Another good reason to keep a lot of cash on hand, and another reason to buy more gold and silver.
By Daniel at 27 December, 2009, 5:46 pm
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As long as no one in charge of government policy can distinguish between “redistribution of wealth” and “throwing money down the toilet” (if indeed there is any difference), there will be fantastic opportunities for a few of us to make a lot of money. I take no joy in profiting on the back of our country’s ills and woes; but I’d be a fool not to do so.
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As if the first subprime crisis wasn’t damaging enough to the economy, U.S. government policy now seems geared toward producing a second act. There is one key difference this time however – taxpayers are directly on the hook and the federal government will have to bail itself out.
The center of this new impending subprime crisis is the FHA (Federal Housing Administration). The FHA insures mortgages that have less than a 20% down payment. It is currently insuring four times as many mortgages daily as it did in 2006 at the height of housing bubble. It now has 5.4 million loans on its books and has become a dominant factor propping up the housing industry. A prominent congresswoman recently stated, “Without the FHA there would be no mortgage market”.
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It looks like the Credit Crisis is by no means over, but we have simply finished phase one and at some point will be entering phase two. If we had successfully dealt with the problems in the financial system this would not happen, if we have merely shifted them and covered them up, there will be a lot more serious problems ahead.
http://seekingalpha.com/article/179868-subprime-crisis-part-two-coming-soon
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