On Monday, the Dow Jones Industrial Average plunge more then 500 points, the most since September 17, 2001 and worst percentage drop since July 19, 2002 after Lehman Brothers Holdings Inc. filed for bankruptcy and American International Group Inc. efforts to raise $70 billion to replenish capital.

The Dow lost 504.48 points, or 4.4%, to close at 10,917.51. The S&P 500 shed 59.01 points, or 4.7%, to 1,192.69, with financials and energy fronting the losses, which hit all of the index’s 10 industry groups. The Nasdaq Composite Index fell 81.36 points, or 3.6%, to 2,179.91.

The financial crisis started in the summer of 2007 mainly due to the surplus of homes in the market and housing prices are falling moderately. About the same time, the first batch of interest rate resets is due. Homeowners are slapped with escalating monthly payments, falling house prices, and to make the matter worst, the inability to refinance their homes, many start to default their loans and turning in their keys.

As homeowners are confronted with higher monthly payments on mortgages that are greater than the value of their homes, homeowners are abandoning their mortgages as they feel no moral obligation to fulfill what they promised to repay, believing it is better to walk away. This may hurt their credit rating short-term better than the downward spiral that lead toward bankruptcy.

This attitude change in the sharp contrast to years ago when borrowers felt that it is a moral duty to pay off their loans. With the morals and values of the nation disintegrating, many are lacking the character and fiscal responsibility of previous generations.

“My first rule - the golden rule - ensures that over the economic cycle the Government will borrow only to invest, and that current spending will be met from taxation” - Gordon Brown

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