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.
I work in real estate and you are correct. The housing bubble was created by easy credit which meant anybody with a pulse and bad credit could get a mortgage.
Reaction to the Russian and Asian financial crises plus Bush's tax cuts for the rich had put a lot of potential new capital into the market. Easy credit is exactly what should have resulted. The credit crisis itself however ultimately resulted not from loose money, but from the work of unscrupulous Wall Streeters who went above and beyond any notion of "easy credit" and into the world of wanton credit market abuse -- the hard-sell peddling of high-cost, high-profit notes that they knew full well would fail once interest rates began to rise to borrowers that they equally knew full well were unqualified for them in any case. All this for the sake of protecting their own soaring short-term profits and bonuses. I won't be here. You won't be here. It will all be somebody else's problem. This was the mantra and battle cry on Wall Street as they tried to make excuses to each other for the stench of what past a point they all knew they were doing.
The other thing that can happen is if the Fed raises interest rates above 10% again to save the dollar, like it did on 1980. Prices will drop because nobody will be able to afford the mortgage.
The Fed's Reagan-inspired monetary missteps in 1980-81 were what CAUSED the long and deep recession of 1981-82. They were NOT a reaction to it. Credit all of a sudden became unobtainable. Outdated and at-risk industries (such as steel) were not able to finance modernization efforts any longer, and they simply collapsed left and right. Virtually our entire northeast manufacturing corridor was reduced to a jobless, padlocked disaster area known ever since as the Rust Belt thanks in large part to the simple economic ineptitude of Uncle Ronnie and his friends.
The Fed's Reagan-inspired monetary missteps in 1980-81 were what CAUSED the long and deep recession of 1981-82. They were NOT a reaction to it. Credit all of a sudden became unobtainable. Outdated and at-risk industries (such as steel) were not able to finance modernization efforts any longer, and they simply collapsed left and right. Virtually our entire northeast manufacturing corridor was reduced to a jobless, padlocked disaster area known ever since as the Rust Belt thanks in large part to the simple economic ineptitude of Uncle Ronnie and his friends.
That''s pretty much what I said. We had a currency crisis resulting in double digit inflation. Actions by the Fed to control the currency supply pretty much gutted the loan market. Nobody could qualify for a mortgage, and if they qualified they couldn't afford it. At one point, 30 year mortgage rates were hovering around 18%. People who could shelter in place survived the real estate crash, but if they were forced to sell they lost their equity and often more. Blame Volker for that, not Reagan.
The 1980 and 1982 recessions were manufactured by the Fed. Reagan's stupid move was deregulating the S&L industry and then bailing them out with taxpayer dollars when they got into trouble. True, Reagan made a bunch of stupid moves, but nobody expected genius. Many people suspected he was just a mouthpiece parroting lines written by his handlers. Without a script, his Alzheimers was pretty obvious.
The other thing that can happen is if the Fed raises interest rates above 10% again to save the dollar, like it did on 1980. Prices will drop because nobody will be able to afford the mortgage.
That''s pretty much what I said. We had a currency crisis resulting in double digit inflation.
Not at all. We had an oil price spike triggered by events in the middle east. The share of GDP going to oil imports doubled in a matter of months as the result. Nixon had tried to deal with the 1973-74 oil crisis with wage-and-price controls. Those tactics failed miserably. Carter chose to let inflation do the necessary rationing. There were plans for special supports for those on fixed incomes, but Congress had only recently added COLA adjustments to Social Security and they weren't interested in buying more of the same medicine. Still, the whole problem was actually settling out and receding into the rear-view mirror, but Reagan and the whacko supply-siders were hell-bent on attacking the inflation monster and hacking its horrible head off. What they killed instead was the economy. Volcker was meanwhile doing Reagan's bidding, not acting on his own. That's what Fed Chairs do.
Unfortunately for us, there are a lot of Chinese who are dumping their dollars into U.S. real estate as they think that the Chinese economy may readjust because there are so many dollars in China so prices are still climbing.
Why is it OK for foreigners—especially those from countries which are not "on our side" to put it mildly— to buy up our real estate at inflated prices, anyway?
Lol can you imagine what that would do to housing prices?
Quote:
Originally Posted by SFBayBoomer
Why is it OK for foreigners—especially those from countries which are not "on our side" to put it mildly— to buy up our real estate at inflated prices, anyway?
Because we're a capitalist driven economy?
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.
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.
