Greenspan predicted this
Greenspan predicted this
Yeah I know few liked A Greenspan but I don't think he was stupid or a fool.
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The current credit crisis will come to an end when the overhang of inventories of newly built homes is largely liquidated, and home price deflation comes to an end. That will stabilize the now-uncertain value of the home equity that acts as a buffer for all home mortgages, but most importantly for those held as collateral for residential mortgage-backed securities. Very large losses will, no doubt, be taken as a consequence of the crisis. But after a period of protracted adjustment, the U.S. economy, and the world economy more generally, will be able to get back to business.
A. Greenspan Dec. 12 2007
___________________________________________
Paul Krugman called the housing bubble down to the last detail on May 8. 2005
http://www.nytimes.com/2005/08/08/opini ... ugman.html
He just won the Nobel Prize for Economics. Rightfully so.
http://www.nytimes.com/2005/08/08/opini ... ugman.html
He just won the Nobel Prize for Economics. Rightfully so.
Well to be accurate, yes Krugman did predict this but his Nobel Prize was for trade economics I believe. Not to take away from Krugman though. I've read a couple of his books and it's like reading one of David's posts. I need to sit back and reflect a bit.jjrs wrote:Paul Krugman called the housing bubble down to the last detail on May 8. 2005
http://www.nytimes.com/2005/08/08/opini ... ugman.html
He just won the Nobel Prize for Economics. Rightfully so.
"The Great Unraveling" (one of his books) goes into detail what was going to happen and why. What's different in his book vs the right wing hooting about Fanny and Freddie is that according to him, it would be mostly private loans. Guess what?
downhill wrote:Well to be accurate, yes Krugman did predict this but his Nobel Prize was for trade economics I believe.
Well, yeah...but he's a smart guy no matter what he talks about
I haven't read his heavy books but I like his blog.
If you want to get to the cause of a problem, you take a problem down to its simplest form... If you want to learn from your mistakes and the past, you must look at them objectively and forget justification...
Don't get defensive, just read this and realize nothing more is needed to truly understand it than mathematics and common sense, when it is in its simplest form.
This is going to break down this particular problem as such. It is not intended to merely put the blame on 1 party, merely to understand how politics work, in general... You can pick any topic/program/agenda from either party and break it down the same way to see the truth...
When a news brief, press conference, whatever you choose to call them, is issued, the words are carefully chosen and scrutinized, typically with the idea to mislead and hide the true agenda and effects to everyone, the media, the people, etc... The media then grabs it and puts its spin on it. The spin depends on which way they want it go based on what the owners of the media want and order... (Thus Fox giving a conservative spin, etc.)
Plan, illusion, profit, reality... In that order is typical business as usual with politics...
On this deal, let's look at it the way they did when they planned it... The original deal kept spinning around, however, the original plan was always hiding back there in the shadows.
In 1994, the President ordered 1 trillion dollars ($1,000,000,000,000.00) to guarantee loans to low and low middle income people.
That is a great thing. Giving the working man an opportunity to live the American dream and buy a house of his own.
But, now think about that for a second... First, who are the low and low-mid income people? They are typically the uneducated, financially irresponsible, personally irresponsible, live on unemployment, workers comp, minimum wages type jobs, job jumpers-no stable long term job, disabled, handicapped, elderly, welfare, young-first time out on own from parents, and such... They are NOT the work force; don’t be deceived nor confused… The middle class is the real work force, not the low class… The true middle class have their jobs for many years, EARN credit, have assets, etc… The middle class has something to lose, not the lower class…
The elderly typically have their homes from a life of working, the handicapped/disabled are assisted, so the majority of those remaining are typically why you could never have 0% (zero) unemployment, they don't want to work, they want a living provided for them. Included are the workers comp, unemployment, insurance, welfare & disabled fraud; basically any type of fraud or beating the system- undesirables. The exceptions again are the elderly, handicapped and some that are constant victims of bad luck...
The poor has no sense of financial responsibility... Just look at lottery winners that were poor before they won. Almost all of them are in worse financial shape than they were before they won, with in 2 years of winning, why? Look at actors, musicians and sports stars that started out poor then make millions, yet end up broke, why? Because they don't know how to handle money. Typically life’s basics and vices are their only important concerns. With vices often taking precedence over life’s basics, vices being drugs, alcohol, sex, gambling, entertainment of their choice, etc...
To break down further, this is a typical home buyer in middle and low middle class America: (In truth this is how most Americans are̷)
Jack & Jill- typical middle and low-middle income:
Jill is very excited as she tells a friend, "We are going to get a house"!
Friend, "Fantastic! Where? How big is it? How much?
Jill, "We are waiting on the bank to tell us what we are approved for"!
A couple of days later. Jill," the bank has approved us for $300,000! Can you believe that! Let's go look for houses, honey! Oh, I love it! It is my dream house"! ...But, can we afford this house?
Jack, "I love this house too! It is perfect for us! We can cut back in a few places, we will be OK"...
Anyone want to guess how much the loan will be for? If you said anything other than $300,000 you should probably open your eyes...
You see, people don't think and plan their own budget. They have an opportunity, the bank will loan the money, and they think that they can/will make sacrifices and cut back if they have to... There is the root of your problem right there.... The bank will loan you $300,000 for a secured asset that is valued at $300,000. That figure becomes the amount that people choose to believe is the amount of a house that they can afford... The type of loan and details are irrelevant, they are getting their dream home.
Now, what about the low class and their response? That’s easy:
“I can buy a house? Hell yeah! Show me where to sign”...
Keep in mind that a house is a secured asset for the loan. The economy was good, lots of investors buying and reselling houses, thus driving up the value of all houses to basically being overpriced... So, the houses aren’t really worth what they were appraised at…
Now, let’s look at another aspect...
If someone told you that they would guarantee you 1 million dollars in loans made for cars, if the loans were made to poor people, what would you do?
You are going to start selling cars to any and everyone that makes the absolute minimum qualifications (even some that don't) because your money is what? Guaranteed...
So the poor gets a car, not just any car, a car that is probably more than they could afford, who cares, they get the car, your money is guaranteed, either from the buyer or the guarantor, so you are going to hire people, more jobs, bonuses, everyone profits until the loans are not paid, then the guarantor must pay... To sum it up, the poor gets a car temporarily, the seller and people in the industry make salaries, bonuses, etc., and the idiot that guaranteed is going to pay… How much? Good question, how much do you think? This is the poor, but there are always some exceptions that make the said payments, however, the most are going to default. This would be a surprise to you? The group of the most financially irresponsible people in our country. They have basically nothing so they have nothing to lose... The guarantor has to understand that he is liable for the amount that he guaranteed and you can bet that it will be at least 3/4 of the full amount, if not the full amount... This is most definitely known beforehand whether it is revealed or concealed to the people or not. That is the point, the people choose to believe what they want…
Now, back to the deal. 1 trillion dollars to guarantee loans to the low and low-middle class, through a third party deal. (not the middle class, but the low and the low-middle class, I can locate the original information if you wish.) Next year, 2009, our complete “Federal Budget” is just short of 2 trillion dollars, and this was 1 trillion in 1994… The feds said you make the home loans to the poor and we will guarantee it. It doesn’t matter what you, Joe Citizen, believe or think, this is the facts… Fannie Mae and Freddie Mac...
So, the banks go crazy making as many loans as possible. Hell, they had nothing to lose. The government was guaranteeing the loans. A third party deal! The banks gave jobs, paid salaries, bonuses, stimulated the economy, and made loans, what they were instructed to do. The people bought houses that they couldn’t afford with loans that they couldn’t comprehend, but, hey, the bank will loan them the money, so why not… They got a house! The banks had a guarantee and when the loans default at a record level, people start blaming any and everyone… When the government can’t pay all of the money that it promised or guaranteed, banks start failing… From the start, the government let their mouth write a check for an amount that their a$$ couldn’t cash. Typical politics…
So the deal that looked like it was going to put working people in homes was known to be a scam before it was even presented, by people that understood what it really was, but the public believed it because all they heard and understood was houses for the working people, and that's what they chose to believe! Hooray!
Don't get defensive, just read this and realize nothing more is needed to truly understand it than mathematics and common sense, when it is in its simplest form.
This is going to break down this particular problem as such. It is not intended to merely put the blame on 1 party, merely to understand how politics work, in general... You can pick any topic/program/agenda from either party and break it down the same way to see the truth...
When a news brief, press conference, whatever you choose to call them, is issued, the words are carefully chosen and scrutinized, typically with the idea to mislead and hide the true agenda and effects to everyone, the media, the people, etc... The media then grabs it and puts its spin on it. The spin depends on which way they want it go based on what the owners of the media want and order... (Thus Fox giving a conservative spin, etc.)
Plan, illusion, profit, reality... In that order is typical business as usual with politics...
On this deal, let's look at it the way they did when they planned it... The original deal kept spinning around, however, the original plan was always hiding back there in the shadows.
In 1994, the President ordered 1 trillion dollars ($1,000,000,000,000.00) to guarantee loans to low and low middle income people.
That is a great thing. Giving the working man an opportunity to live the American dream and buy a house of his own.
But, now think about that for a second... First, who are the low and low-mid income people? They are typically the uneducated, financially irresponsible, personally irresponsible, live on unemployment, workers comp, minimum wages type jobs, job jumpers-no stable long term job, disabled, handicapped, elderly, welfare, young-first time out on own from parents, and such... They are NOT the work force; don’t be deceived nor confused… The middle class is the real work force, not the low class… The true middle class have their jobs for many years, EARN credit, have assets, etc… The middle class has something to lose, not the lower class…
The elderly typically have their homes from a life of working, the handicapped/disabled are assisted, so the majority of those remaining are typically why you could never have 0% (zero) unemployment, they don't want to work, they want a living provided for them. Included are the workers comp, unemployment, insurance, welfare & disabled fraud; basically any type of fraud or beating the system- undesirables. The exceptions again are the elderly, handicapped and some that are constant victims of bad luck...
The poor has no sense of financial responsibility... Just look at lottery winners that were poor before they won. Almost all of them are in worse financial shape than they were before they won, with in 2 years of winning, why? Look at actors, musicians and sports stars that started out poor then make millions, yet end up broke, why? Because they don't know how to handle money. Typically life’s basics and vices are their only important concerns. With vices often taking precedence over life’s basics, vices being drugs, alcohol, sex, gambling, entertainment of their choice, etc...
To break down further, this is a typical home buyer in middle and low middle class America: (In truth this is how most Americans are̷)
Jack & Jill- typical middle and low-middle income:
Jill is very excited as she tells a friend, "We are going to get a house"!
Friend, "Fantastic! Where? How big is it? How much?
Jill, "We are waiting on the bank to tell us what we are approved for"!
A couple of days later. Jill," the bank has approved us for $300,000! Can you believe that! Let's go look for houses, honey! Oh, I love it! It is my dream house"! ...But, can we afford this house?
Jack, "I love this house too! It is perfect for us! We can cut back in a few places, we will be OK"...
Anyone want to guess how much the loan will be for? If you said anything other than $300,000 you should probably open your eyes...
You see, people don't think and plan their own budget. They have an opportunity, the bank will loan the money, and they think that they can/will make sacrifices and cut back if they have to... There is the root of your problem right there.... The bank will loan you $300,000 for a secured asset that is valued at $300,000. That figure becomes the amount that people choose to believe is the amount of a house that they can afford... The type of loan and details are irrelevant, they are getting their dream home.
Now, what about the low class and their response? That’s easy:
“I can buy a house? Hell yeah! Show me where to sign”...
Keep in mind that a house is a secured asset for the loan. The economy was good, lots of investors buying and reselling houses, thus driving up the value of all houses to basically being overpriced... So, the houses aren’t really worth what they were appraised at…
Now, let’s look at another aspect...
If someone told you that they would guarantee you 1 million dollars in loans made for cars, if the loans were made to poor people, what would you do?
You are going to start selling cars to any and everyone that makes the absolute minimum qualifications (even some that don't) because your money is what? Guaranteed...
So the poor gets a car, not just any car, a car that is probably more than they could afford, who cares, they get the car, your money is guaranteed, either from the buyer or the guarantor, so you are going to hire people, more jobs, bonuses, everyone profits until the loans are not paid, then the guarantor must pay... To sum it up, the poor gets a car temporarily, the seller and people in the industry make salaries, bonuses, etc., and the idiot that guaranteed is going to pay… How much? Good question, how much do you think? This is the poor, but there are always some exceptions that make the said payments, however, the most are going to default. This would be a surprise to you? The group of the most financially irresponsible people in our country. They have basically nothing so they have nothing to lose... The guarantor has to understand that he is liable for the amount that he guaranteed and you can bet that it will be at least 3/4 of the full amount, if not the full amount... This is most definitely known beforehand whether it is revealed or concealed to the people or not. That is the point, the people choose to believe what they want…
Now, back to the deal. 1 trillion dollars to guarantee loans to the low and low-middle class, through a third party deal. (not the middle class, but the low and the low-middle class, I can locate the original information if you wish.) Next year, 2009, our complete “Federal Budget” is just short of 2 trillion dollars, and this was 1 trillion in 1994… The feds said you make the home loans to the poor and we will guarantee it. It doesn’t matter what you, Joe Citizen, believe or think, this is the facts… Fannie Mae and Freddie Mac...
So, the banks go crazy making as many loans as possible. Hell, they had nothing to lose. The government was guaranteeing the loans. A third party deal! The banks gave jobs, paid salaries, bonuses, stimulated the economy, and made loans, what they were instructed to do. The people bought houses that they couldn’t afford with loans that they couldn’t comprehend, but, hey, the bank will loan them the money, so why not… They got a house! The banks had a guarantee and when the loans default at a record level, people start blaming any and everyone… When the government can’t pay all of the money that it promised or guaranteed, banks start failing… From the start, the government let their mouth write a check for an amount that their a$$ couldn’t cash. Typical politics…
So the deal that looked like it was going to put working people in homes was known to be a scam before it was even presented, by people that understood what it really was, but the public believed it because all they heard and understood was houses for the working people, and that's what they chose to believe! Hooray!
Ken wrote:If you want to get to the cause of a problem, you take a problem down to its simplest form... If you want to learn from your mistakes and the past, you must look at them objectively and forget justification...
Don't get defensive, just read this and realize nothing more is needed to truly understand it than mathematics and common sense, when it is in its simplest form.
This is going to break down this particular problem as such. It is not intended to merely put the blame on 1 party, merely to understand how politics work, in general... You can pick any topic/program/agenda from either party and break it down the same way to see the truth...
When a news brief, press conference, whatever you choose to call them, is issued, the words are carefully chosen and scrutinized, typically with the idea to mislead and hide the true agenda and effects to everyone, the media, the people, etc... The media then grabs it and puts its spin on it. The spin depends on which way they want it go based on what the owners of the media want and order... (Thus Fox giving a conservative spin, etc.)
Plan, illusion, profit, reality... In that order is typical business as usual with politics...
On this deal, let's look at it the way they did when they planned it... The original deal kept spinning around, however, the original plan was always hiding back there in the shadows.
In 1994, the President ordered 1 trillion dollars ($1,000,000,000,000.00) to guarantee loans to low and low middle income people.
That is a great thing. Giving the working man an opportunity to live the American dream and buy a house of his own.
But, now think about that for a second... First, who are the low and low-mid income people? They are typically the uneducated, financially irresponsible, personally irresponsible, live on unemployment, workers comp, minimum wages type jobs, job jumpers-no stable long term job, disabled, handicapped, elderly, welfare, young-first time out on own from parents, and such... They are NOT the work force; don’t be deceived nor confused… The middle class is the real work force, not the low class… The true middle class have their jobs for many years, EARN credit, have assets, etc… The middle class has something to lose, not the lower class…
The elderly typically have their homes from a life of working, the handicapped/disabled are assisted, so the majority of those remaining are typically why you could never have 0% (zero) unemployment, they don't want to work, they want a living provided for them. Included are the workers comp, unemployment, insurance, welfare & disabled fraud; basically any type of fraud or beating the system- undesirables. The exceptions again are the elderly, handicapped and some that are constant victims of bad luck...
The poor has no sense of financial responsibility... Just look at lottery winners that were poor before they won. Almost all of them are in worse financial shape than they were before they won, with in 2 years of winning, why? Look at actors, musicians and sports stars that started out poor then make millions, yet end up broke, why? Because they don't know how to handle money. Typically life’s basics and vices are their only important concerns. With vices often taking precedence over life’s basics, vices being drugs, alcohol, sex, gambling, entertainment of their choice, etc...
To break down further, this is a typical home buyer in middle and low middle class America: (In truth this is how most Americans are…)
Jack & Jill- typical middle and low-middle income:
Jill is very excited as she tells a friend, "We are going to get a house"!
Friend, "Fantastic! Where? How big is it? How much?
Jill, "We are waiting on the bank to tell us what we are approved for"!
A couple of days later. Jill," the bank has approved us for $300,000! Can you believe that! Let's go look for houses, honey! Oh, I love it! It is my dream house"! ...But, can we afford this house?
Jack, "I love this house too! It is perfect for us! We can cut back in a few places, we will be OK"...
Anyone want to guess how much the loan will be for? If you said anything other than $300,000 you should probably open your eyes...
You see, people don't think and plan their own budget. They have an opportunity, the bank will loan the money, and they think that they can/will make sacrifices and cut back if they have to... There is the root of your problem right there.... The bank will loan you $300,000 for a secured asset that is valued at $300,000. That figure becomes the amount that people choose to believe is the amount of a house that they can afford... The type of loan and details are irrelevant, they are getting their dream home.
Now, what about the low class and their response? That’s easy:
“I can buy a house? Hell yeah! Show me where to sign”...
Keep in mind that a house is a secured asset for the loan. The economy was good, lots of investors buying and reselling houses, thus driving up the value of all houses to basically being overpriced... So, the houses aren’t really worth what they were appraised at…
Now, let’s look at another aspect...
If someone told you that they would guarantee you 1 million dollars in loans made for cars, if the loans were made to poor people, what would you do?
You are going to start selling cars to any and everyone that makes the absolute minimum qualifications (even some that don't) because your money is what? Guaranteed...
So the poor gets a car, not just any car, a car that is probably more than they could afford, who cares, they get the car, your money is guaranteed, either from the buyer or the guarantor, so you are going to hire people, more jobs, bonuses, everyone profits until the loans are not paid, then the guarantor must pay... To sum it up, the poor gets a car temporarily, the seller and people in the industry make salaries, bonuses, etc., and the idiot that guaranteed is going to pay… How much? Good question, how much do you think? This is the poor, but there are always some exceptions that make the said payments, however, the most are going to default. This would be a surprise to you? The group of the most financially irresponsible people in our country. They have basically nothing so they have nothing to lose... The guarantor has to understand that he is liable for the amount that he guaranteed and you can bet that it will be at least 3/4 of the full amount, if not the full amount... This is most definitely known beforehand whether it is revealed or concealed to the people or not. That is the point, the people choose to believe what they want…
Now, back to the deal. 1 trillion dollars to guarantee loans to the low and low-middle class, through a third party deal. (not the middle class, but the low and the low-middle class, I can locate the original information if you wish.) Next year, 2009, our complete “Federal Budget” is just short of 2 trillion dollars, and this was 1 trillion in 1994… The feds said you make the home loans to the poor and we will guarantee it. It doesn’t matter what you, Joe Citizen, believe or think, this is the facts… Fannie Mae and Freddie Mac...
So, the banks go crazy making as many loans as possible. Hell, they had nothing to lose. The government was guaranteeing the loans. A third party deal! The banks gave jobs, paid salaries, bonuses, stimulated the economy, and made loans, what they were instructed to do. The people bought houses that they couldn’t afford with loans that they couldn’t comprehend, but, hey, the bank will loan them the money, so why not… They got a house! The banks had a guarantee and when the loans default at a record level, people start blaming any and everyone… When the government can’t pay all of the money that it promised or guaranteed, banks start failing… From the start, the government let their mouth write a check for an amount that their a$$ couldn’t cash. Typical politics…
So the deal that looked like it was going to put working people in homes was known to be a scam before it was even presented, by people that understood what it really was, but the public believed it because all they heard and understood was houses for the working people, and that's what they chose to believe! Hooray!
Excellent post!
Speedguide.... If you don't love Obama you won't like it here.
Straight out the Trailer!:thumb:
Re.....Spect "walk"!
MacBook Pro 2.33Ghz, 3G of Ram, OS X
Straight out the Trailer!:thumb:
Re.....Spect "walk"!
MacBook Pro 2.33Ghz, 3G of Ram, OS X
-
koldchillah
- Senior Member
- Posts: 4629
- Joined: Thu Apr 04, 2002 1:45 pm
- Location: Orlando
Ken, I agree with much of what you said. I've been saying time and time again, even here on SG, that we are a nation of borrowers.
The only disagreement I have with your position is your assumption that this is a low-income bracket issue and that they are to blame. I don't see any consistency with this assumption in accordance to what seems to be happening today. Bankruptcy and foreclosure is happening across the income brackets and social classes.
The truth is, a vast majority of those first wave of low-income, low down payment borrowers are doing just fine. Sure, a lot of people borrowed way beyond their means, in both the housing sector AND retail sector (credit cards, etc). Your assumption that all these people are the low-class undesireables is the part that i would need to see evidence of before believing.
In my area, there are far more foreclosures going on in the upper-middle class bracket than in the lower income brackets. There are 8 sub-divisions in my neck of suburbia. My sub-division is among the smallest of houses. Mostly police officers, firefighters, teachers, etc.. Basic middle class working families. Across the street are the 5 - 7 bedroom 2-story big boy houses with the BMW's and Lexus' all in the driveways. If I was to believe you and assume that the lower middle class people are the ones that can't pay, then I bet I would be noticeing most of the foreclosures going on in my subdivision, no? WRONG.. When i walk my dog into the uppity uppity sub-divisions I see far more houses on the choppping block. Of our 90+ foreclosures in our community, only about 10% have occured in the most affordable subdivision.
So IMO, financial irresponsibilty is not a class issue. The stench goes straight to the top, even to the so called "wealthy" who just like average joe, overstepped their bounds and couldn't handle their bacon.
Other than that, you are spot on. Clinton laid down the foundation for a system of abuse that was originally laid out with the best intentions but then greed set in and things got way outta control. I still applaud Clinton for his actions, as like I said, a vast majority of those new homeowners and FHA/HUD assisted borrowers are doing just fine. When the sub-prime lending got outta control with these small no-name, make their own requirements, fly-by-night mortgage companies, THAT is when the crap really hit the fan and THATS why we didnt' see this happen in the late 90's instead of today.
The only disagreement I have with your position is your assumption that this is a low-income bracket issue and that they are to blame. I don't see any consistency with this assumption in accordance to what seems to be happening today. Bankruptcy and foreclosure is happening across the income brackets and social classes.
The truth is, a vast majority of those first wave of low-income, low down payment borrowers are doing just fine. Sure, a lot of people borrowed way beyond their means, in both the housing sector AND retail sector (credit cards, etc). Your assumption that all these people are the low-class undesireables is the part that i would need to see evidence of before believing.
In my area, there are far more foreclosures going on in the upper-middle class bracket than in the lower income brackets. There are 8 sub-divisions in my neck of suburbia. My sub-division is among the smallest of houses. Mostly police officers, firefighters, teachers, etc.. Basic middle class working families. Across the street are the 5 - 7 bedroom 2-story big boy houses with the BMW's and Lexus' all in the driveways. If I was to believe you and assume that the lower middle class people are the ones that can't pay, then I bet I would be noticeing most of the foreclosures going on in my subdivision, no? WRONG.. When i walk my dog into the uppity uppity sub-divisions I see far more houses on the choppping block. Of our 90+ foreclosures in our community, only about 10% have occured in the most affordable subdivision.
So IMO, financial irresponsibilty is not a class issue. The stench goes straight to the top, even to the so called "wealthy" who just like average joe, overstepped their bounds and couldn't handle their bacon.
Other than that, you are spot on. Clinton laid down the foundation for a system of abuse that was originally laid out with the best intentions but then greed set in and things got way outta control. I still applaud Clinton for his actions, as like I said, a vast majority of those new homeowners and FHA/HUD assisted borrowers are doing just fine. When the sub-prime lending got outta control with these small no-name, make their own requirements, fly-by-night mortgage companies, THAT is when the crap really hit the fan and THATS why we didnt' see this happen in the late 90's instead of today.
"Nobody's invincible, no plan is foolproof, We all must meet our moment of truth." - Guru
The original plan under Clinton had a few changes done to it. Things like oversights.
How about such silly things like the house you buy under the plan, be your primary place of residence?
A lot of those high prices Ken was talking about, came about by speculators. It was rampant around these parts as people would buy up homes here, sight unseen except for a pic or two on the net, then let them sit idle for months on end then relist them. Money was cheap when you could get a sup prime loan at the snap of your fingers. These people weren't exactly poor.
Just one piece of the pie..
Back to topic, Greenspan DID predict this as well as other economists. It was ignored by the current admin who've always taken the stand that markets shouldn't have oversights or brakes. That they'll always correct themselves. Well that's true to a point but that correction in this case could very well be a depression. A world wide one without government intervention.
It's a sad state of affairs when we turn our noses at things such as health care and social security as being socialist yet bail out an irresponsible wall street and big corporations and refuse to even think of that as being socialistic. lol
Actually this is more related to the later discussion but it didn't get a lot of responses.
https://www.speedguide.net/forums/viewtopic.php?t=246563
How about such silly things like the house you buy under the plan, be your primary place of residence?
A lot of those high prices Ken was talking about, came about by speculators. It was rampant around these parts as people would buy up homes here, sight unseen except for a pic or two on the net, then let them sit idle for months on end then relist them. Money was cheap when you could get a sup prime loan at the snap of your fingers. These people weren't exactly poor.
Just one piece of the pie..
Back to topic, Greenspan DID predict this as well as other economists. It was ignored by the current admin who've always taken the stand that markets shouldn't have oversights or brakes. That they'll always correct themselves. Well that's true to a point but that correction in this case could very well be a depression. A world wide one without government intervention.
It's a sad state of affairs when we turn our noses at things such as health care and social security as being socialist yet bail out an irresponsible wall street and big corporations and refuse to even think of that as being socialistic. lol
Actually this is more related to the later discussion but it didn't get a lot of responses.
https://www.speedguide.net/forums/viewtopic.php?t=246563
downhill wrote:Actually it wouldn't have been so bad IF there hadn't been so much greed by unscrupulous lenders and restraints lifted on subprime loans. What Ken outlined is only the beginning of the problem and not a look at the whole shebang.
The greed was allowed and amplified by a 3rd party guaranteeing loans...
The truth is that a turd is a turd, no matter how much you polish it... Gold plate it and it is still a turd...
That was covered in another thread, I believe while you were away. The 1994 Democrat congress passed this through on Clinton's orders and recomendations...Lefty wrote:Ken, you forgot to divide by congress. There is no explanation to what they do.
But that was not the point of this thread and why I didn't include them. I didn't even want to mention the Presidents name because then it becomes a defend your party fest.
This thread was to show how both parties, politicians in general, dupe the public into believing that a no doubt screwing will help the working man...
It started out as just that, 1 trillion guaranteed in loans to low and low middle class. As I said, everyone then puts their agenda on it, just as it happened... As I said in the post, the government guaranteed the loans and the public allowed the banks to tell them what THEY could afford, based on a secured asset. The loans were guaranteed. Yes, the banks took advantage of it, however, it would not have been possible with out the guarantee and the American people not being responsible. Nothing is going to change until people start taking responsibility for themselves and their actions. The banks couldn't do it with-out people signing on the line and agreeing to it...koldchillah wrote:Ken, I agree with much of what you said. I've been saying time and time again, even here on SG, that we are a nation of borrowers.
The only disagreement I have with your position is your assumption that this is a low-income bracket issue and that they are to blame. I don't see any consistency with this assumption in accordance to what seems to be happening today. Bankruptcy and foreclosure is happening across the income brackets and social classes.
The truth is, a vast majority of those first wave of low-income, low down payment borrowers are doing just fine. Sure, a lot of people borrowed way beyond their means, in both the housing sector AND retail sector (credit cards, etc). Your assumption that all these people are the low-class undesireables is the part that i would need to see evidence of before believing.
In my area, there are far more foreclosures going on in the upper-middle class bracket than in the lower income brackets. There are 8 sub-divisions in my neck of suburbia. My sub-division is among the smallest of houses. Mostly police officers, firefighters, teachers, etc.. Basic middle class working families. Across the street are the 5 - 7 bedroom 2-story big boy houses with the BMW's and Lexus' all in the driveways. If I was to believe you and assume that the lower middle class people are the ones that can't pay, then I bet I would be noticeing most of the foreclosures going on in my subdivision, no? WRONG.. When i walk my dog into the uppity uppity sub-divisions I see far more houses on the choppping block. Of our 90+ foreclosures in our community, only about 10% have occured in the most affordable subdivision.
So IMO, financial irresponsibilty is not a class issue. The stench goes straight to the top, even to the so called "wealthy" who just like average joe, overstepped their bounds and couldn't handle their bacon.
Other than that, you are spot on. Clinton laid down the foundation for a system of abuse that was originally laid out with the best intentions but then greed set in and things got way outta control. I still applaud Clinton for his actions, as like I said, a vast majority of those new homeowners and FHA/HUD assisted borrowers are doing just fine. When the sub-prime lending got outta control with these small no-name, make their own requirements, fly-by-night mortgage companies, THAT is when the crap really hit the fan and THATS why we didnt' see this happen in the late 90's instead of today.
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koldchillah
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- Location: Orlando
I agree. Personal responsibility is certainly a huge part. I only objected to your assumption about the low and low middle class. These aren't the majority of people that are losing their homes right now. Financial irresponsibilty is not just a class issue as you suggest. The vast majority of the low-income families that were assisted in the 90's are still living in those homes.Ken wrote:It started out as just that, 1 trillion guaranteed in loans to low and low middle class. As I said, everyone then puts their agenda on it, just as it happened... As I said in the post, the government guaranteed the loans and the public allowed the banks to tell them what THEY could afford, based on a secured asset. The loans were guaranteed. Yes, the banks took advantage of it, however, it would not have been possible with out the guarantee and the American people not being responsible. Nothing is going to change until people start taking responsibility for themselves and their actions. The banks couldn't do it with-out people signing on the line and agreeing to it...
I was merely suggesting that if you look around at the neighborhoods that are filled with foreclosures, you'll see that it's mostly middle-class, to upper middle class newly constructed homes that are having trouble. Combined households making between 70K - 140K that over extend themselves with credit. Not lower middle class neighborhoods. Most lower middle class families live in older neighborhoods with much lower foreclosure rates than newly constructed, overly developed areas that took advantage of middle class people and upper middle class people who were ALSO just as EASY to convince that they could afford that 5 - 7 bedroom dream house.
Clinton played both sides of this mess. In 1994, the housing bill that you mention was actually a good thing. It was later in '99 before leaving office that his administration applied enormous amounts of pressure to Fannie/Freddie to further lower borrower requirements.. Thats 5 years after his plan expanded the HUD/FHA programs, WHICH WERE WORKING GREAT up until that point.
If everyone, including the Clinton administration, would have just stuck to the original '94 housing bill, we wouldn't be in this mess and home ownership would have grown admirably without this disaster we are seeing now. Of course, thats just my opinion.
"Nobody's invincible, no plan is foolproof, We all must meet our moment of truth." - Guru