answer:Sub-prime loans are those made to people with credit that is poor but not so poor as to disqualify them altogether. People with good credit are considered “prime,” because a lender isn’t risking much by lending them money; people with poor credit are considered “subprime,” because the lender has to take a risk and make a judgment call. They got the loans because the lenders took a gamble on them: the lenders figured that the price of real estate would keep going up, and that the higher interest rates on sub-prime loans would make up for any losses they took from people defaulting on the loans. The people in question also bought the biggest houses they could afford they payments for, and as many of the loans in question were adjustable-rate mortgages, when the rate went up, the buyers found themselves unable to afford the new payments. Our nation’s economy is being hurt because these lenders treated the housing bubble as if it were permanent, and made assumptions that the current rate of growth in housing costs would continue indefinitely, and because the people who took out the loans didn’t adequately read the fine print. When a large number of people do something stupid, it tends to hurt economies. It’s hard to say that the lending was wrong: certainly, the lenders knew they were taking advantage of people who were desperate for the loans, the sellers knew that the low interest rates and skyrocketing housing costs meant they could ask absurd amounts for their houses, and the buyers ignored the long-term cost of the loans while focusing on the short-term size of the payment. There’s more than enough blame to go around. It’s also a circle: if the economy were not doing poorly overall, the people who took out subprime loans would be able to pay them off, and the subprime lenders would not be having financial crises. Personally, I think the subprime housing problem is much more of a symptom of a deeper problem than a cause of problems in itself.