Sub-Pri-maniac Delusions

Let me type this as slowly as I can and highlight it so we can all savor this moment.

"....The Sub-Prime disaster is going to cost the world around 500 billion dollars before this is all over...."

That is half a trillion dollars in losses from allowing people who can't afford expensive homes to afford them. Plain and simple. Thats the reason the US and global economy is going to have to digest a half a trillion dollars in losses. It isn't that hard to read, but let me tell you, it is going to be hard to work through it.

Ya know I really can't help but point out a recurring theme that I have highlighted in this blog several times. One that also seems to be beginning to take hold in the mainstream US media (Ref: Sixty Minutes Piece on 11/11/2007 on Millenials). This "No failure, everybody wins culture" we are cultivating in the US really HAS to be the reason our entire banking system would feel okay with making loans on real estate to people who can't afford it. I mean, my dad was a banker. He used to agonize over risk portfolios, ensuring that his customers were "worth the risk" he entrusted to them. It seems almost anti-banker to make loans like these.

That must be why we spawned businesses like Countrywide, and American Home Mortgage. To ostensibly shed the risk averse banking culture and inherit a more aggressive, growth oriented strategy towards home finance. Makes sense to me....a new generation of no-loss automatons needs a new type of banker. One that ignores risk and is all about helping "me achieve a higher level of me-ness".

Only problem is we still have the same number of people who can't afford homes that seem to increase in value like magic. Every pyramid scheme has it's inevitable end; and the RealEstate pyramid just came to it's fruition.