July 31, 2008

Happiness is subprime mortgage crisis knowledge

So, how do i communicate this to my friends? How do i tell everyone of my newfound happiness without sounding like an alien from a galaxy other than Milky Way even?

I went to a career development talk yesterday about, yes, subprime mortgages in the US. And there i sat in the class of the best teacher (in my book) so far. Things are really looking up for me, you know, i recently just found my new favorite Sunday service preacher and now i came face to face with my newest favorite teacher.

Oh yes, Ateneo Philosophy and Padre Ferriol's 'Meron', I love knowledge (to the extent of sounding weird, utterly floating and crazy). I think the reason i click with Homer is because we can be contented by just watching the National Geographic channel all day. I have spent almost four years in my current school where the teachers do not so much teach as much as they terrorize me into teaching myself (for fear of getting a "--" grade (and those are initials, by the way) or for fear of humiliation in class. Being taught anew like this is more than refreshing.

He was there, just talking like a good old friend explaining to me matter-of-factly about the significance of playing dirty street games (like tumbang preso or agawan-base) outside his house in his early years like it is the only way to have a normal childhood. And i was there sitting, wishing for him to call me for recitation (o di ba?) thinking something like, Sir, i know the answer.

Well, after the whole thing, i told my seatmate, "so, subprime mortgages, yun lang pala yon?"

Kasi naman, una kong basa nung isa naming reading para sa isang klase, ang intindi ko lang e ganito:

Maraming taong nagsangla ng bahay, tapos, nagtaasan ang interest rates sa mga kontrata nila na hindi naman nila alam na mangyayari, kaya yon, na foreclose ang mga bahay nila. Ngayon, dahil maraming bahay sa market, gamit ang law of supply and demand, bababa siyempre ang presyo ng mga bahay.

O di ba, so, ano naman ngayon? Sabi nga ni Attorney, "why is everyone blaming it for the bad things that are happening in the world today", if that is the whole point?

Oh well. It's because my understanding missed the point. What made the problem happen was the other half of the story (which is bigger, so mathematically, maybe 16/25 of the story) - securitization. That only meant, the loans secured by their mortgages were sold as shares/bonds to investors. Since these mortgages were subprime (meaning, the borrowers did not actually have a solid credit rating), these securities started defaulting when the interest rates fluctuated up. The effect of loans not being paid lead to the banks becoming stringent in lending. To compensate for the foregone volume of their income, they raised interest rates instead. Higher interest rates lead to less borrowing. Less borrowing lead to less investments. Less investments mean lesser jobs, lesser spending, lesser productivity.

In short, the global economic slowdown.

And why am i so happy about it.

It's knowledge man, it's knowledge. My dear Philo teachers should have given me an A. My sense of wonder deserves an A Padre. :-)

1 comment:

Warlito said...

Good afternoon Rianne it's me (Lito)again from Naomi's site. Don't forget to add the effects of mark to market and ARMs. I should rephrase my motto to "Passion and or greed gets in the way of intelligence!" :) A lot of people ignored the fact that A in ARM means adjustable. Lucky, I was too poor (I like to think...smart) to buy a house...hehehe. Although I was not too smart with my brokerage and retirement account
:( .It feels better when I refer to them as paper loss. Now I have to replace my passion for golf with cornik, mangosteen, baka with blood soup (this use to be my lilang's treat for going to church), halo halo (halo halo supreme sucks)and fried red fish (don't know the name but, I know it when I see it) during my vaca. Man....I going to get more lukmeg. Have a great day---Lito.