As you can see from the above chart, the real culprit is the US subprime lending! Subprime lending surged amid low interest rates and rising home values. The increase in the average home pricing in turn caused more to take up loans to get more homes, ... etc.
But then again, what's the cause of the recent market volatility and subprime?
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Ans: Delinquencies.
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As you can see from the above chart, delinquencies in the subprime sector is going up. It will continue to chart up over the next few months. This is going to lead to a very gory financial mess. Believe me...
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Source: JP Morgan Chase, Mortgage Bankers Association of America
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