Hi Mr. P.

I believe most Canadians are very similar to their American counterparts - but our banks have more rules. The sub-prime mortgage problem would not happen here - not because of Canadians self control, but because of these rules.

My brother wanted a mortgage, and was declined by the bank. Only X% of income is to be spent on housing and the mortgage he wanted would have put him over that threshold.

My husband grew up very poor, and has insisted on paying cash for things. We owned our own home at a young age, we've never had a new vehicle, and have paid cash for the ones we have.

But we are out of the ordinary. TV advertisements don't advertise the final price of a product - just how much per month. A computer company advertises its computers with a per day price tag ($.99/day). Several years ago promotions offered no payments for six months... now it is up to two years.

Some of the younger men that my husband works with have just about every penny of each paycheque going out to different loans. One day off and they are behind.

The creditors do encourage people to get in over their heads. Then the 'keeping up with the Jones' mentality kicks in'. "We work at the same place, he has a new truck, a new ski-doo, etc., I deserve that too."

I think it is all going to come tumbling down one day.

Jan.

About loans and morgages: I was surprised (if you can say so) when I heard a speech George Bush made saying that it was not the job of the federal government to help people who had made irresponsible decisions when buying homes they couldn't afford.

Things should be seen from the opposite point of view: taxpayers pay to have governments that protect them from unscrupulous companies.
Why can't governments learn from the mistakes of other countries?

We had a similar (though much morer limited) problem in France in the 1980's. Banks had allowed (or encouraged, probably) people to borrow more than they could affor, and some people lost their homes.

Since then, there is a law which stipulates that your loans cannot exceed 30 % of your net monthly income, and it's up to the bank, not the borrower, to find out what other loans the customer already has.

When I borrowed money to buy my flat, my bank looked into everything before they decided what type of loan I could have.
If I had had to sort things out for myself and rely solely on the bank 's sense of honesty I would have felt very worried.

They're also supposed to do this for small loans, for example if you buy a TV set on credit. Usually they don't bother, so people still get into debt, but still, legally the lender is responsible, and that's important.

It's hard for individuals to resist all the manipulation techniques that companies have been learning for years.
As I was watching George Bush's speech I could see all those empty homes, obviously all low-income homes, with "For Sale" signs.

I hope that something will be learnt from the subprime fiasco, I imagine safeguards can be taken by individual states.