The Fate of the Economy... still under deliberation.

[68Wooley]

...and the dollar is strengthening enough that even last week's OPEC production cuts failed to keep oil prices high...

Unfortunately, that's primarily because everyone's realized the Euro zone countries are  as shagged as everywhere else rather than any great news coming out of the US.

Pretty much agree with everything else you say though. We're simply at the end of the property 'gold rush'. People will / are getting burned, and its a shame, but in 8 to 10 years, after another period of growth, we'll be right back here again. I'm personally finding this current downturn a lot less traumatic than the dot com crash.

[crockett]

Neither Greenspan or Bush had anything to do with the housing bubble... That was caused entirely by Congress passing laws designed to encourage home ownership by people with lower incomes, and simultaneously allowing those loans to be packaged and sold as investments which encouraged the banks and investing companies to give riskier and riskier loans.  Both laws had the intended effect, with disastrous consequences.  People who had no business buying a house were told that buying houses with loans they could not possibly pay off was somehow their right and the realization of the American Dream, and investment managers got rich trading these worthless loans.  Given the inevitable outcome when adjustable rate mortgages hit the end of their low-rate period, it's clear that congress got exactly what they intended with these laws - people who had an income that could not support home ownership were kicked out of the homes they never should have had in the first place, and investment companies were stuck with worthless pieces of paper and rendered insolvent almost overnight.  The laws couldn't have caused more damage if they were specifically intended to bring down the mortgage industry (reference the tobacco industry which has survived numerous legislative attempts to destroy it).

It's easy to assign blame for the mortgage crisis and resulting economic disaster, but there were a couple of laws pushed through by Congress without Presidential influence that directly encouraged and enabled the process.  And those laws were passed while the Democrats were in power.  this should not be a surprise, since "a home for every family" was the liberal rallying cry that led to these laws being passed without serious opposition.  It's typical liberal koolaid, making terrible laws based on an unrealistic dream of how things ought to be.  Well, people who can't afford homes should not be enticed to buy homes they can't afford with loans they can not repay.  It's as simple as that and no amount of pretty speeches about rainbows and ponies will ever change that.

It's funny how you always blame the democrats even though it's been Republicans with control of congress for what 10 of the last 12 years? I suppose all this mess just came about in the last year and a half.

The deregulation came from Republican senators who slipped it in a a rider with a bill they knew Clinton would sign. The deregulation is what allowed this mess to happen. The deregulation is what allowed the banks to push all the ARM's and interest only loans, not affordable housing bills.

btw the fact people weren't able to afford their loans wasn't the only issue. These companies used these loans like a pyramid scheme to borrow more and more money. So don't try to blame this entire mess on people that couldn't afford what they bought, big business holds it's fair share of driving the sinking ship right into the iceberg. Again yet another problem that came from the deregulation.

[Torque]

the neocons sure are making the world a safer place for socialized capitalism.

crack me up... so now they have socialized the mortgage industry and some investment banking just to secure more credit from china to continue deficit spending... 

[lazs2]

crock-it.. the entire housing problem has everything to do with people buying what they could not afford..

I don't care how easy it was to make a loan.. I was not going to by a million dollar home on interest only for 3 years and no down.   lots of people did.. lots of people who made almost nothing bought 400k homes on adjustable rates.   

All this inflated home prices and made things worse till the bubble burst.  1% are defaulting.. that is all.. that is all it took.

lazs

[Mojava]

the entire housing problem has everything to do with people buying what they could not afford..

  Another major problem came from contractors gaming the system.  Creating huge tracts of housing, that would be valued at over inflated amounts.  As long as you continue developing, you can continue to receive loans and not have to pay anything back.  As a developer, you create housing, have it appraised at a high value, then reapply for a loan taken from the appraisal amount on a new complex.  The loan would be for a substantial amount more than the actual value of the housing. 

[FrodeMk3]

crock-it.. the entire housing problem has everything to do with people buying what they could not afford..

I don't care how easy it was to make a loan.. I was not going to by a million dollar home on interest only for 3 years and no down.   lots of people did.. lots of people who made almost nothing bought 400k homes on adjustable rates.   

All this inflated home prices and made things worse till the bubble burst.  1% are defaulting.. that is all.. that is all it took.

lazs

Here, I'm gonna agree with Lasz. People agreeing to pay these ridiculous amounts' kept letting prices advance. However, I see the buyers' as only one small part of the problem; complicity resides not only in the lenders, but in the realtors who pushed the ever-increasing prices (with ever-increasing commissions) and with developers as well. IMHO, they are all just as guilty as the mortgage lenders.

The sad thing about the whole mess was that many people were driven to buy by the rising prices, watching them spiraling upward, thinking "buy now, or never get in" and being re-assured of their purchase by everyone that Home prices would only keep climbing...Even when those prices had already gone up past what they could realistically afford, no matter what kind of cockamamie payment scheme's the bank's came up with.

One law regulating sales, at just about any point of this chain, would have kept this from happening. Either a regulation about lending (without the loopholes), One on Realty's for price increase...But we let business run amok, and after all's said and done, it looks' like the U.S. taxpayer is gonna start taking a hit again, because of it.

[SkyRock]

Neither Greenspan or Bush had anything to do with the housing bubble... That was caused entirely by Congress passing laws designed to encourage home ownership by people with lower incomes, and simultaneously allowing those loans to be packaged and sold as investments which encouraged the banks and investing companies to give riskier and riskier loans.  Both laws had the intended effect, with disastrous consequences.  People who had no business buying a house were told that buying houses with loans they could not possibly pay off was somehow their right and the realization of the American Dream, and investment managers got rich trading these worthless loans.  Given the inevitable outcome when adjustable rate mortgages hit the end of their low-rate period, it's clear that congress got exactly what they intended with these laws - people who had an income that could not support home ownership were kicked out of the homes they never should have had in the first place, and investment companies were stuck with worthless pieces of paper and rendered insolvent almost overnight.  The laws couldn't have caused more damage if they were specifically intended to bring down the mortgage industry (reference the tobacco industry which has survived numerous legislative attempts to destroy it).

It's easy to assign blame for the mortgage crisis and resulting economic disaster, but there were a couple of laws pushed through by Congress without Presidential influence that directly encouraged and enabled the process.  And those laws were passed while the Democrats were in power.  this should not be a surprise, since "a home for every family" was the liberal rallying cry that led to these laws being passed without serious opposition.  It's typical liberal koolaid, making terrible laws based on an unrealistic dream of how things ought to be.  Well, people who can't afford homes should not be enticed to buy homes they can't afford with loans they can not repay.  It's as simple as that and no amount of pretty speeches about rainbows and ponies will ever change that.

if the mortgage companies can be bailed out by the govt, then why are they allowed to completely rape US citizens that have lower incomes with ungodly interest rates that go up, and up, and up.  I mean what did they think they were going to be able to do, get the most money out of those with the least?

[crockett]

crock-it.. the entire housing problem has everything to do with people buying what they could not afford..

I don't care how easy it was to make a loan.. I was not going to by a million dollar home on interest only for 3 years and no down.   lots of people did.. lots of people who made almost nothing bought 400k homes on adjustable rates.   

All this inflated home prices and made things worse till the bubble burst.  1% are defaulting.. that is all.. that is all it took.

lazs

lard how in the hell do you think those people were able to buy those homes they couldn't afford? Humm could it be because the market was deregulated and the loan companies figured out ways to work in people that shouldn't be buying houses?

Think for a min Larz.  It was wide spread problem that loan agents were helping these people get into loans they couldn't afford and in many cases deliberately misleading many of them. It was nothing more than a pyramid scheme because the mortgage companies kept pushing these ARM's and Interest only loans because they were making crap-loads of money from them.

Did people buying more than they could afford cause this problem? Yes partially but the bigger problem came from the industry from the Realtors on up. The entire industry was pushing these poop loans because it made them money, but did they do their due diligence to make sure these people could afford these loans?

Hell no, these companies loaned the money on the idea that the housing market was going to keep on going up. The biggest speculators in the game were the loan shark mortgage companies. Add to that they kept borrowing on top of loan on top of loan in a massive pyramid scheme that has the potential to bankrupt this country.

Sorry Lard but you can't just blame the morons who bought more than they could afford, when the companies lending to them were willingly pushing the money at them. Dude have you even bought a house in the last few years?

I bought a house back in the mid to late 90's when I first turned 21. It was all I could do to get a loan for $54k and I made decent money then. Now 2 years ago just as this mess was starting to show it's ugly head, I was about to buy a condo in down town Austin. The mortgage brokers were trying to push me toward much more expensive houses than I wanted to buy, simply because they could get me into a bigger loan. I knew what I could afford and what I wanted to spend yet yet these guys were bending over backwards trying to push me into another $100k worth of loan.

I ended up deciding not to buy at that time and I'm glad I didn't but one thing is for sure the lending companies tried their best to push ARM & Interest only loans at me, which of course I'd never do anyway because I know better.  In short trying to blame this entire mess on people who couldn't afford their houses just shows that you have no clue what was going on.

Yes they are to blame for their individual loan, but 1 average Joe doesn't cause a bank to collapse. Giving out thousands of loans with out proper due diligence causes a bank and possible the entire economy to fail. None of these average Joe's would have gotten their loans had the market been properly regulated and the loan companies did their due diligence. No one can be blamed for giving out the loan other than the company who gave out the loan.

Of course while you will scream socialism you won't see the forest for the trees.. Will the average Joe be helped out of this mess? Hell no, the only help the average Joe will see, is because it might help the lenders. The socialism you always cry about is already here Lard, except it's goes to big business to dug their way into this mess reaping profits all the way to the bank and now they get bailed out by the average Joe's tax dollars.

[crockett]

if the mortgage companies can be bailed out by the govt, then why are they allowed to completely rape US citizens that have lower incomes with ungodly interest rates that go up, and up, and up.  I mean what did they think they were going to be able to do, get the most money out of those with the least?

Those companies knew exactly what they were doing. They were working on a 5 year plan assuming the people would get refinanced, default on the loan in that time frame or sell the loan to another company. It didn't matter either way, to the loan sharks because their risk was covered by the federal govt. They just played hot potato with the loans making massive profits the first few years and even if the people get in over their head the companies still profited by foreclosing.

[lazs2]

crock-it.. listen to yourself.. you are proving my point..

anyone with any brains was not gonna get one of those loans no matter how attractive it was laid out to them..  they did the lemming thing... "everyone was doing it"  not so.   everyone was not doing it. the default rate is 1%.. 

You can't force people to take a loan.. I will grant that some of the lenders flat out lied and did illegal things..  that will always be the case.

One of the problems was the government forcing lending companies to relax their process to include "low income" and minorities..  they made it very attractive for them to make risky loans.   they also knew the government would bail em out and that they would not get hurt.

The involvement of the government is the problem not the reverse.

lazs

[kamilyun]

I'm totally pissed they're helping Fannie and Freddie.  Interest rates dropped .75 % about a week after I closed on my house.  Not that I wish anyone had to pay more interest...but dang...such a small change makes for several thousand dollars I could've saved.

Back to the salt mine (sound of whip cracking)

[MORAY37]

FDR on the Depression of his era.  A fitting quote I feel.

On the Great Depression of 1929:
 
 

“ Primarily this is because rulers of the exchange of mankind's goods have failed through their own stubbornness and their own incompetence, have admitted their failure, and have abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men. True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence....The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit. ”

[Chalenge]

The unscrupoulus in this case being liberals. Our money clearly says on the back 'In God We Trust' yet the liberals have denied God and removed God from all facets of Government.

Render unto Ceasar that which is Ceasars and unto God that which is Godly.

Roosevelt wasnt that great.

[Hangtime]

In 1999 Klinton signed into law S.900: Financial Services Modernization Act of 1999.

*poof* went Glass-Steagall.. the act passed by congress in 1933 to prevent another stock market crash from destroying the economy.

SANTA MONICA, Calif. (MarketWatch) — Time was when banks and brokerages were separate entities, banned from uniting for fear of conflicts of interest, a financial meltdown, a monopoly on the markets, all of these things.

In 1999, the law banning brokerages and banks from marrying one another — the Glass-Steagall Act of 1933 — was lifted, and voila, the financial supermarket has grown to be the places we know as Citigroup, UBS, Deutsche Bank, et al.

But now that banks seemingly have stumbled over their bad mortgages, it’s worth asking whether the fallout would be wreaking so much havoc on the rest of the financial markets had Glass-Steagall been kept in place.

Diversity has always been the pathway to lowering risk. And Glass-Steagall kept diversity in place by separating the financial powers that be: banks and brokerages.

Glass-Steagall was passed by Congress to prohibit banks from owning full-service brokerage firms and vice versa so investment banking activities, such as underwriting corporate or municipal securities, couldn’t be called into question and also to insulate bank depositors from the risks of a stock market collapse such as the one that precipitated the Great Depression.

But as banks increasingly encroached upon the securities business by offering discount trades and mutual funds, the securities industry cried foul. So in that telling year of 1999, the prohibition ended and financial giants swooped in. Citigroup led the way and others followed. We saw Smith Barney, Salomon Brothers, PaineWebber and lots of other well-known brokerage brands gobbled up.

http://www.marketwatch.com/news/story/would-glass-steagall-save-day-credit/story.aspx?guid={3AA33D85-AD38-41B4-B300-033235B5734A}

Looks like that be a 'ah-chit' moment for the democrats.

[MORAY37]

The unscrupoulus in this case being liberals. Our money clearly says on the back 'In God We Trust' yet the liberals have denied God and removed God from all facets of Government.

Render unto Ceasar that which is Ceasars and unto God that which is Godly.

Roosevelt wasnt that great.

WTF are you talking about? God has nothing to do with this... talk about zealot.

Unfortunately, if you read the history books, you'll find that everyone else besides the United States was basically vanquished.  Had Roosevelt not been there, we'd probably be speaking deutsche....your republican conservatives were crying for isolationism...for appeasement.

Roosevelt wasnt that great...  He just propped the whole country back up after the Depression, and saw through the biggest conflict in human history. I figure that only Lincoln and Washington dealt with harsher issues. You sir, are a moron.