"Canuck57" wrote in message
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"Boater" wrote in message
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moneybox
The Subprime Good Guys
These mortgage lenders loan to poor people, strengthen communities, and
are still making a profit. How do they do it?
By Daniel Gross
Posted Saturday, Nov. 15, 2008, at 7:42 AM ET

I will give you a different perspective from my own words.

Higher interest rates encourage debt reduction and government for cheap
money broke the controls and this counter balance. Then investors
abandoned the loan market as it had a negative ROI and created a liquidity
problem. Compound it with people not paying their debts, further liquidity
issues arose. Some investors actually borrowed cheap money to lend
elsewhere for profit! Others borrowed to pay other debt. It wasn't just
a US thing. You could borrow yen at 1% from Japan and lend it to the US
for 2% and make 1% for nothing. Banks loved it as it further multiplied
and leveraged them so they could lend more.

Government liked it because for a debtor, which is most voters, want and
love low interest rates as they have financed their whole lifestyle on
cheap under priced debt. With interest rates below inflation is was the
way to go.

Poorer people were encouraged to buy homes there really couldn't have
afforded otherwise. This added even more ponzi debt to the system. A
nation life style funded on leveraged debt and the democratic congress
asleep at the wheel encouraged it happen.

Then someone defaulted. And the whole bank/government pyramid scheme
unravelled. No one got paid back their money so they couldn't pay back
others. So people and banks stopped lending money because at 4% you want
to be really sure you get paid. Without these assurances, you would have
to be nuts to 1) lend money below inflation and 2) lend money you are not
going to get back.

Now you have every debtor and fiscal mismanaged company from coast to
coast threatening the government for tax payers money or job loss.

Don't you like socialism, it is like 100 rats in a cage fighting for the
same piece of cheese. 99 of them will get nothing as even the US
government isn't big enough, and certainly not productive enough to make
100 peaces of cheese for nothing.

The reckoning for socialists, government leaches and debt junkies is
coming. Those with no debt or very positive net worth at the bottom of
this are going to do quite well.



Well done. You have an excellent grasp of the economics of things. What do
you do, if I may ask?

Eisboch