Making Sense of the Mess

The growing number of defaults in the subprime-mortgage market has many investors confused.

[Timothy]

Investors see too many options. Real people see one option. When gasoline was $3 a gallon or higher these people still had to work, even if they lived in an apartment and walked away from their homes. Paychecks only go so far.

[Not So Fremont]

Not to worry, the investors will be bailed out by George "Monica had more president in her than I ever will" W. Bush. Unfortunately, that will not resolve the issue as the banks collapse and fold under the weight of REOs [foreclosed properties] than no one wants because 1] the original note was overpriced and the property has lost money as home prices slide back to reality-based rates; and 2] no one who WANTS to live in the neighborhoods where most foreclosures are occurring has sufficient credit and/or income and/or savings to support the note due to the tightened lending practices and 3] anyone who was foreclosed upon will not be buying - or renting - anything for a long time. It's a good thing we're in denial - otherwise we'd realize that the Great Depression of the 30s is going to look like a prosperous time. Well, the Russians did say we would destroy ourselves from within. Their intelligence must have known about Bush senior and junior even during the cold war.