looking ahead

Implications: Short term solutions creat long-term problems. This is only one of the issues. 2008 is going to be a real test for the USA economy.

Analysis: Dealing with the subprime issue in a band-aid approach does not solve the housing crisis, as the Fed and the banks are only dealing with a part of the overall issue.
The concept of refinancing and pulling equity out of a home(ATM), is or was a Ponzi-like idea.  It is amazing that banks and other lenders did not caution or insist that borrowers never hear the words "just pull the equity out in 1-2 years, and re-fi."  This could not continue forever.
We will need a focus on out-of-work construction people, builders who will be going belly up in 2008, as well as other bank loans, mainly construction loans that will be foreclosed on.  We are fast approaching the point that auctions at 50% of pre-meltdown prices are not even doing the trick.
2008 will be the year of non-performing loans!!