Financial epiphanies

From Nick Paumgarten’s piece on the decline of high finance in the current New Yorker

A private-equity executive I talked to said that he sensed the jig was up when his cleaning woman — “from Nicaragua or El Salvador of wherever the fuck she’s from” — took out a subprime loan to buy a house in Virginia. She drove down with her husband every weekend from New York, six hours each way, to fix it up for resale. They cleared sixty-five thousand dollars on the deal, in a matter of months. To many, this would have been proof that America is a land of opportunity, but to him it signalled a fatal imbalance between obligation and means.

One could find many similar stories from the UK ‘buy-to-let’ bubble. At the height of the bubble, British buy-to-let speculators didn’t really care whether they had tenants for their properties because the capital value was escalating so quickly that renting didn’t seem worth the hassle — or the agency fees.