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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: philv who wrote (37886)8/5/2005 2:43:44 PM
From: Umunhum  Read Replies (2) of 110194
 
<I can't understand why interest rates would rise on defaults. Any thoughts?>

Let's say you were loaning money out for people to buy cars. A year or two down the road you find out that you are losing money because of all the foreclosures you have to make. Are you going to continue loaning money out at the same rate?

Or as Mish thinks, are you going to loan money out at a lower rate???
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