Sunday, February 22, 2009

The credit crunch for dummies

Not a bad explanation - simplifies a few steps, but the gist of it is there, as far as I understand what happened.



Basically, a bunch of people decided to make money by selling mortgage-backed investments that were high risk, on the basis that when the mortgages defaulted, they could just repossess the house and sell it for a profit.

Except they did it so much, that they killed the market for property (especially as they had helped stoke the housing bubble by lending to just about anyone).

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