Asia Times Online :: Asian news and current affairs

Asia Times Online :: Asian news and current affairs: "Contrast those figures with the current debt problem ascribed to the reckless pursuit of predatory lending. Incidentally, predatory lending was made illegal in most states until overridden by President George W Bush to protect Wall Street profit opportunities.

The US mortgage holdings are some $14.8 trillion, including some $3 trillion of commercial mortgages. Local government debt is about $3 trillion. But, even these gigantic figures pale in comparison beside the $20.4 trillion of consumer and corporate debt. Therefore, the total of non-federal government debt is in the region of $38 trillion!

Of course, not all of it will default. All things being equal, possibly only a small proportion will fail, at least initially. But today, all things are not equal. We know that we are heading into a recession. This means that increasing amounts of debts will default.

The main problem is that predatory lending incurs a high default rate. So if only 10% of outstanding loans default, the government will have to raise some $4 trillion, or more than five times what Congress is being asked. It will increase the US government public debt by some 80%."