ConText

Subprime: Sounds like a complex numberIt's complex all right - apparently, only a handful of elite traders (and people with degrees in higher mathematics) fully understand how subprime mortgages work.

OK, Einstein, go ahead

Basically, they are loans to people with bad credit ratings, with the debt divided up into tiny chunks and sold off to variousinvestors.

Loaning money to people who can't pay back?

Genius! Over here, they're packaged up in products called SIV-lites.

My wife has one of those

It's not that kind of vehicle. Structured Investment Vehicles are high-risk products linked to subprime mortgages. The downturn in the US subprime market, however, has wiped the value off many of these products.

Who loses?

The reverberations have been felt around the world, shaking up stock markets, chopping down hedge funds and forcing central banks to give some institutions a dig-out. There have been high-profile resignations, and some banks have shut down entire divisions. One German bank was left exposed for a takeover.

What's next?

Looks like the market will survive this near-crash, although banks may become more wary of handling such high-risk products.

Try at work

Subprime? Sure, I can explain it. Have you got a month?

Try at the pub

Can you get this round? That pesky subprime has left me skint.

Send your ConText to kcourtney@irish-times.ie