Wednesday, September 17, 2008

Executive Summary: 2008 Sub-Prime Mortgage Financial Crisis

Subject: 2008 Sub-Prime Mortgage Financial Crisis

Explanation: Banks began lending money advertising very low interest rates with subsequent low monthly payments. However under these mortgage agreements impossibly high monthly payments started after the initial trial period. The logic was simple: before the monthly payment adjusts upwards, the homeowner can refinance the mortgage and keep the debt cycle turning.

These mortgages were packaged into securities which were purchased in the hopes of secured, high returns. It was only a matter of time until this debt pyramid collapsed causing the carnage in the financial sector of the economy and massive government bail-outs.

This is far from over, friends. We will continue to see the financial sector of the United States rocked by further disruptions. A significant consolidation of the financial sector will curb competition, and all of it is financed by We The People to benefit the companies selected by The Executive Branch to save.

Cost: By the time this is over, it will probably cost taxpayers as much as the entire Iraq War.

Recommendation: Prayer. You might also want to acquire silver coins as an inflation hedge.

Analogy: This is similar to how the Great Depression started. Wall Street seems to be interested in always finding new ways of losing money.

Associated Jargon: sub-prime mortgage, credit crunch, mortgage backed securities, bail out

Thanks to: Artist & package designer extraordinaire Orlando Villagran for requesting this Summary.

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