Doomsday Scenario! I think this is a very important article to read if one cares about not only the US Economy but also the world economy.My question is how did we ever let it get this wrong? if the Savings and Loan Crisis was a 1 this is a 10. My next question is: Who will benefit the most from the chaos from all this? If it is the richest Disaster Capitalists on earth then I think people should be very angry everywhere!
The problem with this article worldwide is that everyone will suffer from the consequences of this credit meltdown. What I don't understand right now is why the government isn't stepping in? All that needs to be done is to step in and give all mortgage holders a fixed government rate! This could save us from the subprime meltdown. It is a vicious cycle.
1. The subprime borrower leaves or defaults or both and likely at some point has to go bankrupt in a chapter 7 or chapter 13.
2. The lender might be forced out of business by thousands of these defaults.
3 . The banks and other institutions may go bankrupt.
4. Because the value of the property that borrowers own goes down they have no real reason to stay in the subprime because their property has lost too much value to stay.
5. If too many banks fail the government might not be able to federally guarantee savings or checking accounts.
6. There would be runs on the banks and many people would lose everything.
7. This looks as bad or worse than the Great Depression
HOWEVER, if the government simply stepped in now and guaranteed low interest fixed loans to all borrowers all these businesses and the value of properties and the stability of our government and all free world governments could be stablized.
HOwever, if this is not done soon, the collapse could be so severe that they United States and free world economies might not recover ever to what we have seen the last 100 years. I don't think enough people are looking at just how serious this scenario might become. NOthing exactly this bad has ever happened in the History of the United States. Maybe somewhere in history there is some other country that went through something like this. I don't know.
What I do know is that if all loans aren't guaranteed with low interest and fixed rate for everyone who already has a home loan that it will be bad in a way this country and possibly the world has never seen!
Also read my latest article "To Cool a Market Meltdown"
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