How Credit Works

The present financial crisis boils down to one fundamental issue - the credit crunch, now gone worldwide. The short explanation of how we got here, is that credit is an easy system to understand and use, yet one where plans are far too often short-sighted. . . . .

So what went wrong? Greed on both ends, actually. Buyers bought homes they could not afford, while sellers built high-risk ventures into mainstream investment packages, on the theory that diversifying the investments would keep the high-yield aspects while some how mitigating the risk exposure. . . .

Read the complete article on How Credit Works by DJ Drummond posted on Wizbangblog.com November 18, 2008