>Doug started this by asking about the (presumably clueless,
>sheep-to-the-slaughter, victims) people who take advantage of this
>product in a tone that said to me that he thinks that this is a good
>example of David losing to Golliath. I think we can safely allow that
>"real estate speculators" need no protection from themselves.
That wasn't my tone, really. I suspect most of the borrowers know the risks - they're just ignoring them. Like the people who bought Pets.com.
This is just an extreme variation of the taste for adjustable rate mortgages. In the past, the public actually timed their choice of fixed vs. floating pretty wisely, chosing floaters at interest rate highs and fixed at lows. At around 35%, the floating share of new mortgages is at record levels, surpassing earlier peaks in 1994 and 2000. But both earlier peaks were also times when interest rates were peaking. More bubble symptoms, I'd say.
Doug