An important dimension of the problem is the continual need to roll over paper of all kind. Fear can cause the market to seize up. I think of economics as a minor branch of psychology.
On Tue, Aug 28, 2007 at 05:25:29PM -0400, Doug Henwood wrote: > > Whether it's $45b, or $60b, or $90b, it's a lot of money, but still a > pretty small fraction of overall mortgage debt. If it stays at these > levels, it's a problem but not a disaster. Obviously if the default > rate rises or the problems spread up into Alt-A and prime, then it > moves closer to disaster. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com
