[orlovs]

Oh well, yet another publication “rich bad, poor good”. I will leave out payday lending, buying small goods on credit etc. Lets talk about mortgages and student loan. Let’s face it, if you are rich you have become rich somehow or stayed rich ( even harder than first one) you probably understand risk management. What we have got here: you are lending your capital to folks who are less rich (much less trustworthy). Why you are lending to them if risk relatively is pretty high? Actually, its not student loans in most of civilized society is backed by government programs, mortgages is backed by GSEs. You can land money with relatively no risk at all. I am oversimplify but, many problems comes from politician will “help little people/protect little people” or called aswell “to get elected or reelected”. Our friends in government puts incentives to lend money to consumption without almost risk. And I am from Europe/Baltics. We have got our own “helpful programmes”. Like government agency lends you downpayment for mortgage with pretty barbaric rate. So what happened, default downpayment have gone up from 10% to 15-20% to get skin in the game from lender. Who suffers the most? Those who have got these 10% for downpayment.