How Did University Degrees Become Subprime Mortgages? Part II

If you made it to the end of my last post you will have the same question I did. Why did Finance Companies and our ersatz Mr. Finance Company Guy arrange a mortgage for Michelle, our hypothetical mortgagee, when he should have known quite well from experience and the numbers that she would likely be unable to pay it off? To answer this question we have to introduce a bond trader on Wall Street in New York. We can even give him a real name. We can call him Howie Huble because Howie Hubler really exists and he is the most infamous example of what was happening in the bond markets in 2008. A bond like a mortgage and like money is a kind of IOU. It’s a piece of paper that says someone owes someone an amount of money. Bonds have always been considered good, solid, conservative low-risk forms of investment. Usually bonds were IOUs from big companies or banks or even countries, but any kind of debt can be incorporated into a bond and resold to investors. Unless you a