Z
z106
Guest
Excuse my ignorance but what started all this turmoil in the matrkets?
I do know that the financial institutions that bought all these packaged mortgages that included sub prime borrowers are left with the debt and no one knows how much debts everyone else is holding hence the credit crunch.
My question is why have all these subprime borrowers started defaulting now?
Is it because the rising interest rates in the states eventually took their toll on people just recently?
And if so - has the fed not been criticised for not preventing this by not raising interest rates so high so fast as opposed to trying to repair the damage by seriously cutting interest rates last week after the horse has already bolted from teh stable ?
Or is my understanding not quite right?
I do know that the financial institutions that bought all these packaged mortgages that included sub prime borrowers are left with the debt and no one knows how much debts everyone else is holding hence the credit crunch.
My question is why have all these subprime borrowers started defaulting now?
Is it because the rising interest rates in the states eventually took their toll on people just recently?
And if so - has the fed not been criticised for not preventing this by not raising interest rates so high so fast as opposed to trying to repair the damage by seriously cutting interest rates last week after the horse has already bolted from teh stable ?
Or is my understanding not quite right?