The fuel and engine for the sub-prime mortgage meltdown and the credit crunch was Allen Greenspan and the doubling of the global monetary supply, according to the This American Life episode “The Giant Pool of Money” I just got around to listening to. Basically, a bunch of poor countries got rich all of a sudden selling TVs and the like, and in 6 years, doubled the worldwide supply of money. The giant pool of money was hungry for places to invest itself.
Mortgage meltdown isn’t just for people with bad credit, 2.3% of prime loans were 60 days past due in February, up from 1.4% a year ago and the highest in a decade. [USATODAY]