How about some good news for a change about real estate, mortgages, credit, jobs, consumer confidence, Wall Street stability, the future of civilization as we know it?

Sorry, not gonna get it here.

Evidence is evidence and though some may like to engage in wishful thinking, the evidence is not good at all.

Goldman Sachs is actually forecasting that credit losses around the world caused by the current near panic in financial markets will hit some $1.2 TRILLION!!!!!

The same report predicts that U.S. banks, brokers,hedge funds, etc., stand to lose around $460 BILLION in credit losses.

SCARED CONSUMERS

Very scared, in fact. Consumer confidence has hit a five year low; people are nervous about their jobs, their homes, their credit, their lives.

But one example of why the worry: From January 2007 to January 2008, the price of existing single-family homes dropped some 11 percent.

And then, there’s

Bear Stearns

Yeah, JPMorgan Chase upped its bid increasing the value of Bear Stearns, but the new offer still remains some 88 percent below what the stock was worth only one month ago, according to a Reuters report.

Was all of this mess really caused by subprime mortgages?

Well, yes and mostly no.

Yes, in that the subprimes certaintly pulled the trigger on this now global credit crunch.
No, in that the ammunition was stocked by various lending institutions and brokerage firms, all motivated by nothing but pure greed. They rammed these mortgages down the throats of people who wanted to own homes but really couldn’t afford them, and now they are being vomitted back up.

The subprime mortgages were bundled into investments that no one really understood or understands to this day..including officials at the Federal Reserve.

As some have pointed out, in recent years, this country has developed a sort of shadow banking system, one immune from the post-Depression era restrictions slapped on commercial banking institutions to maintain some form of economic stabilty.

It is this shadow banking system that is what is behind this terrible mess. And, the trouble is, much of it remains in the shadows which is why people are running scared.

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