Pre 2002 Lower income people rented. When the rent could not be paid the moved on to lower rent housing. There no govt statistics on this failure. Post 2002 Change this with sub prime loans, the people who previously rented now own a house. Once these people are in the housing market they enter important govt statistics. House sales New house sales Failure over 90 days top pay mortgage Forclosures So while the asset market was in an up swing, these numbers where looked on a favourable, on a down swing the are devastating. So for the housing and the economy to return to normal business, there should be no bail out of home owners, let the market divest of the lenders who did these dodgy loans and in a fear years things will equal pre 2002. BUT if the FED keeps following SP500 sentiment, there will remove the RISK from the casino and then the situation will just get worse, for bigger explosion in the future.