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US not only country suffering from subprime loans

Friday 7 March, 2008

I caught this article by Kim Murphy in the Chicago Tribune Subprime woes, with a British accent  which told of the woes of our British cousins suffering from the same maladies of subprime woes as we Americans are.  What seems to be different are a few things:

-“rescue” companies really don’t rescue mortgagees

-the British housing market, & hence mortgage market, accelerated at an even faster rate than that of the US, & is paying the price for it now, reflected in the sharp increase in mortgage defaults

– interest rates there of 9.5% sound kind of high to me

While much of the rest of the world might not be dragged down by the subprime crisis, part of the reason for that is much of the world, & even the developed world, didn’t benefit from home ownership either.  When I lived in Germany, far fewer people owned their own homes.  They were lifetime renters, which gave them flexibility, but also left the succeptable to the whims of their landlords.  They never had the commitment & tax advantages of mortgage interest.  In many ways, America differs from a lot of the rest of the world in making home ownership a pillar of our financial stability.  There is a lot of sense in rewarding people for bettering their home environment.  But in times like these, when too many people took advantage of the system, there are risks for which we are paying now.  Interestingly in contrast, when I spent time in Poland, I saw many houses in the midst of construction, which might or might not have ever been completed.  I don’t know if they owned the houses & land, but  many of them must have been abandoned because  they ran out of money, even though I was told many people built their own houses by themselves.

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