Thursday, August 07, 2008

Prime Borrowers Also in Trouble? Did Anyone Warn Us?

I don’t follow the economic scene very closely, so the NYT report on prospects of a second, far larger American wave of home mortgage defaults came out as complete surprise to me, and a disturbing one too. I remember watching the housing boom helping the US economy ride out the aftereffects of 9.11 and arguably put George Bush over the top in 2004. I used to wonder how long capital gains for homeowners could continue to outstrip economic performance. The bet turned out badly for the sub-prime market; now, the horror show is coming to the rest of the home loans market.

Are we in for an even bigger shock to the financial market?

4 comments:

MTC said...

The answers to your questions are:

1) Yes

2) Nouriel Roubini of NYU and others

3) Yes

Jun Okumura said...

Is that why your hands are clasped in prayer? I'm almost sorry I asked.

OperationNorthwoods said...

On the bright side, it may not be worse than the 1930's.

Jun Okumura said...

Now that's reassuring.