I was going to call this article “Conspiracy Theory” but, whenever that phrase comes up, ears go deaf and eyes go blind. What I am about to recount is something you have all been living through and will continue to live through for some time to come. It is completely factual so I have little reason to call it “Theory” other than the future predictions, but one wonders how much “Conspiracy” is involved and whether it could be proved, so that these people can be hung up by the balls for putting us all through a certain amount of misery and hardship.
In the past banks used to fund their mortgage lending by using the monies deposited as savings by their customers. This effectively limited the amount of money that a bank could lend for mortgages. That being the case the banks would do certain checks on the property valuation and borrower’s income to satisfy themselves that the loan was likely to be repaid and, in the event of default, that the property value would cover it, Not a bad thing you might think and I would agree. In recent years however, banks have started selling on these mortgages to the bond market which has enabled them to raise more money to fund additional borrowing. What one needs to look at here is what kind of additional borrowing did the banks decide to fund because, without the incentive to carefully check out their borrowers as they did in the past, the system was open to abuse and you just know that there are plenty of greedy buggers out there eager to abuse the system up to the hilt.
