What am I talking about? The Housing crisis! Housing has been on a down turn for at least two years. Why do I say that it was a self fulfilling prophesy, because for several years prior to the actual down turn there were news reports on an almost weekly basis about the housing bubble and how it can not be sustained. The media were beating the drums of a housing downturn until it became a reality. Did the media contribute to the down turn, we can't tell for sure, but it sure didn't help the psychology of the market.
When the housing market went south, it also precipitated the current mortgage fiasco. Now most of those shouting about the overpriced housing market did not stop to think about all of those sub-prime mortgages out there. Once the price of housing started to tank, a lot of people ended up owing more than their houses were worth. That coupled with the ARMs which started to adjust upwards caused the mortgage markets to go south. A lot of theses now worthless sub-prime and ARM mortgages were bundled into packages that were bought by investment banks which in turn resulted in the failure of some big names on Wall street.
A perfect example of the perfect storm.
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Feeling much better now that we downsized.
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