Ray Suarez, Chief National Correspondent, NPR discussed on

KQED Radio
| KQED Radio

Automatic TRANSCRIPT

And that is that i've invited ray suarez to join me as co host of world affairs ray is known to our listeners as the former chief national correspondent for pbs news hour he was also anchor of npr's talk with the nation ray is a great journalist he's a good friend and now back to our program and ray suarez at the heart of all this was the housing crisis and the intricacies of securities that were traded back and forth to the ends of the earth based on american mortgages and during this time yes there was an increase in the number of people who weren't paying their mortgages or who couldn't pay their mortgages but david wessel it didn't it never even got into the eighties more than ninety percent of americans were still paying their mortgages and yet the securities that their mortgages backed lost forty fifty sixty percent of their value how could that happen most people were still paying their mortgages these things became unsellable even though everybody knew most people were still paying their mortgages well one thing that happens is more and more people as this period goes on have a mortgage that's greater than the value of their house so while they're paying their mortgage today if you're an investor and you're looking at a security and it's a package of mortgages and a lot of the people are have mortgage that are greater than the value of their house you say what are the odds that these people are not gonna be able to pay back well there are a lot higher than they i thought there was so there was a general sense an accurate one that if house prices fell across the country more of these things we're gonna be unpaid than people had expected and that's what happens when you when people change their minds about something and in this case they were correct to change their minds they didn't appreciate the risks they had taken so the things were priced at one level suddenly it hits them this is a lot riskier than i thought and the world is a lot uglier than i expected so the the value of the the bonds goes down and you know there were a few people who took advantage of that the big short michael lewis's book as a whole book about people who figured out how to make money about as this thing well they wrote the escalator down.

Coming up next