People become seduced by material comforts> feel economically and physically invincible and loose their sense of morality> think that their $/ creations is king> spend, lend and eat like there is no tomorrow.
BUT man is fallible and lets greed get the better of him> the share market, property/ commodity market becomes the god of prosperity> man borrows at high interest thinking that a regular and increasing returns will repay his borrowings and live the profligate carefree capitalist lifestyle, blatantly ignoring the underbelly of society, the environment, natural limits, reality et al.
Then some inevitable reminder will spoil this fun: e.g. the discovery of massive government lapse/ corruption, stock bubbles, natural calamity, human conflict etc. (See Bernard Madoff and the largest Ponzi scheme in history that the U.S. Securities and Exchange Commission (SEC) overlooked.)
And man then realizes his sinful ways.
" And they heard the voice of the LORD God walking in the garden in the cool of the day: and Adam and his wife hid themselves from the presence of the LORD God amongst the trees of the garden.  And the LORD God called unto Adam, and said unto him, Where art thou?
 And he said, I heard thy voice in the garden, and I was afraid, because I was naked; and I hid myself." [Genesis 3: 8-10]
And so remorse sets in and consumer sentiment falls> people admit to their sinful ways and then try to repent by spending only on absolute necessities (in prep for job loss etc)> property/ share prices plummet bc foreigners (retrenched) return to village, share prices recalibrate as profits plummet since discretionary consumption falls> banks quickly recall loans/ make margin calls as loans values exceed property values> job losses escalate as companies (banks notwithstanding) that cannot respond to margin calls are foreclosed> many are jobless and everyone starts shouting that it's everyone else fault and nobody seems to know what to do about the unpaid debts and the economic mess that they are in> eventually egos are re-calibrated, people eat less and work more> a post Morten of the economy is done with lessons learnt> and then once again, honest work wins the day.
Many bank loans are granted based on property valuation, but in bull mkt, property is over valued as people grab big houses thinking that it can be rented out to earn lots of $$$. But in bear mkt, that same house with no one able to afford the listed rent nor maintain drops in price, even under that of the yet unpaid loan amt.
This means that the home is subject to foreclosure: increasing the glut on the sale market and depressing property prices even further.
The debt remains the SAME, however, due to the downward spiral of sentiment/ housing prices, these debts go 'sour' as "many individuals will be unable to pay off their debts".
In this sense, "debts would increase when real estate prices decline"
In all this, God just sits back and pleased at the sight of the devout rejoicing and the profane despairing- his creation works and he is happy about it- as I now do believe that is.
In love we speak, in God we trust,
- 'The new authoritarianism': "More and more of us are willing to trade freedom for wealth or security... ... A modern form of authoritarianism, quite distinct from Soviet Communism, Maoism or Fascism, is being born. It is providing a modicum of a good life, and a quiet life, the ultimate anaesthetic for the brain." [Guardian, 1July2008]
- 'Don’t risk real freedom for short-term material gain': "Our civil liberties are in jeopardy and we are to blame. We have reduced democracy to the right to make and spend money... (in return for) a temporary blanket of security and what turned out to be an illusory prosperity" [The Times, 7Sept2009]
06Jan2011: Personal debt bomb