The mortgage...

Or they might even start to buy things that aren't Treasuries.

So I need to borrow 750,000.

And that caused housing prices to go up.

Well I have the original mortgage on my house.

Most of the loans we're familiar with in our personal

So right here are a whole bunch of people's mortgages.

You'll sell the house and you'll pay it off, even though you can't pay the mortgage anymore.

Let's say it's um let's say its 10 billion of commercial mortgages.

So let's think about how we manage our money.

So you have to save up 15,000.

why.

What does it mean, derivative?

But for the simplicity of this argument,

Remaining mortgage on the home, 1 07,000.

Now what are my liabilities?

Well everyone knows that it's not going to be exactly 10 .

I suffered from my mortgage loan.

It's only worth 100,000 now.

Let's say I'm some type of the Investment Bank.

We all have heard of it.

Can I go out there and I buy a whole bunch of mortgages.

This right here is the debt, or essentially the principal payment on your mortgage, or how much do you owe to the bank.

You're assuming interest only loans.

So, each of these is an investor.

We even bought our old house, assuming that we'd never have to pay the mortgage in full.

This is really the tip of the iceberg.

And let's say on that house unfortunately, I don't own it outright.

You might use an aggregator. An aggregator is somebody who takes a vertical market approach.

But there wasn't actual aggregate savings going on.

But Countrywide would say, well, we're already giving mortgages to all the people who qualify.

I am right now thirty four years old and

And when they default, what is kind of the recovery?

And they borrowed the money essentially from a special purpose entity.

Your address in Brooklyn, the payments on your mortgage, how long you've been a member of the NYPD.

Right?

We create financial markets that are super complex.

And why does that matter?

So let's say I have another group of assets.

I paid off the mortgage when I got my promotion.

There's 1,000 of me, and we are now going to pay the 10 .

So I stick them all inside of that.

They sell it to Bear Stearns.

But maybe that's not enough. Maybe the economy is still tanking.

I've essentially become the lender to the home owner, and so the home owner's morgage payment will now come to me the Investment Bank .