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5 comments:
okii.. as per your call for comments- where did you get these?
-Lokesh
Hey Lokya... I have included the source with the images now. Bow here is the sad part, you can find the owner of Moneygunny.com by using following link:
http://www.networksolutions.com/whois/results.jsp?domain=moneygunny.com
but some chinese person has hacked this website and the owner has forgotten the password. Maybe somehow I find out how to reclaim a hacked website.
Going back to the topic underdiscussion. I have a interesting story, and the images were some snapshots of that story that I tried creating. It would be great to see how the reader reacts to these peices and everyone together understand the problem with different perspectives coming from every reader.
Here is the context for this Blog: "Sub-Prime Mortgage Meltdown"
Brijesh,
Frankly speaking first two figures were little too complex for me. I third and especially forth figure I think you are showing that the artificial increase in demand ruined the quality.
I believe it's other way round. Due to recession, banks had too much of business money left. They wanted to lend it for small period somehow (way less than 30 years which they should plan for). They increased supply into mortgage sector. That's artificial increase in supply. It worked temporarily since lately short term fix mortgages became popular. Increase in supply lowered the cost (monthly installment). But again temporarily.
Demand for real estate is proportional to (a)population, (b)economic situation of the territory (not country or state) and (c) consumer confidence.
This can not be much influenced by banks or other
entities much.
Now theoretically, all the people who got sub-prime loan got income raise (possible) to keep up with rising interest rates, there couldn't have been any problem to bank. Since this is impractical to get approx 5% raise every year (keeping up with 1% interest rate raise and inflation) in 2002 and on for decade or so. Lowered cost worked only temporarily.
That's my two cents.
PK,
Yeah the first two figures had a subtle philosophical tone in them. Imagine it like the Yin-Yang of what happened, especially in the second figure. But in this case it was more on how the notorious bad influenced the innocent good before the apple got stuck in the throat.
Philosophy aside... I see your point and factors affecting the demand of the mortgage industry. We also need to take a look at the problem by including one more fact that most of the delinquent mortgages were actually originated in the year 2005 and 2006, with the distribution skewed with most bad bookings toward end of 2005 and early 2006. I think I am going to think over your response to a greater depth before writing any further.
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