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...the street--all with shocking swiftness. After experiencing its own real estate market collapse through the 1990s, Japan is certainly no stranger to this kind of pain. Should the country brace itself for another round of carnage?
"The way real estate is now packaged and repackaged, it is not really real estate like we used to know it," cautions Kentaro Sato, a securitization analyst with a foreign investment bank. "In many places, it's just another financial product." As such, he says, real estate has become just as subject to speculative buying and selling, fear and hubris routinely seen in the stock, commodities, options and futures markets.
The Spread of Securitization
The meteoric growth of so called asset backed securities (ABS) in recent years has illustrated this trend. ABSs are debt securities based on pools of diversified assets made from a receivable--from credit card payments and auto loans to more exotic cash flows. Globally, MBSs (mortgage backed ABSs) have gotten an increasing share of bank and lender attention, particularly as US and European markets have rapidly expanded with rising asset prices.
While Merrill Lynch, Morgan Stanley, Citigroup and others have...
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