Daniel Gross annoys me, but this is a good piece.
Other types of consumer debt, which have nothing to do with housing and nothing to do with subprime, are going bad, too.
Even as the economy continues to expand, more and more borrowers are having difficulty remaining current on their debt. Which isn't surprising, given that median household income hasn't budged since 1999 (see Figure 1 on Page 4 of this Census report). What's more, in a natural reaction to reckless lending, mortgage companies and banks are now in money-hoarding mode and thus unable or unwilling to help Americans refinance existing debt.
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The controversy surrounding subprime lending has expanded as the result of an ongoing lending and credit crisis both in the subprime and bad credit mortgages industry, and in the greater financial markets which began in the United States. This phenomenon has been described as a financial contagion which has led to a restriction on the availability of credit in world financial markets. Hundreds of thousands of borrowers have been forced to default and several major American subprime lenders have filed for bankruptcy.
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