Retail Debacle

Before I go ahead with the basic content of this post, I would like to warn the readers that what I am writing is my own idea, it may seem incredulous. The veracity of whatever is posted should not be taken for granted.

The stock markets are tumbling; the only thing I see on the news channels is sub prime crisis. So I went about searching for the meaning of that term. From what I could make out, it is a case in which a particular amount of money is lent to people with low credit, for mortgages. In better words, people with low credit, or the people with little money take loans that the think, they could repay in the near future. Mind You! Loans for housing are pretty high there. They payment downtime was about 20 years or so with a pretty high interest rate.
People of the ‘sub prime’ group are the people, who have a low income, so if my guess is that these people are the people who live with a low income and hope to generate enough income to pay their dues.
So this is what happens, people take loans and then purchase houses, and then pays monthly installments to repay the loan.
People with constant income or rising income can afford to do this. Here is where retail market comes into play.
The manufacturer produces the goods, but these goods are sold only in the markets. Large retail markets obtain the goods from the manufacturer directly and other small markets get the goods through a middle man who acts as an interface between the small market and manufacturer. But the catch is that a large retailer controls the manufacturer by his throat. This leads to outsourcing and thus loss of jobs. This is explained in the post:
http://vignesh23.blogspot.com/2008/02/controlling-manufacturer-retailers-way.html
Outsourcing is the phenomenon through which the manufacturer sets up manufacturing plants (factories) in third world countries, to reduce the cost of production and to obtain larger profit margins.
The process of outsourcing leaves the country with no manufacturing units and thus cutting jobs and when there are no jobs, the people can’t repay their loans.
The house that had been purchased through these loans, are taken over by the bank. The land value dips to a low value because with no manufacturing units and large scale lay offs, there are no takers for that house for the same original price. The bank in turn looses heavily due to the dip in real estate values. There are plentiful people who have opted for that type of loan, so huge losses are incurred by the bank.
To obtain the lost amount the banks try to recover other loans from a myriad of people. These people, many of who invest in over seas stock market, sell their shares in the stock market. When large numbers of shares are dumped into the stock market the value of the stocks reduce drastically, thus leading to a down fall in the stock market.
Therefore the Retail market in a very indirect way causes the stocks and economies to tumble world wide. I have nothing against the Retail markets, but this is just an opinion, an idea, nothing else. Readers can help me by thinking about this and also point out any logical errors, and share their own ideas and views.