Sub-Prime Mortgage Market Collapse, More Bankruptcies Coming
By Kurt O'Keefe, Attorney at Law on Aug 10, 2007 in Chapter 7 Bankruptcy, General Bankruptcy Information
Another day, more consequences of the massive bad lending unfold.
Inflation coming, as the Fed pumps in 24 billion in one night, 61 billion more euros last night alone, 1 trillion yen, billions more from central banks in Australia and Singapore. These actions are unprecedented since 9/11.
Will a recession, causing more bankruptcies, be avoided?
Tony Robbins fans may recall he identifies certainty as the primary human need. As I blogged before, and the New York Times details today, no one knows the extent of exposure to the bad mortgage loans.
Uncertainty is spreading through the worldwide financial markets, because no one knows which institutions, to what extent, are holding the billions of bad loans, and the bonds and other derivative investments piled on those bad loans.
Many of us consumer attorneys have been the canary in the coal mine, screaming about irresponsible lending for years.
It ain’t over. I heard of someone’s client, who got a no doc, stated income mortgage, actually, two, in June of this year. The application says she makes $8,000 per month. The documents that show her actual income, which were not required, say $400 per month is her gross income.
The predictable over-reaction is for investors to panic, pull out cash, and stop investing in anything, due to uncertainty as to what is going to fail, and what is not.
The trickle down effect is, recession likely, only to be avoided by big inflation. Either way, it is bad for workers, who will lose jobs, or effectively make less, as inflation robs the purchasing power of their wages.
Individuals cannot borrow their way out of debt.
It is more likely that you will be making less money, or not get that better job, in the next year. If you have been borrowing to stay afloat, stop, do not sign for mortgages or other credit that you cannot afford to repay, instead, might be a good time to consult a qualified attorney.
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