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The higher the tax rate, the greater the length people will go to avoid it. France is a case in point. An ‘Exodus’ of Wealthy is underway even before French parliament has passed Hollande’s proposed top tax rate of 75%.
This is what I stated, adding the words [banks thought]. The email from reader David follows this recap. Five Reasons Banks Extended Credit in Housing Bubble Years [Banks thought] People would pay mortgage loans because they always did [Banks thought] Housing prices would rise sufficiently to cover defaults [Banks thought] Mortgage interest rates to subprime borrowers were high enough to cover risk [Banks thought] Defaults would happen over a long period of time, not quickly concentrated Banks could pass the trash to Fannie Mae and Freddie Mac (without clawbacks for non-performance), and/or loans could be sliced and diced in tranches to investors If any of those conditions were true, then banks were indeed making loans to “credit-worthy” borrowers
