3 ms·
The comparison to housing seems a little off to me. For example with the property boom, people didn't want to sell their houses because they were going up in va
by jiggy2011 13y ago
The comparison to housing seems a little off to me. For example with the property boom, people didn't want to sell their houses because they were going up in value. Therefor they go up in value some more. Therefor people can't afford to buy them, so we fix that with sub prime mortgages..
- dnautics 13y agoRight, whereas, if we didn't create subprime mortgages, if people couldn't afford to buy them, eventually the price would have had to come down, or else you have idle stock. Instead, we inflated the price bubble by enabling risky individuals to make purchases they shouldn't be able to, and so when the prices actually came crashing down, not only did they take down the housing sector, but the defaulted loans exerted magnified, collateral damage across the entire economy.