Sub prime market is confined due to the plunging of share market and increased in the risk factor of the securitized loans. In the other way to say is affecting housing economy due to borrower’s credit history. In the recent days, the sub prime market caused the death syndrome among the money lenders. This type of situation may economically mislead the public. This type of mislead may create very bad economics. This type of Sub prime market will lead to weak economy of United States.
During the current year, approximately Seven Billion Dollar of Foreclosures increased. This will create the bad impression on the general public mind. This type of foreclosures will damage the consumer spending of the real estate market. By this conventional approach of problems ignores and deliberately on the business and counts only the fixed capital expenses. Some of the economic analysis has attempted by implementing the expenditure on Intermediate goods which may result the gross output of statistics. By this the income is only one-third of the income earned .Some analysts have suggested that the by deposits of seven billion dollar would have been spent, but this has been overlooked. By this Lenders and the Borrowers are the sufferers. These types of problems will increases by the deposits created by the bank and normally this will be normally neglected / ignored.
The depreciation of currency and the inflation will increase the interest rates. Inflation in Dollar depression is increasing the imports prices which may result the interest rates and economy recession. Also, exchange rate will come down by the inflation of balance payments. This type of inflation causes the economic depreciation. In the principle of economy, deficit of foreign funds can be found by the inflation. Buying of Power on the reparation payment will affect on the demand of import goods. By this borrowers demand will directly get affected gut at the same time it increases the domestic market goods and will increase the need of these goods. Also, this will clarifies that production industries will compete the imported goods directly.
By the competition of import and export goods will have the relation by excess creation of imports. This can be named as transfer of problems and the same can be applied as a reason for expansion in credit.
Concerned authority should identify all these and should create a clear bond / link for monetary system and the unexpected depreciation of Dollar else in the near future there will be a major collapse will takes place in economy.