Crunch

Excellent article from Z Net on the state of the economy. Weisbrot gets at the sub prime mortgage issue in straightforward terms. Recommended for the economic systems challenged:

Housing Crash Still Weighs on the Economy by Mark Weisbrot

House prices year-over-year are only down about five percent from their peak in July 2006. That is bad - the worst since the Great Depression -- but most likely just a first installment on what's to come, given the unprecedented price explosion of the last decade. The price declines will further constrain consumer spending, which accounts for about 70 percent of the economy. Remember that this current economic recovery, now six years old, has been driven primarily by consumers borrowing on the rising value of their homes, and spending this cash. The big increase in residential construction, as well as the real estate and related sectors, also kicked in. All of these factors - plus the credit crunch - are now working in reverse.