Similarly, when mortgage rates dropped to historical lows and 14 million Americans accepted variable and ”teaser” rates, the home purchasors should have actually read what they were signing and realized that their rates will IN FACT increase.  Not perhaps or maybe, but definitely.

It is not the Fed’s job to bail out Americans that make poor fiscal decisions.  Just because there are so many Americans that made the same poor decisions should not affect that fact.  Lowering rates is a short term patch, not a long term solution.  America is already facing a credit crisis, not just in subprime lending, but overall.  American household debt is at an all time high.  The market is correcting this situation by removing the marginal credit from the system.  This should not be surprising or alarming.  What should be surprising and alarming is the fact that millions of Americans have borrowed up to their ears for luxury homes, vacation homes, new cars, boats and other toys that are beyond the reach of their income.  This is what needs to be changed, and the market is correcting the problem.

America also needs this market to correct itself and weed out the reckless speculators and stocks need to get back to valuations that are historically reasonable.  I am convinced for this reason that we will be facing a depression in the near future.  But more on that later.