What Caused the Housing Bust (8)

Leverage, in reverse, is devastating.


The cycle kept going – more

a) mortgage securities, more

b) leverage, more

c) loans, more

d) housing –

until one day the marginal borrower blinked.

We'll never know whom or why... but somewhere out there, the "greater fool" failed to close on that next home or condo.

Beginning in about the summer of 2005, the momentum began to slow... and then slowly... imperceptibly... it began to shift.

All the things the cycle had going for it from 1995 to 2005 began to turn the other way.

Leverage, in reverse, is devastating.



By Porter Stansberry