[adios]

Subprime mortgages are a very small portion of the total amount of money lent in reality. The problem basically is the transparency of CDO deals in that the quality of the bonds is suspect and unknown. Therefore people don't want to touch them and also short term liquidity is a problem to lenders that hold the mortgage related bonds in their portfolio. It's more of a crisis in the MBS market than anything else. Remember lenders borrow short and lend long. In order to borrow short, lenders have to continuously borrow money from short duration lenders. When that money dries up there are severe problems. Liquidity in lending will probably be ok for conforming loans but I expect credit standards to be much higher and bigger down payments. I think some of the prices people pay for residential housing in some areas of the country is completely absurd and will come down. In many places it won't be that big of a deal. However, IMO the overpriced real estate tends to be in place where a lot of people live and a thus a lot of mortgage money is involved. IMO a slowdown in the housing industry will have an impact on the economy. How much remains to be seen but I'm fairly certain will see a recession in the near distant future. I hope I'm wrong about that.