OK, let the banks fail. What happens to the mortgages and the people with plenty of debt? I need an answer to this before I can agree to let the banks fail. - Rob Diana
The issue is the severity of the adjustment. You can say the Great Depression was an adjustment, but so many suffered because it was so drastic. - Eric @ CS Techcast
The mortgages will default, and the people who had them will have to find less expensive housing. Many folks who leaped into home ownership will have to go back to renting for a while. They couldn't afford the houses they were in anyway, so this is reverting to housing that they can actually afford. - Brent Newhall