The current financial crisis in the US

I am not a financial analyst nor I know much about the inner working of the financial system, but I know logic. Few years back, as on site consultant working in Houston, I used to visit many clients on their homes. One thing always caught my attention “everyone seemed to have a new house.”

Houston was spreading rapidly and new neighborhoods would pop up every few months. On my house visits I would wonder how someone with low income could afford such a big house!!!!!!!!!!

The answer was not hard to find, banks and mortgage lenders were giving loans left and right, anyone with stable income could get a house loan. Many people asked me why I don’t take the opportunity and get me a new house, and I would always used say “ this will not last, it will come a time when these people will not be able to pay back their loans and it will be a big mess.”

What is happening today with the US financial systems is very simple: some people took money and now they can not pay it back.