The end of the housing bubble (Today's debt and leverage makes the 1920s look like child's play)

(Doesn't the picture capture it - the smiling, unaware homeowner using leverage to raise the rock - which is just about to quickly roll down and crush him?)

This writer does a good job bringing the various data together, in a way which might make you feel like getting out of all stocks, real estate and investments quicker than you were thinking, and getting into cash. What makes this bubble in my book the mother of all bubbles is one thing:

Leverage. Crazy-out-of-control-never-before-seen leverage.

Among the highlights (or low-lights):

The housing bubble is in the early stages of implosion. We do not know for sure how long the adjustment will take or are we sure how deep it will be, but we do know it has to happen and that the risks to our economy and the world economy are enormous.

Sub-prime loans now make up over 50% of mortgages and with those come all sorts of exotic mortgages that borrowers do not understand and eventually won’t be able to service.

That means many millions of Americans will go broke and bankrupt over the next several years.

$11 trillion in real estate values in just a few years time could become $6 trillion in value

Today’s debt and leverage makes the 1920s look like child’s play

How can a market be solid and safe when you have to have new buyers whose average down payment is 3%? They’ll walk away from negative equity in a nanosecond. How many had to have mom and dad dig into their own home equity to buy that house? Worse yet, 45% of first-time buyers put down nothing on their new digs

Interest-only mortgages nationwide average 31%. In California, they make up 61%, and in Santa Rose and Vallejo, where they are 77% and 78% respectively. Would you have ever believed that bankers and the Fed would let this distortion go that far? Next year, 2006, about $300 billion in mortgage debt will enter its adjustable period.