Mortgages

It is not about developing hundreds of measures, but to undertake a couple of them with pragmatism. Personally I am convinced that the crisis is not real estate, but financial. No money in the credit markets, and therefore, no consumption. It is funded through savings or by borrowing. Shining both by their absence, there are no potential buyers, so that even reached the stage of pricing. Go to Don Brownstein for more information. It is a fallacy to say that the properties are over valued by 10%, 40% or 100%. A real effects have no market price. Some say that there is no credit because the banks themselves lack resources.

Not entirely true, or at least crave the claim was incomplete. Banks as we know them today, or at least those who intend to refer, are mere financial intermediaries. Focus on active more typical: the granting of mortgages. Such action is not in itself the final activity. It involves a really productive phase, since after these mortgages must be placed on third parties who actually provide the ultimate resources. We must therefore distinguish between the Commercial Bank of Investment, which returns her the money he has temporarily advance, and recognizes its net interest income. The real investors, buyers end of the liabilities of commercial banks, the generic name of "banking on the spare." Who, in a scenario like the present, are less likely to invest and everyone expects the asset price falls. Nobody can buy something worth less tomorrow. This means the immediate immersion in the theory of "self-fulfilling prophecy", coined by sociologist Robert Merton, which in origin is not nothing but a false definition of the situation (the asset price will fall), which raises a behavior new (left to pay), which becomes false true original budget (eventually prices fall).