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Old 09-24-2018, 10:53 AM
 
6,997 posts, read 6,632,415 times
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Quote:
Originally Posted by John-UK View Post
Yes, but the root was that land was untaxed. Land rose in value so it was great to lend for land. Cannot lose. Look at the root. A bank could lend to borderline borrower, but it never mattered to them as if they defaulted the foreclosed property had a value more than what they lent for it. That does not happen when lending for industrial machinery, it loses value greatly. I see the banks never threw money at industrial machinery. If you wanted that they would would want to see your business plan and have all sorts of check done, not give you a mortgage over the phone.

It was land that was the problem. If Land Value Tax (zero tax on buildings) was in place, land would not be such an easy earner for them. They would not have been cavalier with the crash not happening.

They levy real estate taxes. That is bundled into the mortgage payment, unless you've paid off the loan.

The capital gains tax exclusion was a one-time benefit for people age 55 and over before the change to the tax law.

The investment banks are in the business of offloading risk onto investors for a price. When the music stopped, they were found to be holding much of the debt.

Investors took a trillion dollar hit on the telecom debt problem from the late 90's. The competitive local exchange carriers (CLEC's) issued debt to finance the build out of infrastructure to compete with the regional Bell operating companies (RBOC's). One of the complaints in the investor class lawsuit was that they were misled about equal access for these startup companies. I don''t think any of them survived. Also, they had the same kind of seller financing for telecommunications equipment during the bubble, even accepting IPO shares from the startup internet/telecom firms in lieu of cash.

Reagan and Thatcher were not around in the late 90's and 00's. They were around during a different real estate boom and bust. The problem of regulatory capture cuts across party lines and timelines.

Last edited by lchoro; 09-24-2018 at 11:08 AM..
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Old 09-24-2018, 11:05 AM
 
Location: London
3,885 posts, read 3,324,690 times
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Quote:
Originally Posted by lchoro View Post
They levy real estate taxes.
That does not stop land's value from rising and being untaxed. That is the root. Find out about Land Value Tax (zero tax on buildings), which is linked to the value of the land. Land Value Tax stops land speculation, which was clear in causing the crash. Land is easy money, so the banks said let's dive in. We saw the result.
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Old 09-24-2018, 12:04 PM
 
6,997 posts, read 6,632,415 times
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Quote:
Originally Posted by John-UK View Post
That does not stop land's value from rising and being untaxed. That is the root. Find out about Land Value Tax (zero tax on buildings), which is linked to the value of the land. Land Value Tax stops land speculation, which was clear in causing the crash. Land is easy money, so the banks said let's dive in. We saw the result.
You're looking at the wrong market and the wrong tax. It is called a real estate tax in the U.S. and assessed by the local jurisdictions here. The tax applies to the current value of the land and all structures on the land. Both the U.S. and U.K. assess taxes on the change in value when property is transferred. The capital gains exclusion was relatively new, but it only applies if you own the house for five years and lived in it for two. It allows more equity to be retained when the property is sold. It facilitates more leverage since more capital is available for the next purchase.
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Old 09-24-2018, 03:33 PM
 
1,461 posts, read 331,260 times
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Don't know about anyone else, but what caused many foreclosures in my area was job loss, not whether or not someone's home was underwater.

The worst thing that can happen with a flat income and upside down house is you can't move. Something else has to push you over the edge: medical emergency / disability, job loss, loans called by bank (RARE with primary res mortgages unless someone does something stupid to trigger it like transfer deed without a new mortgage being cut).
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Old 09-24-2018, 03:59 PM
 
Location: A motel/RV-park.
754 posts, read 692,168 times
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08' crash in a nut-shell: https://youtu.be/rdf-jKsKA9k
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Old 09-24-2018, 04:33 PM
 
1,461 posts, read 331,260 times
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Quote:
Originally Posted by John-UK View Post
That does not stop land's value from rising and being untaxed. That is the root. Find out about Land Value Tax (zero tax on buildings), which is linked to the value of the land. Land Value Tax stops land speculation, which was clear in causing the crash. Land is easy money, so the banks said let's dive in. We saw the result.
My area (Southeast US) saw lots of people getting loans and maxing out their DTI applying for loans on land without structures, unimproved lots, and even land that didn't perc. "Good land" that either had utilities or passed tests for a well cost roughly $15,000 an acre. Anything listed for $5000 raised eyebrows - "What's wrong with it?" No road frontage, etc.

Now, 10 years after this information was accurate, after some time in "recovery", I see the half-finished development in my home town selling once-$30k lots for $9k under foreclosure and getting no bites.
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Old 09-24-2018, 04:56 PM
 
5,748 posts, read 1,288,224 times
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Quote:
Originally Posted by John-UK View Post
Economics historian Prof Adam Tooze explains the 2008 crash:
https://player.fm/series/dan-snows-h...ith-adam-tooze

Adam Tooze refers to himself as a left liberal historian. I think if you are a historian with a bias either way your conclusions can't be objective and of little value.
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Old 09-24-2018, 08:32 PM
 
Location: plano
5,953 posts, read 7,492,992 times
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The foremost cause was what the professor referred to as sub prime loans. Some if these are also called liar loans. No verification of ibcome. So mortgage applicants lied about income to buy a more expensive house. The values we're rigged to keep it all going util the merry go round stopped. The rest of it was a pyriamid scheme built on these iar loans.

Were any lying mortgage applicants sent to jail along with any mortgage broker who encouraged this dishonest process? I don't know but think not in great numbers

The banks are blamed. Nut the liar loans were the source not the banks directly in my view.

Regulators failed by letting this ridiculous type loan happen. Greenspan. Bush. Clinton and Dodd Frank.
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Old 09-24-2018, 09:21 PM
 
5,748 posts, read 1,288,224 times
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Quote:
Originally Posted by Johnhw2 View Post
The foremost cause was what the professor referred to as sub prime loans. Some if these are also called liar loans. No verification of ibcome. So mortgage applicants lied about income to buy a more expensive house. The values we're rigged to keep it all going util the merry go round stopped.

Of course that has been known for almost a decade.


It has been talked about ad nauseam since 2008.

However the real reason for the meltdown was the fact that many believed RE prices could never come down. As long as prices were going up even liar loans were not a problem. That is what the banks, mortgage companies and Wall Street believed. The mantra was even during the great depression housing prices continued to rise. The historian was off on this.


The Worst Ideas of the Decade (washingtonpost.com)


Countless delusions and mistakes brought on our financial crisis, but none did as much damage as the belief that home prices never go down.


Quote:
Originally Posted by Johnhw2 View Post
The rest of it was a pyriamid scheme built on these iar loans.

Were any lying mortgage applicants sent to jail along with any mortgage broker who encouraged this dishonest process? I don't know but think not in great numbers

The banks are blamed. Nut the liar loans were the source not the banks directly in my view.

Regulators failed by letting this ridiculous type loan happen. Greenspan. Bush. Clinton and Dodd Frank.

The democrat party pushed for these types of loans. They wanted everyone who wanted a home to own a home. The GOP was fine with that also.

And a few went to prison who were some of the worst offenders with this. The rest no. It is old news. No one today will face anything from what happened 10 years go.
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Old 09-24-2018, 09:47 PM
 
Location: Prepperland
13,116 posts, read 9,202,467 times
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Of course, no one wishes to deal with the curious situation where "dollar bills" (federal reserve notes) are not dollars (i.e. coin).
A dollar bill is an IOU denominated in dollars, a debit, not a credit. And the obligated party (US Gubmint) repudiated redeeming them in 1933, making them legally worthless.

Any discussion beyond this point is an exercise in spin doctoring, hand wavium, and wishful thinking.
Of course, if one is an obligated party on said note, they cannot object to their tender under the law of notes.
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