The hard and simple maths of crisis
By Julian Delasantellis
Apr 30, 2009
Asia Times
“Mortgage defaults are not randomly distributed events, but highly related. One borrower defaults, is foreclosed upon, then, when the house undergoes a low-priced foreclosure sale, the rest of the comparable houses in the neighborhood also lose value. These homeowners can’t refinance out of their adustable rate mortgage option resets, so they default too. A surplus of homes develops, so the homebuilding and renovation industries contract, causing job losses, which cause more defaults.”
The End of Something.. 