A reader of this blog (Old Soldier) was kind enough to forward me a fascinating article by John Maudlin called Fingers of Instability. It'll take you a little while to read it, but I highly, highly recommend it. It's fascinating.
Extracted from the Comments section - - some other interesting tidbits about the housing bubble and the credit which made it possible:
- 32.6% of new mortgages and home-equity loans in 2005 were interest only, up from 0.6% in 2000;
- 43% of first-time home buyers in 2005 put no money down;
- 15.2% of 2005 buyers owe at least 10% more than their home is worth (negative equity);
- 10% of all home owners with mortgages have no equity in their homes (zero equity);
- $2.7 trillion dollars in loans will adjust to higher rates in 2006 and 2007.