Micro Events, Macro Results

Micro Events Macro Results

A common comedy theme is the tiny event with imagined (usually stretched) consequences that turn into a major possible implication. The comedy versions are usually far fetched. In the real world this stuff can happen. A good example is the current sub-prime crisis.

Only a very small percentage of mortgages are in foreclosure. Of those, many will liquidate without a large loss. The real crisis is fear. The sudden lack of confidence in mortgage backed securities has caused a liquidity crunch. This is not just in the sub prime market. When mortgage brokers can’t sell their accumulated mortgages, they can’t get the money to make more mortgages. No mortgages in most of the civilized world means no sales. No sales means no building. No building means no jobs and no materials purchases. The secondary purchases people make when they buy a house are also drying up.

Another by-blow of the sub-prime crisis is that noone really knows who owns all the bad mortgages. Investors afraid of getting stuck don’t invest. The whole world economy suffers. Is this a market landmark? How much further will the economies tank. The stock exchanges have benefited from the Federal Reserve rate cut. How long will this exuberance last? Answer these questions. Get rich.

David Segrest is a REALTOR in Charlotte NC. His website is http:www.segrestrealty.com .