With the housing bubble deflating daily, here at IDWT, we anticipate the worst. CBSmarketwatch was reporting today that existing-home sales have fallen for 6th month in a row, that median sales prices were down 2.2% in past year; along with inventories beginning to shrink. Sales are down 14.2% in the past year NAR’s analysis reveals.

Will thus millions of Americans follow the trend occuring today in the UK where, according to the Registry Trust, up to a million households will face court action over their debts this year. 

Britons are drowning in debt… A spokesman for the National Debtline charity questioned the behaviour of banks, saying, “The question is whether it is irresponsible lending or irresponsible borrowing. It is down to both. We would like to see more responsible lending.”…

This week again, it was noticed that economy had worst growth since 2002 and the Fed said that housing will *weigh* on economy longer than anticipated. As if it wasn’t enough, David Seiders, chief economist for the National Association of Home Builders in Washington, said that home construction bust may last until 2011. This is all bad news to say the least. Soon many homeowners are going to face the harsh reality: that their houses resemble ATMs that are out of money.   

Meanwhile lawmakers, lenders clash over predatory lending:

May 30, 2007 -…  ”The system is complex, and it was originally designed that way to protect consumers,” said John Robbins, chairman of the Mortgage Bankers Association, which represents many of the largest banks and lenders in the world. “But just the opposite has happened; now predatory lenders are able to hide under the paperwork.” … “These problems are systemic and fundamental, resulting from certain identifiable factors,” said Assemblyman Rory Lancman, D-Queens. “This is not just about ‘bad apples.’ “… Half of all sub-prime loans sold around the country in recent years were written by lenders who are now bankrupt, which he said is proof of institutional issues…

Yes, the issues are systemic and fundamental. The problem here is that psychology has become more important than fundamentals.

We have to drop our pink colored glasses: there is little or nothing we can do. A debt binge is either paid or defaulted. And no lawmaker has the ability to change the outcome. Two options… only.