Originally Posted by dab11999

The problem is that many people bought homes at high prices and funded them with loans that will raise interest rates over time. Now that house prices are falling, people are realizing that they will not have much equity in their homes for many years due to high interest payments and rising loan to value percentages. In addition, they are going to end up paying many times what the property is worth. Many are cutting their losses by going into foreclosure. That is what has started the credit crisis. With cash flow drying up, the dollar has gone into a tailspin. If companies cannot obtain working capital, then they will begin contracting. Job losses are going to add to the capital contraction.
This process has bled over into some foreign markets, compounding the problem. You will begin to see much of our assets become foreign owned. Many people buy gold as a hedge against inflation when the dollar loses value.
This is the short version.