Extra Credit Essay Example | Topics and Well Written Essays - 500 words - 3

Extra Credit - Essay ExampleAt the beginning of the twenty-first century, the amount of money in the entire worlds savingsincluding retirement funds, insurance funds, of import bank savings, and other fundswent from $36 trillion to $70 trillion. That $36 trillion was the result of hundreds of long time of growth, and then explosively there was this unheard of expansion of funds, because countries like India and Saudi Arabia were making a pack more money and adding to that pool of savings. Before 2000, investors would do everything they could to protect their investments, and would put their money into safe investments much(prenominal) as municipal bonds. Then, when the funds nearly doubled, the investors ran out of places to invest their money, because although the money looking for investment opportunity doubled, the unattached good investments did not double. So when the demand for investments couldnt be met, someone had to create a product that would provide more investment opportunities and meet that demand. What happened next was what Malcolm Gladwell calls a tipping point, or a sudden rise of an idea or behavior that spreads epidemically, because ideas and products and messages and behaviors spread just like viruses do (Gladwell 7).The solution that the financial industry came up with was to identify a new source of consumer by making mortgage loans available to people with bad credit and low income. That way, investments could be made based on the interest that would be earned on these mortgages roughly 5-9%, instead of the meager 1% available elsewhere. With such a vast demand, mortgage agents had to go find new people to mortgages, until finally in 2003, basically everyone who was qualified to realise a mortgage already had one. Then another level of standards had to be introduced, and this involved NINA (no income no assets), tell income verified asset loans, and stated income, stated assets loans. People no longer even had to prove their inc ome, they could just now say that