Its official: The sub-prime mortgage meltdown has made it to prime time. Last night on Boston Legal, my favorite TV lawyer took the case of a borrower, facing foreclosure, and negotiated a new deal with the bank. This was entertainment pure and simple, but the point was made that borrowers and lenders have both been hurt by this mess, that neither side saw it coming and it's in the interest of both sides to make a deal.
I might add if they dont (make a deal) we are looking at an economic crisis the likes of which we havent seen since the 1930's Then it was the easy money provided by the banks in the roaring 20's that allowed "investors" to get in over their heads in the stock market on 10% margin. When the inevitable crash happened, it brought down the banks with it and we had the great depression. This time it was also easy money that fueled the boom "Investors" got in over their heads with 100% financing and the buble burst. Will this crash also bring down the banks and result in another depression? only time will tell. but in my mind the only solution is to make a deal....either the banks will do it on their own, or government will force it. If we let the markets correct themselves and let the chips fall where they may....its depression time.
Comments(2)