Cutting through the hysteria over the "liquidity crisis"

Dick Armey nails it perfectly.

Excerpts:


"Let's put this in perspective. For all of the media's hysteria, less than 15% of the 44 million mortgages in America are in the subprime sector. As a total of all mortgages, foreclosure rates are 0.6%, up slightly from 0.5% last year.

While these foreclosures are often individually difficult, this hardly has the potential for wholesale economic catastrophe. Losses are estimated to be $35 billion at most — equivalent to a stock market decline of 0.2%, according to Stephen Cecchetti of Brandeis University."


"The real threat to the economy is not the foreclosure rate, but that government will overreact, especially if the motives are driven by impulsive populist politics. Chances are, by the time hearings are held and legislation is passed, the market correction will be over."

But I can hear the Chicken Little plaintive squawks, in tune to the bleat from the sheep who masquerade as so-called experts:


"Yeah, but it's the DELINQUENCIES that matter".

Really?


Excerpt:


"Some of them have blown their chance by exhibiting the same kind of behavior that made them bad credit risks in the first place. But most have not. In fact, about nine out of every 10 sub-prime borrowers are still making their payments."

Here's the truth:

-- The media has milked this thing for all it's worth. As we know, they live for bad news.

-- Those of a certain political/social/economic worldview are vested in seeing the economy slide into recession, so that Republicans will not be able to run on the robust economy that we have enjoyed in recent times.

-- The wild swings on the various American stock markets are generally a result of short trading, and other manipulation by money managers, who are so cynical that nothing else matters than to make the deal happen.