Quote:
Originally Posted by Mancie
Maybe it boils down to the old saying...If you owe the bank £500 quid you worrry.. if you owe the bank £5 million quid they worry.  |
One thing the mortgage lenders were doing is selling mortgages. So they give mortgages to thousands of people who were living beyond their means, the company would then sell those mortgages/debts to another bank. That bank bought them to make more profit. That's how they got in so much debt as they were just adding so much compound interest - very complicated though.
Another thing is that Governments like Greece issue bonds then lend money against those bonds and find they can't pay the interest they were then lending more money to pay the interest and so on - they then have to cut jobs to try and make the money back - thus they end up in a vicious cycle. They then have to borrow more money to be bailed out and so on. Fact is there are some banks who have more money to keep lending if need be, but it's all virtual money - on computers. The whole thing is mind boggling..