Idiot’s guide to the subprime mortgage crises

They say that when Uncle Sam sneezes, the rest of the world gets a cold. Now, Uncle Sam certainly isn’t sneezing, Uncle Sam’s got a flu and the rest of the world got pneumonia.

The economic woes of the United States are far from over brought about by rising fuel costs and mainly the subprime mortgage crises.

Most people in other countries do not understand what this subprime mortgage crisis is all about. The reason for such is that mortgage is not a very popular thing in other countries, and if it is, they probably still do not have the sophisticated mortgage system that the United States is implementing. If they don’t understand what mortgage even is, how in the world could they understand what subprime mortgage is much more the subprime mortgage crises.

For instance, in our country the Philippines, although we have “mortgages,” we still do not have a very complex mortgage industry like the United States has. Mortgage may be well advertised here in the Philippines, but not as much compared to the U.S wherein the entire economy is basically driven by credit. In fact when you search for “online mortgage” in google, you will be bombarded with offers from U.S companies offering “low” mortgage rates and telling you why you should borrow from them.

Another reason why people from other countries do not understand the subprime mortgage crises is because they just don’t care to understand it. They don’t see how the subprime mortgage crises will affect them directly. To their mind, since the subprime mortgage crises is happening only in the U.S, then it won’t have any direct affect on us. This thinking is totally wrong. As I said, when Uncle Sam has a cold we get pneumonia. A slow down in the U.S economy would mean slower exports for most countries which in turn affects a country’s economic performance.

Considering the above premises, it is therefore advisable for us to understand what the subprime mortgage crises is all about.

But because the subprime mortgage crises is very technical, I did some research on how to make it more understandable to the ordinary layman. The best explanation I could find on the subprime mortgage crises is a youtube video. Watch it and learn what the subprime mortgage crises is all about. (P.S: Sorry for the foul language at the end of the video, I have not control over it)

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3 Responses to Idiot’s guide to the subprime mortgage crises

  1. Alisa says:

    Yes many are feeling the affects of what has happened in the mortgage business. And I like your analogy about Uncle Sam getting a cold and everyone catching pneumonia. What I learned recently on My Journey into the Stock Market:

    http://www.ourstockmarketjourney.blogspot.com/

    Is that one of the reasons many around the world were impacted by this crises is that pools of subprime loans were securitized and traded as securities within the world of investing. Many investment funds contained high percentages of subprime loans. Also, many retirement funds had more than a fair share of exposure to subprime mortgages.

    But who would have known that it would come to this?

    Nice Blog.

  2. Pingback: Ameliorations > Sub-Prime Mortgage Problem

  3. zigfred says:

    Alisa: Some “experts” knew about it already and were already trumpeting a “prophetic” message, unfortunately nobody listened.

    Thanks for the compliment and thanks for dropping by.

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