Types of borrowers
- Hedge borrowers - cashflow can pay both debt and interest
- Speculative borrowers - cashflow can pay only interest. Needs to regularly refinance to repay debt
- Ponzi borrowers - believes future appreciation can finance both debt and interest
Crash happened when too high a percentage of borrowers in the system are Ponzi borrowers.
https://en.m.wikipedia.org/wiki/Hyman_Minsky