"Boater" wrote in message
...

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.