The Sub-Prime Mortgage Mess
Someone emailed me this hilarious cartoon slide show illustrating how the financial crisis of 2008 was precipitated by the housing bubble in the US, through exceptionally sly lending practices.
Although cute upon first review, it hilariously captures the essential truth behind Wall Street's ability to parcel off risk to uneducated investors in collaboration with banks, mortgage companies, and the lenders who sat across the desk from the often unsuspecting sub-prime borrowers who should have never been given mortgages in the first place.
The scary truth is that everyday investors like you own billions of dollars of these securitized mortgages within their mutual fund investments, pension funds, and RRSP's. Once interest rates begin to rise from historical lows, the failure rate of these mortgage funds will likely lead to a second round of mortgage failures that could be larger than the last one.
Caveat Emptor - Buyer Beware!
