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Subprime Mess Small By Dot Com Standards

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by Yves Smith and Felix Salmon
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Apr 25 2007 12:00am EDT

Subprime Mess: Small, by Dot-Com Standards

Quote of the day comes from Mike Milken, comparing the magnitude of the subprime mess to that of the dot-com crash:

Intel stock went down $100 billion in one day. If this is a $200 billion problem, it's not all that big, especially considering how much bigger the markets are now than they were in 2000.

It's a point worth remembering. The total amount of subprime originations in 2006 was $421 billion. Even if 20% of them get into trouble, that's only $85 billion or so. Add in a few more from 2005, and some Alt-A and prime mortgages on top, and you still have a number which is akin to the amount that a single company can fall in value on the stock market in a single day.

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