Re:Rate Hikes Are Affecting the Economy
by 300bps on Wednesday November 02, 2022 @11:53AM
(#33437836)
Clearly there's no reward for being financially responsible.
It's called Moral Hazard. A lot of us learned this in 2007/2008. For me I had a friend in 2005/2006 that would go to Toll Brothers developments with 2 friends because they only "allowed" you to buy 3 houses per person. So together they'd buy 9 houses, sit on them for 6 months and flip them making hundreds of thousands of dollars.
I thought he was insane and that it was inevitable to blow up spectacularly. Which it did. Which the government almost completely bailed him out of and there were almost no consequences, financial or otherwise.
It's called Moral Hazard. A lot of us learned this in 2007/2008. For me I had a friend in 2005/2006 that would go to Toll Brothers developments with 2 friends because they only "allowed" you to buy 3 houses per person. So together they'd buy 9 houses, sit on them for 6 months and flip them making hundreds of thousands of dollars.
I thought he was insane and that it was inevitable to blow up spectacularly. Which it did. Which the government almost completely bailed him out of and there were almost no consequences, financial or otherwise.