The Reasoned Review

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Eye of the Fiscal Hurricane

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If predictors are accurate, we’re going to be in a world of hurt in the coming years. Sub-prime loans were not the only “funny paper” passing through our banks this decade. They also issued bonds on “Option ARM” (Adjustable-rate mortgage), Alt-A (alternate “A” credit rating) as well as plain ol’ prime mortgage loans (“Prime” = Credit Score > 650). Once these begin to default we could once again see trillions of dollars erased from the economy. Only this time the US will be unable to beg China for the money.

We’re not out of the woods yet.

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Written by pavanvan

January 23, 2010 at 10:39 am

One Response

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  1. Indeed, but what most don’t yet realize is that while this second onset is just as large as the first, it now meets a much weaker economy. Many a ship has survived a first torpedo only to then founder on a riff …

    crisismaven

    January 23, 2010 at 11:31 pm


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