Daily Kos: The Subprime Disaster in One E-Z Anecdote

by TheWurx

Fri Mar 30, 2007 at 11:49:23 AM PDT

For years, economic-oriented blogs have been telling us about the disaster that is going to befall the subprime mortgage industry the moment interest rates rise and adjustable rate morgages begin to adjust upward. As it happens, the subprime mortgage industry has imploded right on schedule... but please note that INTEREST RATES HAVE NOT RISEN BY ANY SIGNIFICANT AMOUNTS. Rates are at most a point higher than they were in the last year or two. Only the loans opened with teaser rates are getting much of a spike. The rest have been repriced without too much pain.

Then why are all the subprimes tanking? I have an anecdote that will illustrate it perfectly.