Monday, August 20, 2007

Ninja Loan

Someone wondered why I could relate Subprime Mortgage Financial Crisis to Kunoichi in my fiction. It is interesting, isn't it? In fact, the crisis does relate to ninja.

When the interest rate was very low, a loan to someone with No Income, No Job, or No Assets was promoted by banks. That loan was called Ninja Loan.

When the price of real estates rised, the premium could support the borrowers' payments. Since they had no income, no job, no assets, they had to pay higher interest for their loans. The bank sold the loan to other financial institutes. The financial institutes packaged the loan into some funds and sold them to investors. Because of the higher interest, it attracted a lot of investors with good returns.


Yet when the price went down, the borrowers had no favorite. Since the borrowers of ninja loan was bad at returning loans, when they could not return, the loan became bad debt. The fund related to subprime would become bankrupted. Such terrible situation keeps going and leads to mass stock selling.

See the detail at Wikipedia.

2 comments:

The Elderly said...

an apt description for a most hideous state of affairs....

Kunoichi Terminator said...

If you had read my fiction http://bladeak.blogspot.com/2007/08/fiction-ii.html

you would know the bankrupcy of subprime funds were caused by the heroes called Howard and Robert. They executed the female executives in charge of the subprime funds.