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  • sts7i sts7i May 21, 2008 3:30 PM Flag

    'Trillion Dollar Meltdown' paints scary economic picture

    'Trillion Dollar Meltdown' paints scary economic picture


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    The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash by Charles Morris; Public Affairs, 194 pages, $22.95.




    Yahoo! Buzz Digg Newsvine Reddit FacebookWhat's this?By Kerry Hannon, Special for USA TODAY
    Charles Morris, author of The Trillion Dollar Meltdown, isn't one for sugarcoating. His analysis is dour and grim, but certainly not dull. And when read against a backdrop of an ever-weaker economy, increasingly anxious economists and a stream of gloomy predictions, it can be downright scary.
    Morris, a lawyer and former banker who has written 10 books, argues that the subprime mortgage crisis is only a taste of the mayhem that will play out across an array of financial assets.

    He lays out the likely course of write-downs and defaults on a whole gamut of assets — residential mortgages, commercial mortgages, high-yield bonds, leveraged loans, credit cards and the complex bond structures that sit atop them. It comes to about $1 trillion, according to Morris. "The sad truth, however, is that subprime (losses he estimates as high as $500 billion) is just the first big boulder in an avalanche of asset write-downs that will rattle on through much of 2008," he predicts.

    He doubts it will be an orderly deleveraging. "There will inevitably be margin calls, panicked selling, clamors from shareholders, and the flight from all risky assets that could double or triple the damage."

    The subject is complex. But for the most part, Morris serves up a sharp, thought-provoking historical wrap-up of the U.S. economy and its markets, along with clear scrutiny of today's economic woes.

 
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