No, they are merely a symptom. Hint: who benefits from this? And even they are only in power because of rampant ignorance and apathy among the people.

Have you noticed over the past few years that house prices were climbing rapidly at the same time that rents were stable? A pretty sure sign there's something funny going on. You could buy a cheaper house now, but only if you don't need a loan to buy it. Even the fanciest borrowers are having trouble getting loans these days.

The "credit crisis" aspect of the economic troubles is just that too many loans were not being repaid. Pretty old-fashioned problem, really. And now there's too little new lending to support the economy, as banks struggle to have enough cash on hand to avoid insolvency status.

But this credit mess was possible because the rules were loosened and enforcement of the remaining financial crimes was de-funded. The people getting paid to originate the loans were not the people who would be left holding the bag when they fail. There was no financial incentive to be cautious in lending. Furthermore, the downstream people re-selling the mortgage-backed securities could get away with overstating the value and understating the risks of those loans. As long as everybody was rolling in fake profits, they kept cultivating the problem. Eventually the scam got so big it crashed the entire credit market.

Now instead of making new loans, banks are hoarding their capital. The taxpayer handouts to the rich quasi-criminals who caused the problem are now going into buying other slightly less rotten banks to desperately paper over their books, and stuffing each-other's personal pockets before the ship sinks.

There's more to the economic problem than just an undersupply of credit, but that's for another page.

To say that it's a buyer's market out there today would be a gross understatement. Detroit being an extreme example, you could buy a house there for under twenty thousand dollars, right now. But then you would be surrounded by an almost abandoned neighborhood.

Now I haven't seen the numbers, but I'll speculate that if you take a fancy suburb in, say Phoenix, Arizona, a house that would have set you back four hundred thousand bucks several years ago, you might now snag for two hundred thousand, maybe less.

To get a feel for how things are in your community, check the local periodicals to see what offers are out there, maybe forsaken homes are on auction by banks beyond desperate to get rid of them.

yes. banks foreclose on houses where homeowners cannot afford the payments anymore (they were tricked into getting a mortgage they couldn't afford, they've lost their jobs due to the recession, etc).

the banks, however, can't sell these houses, because want-to-be-homeowners can't get mortgages, because other banks don't want to take on the risk of getting more houses and losing money.