In the late 1980s and early 1990s we had the junk bonds and the S & L Scandals and now we have a crisis in the sub-prime lending banking sub-sector.
During the height of the real-estate bubble too many loans were being made to folks who had marginal or less than marginal credit.
Loans were made well above the actual equity value.
Now the equity in many folk's homes has dropped by 20% or more, where does that leave the lenders? Well, it leaves the borrowers upside down in equity and for new home buyers it means more incentive to simply walk-away from their debt, vacate and/or wait for a long-eviction process.
These factors will cause the sometimes less than ethical sub-prime lenders severe financial problem.
Some economists and analysts will say, what did they expect; they deserve it? Others have said it is a sleazy industry, that sub-prime market.
No matter what you think about the situation or why it happened, there will be an economic fall-out to all this.
More foreclosures, more sub-prime lender bankruptcies, more loans being recalled and more personal bankruptcies, thus a ripple affect in our economy.
It will also cause a lengthening to the time of real estate value recoveries and that prolonged recovery will also impede positive advances in consumer confidence levels, which is an important economic indicator as well.
I certainly hope this article is of interest and that is has propelled thought.
The goal is simple; to help you in your quest to be the best in 2007.
I thank you for reading my many articles on diverse subjects, which interest you.