From: "Rod Speed" 
Newsgroups: misc.invest.stocks misc.consumers.frugal-living misc.invest.real-estate
Subject: Re: Where did the 400 billion USD in subprime mortgage losses go
Date: Sun, 2 Dec 2007 15:00:16 +1100
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mich  wrote
> FrediFizzx  wrote
>> mich  wrote
>>> FrediFizzx  wrote
>>>> Rod Speed  wrote
>>>>> FrediFizzx  wrote

>>>>>> Good example.  The money is still out there.  The people that> sold at the top have the money.

>>>>> No they dont when the whole market drops significantly due to the large oversupply of houses that are the result 
>>>>> of mortgage defaults with those> who should never have been given that mortgage in the first place.

>>>> What the heck does that have to do with people that sold at the
>>>> top? This totally answers the OP's original question as to where
>>>> the money went.  It doesn't just vaporize.
>
>>> The seller of the $300 000 house has $300 000 in cash.
>
>>> The buyer had a $300 000 house that's only worth $250 000.
>
>> So what?  That is an "unrealized" loss of $50K if the buyer hangs on
>> to it.  In five years or so the house might be worth $350K for an
>> unrealized gain of $50K on the worth of the house.  If the buyer
>> defaults and the bank losses the $50K, the seller is the one who has
>> the real money gain that the bank lost.

> The question is where did the money go.

And he clearly claimed at the top that its still out there.
Not necessarily when the entire market sags.

> The buyer of the house has a house that is worth $50 000 less than what he paid.

And the seller may well have bought another more expensive house with the
proceeds of the sale, and has ALSO lost even more than that in value too.

> Accept the facts and move on.

No thanks, I'll keep rubbing your noses in the fact that his original is just plain wrong.