Subprimes Making Market Worse

It appears that China is not the only problem America is facing. In fact, the worst problems are found within the United States. It just so happens that these are the propblems of debt. Personal, and not national debt.

This article highlights this fact:

But the most scary part of the ride is what this all means beyond Wall Street. On Tuesday, Countrywide Financial chief executive officer Angelo Mozila warned that the US lending industry has entered what he calls a "liquidity crisis". This is a gentle way of stating that the engine that is supposed to provide new housing finance to US homebuyers, and to the US economy, is seizing up.

Lenders are now demanding that prospective borrowers actually prove both their ability and, even more remarkable, their desire to pay back their mortgages. Until recently, that was considered, well, just so quaint.

Consider, too, if you combine this factor, which will significantly hold down housing demand, with the fact that all the mortgages being defaulted on today will result in fire-sale bank-foreclosure auctions tomorrow. You suddenly have a lot less demand and a lot more supply - the exact reverse of the conditions that stoked the great real-estate boom of the early part of this decade.

So far the US real-estate sector has avoided the fate that many economic observers say is its rightful due - a crash following a boom. Nevertheless, forced liquidation of excessively leveraged buyers' assets has traditionally been the starter's pistol of the worst parts of financial panic. And that is what the US real-estate market faces now - let alone the separate and equally grave problems of demand.

When people, as perhaps yourself, start borrowing without having the means to pay back their debt, problems like this arise. The rise of the irresponsible debt culture in America is what appears to be weakening the economy. This should be no surprise since it is the natural flow of circumstances that led to the impoverishment of your own personal financial situation. In the same way it is leading the the impoverishment of an entire nation.

It is not enough the the American government is in debt, but now the debt of the nation is starting to bring this great country into a recession.

Therefore, help save America and get yourself out of debt. Until then, do not borrow money.