From the article:
“The more precariously positioned ARM borrowers are very much on the minds of economists, some of whom fear that masses of consumers will not be able to afford the new higher payments, setting off a recession. According to Christopher Cagan, an analyst with First American Real Estate Solutions, a housing consultancy in Santa Ana, Calif., about 19 percent of the 7.7 million ARM’s taken out in 2004 and 2005 are at risk of defaulting.”

I did not change my statement, because I still think it is correct. After reading North County Jim’s comments, I read that paragraph a second time, and it still sounded to me like Cagan was expecting these loans to default. How else would we get the “masses of consumers [who] will not be able to afford the new higher payments, setting off a recession risk”?

Yesterday’s rent thread was very impressive in the high standards the posters set for themselves. The impeccable logic used by all sides made the post a pleasure to read, and I learned a lot from it.