Losses are spreading from sub prime to near prime and prime mortgages, commercial mortgages, and unsecured consumer credit (credit cards, auto loans, student loans).

Moreover, mortgages are usually securitized.

Delinquencies, defaults, and foreclosures are now spreading from sub prime to near prime and prime mortgages.

America exported its toxic mortgages around the world, in the form of asset backed securities. America exported its deregulatory free market philosophy, which even its high priest, Alan Greenspan, now admits was a mistake.

America exported its toxic mortgages around the world, in the form of asset backed securities.

Nearly all mortgages have floating rates that vary with the five year loan rate set by the People s Bank. However, late last year, Everbright Bank and some others began offering fixed rate mortgages.

Nearly all mortgages have floating rates that vary with the five year loan rate set by the People s Bank.

In the United States, brokers were selling mortgages without checking whether the borrower had the means to repay.

As prices went up and recessionary pressures increased, many homeowners failed to pay their mortgages.

America managed to pass off bad mortgages worth hundreds of billions of dollars to investors (including banks) around the world.

German banks grant mortgages only to a maximum of 60 of the value of a house, instead of the 100 mortgages that were frequently seen in the US and United Kingdom.

After the subprime crisis erupted, mortgage and consumer debt was paid down by households either with their savings or by default. The fall in US total debt, and the narrowing of the financing gap between total debt and domestic funds, led to a significant improvement in the US current account deficit in 2008 2009, disproving US Federal Reserve Board Chairman Ben Bernanke s claim that the deficit was caused by a global saving glut.

After the subprime crisis erupted, mortgage and consumer debt was paid down by households either with their savings or by default.

Instead, easy money stimulated the economy by inducing households to refinance their mortgages, and to spend some of their capital.

High home prices are already putting great stress on many families, which are struggling to make their mortgage payments.

This implies that QE would not reach, say, Spanish households, whose mortgages are indexed to short term rates, which are already close to zero.

Instead, they focused exclusively on US foreign debt, ignoring household debt (mortgage and consumer debt), public debt, business debt, and financial debt.

Nationalizing Fannie and Freddie, and using them to peg the price of mortgages, would have been the cleanest and easiest way to accomplish that.

Already, 2.2 trillion of wealth has been wiped out, and about eight million households have negative equity their homes are worth less than their mortgages.

And then those who bought these mortgages never bothered to investigate their underlying value a spectacular abdication of managerial responsibility.

But the second line of defense is macroprudential manipulation of capital requirements, to be applied across the board or to selected market segments, such as mortgages.

When home prices stop rising, recent homebuyers may lose the enthusiasm to continue paying their mortgages and investors lose faith in mortgage backed securities.

Credit tightened sharply.

In the old days, when borrowers found it impossible to make their payments, mortgages would be restructured foreclosures were bad for both the borrower and the lender.

Consumer credit began in China only in the late 1990 s, with regulations allowing banks to offer mortgage loans, which now amount to about 10 of total loans.

To be sure, financial innovation, like lending to buyers who would not normally have qualified for mortgage loans (sub prime borrowers) also played a role.

Consumer spending is plummeting, as expected.

It's also good with credit.

Many who want to refinance their mortgages still cannot, because they are underwater (owing more on their mortgages than the underlying property is worth).

In an effort to increase its low popularity in Latin America, the Bush administration recently announced an additional 75 million for education, and 385 million to help finance mortgages for the poor.

The Germans want the ECB to focus only on large systemic banks, and leave smaller savings banks (like those that invested heavily in subprime mortgages) to national authorities.

They buried the bad mortgages in complicated instruments, buried them so deep that no one knew exactly how badly they were impaired, and no one could calculate how to re price them quickly.

When they get into the polling booth in November, will Americans vote on culture wars issues sex and guns or on the basis of whether they can afford to pay their mortgages?

Millions of American homes that were purchased with subprime mortgages have been foreclosed in recent years, forcing their owners, unable to service their debt, to leave.

Demand for consumer products typically follows an S curve.

Only consumption is lagging.

Nowadays prices of commodities are very high.

Most people just pay off their mortgage, make the mandatory contributions to their state or private pension (if they have one), and keep some money for short run contingencies.

This would lower the cost of labor, restoring competitiveness (as in Asia after 1997 98) while also inflating asset prices and thereby helping borrowers who are underwater on their mortgages and other debts.

But sub prime mortgages would probably not have been supplied on the same scale if central banks had not created an environment of ample liquidity and persistently low interest rates.

Panic ensued and credit stopped circulating.

The famous ninja (no income, no job and no assets) mortgage loans were as clear a sign of regulatory negligence as any.

The differences in price for many other consumer goods is even larger.

There was also a commodity bubble and a private equity and hedge funds bubble.

Their consequent reluctance to lend constrains investment.