U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Foreclosures, Short Sales, and REOs
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 02-28-2012, 05:17 PM
 
Location: Florida -
8,238 posts, read 9,994,274 times
Reputation: 15087

Advertisements

Prior to the Great Depression, a tremendous loosening of credit allowed almost anyone to buy far more stock than they could afford ... on 'margin.' In the 2000-2005 housing price 'run-up', almost any "investor" could buy far more house/s than they could afford ... on 'credit.'

As prices spiked, most of these "wise investors" refinanced inflated property, cashing-out with more cash than they had 'invested' in the property. This new 'refi wealth' was then spent on more property and 'stuff' people could not otherwise afford. Suddenly, the 'bubble burst,' leaving millions of now "defrauded investors" owing more than their property was worth ... or they could realistically hope to pay. While this may be a bit of an over-simplification, I don't believe it is really that far from the truth.

What do you think? "What really caused the crisis?" or "How will/should history record it?"
Reply With Quote Quick reply to this message

 
Old 02-28-2012, 05:46 PM
 
Location: New York
2,251 posts, read 4,161,023 times
Reputation: 1607
Quote:
Originally Posted by jghorton View Post
Prior to the Great Depression, a tremendous loosening of credit allowed almost anyone to buy far more stock than they could afford ... on 'margin.' In the 2000-2005 housing price 'run-up', almost any "investor" could buy far more house/s than they could afford ... on 'credit.'

As prices spiked, most of these "wise investors" refinanced inflated property, cashing-out with more cash than they had 'invested' in the property. This new 'refi wealth' was then spent on more property and 'stuff' people could not otherwise afford. Suddenly, the 'bubble burst,' leaving millions of now "defrauded investors" owing more than their property was worth ... or they could realistically hope to pay. While this may be a bit of an over-simplification, I don't believe it is really that far from the truth.

What do you think? "What really caused the crisis?" or "How will/should history record it?"
Someone beat you to it....

The late-2000s recession, sometimes referred to as the Great Recession,

see link http://en.wikipedia.org/wiki/Late-2000s_recession
Reply With Quote Quick reply to this message
 
Old 02-28-2012, 08:25 PM
 
4,480 posts, read 7,937,629 times
Reputation: 6404
Quote:
Originally Posted by jghorton View Post
"What really caused the crisis?" or "How will/should history record it?"
Its not over yet. There are many more chapters to this book.
Reply With Quote Quick reply to this message
 
Old 02-29-2012, 12:19 PM
 
Location: Barrington
41,854 posts, read 31,715,364 times
Reputation: 14077
Economies need speculation. Speculation causes bubbles. Bubbles cause mania. Too much speculation causes big bubbles. All bubbles eventually pop.

The opposite of mania, in the clinical sense, is depression.
Reply With Quote Quick reply to this message
 
Old 02-29-2012, 07:26 PM
 
Location: El Dorado Hills, CA
3,670 posts, read 7,974,554 times
Reputation: 3748
I think it will be seen as a little bit of both. When things are going gangbusters, people get caught up in the excitement and do not want to believe it will ever end. The people that were shouting from the treetops that this problem was coming were shunned and ridiculed. I think there was greed, ignorance, and misfortune all around.
Reply With Quote Quick reply to this message
 
Old 03-01-2012, 01:06 PM
 
Location: Albuquerque
5,549 posts, read 13,845,197 times
Reputation: 2669
Quote:
Originally Posted by Modification Specialist View Post
Someone beat you to it....

The late-2000s recession, sometimes referred to as the Great Recession
I think jghorton was referring to the Great Depression of the 1930's.

In any case, referring to the 2008 "event" as a recession is wrong - unless
you buy the government's claim that we are no longer in a "recession."

.... any takers on that ? ...

Depression = recession lasting more than 4 quarters.

There has been a moderating of a continuous economic downturn that
started in 2008. There has been no recovery. This is a depression
and it has been going on for the past 3 1/2 years.
Reply With Quote Quick reply to this message
 
Old 03-01-2012, 03:01 PM
 
42 posts, read 147,672 times
Reputation: 56
Quote:
Originally Posted by mortimer View Post
I think jghorton was referring to the Great Depression of the 1930's.

In any case, referring to the 2008 "event" as a recession is wrong - unless
you buy the government's claim that we are no longer in a "recession."

.... any takers on that ? ...

Depression = recession lasting more than 4 quarters.

There has been a moderating of a continuous economic downturn that
started in 2008. There has been no recovery. This is a depression
and it has been going on for the past 3 1/2 years.
If there was a "like" button on your post I would have clicked it!
Reply With Quote Quick reply to this message
 
Old 03-01-2012, 11:25 PM
 
484 posts, read 1,326,115 times
Reputation: 1438
The Great Recession was caused by greed, magnified by easy credit.

The greed came from...:

1. ...Institutional investors who didn't like the 1% returns they were getting on money market accounts, so they sought "safe" investments like MBS's, which were returning over >6% and were AAA rated just like MMA's were.

2. ...Banks who capitalized on #1 by selling MBS comprised of garbage mortgages.

3. ...Home buyers who had no savings, no down payment, and who bought a house when they really should have been a renter... all because they were afraid they'd miss the boat.

4. ...Real estate investors who, thru easy credit, thought they could perpetually leverage themselves to become multi-millionares.

5. ...Lenders that were willing to lend to anyone because no matter how bad the borrower's credit, the lender knew someone else would be responsible for the consequences if they defaulted (related to #2)
Reply With Quote Quick reply to this message
 
Old 03-02-2012, 03:59 PM
 
2,287 posts, read 2,492,870 times
Reputation: 6999
Quote:
Originally Posted by sheshells View Post
If there was a "like" button on your post I would have clicked it!
Sheshells, there is! Its the "rate this post positively" on the bottom left. Its very much appreciated when you do this. See the count by your name? You have had 4 as I post this. We all start out with 10. Enjoy City-Data, and welcome.
Reply With Quote Quick reply to this message
 
Old 03-02-2012, 04:03 PM
 
2,287 posts, read 2,492,870 times
Reputation: 6999
Josh, I would also add that those same home buyers that shouldnt have been able to buy a house, then used that same home as a atm machine.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Foreclosures, Short Sales, and REOs
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top