So far, all the drama over the subprime implosion has not led to anything remotely similar to the meltdown of Long-term Capital Management. There has been no coordinated Fed-directed government effort to staunch the losses. This time around, more than a few government officials have been sticking to what seems to be a similar script: That the mess is contained, notes the New York Times. "Contained" indeed seems to be the favored word. But the issue is exactly how much really "toxic" debt is out there and who owns it? Breakingviews.com suggests that about $500 billion in low-rated subprime debt is out there. It might be held by hedge funds, commercial banks (mainly in Europe), investment banks and possibly insurers. At some point, it will have to be marked to market or written off or somehow accounted for. I do not think we can assume the danger has completely passed. Hopefully, the ultimate wind-down will be orderly.

For more:
- here's the Breakingviews.com article