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He wanted to spur housing by LOWERING INTEREST RATES - NOT by "letting unqualified people buy homes". Those are 2 very distinctly different things. Nothing wrong at all about having low interest rates. It's when you let too many folks who are a poor credit risk buy homes that you have a problem - and that has nothing to do with interest rates. It has to do with credit-worthiness and making sure that your standards in regard are followed - and wayyyyyy too many lenders didn't do that - mainly because they didn't CARE about credit-worthiness since they had no intention of carrying the loan but instead intended to simply pass it off to some other "sucker".
Again, low interest rates were NOT the problem. The problem was too many unqualified buyers who were approved. How low the interest rates were wouldn't have mattered had the initial first-line lenders exercised due-diligence when making loans.
He wanted to spur housing by LOWERING INTEREST RATES - NOT by "letting unqualified people buy homes". Those are 2 very distinctly different things. Nothing wrong at all about having low interest rates. It's when you let too many folks who are a poor credit risk buy homes that you have a problem - and that has nothing to do with interest rates. It has to do with credit-worthiness and making sure that your standards in regard are followed - and wayyyyyy too many lenders didn't do that - mainly because they didn't CARE about credit-worthiness since they had no intention of carrying the loan but instead intended to simply pass it off to some other "sucker".
Ken
Nor did he tell banks to indulge in risky betting.
Again, LOW INTEREST RATES was NOT the problem.
Too many unqualified buyers was the problem. Many of those folks shouldn't have been qualified NO MATTER WHAT the interest rates were.
Nor did he tell banks to indulge in risky betting.
Indeed, he did not.
There was nothing wrong with the advice Krugman was giving. It had NOTHING to do with the housing bust - NOTHING. The housing market would have been fine, had lending standards been maintained. Problem is, they WEREN'T.
Again, LOW INTEREST RATES was NOT the problem.
Too many unqualified buyers was the problem. Many of those folks shouldn't have been qualified NO MATTER WHAT the interest rates were.
Ken
I addressed this. Krugman is STILL arguing for low rates. If you can afford a house you have bought one. That leaves only one group left.
read your links before you post them, that is not Krugman's site. it is a site full of quotes that gives right wing interpretations of what he has said. Basically the same thing going on right now on this very thread.
The site quotes Krugman with the exact quotes and includes the source, like the NYT
I addressed this. Krugman is STILL arguing for low rates. If you can afford a house you have bought one. That leaves only one group left.
Again, there is NOTHING wrong with low rates. As long as lending standards are maintained, so what?
As far as "If you can afford a house you have bought one. That leaves only one group left." - that's a bunch of nonsense. New people are aging their way into adulthood ALL THE TIME. You think those folks should have to pay higher rates simple because they were born later than the folks who managed to get low rates? The US population is GROWING - that means MORE PEOPLE and MORE DEMAND for homes. As long as they are qualified there's no reason for them to not get the best rates they can.
Again, there is NOTHING wrong with low rates as long as lending standards are maintained.
Low rates didn't cause the housing bust - failure to follow LENDING STANDARDS caused the bust.
Again, there is NOTHING wrong with low rates. As long as lending standards are maintained, so what?
It's like trying to explain things to a block of ice. His argument wasn't to keep things affordable for the responsible. HIs argument is for keeping the economy in a bubble.
You can not create a housing bubble on the back of the responsible.
To be honest, a new bubble now would help us out a lot even if we paid for it later. This is a really good time for a bubble…
There was a headline in a satirical newspaper in the US last summer that said: "The nation demands a new bubble to invest in" And that’s pretty much right.
There is never a good time for the government to create a bubble. We saw what happened when they did what Krugman was promoting.
It's like trying to explain things to a block of ice.
Now you know why I didn't bother to respond to his rebuttal. You can't argue with someone suffering from tunnel vision.
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