Tuesday, June 24, 2008

Number 1 Downer Street

We all know about the sub-prime mortgage crises. I've talked about it on this blog and I'm borderline retarded, so I have no doubt that you've probably read something about it from someone who's smart. But have you read anything about the possibility of a prime mortgage crises? Because I haven't. And even though nobody is talking about it, I see no way that we're not headed in that direction.

Think about it - everyone was taking advantage of the housing boom 5 years ago. People who normally couldn't afford a mortgage were getting approved with ARM's and we've already seen the fallout from that. But what about the people who were approved for prime mortgages who were buying outside their means? What about them? I'm talking about the young 30-something couples who combined make $100,000 to $200,000/year but were getting approved for $800,000 mortgage loans. With the market crash, there's no way their houses are worth what they paid for them 5 years ago, so what happens if they lose their jobs? Who is going to pay for their $3000/month mortgages? Is the government prepared for that kind of bailout? Because it seems to me that a bailout of the prime mortgages will be a lot more expensive than a bailout of the subprime. And if that happens, we're all bleeped.

Just sayin'.

[Sorry Jeremy; I'll get back to being 1 Happy Street tomorrow]