Subprime Mortgage Debt Constitutes Economic Threat
When asked what constitutes a threat to the US economy, some economists insist that it is subprime mortgage debt, along with other debt. Indeed, with high interest rates, credit card debt is often considered subprime debt. Add this type of debt to subprime mortgage debt, and the amount of subprime debt in in the US is truly troubling. The Guardian reports on the contribution of subprime mortgage debt to US economy troubles:
“NABE members are increasingly concerned over the short-term risks associated with subprime mortgages and other forms of indebtedness, while they continue to cast a wary eye on inflation,” said Ellen Hughes-Cromwick, president of the National Association for Business Economists.
As this debt continues to be a problem, other economic factors are added in. Consider stagflation. Stagflation is creating its own problems as consumers experiencing stagnant growth in buying power are unable to keep up with inflation. As inflation causes prices to rise, money will increasingly be spent on things like gas (oil prices are rising rapidly) and food, reducing the amount of money that can go toward paying down debt.
During a recession (stagflation is often considered a harbinger of recession), having a great deal of debt is a bad idea for individuals. And efforts by government agencies, including Fed rate cuts and mortgage loan rate freezes and other term modifications, don’t seem to be helping at all.
Tags: subprime mortgage debt, subprime mortgage, home mortgage loan, mortgage loan blog,
mortgage loan freeze, stagflation, recession
