Michael Mandel serves up a dose of common sense:
adjustable-rate mortgages, which are the heart of the problem, make up
just 7% to 8% of the total home mortgage market. Still, in absolute
terms the size of the defaults could be enormous. Some estimates
suggest that banks and other lenders could take a hit of $300 billion
But remember, the tech bust devoured about $9 trillion
in corporate equity; next to that, the subprime problem looks like an
insect bite–unless it spreads to the rest of the mortgage market. But
at least so far that doesn’t appear to be happening: Mortgage rates for
good borrowers have actually been going down. In early February, for
example, the average rate for 15-year fixed rate mortgages was 6.06%,
according to Freddie Mac. As of Mar. 8, that was down to 5.86%.
For an alternative perspective, here is Nouriel Roubini’s Who is to Blame for the Mortgage Carnage and Coming Financial Disaster? Unregulated Free Market Fundamentalism Zealotry.
In other words, I am to blame. If not me, then Alex. Blame Alex.