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.
Housing bubble happened because the central bank (quasi-government institution) was too loose on credit (i.e. they held their interest rates too low for too long). Since banks could get money cheaply, they made a lot of loans. Many high risk loans were then purchased by Fannie Mae or Freddie Mac (quasi-government institutions). Other high risk loans were insured by bundling risk (credit-default swaps), and innovatively, I might add. The free flow of money drove prices northward in the housing market (and elsewhere). Eventually, the market recognized that home prices were inflated and buyers quit buying. Sellers, who often had less put into the house than what the market was then offering began to walk away. Bubble pops. Crisis arises.
show me where in the Constitution where the goverment has the right to interfere with private business?
You should watch the presentation "House Of Cards"
It will only take a couple of hours for you to learn the streak of total ignorance and greed which has caused the greatest fall of our economy in it's history. If the depression of 1929 had received the same kind of government bailout there would have been a simple blip and very few suicides.
Housing bubble happened because the central bank (quasi-government institution) was too loose on credit (i.e. they held their interest rates too low for too long). Since banks could get money cheaply, they made a lot of loans. Many high risk loans were then purchased by Fannie Mae or Freddie Mac (quasi-government institutions). Other high risk loans were insured by bundling risk (credit-default swaps), and innovatively, I might add. The free flow of money drove prices northward in the housing market (and elsewhere). Eventually, the market recognized that home prices were inflated and buyers quit buying. Sellers, who often had less put into the house than what the market was then offering began to walk away. Bubble pops. Crisis arises.
What part of that was capitalism run a-muck?
All of it, it is all about Greed. Were the only person so far to blame socialism?
Casper
All of it, it is all about Greed. Were the only person so far to blame socialism?
Casper
The government isn't greedy? The Federal Reserve isn't greedy?
Every being on earth is greedy. Free markets tend towards an equilibrium, the recession is simply a correction to an inflated market. Inflated markets were caused by incentives put in place by government agencies (i.e. socialism).
The government isn't greedy? The Federal Reserve isn't greedy?
Every being on earth is greedy. Free markets tend towards an equilibrium, the recession is simply a correction to an inflated market. Inflated markets were caused by incentives put in place by government agencies (i.e. socialism).
Sir you are in error. A group of youngsters who had no knowledge of the markets except what they had learned in college came up with this wonderful way to make money. They devised a formula which included home values increasing at 6.4% per annum to perpetuity. They tied mortgage creation to bonuses so that more of them would be sold. Then they came up with something called "Stated Income." Whatever a potential mortgagee told them their income happened to be...they wrote it on the dotted line. That was a fool's game.
When I got the only three mortgages I've had on homes in my life they visited my bank and credit union and verified what my "STEADY" income was and even checked to see that my wife and I were both employed. The reason the greedy bastards got away with it is because they were all playing the same song and singing the same verse.
This wasn't just in the U S. The Wall Steet dudes packaged the worthless mortgages and stamped them AAA and sold them all over the world. One small city in the Netherlands lost over half of what they were worth because they had always trusted AAA packages from the U S and had never been disappointed.
Like I said...watch the "House Of Cards" presentation and learn something.
A group of youngsters who had no knowledge of the markets except what they had learned in college came up with this wonderful way to make money. They devised a formula which included home values increasing at 6.4% per annum to perpetuity. They tied mortgage creation to bonuses so that more of them would be sold. Then they came up with something called "Stated Income." Whatever a potential mortgagee told them their income happened to be...they wrote it on the dotted line. That was a fool's game.
When I got the only three mortgages I've had on homes in my life they visited my bank and credit union and verified what my "STEADY" income was and even checked to see that my wife and I were both employed. The reason the greedy bastards got away with it is because they were all playing the same song and singing the same verse.
This wasn't just in the U S. The Wall Steet dudes packaged the worthless mortgages and stamped them AAA and sold them all over the world. One small city in the Netherlands lost over half of what they were worth because they had always trusted AAA packages from the U S and had never been disappointed.
Like I said...watch the "House Of Cards" presentation and learn something.
I don't disagree with any of that. The reason that money was so easy to obtain for bank customers is that it was so easy to obtain for banks. The Federal Reserve was lending money to banks at extraordinarily low rates (well below the rate of inflation). Fannie Mae and Freddie Mac were buying massive amounts of high risk mortgages. The free flow of money drove up the price of housing at a steady rate, which made real estate and mortgage lending a great investment. Recognizing a risk, banks attempted to insure their investments. Unfortunately, it was impossible for insurers to properly assess the true risk due to the imbalance in the marketplace (bubble) caused by the free flow of money.
Eventually buyers recognized the inflated house prices and began to stop buying houses, driving house prices down rapidly. Sellers, who had very little money put into their houses, walked away from their loans at higher rates. Mortgage insurers were overwhelmed with claims: they could not pay banks. Banks, who were relying on insurers to mitigate the risk of foreclosing on housing, began to fail when the insurers couldn't meet their obligations.
Yes, of course it is. It gave rise to the US industrial revolution, the rise of the automobile, telecommunications, and the aircraft industry. All the technological gains and increases in the standard of living in the US are all due to European socialism. Is pot legal where you live? What did the European Union do again?
I don't disagree with any of that. The reason that money was so easy to obtain for bank customers is that it was so easy to obtain for banks. The Federal Reserve was lending money to banks at extraordinarily low rates (well below the rate of inflation). Fannie Mae and Freddie Mac were buying massive amounts of high risk mortgages. The free flow of money drove up the price of housing at a steady rate, which made real estate and mortgage lending a great investment. Recognizing a risk, banks attempted to insure their investments. Unfortunately, it was impossible for insurers to properly assess the true risk due to the imbalance in the marketplace (bubble) caused by the free flow of money.
Eventually buyers recognized the inflated house prices and began to stop buying houses, driving house prices down rapidly. Sellers, who had very little money put into their houses, walked away from their loans at higher rates. Mortgage insurers were overwhelmed with claims: they could not pay banks. Banks, who were relying on insurers to mitigate the risk of foreclosing on housing, began to fail when the insurers couldn't meet their obligations.
And the rest is history.
Ahhh, but you forgot how and why these banks started lowering their lending standards. Let's not forget the Community Reinvestment Act that ACORN pushed through to supposedly help out low-income people to buy homes. Never mind they could not afford the homes, ownership was the only thing that mattered. The banks resisted lowering their lending standards until ACORN then lobbied to get the govt to back these high risk loans via Fannie and Freddie. The floodgates of lending were opened up and everyone and their unemployed cousins twice-removed bought houses they couldn't necessarily afford.
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.
