The sub-prime contagion has now reached as far from the USA, geographically, as it possibly can: Australia. In July Basis Capital, arguably the best-known home-grown hedge fund manager in the southern hemisphere, ran into serious trouble after defaulting on margin calls to several of its creditors. At the time of writing its survival was in the balance.
Sub-prime problems were never supposed to spread this far south. Australia has a sub-prime market – locally it’s called non-conforming housing loans – but it is tiny compared with the US industry.
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