What am I missing?
 

Okay we had loose monetary policy so too many dollars were looking for something to do. This lead to a lot of bad loans. The bad loans are freaking everybody out so the Feds need to loosen monetary policy? I'm just trying to follow the ball here. Neat how this is blowing up in an election year.

Bad loans= Bank panic ,
panic fighting loose monetary policy

all the banks here have put up their interest rates. People who have over extended on their mortgages are feeling the pinch now.

It'll be interesting to see what happens over the next 12 months, although I think the writing is on the wall, so it wont be surprising.

I can't recall hearing so much about how we're about to have a recession. At least oil is under $91.

What I don't get is that banks are loosing money and the stock markets freaking out because people are foreclosing because they can't afford the mortgage in which the interest was jacked up on them... by the bank. I'm no ecomoics guru, but it would seem to make sense to me that the banks should lower the interest rate to a manageable level. They'll still make money, and not have foreclosures. Since no one is doing this, there must be something wrong with my simple way of thinking.

One of the guys at work was in one of those adjustable rate mortgages. And he makes a good income - in excess of 100k/year. His home sounded like a typical middle class home - he wasn't in a mansion with a middle class salary. But he was stressing out about needing to get it refinanced because if he didn't he wouldn't be able to make the payments under the new interest rate. He got it refinanced and had no issues... but it looks like a lot of people aren't as lucky.

That would be me and I *don't* make 100k/yr.

I think I can refi in 2009 after I've been at my job for 2 years. I think.

Thank God we refinanced in 2000. We had about a 200k plus loan at 30 years and dropped it down to a 15 year for nearly the same payments at around 5.5%. We have watched close friends of ours jump on the speculative buying market and buy much more home then they could afford reasonably and now they are really hurting. One close friend bought a 600k home (inflated price) with an interest only loan at the top of the wave and I doubt he will be hanging on much longer. I don't even think he could refinance it at this point because of the devaluation he would take if it were reapraised. All I could say (and I won't) is I told you that was a bad idea... I fear a real down turn is not to far off. Another 9/11 like event may actually put a nail in our coffin.

Please see the fable about the goose that laid the golden egg.