The Housing 'Time Bomb'

Widespread speculation, 'interest only' mortgages with no down payments, and a 'ridiculously low' prime lending rate -- combined with a huge federal deficit -- all point to 'economic armageddon' for the U.S.
July 29, 2005, 9am PDT | Michael Dudley
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"The facts are astonishing. The current housing bubble is 'larger than the global stock market bubble in the late 1990s (an increase over five years of 80% of GDP) or America's stock market bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history'...The banks have lowered the standards for home loans to such an extent that the traditional loan of 20% down and a fixed interest rate is virtually a thing of the past. Instead, those conservative practices have been replaced with 'creative financing' schemes that put the entire housing market at risk.

"Shaky lending, interest-only loans, no down payments, a US government that is $8 trillion in debt due to Washington’s profligate spending, and a 'ticking-time bomb' of adjustable-rate mortgages that will reset within three years -- the table is set for a disaster of Biblical proportions. If we hit a bump in the economic road ahead (rising gas prices? recession?) the 'Land of the Free' will be knee deep in bankruptcies and foreclosures. We’ll all be fighting for a soft spot under the freeway onramp."

Thanks to Michael Dudley

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Published on Wednesday, July 27, 2005 in Dissident Voice
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