We didn't learn a thing from the housing bubble

[Toro]

How?

Proprietary trading has been significantly curtailed.

Not yet
Volcker Rule may be in for another delay - MarketWatch

No, it's happening right now. The banks are shedding their prop desks.

 

[Freewill]

Dems brought back regulation to make insured toxic assets rated A+ impossible AGAIN. Won't happen again until lying cheating GOP get in again...

I would like to say you are just a low information voter but in this case you have to know you are lying. It was the democrats that created the bubble you can try but you can't change history.

Want to correct the disaster that occurred in 2006, elect republicans. NOTHING in the country has been right since 2006.

 

[eflatminor]

You're a complete idiot.

There's the brilliant rhetorical skills of the Poo we all know and love! Why, the manner in which you dissect an argument, and how your respond with such specificity, such logic and reason...it's really quite impressive...

And thanks for once again proving my point that you are incapable of any discourse beyond ad hominem attacks, red herrings and non sequiturs. Much appreciated...

You aren't making an argument. You're stringing together words and phrases you heard somewhere that sound important to you in a pathetic attempt to make it look like you have a clue about what's going on.

If true, then it should be all the much easier for you to respond with specificity...but you don't, because you can't. Fail.

 

[HereWeGoAgain]

No. We didnt.

Buying and owning a house used to mean something different. It was a place you laid a foundation for life. You created memories, and remembered them for decades as you grew old with that grand or humble home. You buried the old loyal dogs you had over the years in the backyard. You watched the neighbors kids grow up.

Now? Well, now it's used as a piggy bank, to try to sell in a few years for a huge profit, so you can move into a bigger, more expensive home..........and thus, increase your self worth as a person, since EVERYTHING we use today to measure a man's worth is done in property and money.

So no. We didnt learn shit.

I dont have a problem with someone who wants a nicer house. Things change,you might have more kids you might have to move for a job. And the reason we moved from our original house,the neighborhood went to shit when people bought up the empty houses and rented to a bunch of beaners. Turning what used to be a decent place to live into a shithole.
And I'm not sure why you would be against investing money in a home? When you sell, that last house is going to dictate how you live out your very short golden years.
Personally I would rather be able to purchase a piece of land then to end up in a senior community.

 

[yidnar]

We've been getting a lot of refi offers lately. A lot of ARM's, they always emphasize in bold letters we'll be able to skip up to two payments, and they always encourage us to consume the difference on our note rather than save it.

I ask of the loan industry and government - did we not learn anything from the housing bubble? Its like it never happened! These guys are ready to do it all over again.

yes we did learn something.we learned that even when the overwhelming evidence point to liberal policies for a disaster libbs still blame the right.

 

[editec]

The reason the price of houses rose so quickly was because the banks wanted to lend as much money as possible since they knew they would not be holding the paper

In order to do that they had to petition the government to lower the standards for borrowing. Now I KNOW hat started AT LEAST back in 1990 or so and got even worse as years went by.

Then, as there was plenty of BORROWED money chasing housing, market forces drive up the value of homes completely out of line with incomes and what the REST OF the economy was really doing.

Naturally that distorted RE market could NOT last.

So we had a housing market injected with no-income verification/no asset verification loans that drove the valuation of housing (which are after all based on recent sales).

Those of you attempting to pin the blame ALL on one Party or the other are either very very stupid, very badly misinformed, or out-right liars.

 

[kaz]

The reason the price of houses rose so quickly was because the banks wanted to lend as much money as possible since they knew they would not be holding the paper

In order to do that they had to petition the government to lower the standards for borrowing.

Petition the government? Dude, Clinton went around talking about housing being the American Dream, then his administration threatened the CEOs of all the major financial institution to lower credit standards or he'd have their asses hauled into endless Congressional investigations. The Fed followed it up by flooding the market with endless ultra low interest loans and underwriting. This is on top of how the mortgage deduction skews prices and doesn't actually make housing more affordable. To say that was driven by the market is just a flagrant rewriting of history.

Those of you attempting to pin the blame ALL on one Party or the other are either very very stupid, very badly misinformed, or out-right liars.

This is true. Clinton started the policy. W came in and made some weak statements that it wasn't going to end well, then continued to drive it. It was pathetic.

 

[Two Thumbs]

Are you seriously this big of an idiot?

So the fact that dems kicked this off with clinton, and are doing it again under obama, actually is over your head.

you're pathetic.

Your stating that everything is Clinton's fault doesn't make it true it only makes you look like a fucking idiot.

You can't be illiterate, so you must be intentionally remaining ignorant of all the facts.

oh and

I didn't say it was all clintons fault

I said clinton took carters shitty idea, everyone else let the crap keep going, it's buffoons like you that can't admit that clinton did it, did it on purpose and obama is doing it again KNOWING the results will be the same.

 

[Londoner]

1939-1980 - American capital tied to American labor. Capital investment used American Labor to manufacture products. Government policies/programs ensured high wages/benefits. The result was that that the father could support entire family on just his wages, so the mother could stay home and raise the kids. This is when Reagan bragged about having the highest paid middle class workers in the world. The high wages paid to the middle class meant that the American consumer had tons of spending money for consumption. This lead to massive capital investment: when there is a high demand, capital must innovate and invest and add jobs to capture that demand. (Don't try to explain this to a "talk radio Republican" - they have been kept ignorant of the relationship between high wages = high demand = economic growth)

1980 - Capitalist saw how cheaply goods were being made in Asia and Global south. The capitalist realizes that he could have his goods made by workers who made pennies a day and lived in hovels beneath dictators. Capitalists begin to offshore their production to Communist China, Taiwan, Korea as well as Latin and South America. The capitalist sees his profits rise as he ships jobs away from the American middle class to ultra-cheap labor markets. The American middle class begins to die, and must be saved by a massive expansion of credit: debt based consumption > Morning in American brought to you by Master Card, American Express and Visa. Don't take my word for it: research what happen to household debt since Reagan and the birth of offshore capitalism)

Cheaper Labor costs provide higher return on investment = Pure Capitalism - Capitalism is known for getting incentives right. Cheaper labor costs means higher profits. Higher profits IS the primary incentive for sound investment. Therefore, getting rid of the high cost of American Labor is the essence of capitalist logic, which is driven by a higher rate of return. Nike investors make more when each shoe is made for pennies, as opposed to having to support the expensive living standards of the American Middle Class.

Since workers make so much less (in order to give capitalist higher rate of return), what follows? Answer: workers have less money for consumption. Because workers can no longer afford to consume as much, the USA, since Reagan, required a credit economy to finance consumption. So, starting in 1980, to make up for the shift of jobs to low cost labor markets, the USA grew a massive debt economy where individuals started receiving 3 credit card offers a week. Starting in 1980 American Families went on an unprecedented borrowing binge.

By 2000, Americans were so in debt that they could no longer borrow as much to consume and keep the economy afloat.

So how did they keep the economy afloat? Where did the USA find its stimulus, if not through traditional credit based consumption?

Answer: housing bubble. The financial industry turned to the last thing left with any value: the home. So the Bush administration made it easier for each American to leverage their home's value to borrow enough to keep consuming. They created a conveyor belt where each new mortgage was turned into a financial product that they could sell around the globe. (Wall Street sold Europe over a trillion dollars of mortgage backed securities and derivatives. Through rate manipulation, Greenspan made the housing sector the only game in town, promising the best returns available. So money flowed into the US economy to create one of the most fraudulent bubbles in history.

When the bubble burst, the government bailed out the wealthy Wall Street private sector, and then foreclosed on the poor.

It was a wealth transfer from the middle class to John Galt . . . as per usual.

And "no" - to answers the OPs question - we have not learned a thing. The predators who profited from the bubble and it's popping have paid generously into the Conservative Message Machine to convince America that the falt lies with the poor middle class who got foreclosed on, and not the wealthy private sector who made money on the way up, then on the way down, then after being bailed out.

Welcome to predatory capitalism.

American swallowed poison in 1980 when it freed capital to get its manufacturing from cheap labor markets in Communist China. It sold the middle class down river, requiring the use of credit, debt and bubbles to sustain the American economy (to make up for the shift of jobs to cheap labor climates in dictator lead nations).

(the average Republican voter knows none of this. Ask a GOP voter where Walmart gets most of its manufacturing, and they look at you with a blank stare. They are the useful idiots of predatory offshore capitalism).

 

[The Rabbi]

"Brevity is the soul of wit."

Londoner doesn't get it.

 

[boedicca]

The reason the price of houses rose so quickly was because the banks wanted to lend as much money as possible since they knew they would not be holding the paper

In order to do that they had to petition the government to lower the standards for borrowing. Now I KNOW hat started AT LEAST back in 1990 or so and got even worse as years went by.

Then, as there was plenty of BORROWED money chasing housing, market forces drive up the value of homes completely out of line with incomes and what the REST OF the economy was really doing.

Naturally that distorted RE market could NOT last.

So we had a housing market injected with no-income verification/no asset verification loans that drove the valuation of housing (which are after all based on recent sales).

Those of you attempting to pin the blame ALL on one Party or the other are either very very stupid, very badly misinformed, or out-right liars.

The person who lobbyied the most for loosened lending standards was James A. Johnson, the CEO of Fannie Mae.

 

[tjvh]

Nobody is going to learn anything as long as the Government using our Tax dollars keeps bailing them out.

 

[The Rabbi]

Nobody is going to learn anything as long as the Government using our Tax dollars keeps bailing them out.

I disagree.
They learn they can make shitty loans in a rising market and the gov't will bail them out when things go bad.

 

[tjvh]

Nobody is going to learn anything as long as the Government using our Tax dollars keeps bailing them out.

I disagree.
They learn they can make shitty loans in a rising market and the gov't will bail them out when things go bad.

Yeah... That is what I meant. They know exactly what they are doing because they know their rich uncle Sam will bail them out when they go too far.

 

[The Rabbi]

Nobody is going to learn anything as long as the Government using our Tax dollars keeps bailing them out.

I disagree.
They learn they can make shitty loans in a rising market and the gov't will bail them out when things go bad.

Yeah... That is what I meant. They know exactly what they are doing because they know their rich uncle Sam will bail them out when they go too far.

And the same for borrowers. If they buy more house than they can possibly afford, one of two things will happen. Housing prices will rise and they'll clean up when they sell in a few years, or prices will tank and Uncle will bail them out.
That's what "moral hazard" means.

 

[Dugdale_Jukes]

While sub-prime financing played a somewhat significant part in the housing bubble and bust, it was only part of the problem. Average people who bought their homes were fine and could afford the payments, until the bubble burst and they lost their jobs in the ensuing meltdown. Once they lost their jobs, they could no longer afford the payments, but it wasn't because of the financing.

Amazingly illogical. Sub-prime financing was encouraged precisely for people who were NOT "fine and could afford the payments." Their failure to make these payments CAUSED the meltdown and loss of jobs, not vice versa.

Traditional "conforming" real estate financing required 20% down for residences and 30% down for investments. If these had been maintained, a dip in real estate prices would not have caused the banking collapse.

Just to be crystal clear, auditor0007 was 100% correct in the sense that subprime was the tinder the lit match landed on, not the forest fire itself.

Not to mention that the forest didn't burn. Bush and Paulsen threw tax money all over Wall Street to localize the fire and Obama quickly followed suit, which also served to exaggerate the part subprime played. Had the forest burned, then low margin/no margin derivatives would have taken over as the primary fuel feeding lack of faith in a cascading series of crises.

 

[The Rabbi]

While sub-prime financing played a somewhat significant part in the housing bubble and bust, it was only part of the problem. Average people who bought their homes were fine and could afford the payments, until the bubble burst and they lost their jobs in the ensuing meltdown. Once they lost their jobs, they could no longer afford the payments, but it wasn't because of the financing.

Amazingly illogical. Sub-prime financing was encouraged precisely for people who were NOT "fine and could afford the payments." Their failure to make these payments CAUSED the meltdown and loss of jobs, not vice versa.

Traditional "conforming" real estate financing required 20% down for residences and 30% down for investments. If these had been maintained, a dip in real estate prices would not have caused the banking collapse.

Just to be crystal clear, auditor0007 was 100% correct in the sense that subprime was the tinder the lit match landed on, not the forest fire itself.

Not to mention that the forest didn't burn. Bush and Paulsen threw tax money all over Wall Street to localize the fire and Obama quickly followed suit, which also served to exaggerate the part subprime played. Had the forest burned, then low margin/no margin derivatives would have taken over as the primary fuel feeding lack of faith in a cascading series of crises.

I wonder at anyone who can express a theory so confidently with so poor a track record.

 

[Two Thumbs]

1939-1980 - American capital tied to American labor. Capital investment used American Labor to manufacture products. Government policies/programs ensured high wages/benefits. The result was that that the father could support entire family on just his wages, so the mother could stay home and raise the kids. This is when Reagan bragged about having the highest paid middle class workers in the world. The high wages paid to the middle class meant that the American consumer had tons of spending money for consumption. This lead to massive capital investment: when there is a high demand, capital must innovate and invest and add jobs to capture that demand. (Don't try to explain this to a "talk radio Republican" - they have been kept ignorant of the relationship between high wages = high demand = economic growth)

1980 - Capitalist saw how cheaply goods were being made in Asia and Global south. The capitalist realizes that he could have his goods made by workers who made pennies a day and lived in hovels beneath dictators. Capitalists begin to offshore their production to Communist China, Taiwan, Korea as well as Latin and South America. The capitalist sees his profits rise as he ships jobs away from the American middle class to ultra-cheap labor markets. The American middle class begins to die, and must be saved by a massive expansion of credit: debt based consumption > Morning in American brought to you by Master Card, American Express and Visa. Don't take my word for it: research what happen to household debt since Reagan and the birth of offshore capitalism)

Cheaper Labor costs provide higher return on investment = Pure Capitalism - Capitalism is known for getting incentives right. Cheaper labor costs means higher profits. Higher profits IS the primary incentive for sound investment. Therefore, getting rid of the high cost of American Labor is the essence of capitalist logic, which is driven by a higher rate of return. Nike investors make more when each shoe is made for pennies, as opposed to having to support the expensive living standards of the American Middle Class.

Since workers make so much less (in order to give capitalist higher rate of return), what follows? Answer: workers have less money for consumption. Because workers can no longer afford to consume as much, the USA, since Reagan, required a credit economy to finance consumption. So, starting in 1980, to make up for the shift of jobs to low cost labor markets, the USA grew a massive debt economy where individuals started receiving 3 credit card offers a week. Starting in 1980 American Families went on an unprecedented borrowing binge.

By 2000, Americans were so in debt that they could no longer borrow as much to consume and keep the economy afloat.

So how did they keep the economy afloat? Where did the USA find its stimulus, if not through traditional credit based consumption?

Answer: housing bubble. The financial industry turned to the last thing left with any value: the home. So the Bush administration made it easier for each American to leverage their home's value to borrow enough to keep consuming. They created a conveyor belt where each new mortgage was turned into a financial product that they could sell around the globe. (Wall Street sold Europe over a trillion dollars of mortgage backed securities and derivatives. Through rate manipulation, Greenspan made the housing sector the only game in town, promising the best returns available. So money flowed into the US economy to create one of the most fraudulent bubbles in history.

When the bubble burst, the government bailed out the wealthy Wall Street private sector, and then foreclosed on the poor.

It was a wealth transfer from the middle class to John Galt . . . as per usual.

And "no" - to answers the OPs question - we have not learned a thing. The predators who profited from the bubble and it's popping have paid generously into the Conservative Message Machine to convince America that the falt lies with the poor middle class who got foreclosed on, and not the wealthy private sector who made money on the way up, then on the way down, then after being bailed out.

Welcome to predatory capitalism.

American swallowed poison in 1980 when it freed capital to get its manufacturing from cheap labor markets in Communist China. It sold the middle class down river, requiring the use of credit, debt and bubbles to sustain the American economy (to make up for the shift of jobs to cheap labor climates in dictator lead nations).

(the average Republican voter knows none of this. Ask a GOP voter where Walmart gets most of its manufacturing, and they look at you with a blank stare. They are the useful idiots of predatory offshore capitalism).

You had something until you blamed it all on Bush, and by doing so, showed your own ignorance, while ridiculing others for theirs.

oh
the
Irony

 

[Billo_Really]

Petition the government? Dude, Clinton went around talking about housing being the American Dream, then his administration threatened the CEOs of all the major financial institution to lower credit standards or he'd have their asses hauled into endless Congressional investigations. The Fed followed it up by flooding the market with endless ultra low interest loans and underwriting. This is on top of how the mortgage deduction skews prices and doesn't actually make housing more affordable. To say that was driven by the market is just a flagrant rewriting of history.

I hate to break it to you, skippy, but the housing bubble was caused more from private lenders than public ones.

The default rate for private lenders was 6 times that of public lenders.

The loans to borrowers with lower credit scores which the GSEs bought up fared much better than did similar privately-securitized loans. (Six times better, according to the Center for American Progress). A Federal Reserve report using different methodology "found no evidence" that government policies designed to encourage lending to lower-income borrowers had contributed to the subprime bubble.

 

[Bradfrogger]

Obummer is determined to destroy our economy..