What's Going On With Subprime Loans

I came across this post at Alea blog, which has a picture worth many thousands of words:


As you can see, the other loan default rates are at or below their levels in the 2001-2002 recession.

The big question is whether the other default rates will follow subprime variable rates.

My guess is yes, for at least 2 of the remaining 3. Notwithstanding the Dow, we are headed for a slow down, and interest rates are going to have to rise. They are still at or near historically, and unsustainably, low levels.

With oil likely to break 90 by year's end, and trillions in mortgage resets due to hit in the next few years, I see it as getting very, very bad.