woodrow, I agree with you that “risk” implies a possibility, and not a certainty of occuring. Risk means a chance of it happening. I think Cagan misused the word in the story. So I took it in context: “masses of foreclosures leading to recession” cannot occur if only a “risk” exists of 19% of 7.7 million homes leading to foreclosure. Even if the entire 19% leads to foreclosure, namely 1.5 million, I don’t know if that would be enough foreclosures to cause a recession. How could we have “masses of foreclosures leading to recession” if 1.5 million loans only have a slight chance of defaulting? It just doesn’t make sense to me, still. Perhaps you can explain that, and then I’m happy to change my mind.
In the meantime, maybe Cagan can clear up for us exactly what he meant? That would settle it once and for all.
