Credit card, electronic wallets, mortgage back security stock options.

Losses are spreading from sub prime to near prime and prime mortgages, commercial mortgages, and unsecured consumer credit (credit cards, auto loans, student loans).

They are likely to place much greater emphasis on consumer lending, especially mortgages and credit cards.

With the government assuming credit risk, mortgages become as safe as government bonds of comparable maturity.

Its banks and financial institutions were not tempted to buy the mortgage supported securities and credit default swaps that ruined several Western financial institutions.

But non prime borrowers about one third of US households do not have much access to mortgages and credit cards.

The mortgage crisis and the credit crunch have led to bailouts for the banks and the nationalization of housing finance and insurance.

The same holds for households, with millions of weaker and poorer borrowers defaulting on mortgages, credit cards, auto loans, student loans, and other forms of consumer credit.

Credit Where Credit is Due

Who wouldn t want credit markets to serve the cause of home ownership? So we start by introducing some real competition into the mortgage lending business.

In the US, reviving the credit markets requires stopping the mortgage defaults driven by negative equity.

What started with subprime mortgages spread to all collateralized debt obligations, endangered municipal and mortgage insurance and reinsurance companies and threatened to unravel the multi trillion dollar credit default swap market.

International Real Estate Federation

Rural Credit

Credit

The main problem is that the flow of foreign credit has been impaired because US mortgage backed securities and the derivatives based on them have become nearly unsellable everywhere.

Perhaps the buy on dips confidence index has slipped lately because of negative news concerning credit markets, notably the US sub prime mortgage market, which has increased anxiety about the fundamental soundness of the economy.

Banks and credit card companies have become much more cautious about extending credit.

Well, credit is cheap.

The housing recession the worst in US history and worsening every day will eventually see house prices fall by more than 20 , with millions of Americans losing their homes.

If nothing nasty happens losses on mortgages, commercial real estate, business loans, and credit cards the banks might just be able to make it through without another crisis.

The Right Weights for Mortgage Risks

Occupy the Mortgage Lenders

The supply of credit, in other words, resulted from the demand for credit.

To get more people to borrow more money, credit standards were lowered, fueling growth in so called subprime mortgages.

For every time you borrow money from a bank, whether it is a mortgage loan or a credit card charge, the money given to you is not only counterfeit, it is a illegitimate form of consideration.

Credit histories cannot be shared, because a credit bureau is just getting started.

Credit stopped flowing.

Unfreezing Credit

(a) Credit and security structure

Limited access to credit

13.4 Financial Credit

Credit card, investment account?

As a result, a housing bubble, a mortgage bubble, an equity bubble, a bond bubble, a credit bubble, a commodity bubble, a private equity bubble, and a hedge funds bubble are all now bursting simultaneously.

In America, for instance, bad debt and foreclosures are at levels not seen for three quarters of a century the decline in credit in 2009 was the largest since 1942.

So far, the sub prime crisis has had a limited direct impact on Latin America s mortgage markets.

Credit risk is best hedged through diversification across uncorrelated credits.

Delinquencies, defaults, and foreclosures are now spreading from sub prime to near prime and prime mortgages. Thus, total losses on mortgage related instruments include exotic credit derivatives such as collateralized debt obligations (CDOs) will add up to more than 400 billion.

However, beyond the mortgage market, other huge risks are lurking, especially in the US financial system credit cards, car loans, and presumably a few other things.

Germany s Secret Credit Addiction

Consider also the credit markets.

The third tool is credit policy.

Given how financially stretched US households are, a good part of this tax rebate may be used to pay down high credit card balances (or other unsecured consumer credit) or to postpone mortgage delinquency.

The Constitution, Land Law and Law on Marriage and Family provide for equal rights of men and women over land (See Article 15).

Mortgage debts, too, must be written down.