Many people, in a particular sector (housing) bought things they couldn't afford, on credit, with loans from big financial institutions. Those financial institutions are involved in many different aspects of the economy. So many people are forfeiting their debts simultaneously, that it affects the income stream of the big financial institutions, such that they can't function, and that has a huge ripple effect.
What irks me most is that the proverbial bill is not coming due for the people who couldn't afford their lifestyle -- though they are the primary cause of the problem. Mostly they've just had to move into an apartment, or a smaller house, abandoning the house they never put any real money into anyway.
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Date: 2008-09-29 11:07 pm (UTC)Many people, in a particular sector (housing) bought things they couldn't afford, on credit, with loans from big financial institutions. Those financial institutions are involved in many different aspects of the economy. So many people are forfeiting their debts simultaneously, that it affects the income stream of the big financial institutions, such that they can't function, and that has a huge ripple effect.
What irks me most is that the proverbial bill is not coming due for the people who couldn't afford their lifestyle -- though they are the primary cause of the problem. Mostly they've just had to move into an apartment, or a smaller house, abandoning the house they never put any real money into anyway.