“The Subprime Problem is Contained”

“Contained on earth,” that is.

CBS’ 60 Minutes did a fairly good high-level overview last night of the subprime mortgage situation we find ourselves in.

Pay attention to the buyers’ segments:

Buyers: Why pay a $3200 payment on a 1200 square foot home.
Croft: But that’s what you agreed to do when you bought the house
Buyers: Fine. If the value was going up.
…
Croft: You’re just going to let it go into foreclosure
Buyers- That’s the only advice we’ve gotten so far.

As Tony said yesterday in a comment:

The comment threads about the business decision to foreclosure vs. the ethical obligation to continue to try and make payments are very interesting and entertaining. Imagine this scenario: You take the moral high ground and do everything you possible can to make the mortgage payments at all costs. First you forgo the luxury items (cable, eating out), then you cut back on things like insurance (hope you don’t get sick), then you cut back on gas and heating oil (buy a bike and space heater), then you skip meals, etc etc. All the money you send to a bank in North Carolina or California is money you don’t pump back into your local economy. Then your neighbors who own businesses can’t make their mortgage payments. So your moral decision to make the payments on your home actually bankrupted your own town. Imagine that.

Just don’t read this article (no longer available).

Happy Monday.