Tuesday, March 6, 2007

Subprime Problems In Graph Form

This chart is from the WSJ:

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Notice a few things.

1.) Defaults now are higher than they were in 2002-2003 at the beginning of this expansion.

3.) '02-'03 were the first two full years of this expansion.

That means sub-prime mortgage delinquencies are higher now -- 6 years into the expansion -- than they were at the beginning of the expansion.

A simple explanation may be delinquency rates were coming down in 20-03. This is possible. However, the fact we are six years into an expansion and delinquency rates are this high may indicate other problems -- such as the effect of lending money to everybody who has a pulse.