On Thu, 24 Sep 2009 21:27:49 +0100, J. P. Gilliver (John) wrote:

Or as happened in the sub-prime mortgage market in the US lending
more than the asset was ever going to be worth. That was the root
cause of the problem and the house of cards has collapsed when
these,
effectively unsecured, loans became bad what 2, 3 years ago.

More than it was ever going to be worth - in how long?

The time period isn't particularly relevant, the fact the loan is for
more than the asset value is bad and nothing more than a gamble. You
can't know if some one is going to default in 1 month, 1 year, 10
years or never.

And remember this was the sub-prime market, loaning money to people
who didn't have much income and/or poor credit histories. A much
higher risk of default from the outset.

--
Cheers
Dave.