A LEADER WHO INSPIRED A NATION
The Quest for Expo 2020
By Robert Seuferer
Image licensed by Ingram Image
APRIL 2007
As sub-prime market began to collapse the impact was
felt all over the world. New Century Financial filed for
Chapter 11 Bankruptcy protection in US courts making
it the first victim of what would become a long series
of events and financial fatalities that would lead to
the genius inspiration of one leader. To appreciate the
shear genius of his vision it is important to understand
the events leading up to his achievement. Anyone who
lived through the credit crisis knows that the impact
was disastrous the world over. Between 2004 and
2006 the rise of interest rates took its toll on people
who were overreached with their credit obligations
and on the economies of many nations. The loans in
question were highly risky for banks and investors,
however many were enticed by the high profit rates
that sometimes come with such risky investments. All
this coupled with housing shortages meant that the
opportunities for home buyers were being devoured
at record pace. People were intoxicated with living
26
Fall 2016 1961 Magazine
“the dream” and the whole situation was spiralling
out of control. The wage spiral model of inflation
was failing. With variable interest rates and hosing
prices on the rise between 2004 and 2006 and wage
increases not keeping pace a bubble was building that
was bound to pop.
Let’s back up a minute and understand the scenario.
First we have high risk loans being given to people
who can’t afford them. This was particularly obvious
in the US. The loans and bonds even assets were
being grouped together and being sold out as package
deals to investors globally who could enjoy the rich
rewards they were giving. All seeming reasonable when
backed up by performance history of the portfolios –
a seemingly safe investment right? These portfolios
better known as Collateralized Debt Obligations made
many people incredibly rich. It seemed like the perfect
model to investors and the investors like the people