For the last ten months or so, the financial markets have been in turmoil. The credit mess is affecting everybody in one way or another.

Starting in 2002 the real-estate market was going through the roof and the prices became unrealistic to say the least; whatever house you might have bought a few years earlier for about $300,000 was by the summer of 2007 way over $1,000,000. Most people could not afford to buy at such prices, but they were buying anyway. Financing was easy; in fact, it was so easy that anyone with a minimum of common sense should have wondered.

Banks were throwing money at people with less than decent credit and less than adequate income. It was a game and everyone got caught in it without concern for the future or the foreseeable consequences. The loans made to buyers were all adjustable and offered at an incredibly low initial price.

Everybody knew one day the payments would go up, but for the moment nobody seemed to mind. More or less, everyone turned into a little scarlet and the “I will think about this tomorrow” philosophy swiped the country. The price of real-estate was growing so fast that the prospective of getting charged more tomorrow for the money borrowed today seemed to be distant.

Tomorrow came, all of a sudden, in the fall of 2007.

Read more.

Originally posted by Petra Vlah at Divine Caroline.

Photo by I See Modern Britain