Today, borrowing against equity in real estate occurs at rates never seen before. Mortgage equity withdrawal was unheard of generations ago – a second mortgage was the last recourse for a family in trouble.

Today it is routine.

Septuagenarians shake their heads as they see young people living lifestyles which don’t square with what they know of their incomes and expenses. Debt it seems has not taught any hard lessons lately – debt has become too friendly, too tame, and too forgiving.

In the last three years alone, nearly three trillion dollars of new mortgage credit has been extended – first mortgages, second mortgages, home equity loans, and lines of credit.

Some dismiss concerns of too much debt by pointing to the bottom line.

Debt, they say, is not a problem because household balance sheets are the best they’ve ever been. Today, household net worth does look impressive – against a meager 12 trillion dollars in debt stands a hefty 64 trillion dollars in assets.

A closer look at net worth, however, shows that while liabilities have marched steadily upward, assets can go up or down

What happens if real estate assets suffer the same fate as equities did a few years ago? Or, what if real estate values simply go flat for an extended period of time?