Pop Goes The Bubble: The New Century Financial Corp. Debacle
The recent news that New Century Financial Corporation, the nation’s second-biggest subprime mortgage lender is about to declare bankruptcy didn’t come as a great surprise to me. I see it as a bellwether event. Lots of other sub-prime lenders are at risk. This is another piece of evidence that the grossly over-inflated real estate bubble, that up until now has been deflating gracefully, is about to absolutely implode. In coastal regions, residential real estate prices were bid up to unsustainable levels, fueled by low interest rates and legions of lenders that were willing to make loans to people that shouldn’t …