How does people not being able to pay off their mortgages affect shares??

I was watching the news and apparently that is what caused the latest crash.How does people not being able to pay off their mortgages affect shares??
Because mortgage companies stock goes down due to less new loans and taking a loss on all the loans people default on. It lets people know that the entire market can be bad when people have no money to pay on their home.How does people not being able to pay off their mortgages affect shares??
Did they not see this coming? I've been hearing for years about this.All these investors hot for a quick profit by lending to people they they knew(deep down) would have a much higher foreclosure rate. No thought on anything but that short term ';bottom line'; profit return. I have no sympathy for these ';investors'; at all. Should have thought about the consequences before creating all the fancy loan terms to qualify these people about to loose their ';American dream';.


The cards were stacked against them(';goofy'; mortgage terms) from the beginning.
If I had to write a 200 word story for the local rag on the prospects for moon cake sales in Hong Kong this coming mid Autumn festival, and I was feeling lazy, I could quite easily start it ';The recent US subprime mortgage woes are contributing to a slump in this years sales etc'; and get away with it. I might even sound vaguely knowledgable about financial affairs.


This is the problem - ';subprime'; has become the new ';9-11'; in being the blame for everything from oil price drops to cotton workers in China losing their jobs.


Journalists just love to say the word. It's the first, second and third question to any bank CEO or analyst.





So short answer is, markets are so heavily interlinked, you can practically say anything causes anything, and the subprime story is a popular one.





That's not to say it's not true. There are many ways to link subprime with stock market decline (more expensive credit = less borrowing to buy shares; jittery financial markets, both institutional and retail; property %26amp; finance stocks decline) but I can't see how it would actually cause a specific crash last week since the market has known about it for some time.