posted on Aug, 20 2007 @ 05:25 PM
Originally posted by Fifth_Column
The real estate market is crashing faster than anyone had anticipated.
With the lending policies of us banks in regards to subprime mortgages it's amazing that this crash has not happened sooner.
If you lend people up to 120% the value of a house with out checking they have the means to pay it back you can't pretend to be surprised when people
Lots of people default, Lots of houses for sale... person sees cheep house and buy with a shiny new subprime mortgages.
As a result of this the poor companies who buy the bonds issued over the subprime mortgages without considering the risk associated with the high
interest loose there money... profits go down... shareholders panic... ect... ect...
In the long run it will be interesting to see if the US keeps their dominant position once people start to realize that the problem is relatively
contained (people may start looking more towards china or the eu.. (im not holding my breath)).
(I know in Australia our LoDoc loans are beginning to raise criticism and we love our credit cards to the average debit of $7000 per person. But we
have a mining boom at the moment forcing up property prices (the average house price in australia is now $400000) and there is the slim chance that we
may learn form the mistakes of the us before it's too late...
In europe a similar problem occurring is unlikely due to the majority of people rent. And i would not have a clue on the situation in china....)
Anyway whatever happens it's going to be a interesting few years...
[edit on 20/8/07 by evilCorgi]