Option ARM casualties has started a massive depression in US Economy
Sam Adelton
Sep. 8, 2006

Falling home prices, negative amortization, new bankruptcy law in America - all working together to start the great depression.

The consumer is scared to death right now. The refinancing boom has taken the rug out from under the feet of the middle-class Americans.

In the list of excesses that the banks and mortgage companies indulged in is something called Option ARMs that allows borrowers to pay little and the rest is added back to the principal loan amount making average middle-class poorer every day.

Option ARMs were used by American banks not as financial-planning tools for the wealthy but as affordability tools for the masses. Banks tapped an army of unregulated mortgage brokers to do what was needed to keep the money flowing, even if it meant putting dangerous loans in the hands of people who couldn''t handle or didn''t understand the risk.

People who thought they refinanced, got an easy thick cash payout, and reduced their payments are now realizing that they lost it all. Even worse they cannot get out of the mess through bankruptcy. It is a cloud of financial slavery that surrounds the middle-class, as they are strapped with credit card debt, negative amortization, heavy mortgage debt, and staggering gas prices.

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