Just another crisis started by the greedy, exacerbated by the stupid which will eventually be paid for by the hard working.

Problem is, there are less and less responsible hard working folks left.

A lot of these so-called “losses” are what occurs when wealth on “paper” becomes much greater than the underlying real assets.

A real loss of assets is exemplified by the property that was physically destroyed by the recent fires in California. The so-called “losses” of homes by people who mis-judged their ability to pay their mortgages are not real losses, but rather a shuffling of ownership in existing real assets. The price of all of those foreclosed houses will drop to the point where people who handled their finances more responsibly will be able to “move up” to them.

There are so many variables in making home loans that no one can predict what will happen in sll areas. It doesn’t work that way, contrary to popular belief.

First, ordinary couples buying their first home usually buy a house larger than they need. That is particularly true when both are working.
They do not consider the fact that one of them may become unemployed. Sometimes both become unemployed. What happens then?

Sub-prime loans are the first to become a problem with a downturn in income for the mortgage payer(s) who bought a particular house.

If similarly situated buyers are affected for the same, or different reasons, the problem is compounded. That happened in with sub-prime loans.

In some areas it will become a problem with “conventional” loans as well. There is somewhat of a domino affect that varys from area to area.

St. Louis is extremely vulnerable. Achcorage, Alaska is not.

(Note that i bought a house in Anchorage in 1985 for less that I could have put in the foundation. It was when the price of oil went down to $8.00 a barrel, and the Econmy collapsed. The house was repossessed by the Feds. They sold it to me for $49,000 cash. British Petroleum now rents it from me. A VP is living there.

Also, remember to check with an accountant for their advice when refinancing. Depending on individul circumstances you may owe IRS money.
Many have been caught in that trap.

Paul Krugman, whom Alan Greenspan has called a respected economist, has a column today in the Metro Section of the Post-Dispatch about the subprime mortgage problem. Makes for interesting reading. Recommend it very much. (By the way, yesterday’s Post-Dispatch had a journalistic “hit piece” book review of Mr. Krugman’s latest book by the far right wing commentarian columnist of Bloomberg News.)I say read the book and decide for yourself. And do keep in mind that the “far left” scholar Alan Greenspan respects Mr. Krugman’s work. Wake up, America!