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The first signs that the bubble was about to burst on the United States housing breathe of the measure decade or so was the sharp fall of the US stock market. It fell sharply as the subprime mortgage crisis began its inevitable spill into the broad financial markets. Two avoid funds run by a leading New York broker began to shows signs of serious trouble as a result of their heavy exposure to subprime mortgages. Eventually the company had simply no option but to prop up the funds from their own capital. The feelings in capital markets were that the possibility of write-downs of securities backed by subprime mortgages at other institutions would become a very strong reality which would in turn become a genuine threat to other parts of the economy. The cost of borrowing is beginning to rise steadily and consumers are caught in a difficult position as their one study asset in their lives;their home is making the steady move between being an asset to a liability. Analysts generally concur that for a long measure house prices have raised to a level where they far outstrip any logical relationship to what people earn or what they ordain go in rental income. Nowadays the average rental cost per square foot is half what it takes to repay a owe. In the exuberate days of the property boom consumers were encouraged to buy properties and borrow too much money. Mortgage banks were happy to lend money and asked for very little equity in the property as security. Sometimes as low as 10%. Ask yourself what kind of banker would do such as thing? One who could then sell on these mortgages in a block to hedge funds where the securities were backed by these shaky mortgages. It was a win/win situation then. The consumer enjoyed the security of "owning" their own property the mortgage banks earned a nice commission on selling the mortgage and the hedge funds were able to sit on blocks loans on secured assets. Now that the dust has begun to settle on this fiasco analysts fear that a trillion dollars in owe loans out there will not be repaid. This means foreclosures and a eat of property on the market. Mortgage banks are now battening drink the hatches demanding equity of 30-40% and considerably higher and fixed interest rates for new borrowers. This trend is expected to continue for at least the next five years. In the short term financial forecasters guess that the US economy will face a study uphill assay to achieve the 2-1/2 to 3 percent growth rate had aimed for in the back up half of 2007. The new forecast is a growth evaluate of less than two percent for that period largely as a result of a major fall in consumer spending. With an election year in the offing democratic congressmen are pushing a proposal to bail out subprime borrowers on humane grounds. Many of these home owners are now approaching retirement age. Statistics show that around a third of them have no form of pension and were dependent on the profits from the sale of their property as it would allow them to take e of themselves in their golden years. Now they are faced with the reality of having lost their equity and may be both homeless and on the poverty lie. Whether the US government can turn their back on these people remains to be seen. If Congress decides to step in and underwrite the bulk of the projected bad debt then austere times indeed are expected for the US economy. Althaf Ahmed is a forex trader for the past 2 years. He runs a educational blog at where he shares his thoughts on the financial market publishes articles by different authors around the world provides trading tools and resources and also free mentoring to aspiring traders.

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The first signs that the breathe was about to burst on the United States housing breathe of the measure decade or so was the sharp fall of the US stock market. It fell sharply as the subprime mortgage crisis began its inevitable spill into the broad financial markets. Two hedge funds run by a leading New York broker began to shows signs of serious trouble as a prove of their heavy exposure to subprime mortgages. Eventually the affiliate had simply no option but to hold up the funds from their own capital. The feelings in capital markets were that the possibility of write-downs of securities backed by subprime mortgages at other institutions would change state a very strong reality which would in turn become a genuine threat to other parts of the economy. The cost of borrowing is beginning to go steadily and consumers are caught in a difficult position as their one major asset in their lives;their home is making the steady slip between being an asset to a liability. Analysts generally concur that for a long time house prices have raised to a level where they far outstrip any logical relationship to what people acquire or what they will return in rental income. Nowadays the average rental cost per square foot is half what it takes to repay a owe. In the exuberate days of the property boom consumers were encouraged to buy properties and borrow too much money. Mortgage banks were happy to lend money and asked for very little equity in the property as security. Sometimes as low as 10%. Ask yourself what kind of banker would do such as thing? One who could then sell on these mortgages in a block to avoid funds where the securities were backed by these shaky mortgages. It was a win/win situation then. The consumer enjoyed the security of "owning" their own property the mortgage banks earned a nice commission on selling the owe and the hedge funds were able to sit on blocks loans on secured assets. Now that the clean has begun to settle on this fiasco analysts fear that a trillion dollars in mortgage loans out there ordain not be repaid. This means foreclosures and a glut of property on the market. Mortgage banks are now battening down the hatches demanding equity of 30-40% and considerably higher and fixed arouse rates for new borrowers. This trend is expected to continue for at least the next five years. In the short term financial forecasters guess that the US economy will face a study uphill struggle to achieve the 2-1/2 to 3 percent growth evaluate had aimed for in the second half of 2007. The new anticipate is a growth evaluate of less than two percent for that period largely as a result of a major go in consumer spending. With an election year in the offing democratic congressmen are pushing a proposal to bail out subprime borrowers on humane grounds. Many of these home owners are now approaching retirement age. Statistics show that around a third of them have no form of pension and were dependent on the profits from the sale of their property as it would allow them to take e of themselves in their golden years. Now they are faced with the reality of having lost their equity and may be both homeless and on the poverty line. Whether the US government can turn their back on these people remains to be seen. If Congress decides to step in and underwrite the bulk of the projected bad debt then austere times indeed are expected for the US economy. Althaf Ahmed is a forex trader for the past 2 years. He runs a educational communicate at where he shares his thoughts on the financial market publishes articles by different authors around the world provides trading tools and resources and also free mentoring to aspiring traders.

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The first signs that the bubble was about to burst on the United States housing bubble of the last decade or so was the sharp fall of the US stock market. It fell sharply as the subprime mortgage crisis began its inevitable spill into the broad financial markets. Two hedge funds run by a leading New York broker began to shows signs of serious trouble as a result of their heavy exposure to subprime mortgages. Eventually the affiliate had simply no option but to prop up the funds from their own capital. The feelings in capital markets were that the possibility of write-downs of securities backed by subprime mortgages at other institutions would become a very strong reality which would in turn become a genuine threat to other parts of the economy. The cost of borrowing is beginning to go steadily and consumers are caught in a difficult lay as their one study asset in their lives;their home is making the steady slip between being an asset to a liability. Analysts generally concur that for a long time house prices undergo raised to a level where they far outstrip any logical relationship to what people earn or what they will go in rental income. Nowadays the average rental cost per square foot is half what it takes to repay a mortgage. In the exuberate days of the property go consumers were encouraged to buy properties and acquire too much money. Mortgage banks were happy to lend money and asked for very little equity in the property as security. Sometimes as low as 10%. Ask yourself what kind of banker would do such as thing? One who could then sell on these mortgages in a block to hedge funds where the securities were backed by these shaky mortgages. It was a win/win situation then. The consumer enjoyed the security of "owning" their own property the mortgage banks earned a nice commission on selling the mortgage and the hedge funds were able to sit on blocks loans on secured assets. Now that the dust has begun to settle on this fiasco analysts fear that a trillion dollars in mortgage loans out there will not be repaid. This means foreclosures and a glut of property on the market. Mortgage banks are now battening down the hatches demanding equity of 30-40% and considerably higher and fixed interest rates for new borrowers. This trend is expected to continue for at least the next five years. In the short term financial forecasters predict that the US economy will face a major uphill struggle to bring home the bacon the 2-1/2 to 3 percent growth rate had aimed for in the second half of 2007. The new forecast is a growth rate of less than two percent for that period largely as a result of a major fall in consumer spending. With an election year in the offing democratic congressmen are pushing a proposal to bail out subprime borrowers on humane grounds. Many of these home owners are now approaching retirement age. Statistics show that around a third of them have no form of award and were dependent on the profits from the sale of their property as it would allow them to take e of themselves in their golden years. Now they are faced with the reality of having lost their equity and may be both homeless and on the poverty line. Whether the US government can move their approve on these people remains to be seen. If Congress decides to step in and guarantee the bulge of the projected bad debt then austere times indeed are expected for the US economy. Althaf Ahmed is a forex trader for the past 2 years. He runs a educational communicate at where he shares his thoughts on the financial market publishes articles by different authors around the world provides trading tools and resources and also free mentoring to aspiring traders.

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