But we have another S&L type of crisis coming over all the crazy loans made over the last 5 years.
This went up like the false stock market did and could go back equally hard.
There is IMO going to at least be one hell of a recession when the housing/loan collapses sink in.
It could or could not become a catastrophe....depending on the the morgage bankers' attitudes....they don't HAVE to raise the interest rates on their customer's ARM's, the contracts just state they COULD raise them! The smart banks will hold back raising the interest rates so high that they begin to force their customers to default. If it got to be such a drag on the economy, even congress could step in and legislate a moratorium on ARM interest increases!