Effect of subprime loans on the economy

Coming from a person of his qualifications I tend to somewhat agree but the magnitude of this statement is very serious. I don’t know how extensive the subprime defaults will be and how much of the loan the lender will be able to recover by selling the house. We have seen a lot of home value appreciation in large sections of the country – so the lenders themselves should survive. I wonder if he’s hinting at the consumer and the effect this will have. So, I don’t know the cumulative effect, but again coming from such an expert I’m a bit unsure.

Bloomberg.com: Worldwide: ““We have a trillion dollars of subprime mortgages and we’re going to have huge defaults,” Heebner, 66, said in a telephone interview today from his office in Boston. “If you’re looking at the housing market, it’s not the darkest before dawn, it’s the darkest before pitch black,” Heebner said. “

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