Sub-Prime Primer
By Jason on Apr 16, 2008 in Articles of Interest, Humor
If you haven’t been able to wrap your head around this whole ’sub-prime mortgage crisis,’ here’s an easy to understand slide show on what basically went down. It’s nothing new but we felt the need to share it once more just to make sure everyone was aware of it’s existence. It’s also one of the most entertaining explanations we’ve come across to date.
Utility:
(5 votes, average: 6.4 out of 10)
Loading ...
(5 votes, average: 6.4 out of 10) Loading ...
i don’t understand slides 8 thru 20. what the heck’s all that stuff? how do you just get rid of bad mortgages? i don’t understand the categorizing them into good, bad, ugly categories and i don’t get where securities, bonds, and all of that stuff come in…
Phoebe | Apr 18, 2008 | Reply
That’s part of the point. They chop up and repackage these mortgages so no one really knows what they’re dealing with.
But basically it’s like this: based on their criteria some of the mortgages will be good, so they sell these good ones with AAA ratings, some others are BBB, and as long as the gains for these two offset the losses for the “Ugly” loans, they will make money in the end. Unfortunately you need an ever rising market for that to continually work. If the market tanks, the Ugly can pull the BBB and maybe even the AAA down with it.
I could make an example with Batman paraphernalia if you’d like.
Ocean | Apr 18, 2008 | Reply
Please do!
Rebecca | Apr 18, 2008 | Reply
batman! batman!
Phoebe | Apr 19, 2008 | Reply