This an explanation of the sub-prime mortgage crisis I came across a few days ago.
The Real Estate Market Crash – Free Legal Forms
It’s a brilliant piece of work. Who knew that the use of stick figures and profanity could provide such an in-depth understanding of a complex issue? It’s the classic example of a boom-bust market cycle. Something out there makes Scrooge McDuck levels of money, eventually attracting more investors than the market for that something could ever support. The inferior somethings lose value, leaving millions broke. The same thing has happened with everything from stocks and south sea islands to tulips and comic books. Only now the hot commodity was mortgage loans, which involves a lot more money, and will cause a lot more damage.
Now, we could take this as a grand global lesson in how to manage our money and not live beyond our means. Basic arithmetic should keep us from making bad loans like this again. If we don’t have the basic arithmetic we should invest more in education so that we have the basic arithmetic. Then again, I don’t know if we’ll learn anything at all. The Sub-prime mortgage crisis, like most other economic crises before it, arose from attaining that sweet between scarcity and abundance. Mortgage loans were scarce enough to be valuable, but abundant enough so that anyone could get a hold of one. Whether it’s carbon nano-tubes or near earth asteroids, it’s always the next best thing in investing that’s going to tip off the next recession. We can only hope our laws are strong enough to pick up the pieces when the whole thing comes crashing down again.