The middle class is under a massive squeeze: they can't afford medical care, college for kids, housing, etc. The only reason we have not been in recession since 2000 is due to availability of cheap debt to absorb the rising costs — while at the same time, having a reduction in wages and offshoring of their jobs.

My crystal ball tells me that we will not have a sustained economic recovery without a middle-class, and the best way to bring the middle-class back is to drastically reduce taxes on them, and increase the taxes on the rich to rates that are at least equal, if not above, the middle-class tax rates.

This means: remove the income cap on Social Security and Medicare taxes, and eliminate the 15% dividend tax. The rich get the majority of their income through dividends, yet they are taxed at the 15% poverty level.

This isn't to say that some firms weren't making more on subprime at the company level selling direct to the street, but I assure you, those profits hardly ever made it down to the LOs. No LO, unless they were working for one of the boilerrooms, would ever have an incentive to put a borrower in a subprime loan over a conventional or FHA. The only reasons to are the borrower doesn't qualify or that particular brokerage couldn't originate FHA loans.

Many of these companies had limited product offerings, so often times their LOs would just hardsell whatever they had. It wasn't so much they were trying to make more money. If all you can offer is a 2/28 subprime loan then that is what you are going to sell, not unlike all businesses.

75% of these individuals claiming bankruptcy had health insurance and came from well-educated backgrounds where they owned their homes and had middle class jobs (Himmelstein, et al, 2009).

Some 1.5 million families lose their homes due to medical related expenses each year (NCHC, 2009).

Health expenses will cost $8,160 per person paid either directly through health expenses and health insurance premiums or in others ways such through taxes and inflated prices (Associated Press, 2009).

Not saying people aren't at fault for taking on bad mortgages, they're the same people at fault for not taking control of their health, who will pay $65 to get their hair done but are suddenly broke when it comes to paying their bills.

References:

Associated Press. (2009). Healthcare costs to top $8000 per person. Retrieved June 22, 2009 from MSNBC Web site http://www.msnbc.msn.com/id/29355231/

Himmelstein, D. U., Thorne, D., Warren E, Woolhandler S. (2009). Medical bankruptcy in the United States, 2007: results of a national study. Am J Med, XX, XXX. (not yet published)

National Coalition on Health Care (NCHC). (2009). Facts about healthcare costs. Retrieved June 22, 2009 from NCHC Web site http://www.nchc.org/documents/Cost%20Fact%20Sheet…

http://www.cnbc.com/id/15840232?video=1145392808&…