This money game is a mutual entwine guarantee chain
This money game is a mutual entwine guarantee chain: securities value by the borrower to pay regularly for the principal and interest of principal and interest payment guarantee, by houses for guarantee, real prices will rise by values for guarantee, house prices will rise by Ugg boots clearance economic growth and inflation as guarantee, economic growth and inflation by financial institutions themselves as collateral. Meanwhile, economic growth and inflation is properly inflated will also ensure personal income growth, which ensures the borrower abide by contract pay principal and interest. This is a perfect chain, end phase transition. However, people only realize it would a honor all honor, seldom think of it will both, Ugg outlet any link to a problem, this chain will rupture. Problems link first comes the chain itself. Prices for many reasons, it creates a result, rising personal income rising faster than the speed of income is not too high, cause many people worry purchase, while causing them to pay more for the principal and interest on to their lives and personal finances cause greater pressure. If house prices have been rising, when faced with a huge financial pressure, was also able to move house solution to cover. But, Ugg Australia house prices has been rise is impossible.
Problems arise from the chain link also the external. Subprime mortgages are large-scale issue, one important reason is that fed long-term take low-interest policy. Greenspan holds the fed period, to slash interest rates bringing borrowing cost is extremely low, natural cause large quantities of reimbursement ability is limited, in succession loans. Although fed rate cut was to change policies, UGG Earmuffs but, the subprime crisis occurred, the fed rate cut again using the method. Then a many economists put forward, rate cuts as the culprit causing the subprime crisis, to solve the subprime crisis is useless. So, the fed cut interest rates will lead to not know subprime risk? Certainly know, however, Ugg Gloves because have greater financial goals, of two evils choose the light, the federal reserve considers exposure to subprime loans to achieve greater target in the background, is bearable, can be digested.www.uggsaleaustralia.com
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