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?


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.