mr Bernanke made the observation that the sub-prime fall-out would have to reach $100bn before it became "systemic". So now I eagerly collect snippets of news, adding up the figures.

When people talk about this scale, they tend to say to themselves "wow, that's a big number", and then stop thinking about it. What they don't realize is that, even if there's only a 5% chance of such a big number being exceeded, if it is broken, then the Tipping Point will be that more serious when it is breached.

This morning, Nomura revealed that it had logged about ¥72bn (let's say, $600m between friends) in losses since January in the sub-prime sector, while Australia's Absolute Capital said that it had suspended withdrawals from two funds until October. Absolute Capital Yield Strategies Fund and Absolute Capital Strategies Fund NZD are worth US$180m combined. Basis Capital, also of Australia, is thought to have a "serious" exposure to the subprime market.

It's a bit like dropping jellybeans into a large jar. You might think "oh, we'll never fill that up". And then, once day, it does.

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