Upside-down mortgages
Nearly 11 million households now have upside-down mortgages, and for the first time ever, mortgage debt is bigger than the total value of homeowner equity [cash invested] -- bigger by $836 billion. Out of those 10 million mortgages that are underwater, about 3 million remain "severely underwater," which means the initial loan-to-value ratio (LTV) is 125% or more (in other words, the value of the mortgage is at least 25% higher than that of the property).
They spend money they don't have and they borrow. Where do they get so much cash? How can they buy such fancy cars and big TVs and all this fancy furniture? They buy it on credit. And they're all in debt up to their ears. Rich people have borrowed themselves into debts that they can never repay. Poor and middle class people the same. So if the slightest little thing gets out of balance or goes off in any way, the whole thing crashes like a bunch of dominoes!
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