The Great Financial Crisis Story
Politicians want growth so they allow rates to stay low. (Give the people what they want to get elected) Dad used to pay 10% for his $50,000 mortgage but times have changed and people want things they can’t afford – NOW! They want bigger, nicer houses and they don’t want to pay an arm and a leg. Thanks to low rates times are good – really good. In fact, times haven’t been bad for so long, most young people don’t remember any hardship. Get the biggest house with the cheapest and most flexible mortgage you can get and forget about it. Low interest rates create demand for home-loans. (Money is cheap) Your sophisticated older brother just got his MBA and is now a Wall Street banker. He hatches a pretty nifty scheme. He loans you $5,000 at 2% interest to build a new tree house.
