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Housing Market Tracker - Subprime Review

Just see Bloomberg TV that foreclosure by 2010 will be $270 billion. Here is the thought for Thanksgiving:
US total Market value for equity is $15 trillion.
A correction of 10% lost $1.5 trillion.
US total mortgage value at $10.2 trillion.
13% of it is Subprime mortgage, i.e. $1.3 trillion.
US GDP is $13 trillion.
IS subprime issue over exaggerated ?

Ben Bernanke’s Initiation: Flashback to 1987

Thanks for the reply. As you point out, today Fed fund is CPI plus 3%. It was CPI plus 3.5% in 1987.
The big difference is the GDP. Higher growth means higher inflation. It need higher fed fund rate to slow down the growth. Today GDP at 3%, it is exactly the difference between Fed fund rate and CPI.
Back then, the difference of Fed fund and CPI was only 3.5%. Comparing it with 6% GDP, fed fund needs to be raised for another 2.5% to 3%. I would be very scared under that environment.

Ben Bernanke’s Initiation: Flashback to 1987

In 1987, GDP was rising at yearly rate of 6%. Inflation around 3.6%. Interest rate was heading 9-10% to curb the over heated economy.
Today, we have GDP less then 3%, inflation 2.5%, 5-5.5% intrest rate is about right.
The two situations are very different.