This time of year we are flooded with reminders, checklists, and predictions. Many are useful, but some are merely entertaining.
While there are many items related to your financial health that deserve attention at the beginning of the year, this might be a good time to order your annual free credit report.
Trying to understand the global financial crisis? Confused by derivatives and default swaps and the commercial paper market?
Here are three ideas to explain it all: cheap money, surging debt, and bad credit.
Recipe for financial chaos: Take one large economy. Add cheap money—the lowest yields in 40 years. Encourage households to rack up big debts without any attention to long-term ability to repay. End result: a surge in credit card and mortgage debt, driving a consumption and housing boom in the economy. A big-screen TV, a new car, a bigger house, maybe even a vacation home—all available for “no money down” and with “low monthly payments.”
