[saden1]

Originally Posted by Schneed10

I disrespectfully disagree. That's an incredibly incorrect statement. And to think anything in economics is simple is laughable.

I'm glad you feel that way...now let's show work:

The year is 2002ish and the economy is doing reasonably.

1. Schneed has a job and makes decent money.
2. Banks are lending at favorable terms and LIAR loans are ready to be consumed by Schneed.
3. Schneed buys a house he can only afford with a 5 year ARM loan.
4. It's 2007ish; Everything is peachy and economy is still doing reasonably well.
5. Poor ol' Schneed's mortgage changes to less favorable terms and he can't pay.
6. Investors get wind of Schneed and his ilk's LIAR loans, lose confidence in the banks and the credit market freezes.
7. Banks stop getting paid and consequently stop lending.
8. Companies can't get money to fund growth and start preparing for the worst.
9. Mass lawyoffs ensue and corporate spending freezes.
10. Poor ol' Schneed gets laid off and his house goes under.
11. His neighbors house's value drops. No more equity to borrow against.
12. Consumers brace themselves for the worse and stop spending.
13. More layoffs ensue and Schneed's neighbor gets laid-off.
14. Schneed loses his mind and starts making retarded arguments about stuff he's not well informed on.

I know you're averse to linking but this whole mess is well documented and sourced.