[Middle Man]

Part of the bigger problem is that there appears to be no end of capital available so people can go further into debt. And we Americans save little (or none) and spend much.

[dead]

You must be reading my mail.

[VRWCmember]

Some of the points of the article are quite valid, but some parts of it are rather alarmist and probably unfounded. A balanced approach would be to observe that the rapid increase in "home equity" loans and overextension of second mortgages puts many "homeowners" in extremely precarious financial condition. To extend this out to say that we are on a "mortgage bubble" with dire national economic consequences is probably a bit of a stretch.

[LS]

It is not true that Americans don't save. The economists at the Milken Institute did a comparative study of the U.S. and other industrialized countries. When you account for private and employer-contributions in pension plans (savings); health-insurance benefits (one of the MAIN reasons people save in free societies); and the incentive of mortgage interest deduction, in fact we save at almost the same rate as anyone else.

Why do people save? 1) for retirement (covered with pensions); 2) for emergencies, especially medical (covered with health insurance) and for 3) big-ticket items, esp. homes (which have the tax deduction incentive). I have never bought the notion that Americans don't save. We just have mechanisms such as employer contributions and health insurance that mask what we would normally put aside in other situations.

[Snerfling]

Part of the bigger problem is that there appears to be no end of capital available so people can go further into debt

Anyone who lived through the 70s saw what happened to the economy when the price of gas tripled. When the price of gasoline drops below $1 this time around, a similar, but reverse effect will occur. When mortgate rates drop to around 5%, we'll see another huge wave of re-financing.

[grania]

Part of the bigger problem is that there appears to be no end of capital available so people can go further into debt.

I'd rephrase that to say: A huge part of the problem is that many people get an opportunity to lower the interest rates, and thus the payments, on their mortgages, but instead of doing that they max out the mortgage and spend the money on other things, many without even paying off their credit cards.

I have no sympathy here. People should know to put the brakes on high monthly payments that won't go away.