These days when you tell the people around you about what is about to happen in the financial markets, most of them would brand you easily as a delusional propagandist with the Dow running beyond the 13,000 benchmark. If this were true, then there are plenty of them out there!

(05/09/moneycentral) Middle class living on the edge. A Democrat-funded think tank says most families’ economic risks are growing…. census records and other sources to paint a picture of increasing peril for those in the middle 60% of income distribution, about $18,000 to $88,000… Income for middle-class families has remained stagnant or flat since 2001. Prices for big-ticket items — housing, health care, college education and transportation — have skyrocketed, leaving families unable to save. Middle-class families are borrowing record amounts of money to pay their monthly bills…. “Families are being forced to live beyond their means, just to pay for the basics, such as housing and health care,” said Christian Weller, a senior economist for the Center for American Progress…

It ain’t over, until it is over? Here comes the next popping bubble.

(05/13) Lending’s Next Tsunami?: Alt-A loans once were limited to people with good or pretty good credit who didn’t qualify for the best mortgage rates. The original Alt-A borrowers had little money for a down payment or a minor credit issue, and so received an interest rate higher than prime but not as high as subprime. Over time, more and more borrowers took advantage of the ability to qualify for a loan while providing less documentation. The more housing prices rose, the more popular Alt-A loans became. Alt-A loans, experts say, make it easier to qualify for more debt. Many people took advantage of that looser standard to get a loan with a low “teaser” payment in the short run…

Analysts say delinquencies are rising in the Alt-A sector for the same reasons as subprime: too many loans made with little or no down payments combined with little or no proof of income. That’s a combination sure to backfire as soon as home prices dip, experts say. Bad loans are mounting on the books of Alt-A lenders. Yet their reserves for loan losses aren’t keeping pace, according to a Register analysis of filings by Impac, IndyMac and Downey, as well as interviews with analysts and federal regulators. Lenders have a real incentive to keep reserves low. If companies set aside more for loan losses, their profits drop proportionally, according to accounting rules. Their actual exposure to losses is limited, because most loans are sold on Wall Street these days. And keeping reserves low is not necessarily against accounting rules, experts say. Companies have plenty of leeway in their accounting…

On a bigger scale, what gives?

05/10/denverpost: Bank of America Corp. chief executive Ken Lewis said a so-called credit bubble is about to break after six years of historically low interest rates and relaxed lending criteria… “We are close to a time when we’ll look back and say we did some stupid things,” Lewis said, speaking at a lunch at the Swiss-American Chamber of Commerce. “We need a little more sanity in a period in which everyone feels invincible and thinks this is different.”

If being “delusional propagandists” means telling the truth, then here We at In Debt We Trust are proud of being labelled as such.