The disease in the mortgage subprime market is spreading to the huge number of “Alt-A” loans given to people in the “grey area” between subprime and prime. That is defined as all those people with better to good credit who took out the interest-only mortgages, negative amortization loans, “no income verification” loans, and the like. This group too is now seeing a drastic increase in delinquencies, with 2.4% of them currently sixty days or more overdue.

The more this spreads, the more danger posed to the housing market as lenders panic and drastically rein in available credit and “apply the brakes” further on an already weak housing market.

At the end of the day though, we have nobody to blame but ourselves. This quote from the WSJ article was particularly telling:

Thomas Gorman, a bankruptcy attorney in Alexandria, Va., says he is seeing more financially strapped borrowers who “probably bought more house than they could afford and then took on more credit-card debt” to furnish the house and pay for the move. When the housing market cooled, they were “caught in the middle,” unable to sell their home or refinance and make their debt load more manageable.

That’s what it’s all about, isn’t it….spending more than we can afford so we can “keep up with the Joneses,” hocking ourselves to our eyeballs in credit card and mortgage debt to pretend living a life we can’t live. Contributing to that attitude, of course, are all the corrupt economists out there serving as shills who find ways of spinning consumption spending via debt as a good thing–for the government all the way down to our individual pockets. The ultimate fault, of course, lies with ourselves.

I told someone the other day that I’m renting right now after having sold my condo, with an eye to perhaps eventually buying a foreclosed property on the cheap. “Oh, so you’re waiting to take advantage of someone’s misfortune,” I was told.

No I’m not taking advantage of someone’s misfortune. I’m most likely taking advantage of his stupidity and greed.

Tags: alt-a, economics, economists, economy, housing-bubble, housing-market, mortgage, subprime