Eight Reasons Not to Worry about the Subprime Mortgage Crisis

1) The government will bail out the industry.

2) Subprime loans aren’t big enough to drag down the economy.

3) Experts like Greenspan are only exaggerating – only 2 years ago he said nothing was wrong. His media grand-standing is because he is jealous of the attention now paid to the new Fed chair Ben Bernanke who isn’t worried about subprime.

4) Any decline in housing prices just makes homes more affordable for the middle class. A declining real estate market represents a wealth transfer from rich people who own mortgages to the middle class who can now afford a home.

5) Any downside risk is completely mitigated by the real value of housing. This can’t be a repeat of the Dot Com Bust because real assets back up the loans.

6) Predatory lenders are the ones suffering. The moral good of punishing those who take advantage of the poor and financially illiterate outweighs financial loss.

7) Companies like New Century Financial have committed crimes and won’t survive under any circumstances – and that’s a good thing.

8) Falling housing prices will encourage the Fed to lower interest rates and drive broader economic growth.