Calculated Risk: Affordability "Products" Lead to Higher Defaults in the O.C.

Calculated Risk: Affordability "Products" Lead to Higher Defaults in the O.C.:

"To me, the failure of Alt-A is the failure to represent reality of the view that people who have a track record of successfully managing modest amounts of debt will therefore do fine with very high amounts of debt. Obviously the whole thing was ultimately built on the assumption that house prices would rise forever and there would always be another refi."

I would add, "it is not necessarily true that governments that have a track record of successfully managing modest amounts of debt will therefore do fine with very large amounts of debt."

(BTW, I grew up in the OC. Remember, the OC is the county that went bankrupt awhile back.)
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