What caused the eonomic meltdown?

[kiwiman127]

The primary cause of the tech and housing bubbles is not politics but central banks. Politics played a role but both the housing and tech bubbles were driven by the excess creation of money and lax lending standards. When credit becomes too abundant, it can feed into asset markets and create bubbles. This wasn't the only reason - there were many - but it was the primary reason. And both the tech and housing bubbles are linked.

People trying to blame Democrats or Republicans or the GSEs or the CRA or whatever are missing the point. This was a global issue, not simply an American issue.

Cause ---> effect.

Effect = housing bubbles in many countries across the globe.

Ergo, the cause is global, and you must look for global causes.

Of course, politics in America had an affect, but the CRA or George Bush didn't cause housing bubbles in Spain, Australia, Canada, Ireland, etc.

Thanks for putting the whole thing in realistic non-partisan terms. Not every problem facing the US is the result of one party's missteps, in many cases other things/people drove problem. The world isn't black and white or isn't "us" and "them" all the time. Of course try to tell that to folks that think the world's problems can be solved by their ideology!

 

[kiwiman127]

Given that virtually any and every house was being given no-credit-check mortgages, what was to stop uncreditworthy people and flippers who got caught holding the bag from buying non-CRA houses?

Nothing.

But house flippers weren't generally poor people. They were middle class people trying to get rich.

I know some flippers that were just starting out who got caught holding the bag.

Point being that the CRA properties acted as a sort of financing typhoid Mary, affecting housing purchases in virtually all regions and neighborhoods.

Yet private lenders made about 80% of the loans of the loans to low to moderate income home buyers. So 20% of the loans caused the crisis?

 

[Oddball]

Nothing.

But house flippers weren't generally poor people. They were middle class people trying to get rich.

I know some flippers that were just starting out who got caught holding the bag.

Point being that the CRA properties acted as a sort of financing typhoid Mary, affecting housing purchases in virtually all regions and neighborhoods.

Yet private lenders made about 80% of the loans of the loans to low to moderate income home buyers. So 20% of the loans caused the crisis?

The economy and home values cratering affects the low-to-moderate income earners the most...DUUH.

 

[EdwardBaiamonte]

Nothing.

But house flippers weren't generally poor people. They were middle class people trying to get rich.

I know some flippers that were just starting out who got caught holding the bag.

Point being that the CRA properties acted as a sort of financing typhoid Mary, affecting housing purchases in virtually all regions and neighborhoods.

Yet private lenders made about 80% of the loans of the loans to low to moderate income home buyers. So 20% of the loans caused the crisis?

1) private lenders got the money to lend from the Fed whose policy was to stimulate the housing market with low low interest rates!!!

2) private lenders made loans becuase the Fed gave them the money and because Fan/Fred bought the loans and/or guaranteed them.

3) Fan Fred was given a special government mandate to the extent
it promised to meet idiotic liberal affordable housing goals that would not have been met had the Republican free market been allowed to operate.


As a liberal you will find all that way over your head.

 

[TakeAStepBack]

Investor's Business Daily takes apart ACORN and the CRA in an editorial Community Reinvestment Act: Separating Fact From Fiction

Oh come on, Invested Bigots Daily has less credibility than Wikipedia. You keep going from bad to worse. Basically all you are proving is that the CON$ervoFascist Brotherhood lies in packs.

According to you. I notice you can not rebuttal any specific information. You just try to shoot the messenger and claim. You provide nothing because you can not.

You lose, Ed. You're a fucking hack of the highest order.

Congrats on your special Ed.

 

[edthecynic]

Investor's Business Daily takes apart ACORN and the CRA in an editorial Community Reinvestment Act: Separating Fact From Fiction

Oh come on, Invested Bigots Daily has less credibility than Wikipedia. You keep going from bad to worse. Basically all you are proving is that the CON$ervoFascist Brotherhood lies in packs.

According to you. I notice you can not rebuttal any specific information. You just try to shoot the messenger and claim. You provide nothing because you can not.

You lose, Ed. You're a fucking hack of the highest order.

Congrats on your special Ed.

All your bullshit has been thoroughly rebutted, repeating the same crapaganda from a different Right wing whacko changes nothing. But maybe I should rebut your shit in a way you can surely accept.

 

[TakeAStepBack]

I'm agnostic, Special Ed. You're making yourself look even worse. What part of the information is not factual from the article? Be specific. Show your work.

 

[TakeAStepBack]

I didn't think so, special Ed.

 

[Dissent]

Government interference with the economy.

 

[Toro]

I know some flippers that were just starting out who got caught holding the bag.

Point being that the CRA properties acted as a sort of financing typhoid Mary, affecting housing purchases in virtually all regions and neighborhoods.

Yet private lenders made about 80% of the loans of the loans to low to moderate income home buyers. So 20% of the loans caused the crisis?

The economy and home values cratering affects the low-to-moderate income earners the most...DUUH.

If you go all the way back, then, Reagan's deregulation caused both the S&L Crisis as well as the Financial Crisis. Financial deregulation around the world has often created a boom in credit and subsequent unstable housing and asset market crises.

 

[Toro]

I'm agnostic, Special Ed. You're making yourself look even worse. What part of the information is not factual from the article? Be specific. Show your work.

I meant to ask - in that article, it references "commitments." Why does that matter? Commitments aren't loans.

 

[Oddball]

Yet private lenders made about 80% of the loans of the loans to low to moderate income home buyers. So 20% of the loans caused the crisis?

The economy and home values cratering affects the low-to-moderate income earners the most...DUUH.

If you go all the way back, then, Reagan's deregulation caused both the S&L Crisis as well as the Financial Crisis. Financial deregulation around the world has often created a boom in credit and subsequent unstable housing and asset market crises.

Pish posh...Criminals cause crime.

The only "deregulation" that caused the boom in bogus credit issuance amounted to the Fed artificially holding down interest rates and banks being politically bullied into handing out mortgages to people who weren't creditworthy....All under the idiotic rubric of "affordable housing".

 

[Toro]

The economy and home values cratering affects the low-to-moderate income earners the most...DUUH.

If you go all the way back, then, Reagan's deregulation caused both the S&L Crisis as well as the Financial Crisis. Financial deregulation around the world has often created a boom in credit and subsequent unstable housing and asset market crises.

Pish posh...Criminals cause crime.

The only "deregulation" that caused the boom in bogus credit issuance amounted to the Fed artificially holding down interest rates and banks being politically bullied into handing out mortgages to people who weren't creditworthy....All under the idiotic rubric of "affordable housing".

I agree on the Fed. But if you're going all the way back to the 70s to find a right wing meme, the left can go back to the 80s for a left wing meme. It's as valid.

 

[Wry Catcher]

What do you consider to be the MAIN driving force behind the 2008 economic meltdown?

In a word, GREED. Of course there is rarely one cause for a major event, yet to blame one party or one person is the stuff of talking heads and not us. It's clear the Congress is culpable, as well as the banking, insurance, real estate and financial services industries; the Fed, the President and his economic advisers and all those citizens who took out home equity loans to vacation and spend like drunken Marines.

 

[Oddball]

If you go all the way back, then, Reagan's deregulation caused both the S&L Crisis as well as the Financial Crisis. Financial deregulation around the world has often created a boom in credit and subsequent unstable housing and asset market crises.

Pish posh...Criminals cause crime.

The only "deregulation" that caused the boom in bogus credit issuance amounted to the Fed artificially holding down interest rates and banks being politically bullied into handing out mortgages to people who weren't creditworthy....All under the idiotic rubric of "affordable housing".

I agree on the Fed. But if you're going all the way back to the 70s to find a right wing meme, the left can go back to the 80s for a left wing meme. It's as valid.

Don't give a shit about the right/left wing memes...The S&L crooks were crooks, even under dereg.

The Fed and F&F were willful financial heroin dealers....And now the people who played it straight are being forced to bail out both the junkies and the dealers.

 

[GWV5903]

Pish posh...Criminals cause crime.

The only "deregulation" that caused the boom in bogus credit issuance amounted to the Fed artificially holding down interest rates and banks being politically bullied into handing out mortgages to people who weren't creditworthy....All under the idiotic rubric of "affordable housing".

I agree on the Fed. But if you're going all the way back to the 70s to find a right wing meme, the left can go back to the 80s for a left wing meme. It's as valid.

Don't give a shit about the right/left wing memes...The S&L crooks were crooks, even under dereg.

The Fed and F&F were willful financial heroin dealers....And now the people who played it straight are being forced to bail out both the junkies and the dealers.

Yes they are, this is the big difference between liberal and conservative, pretty clear...

 

[The Rabbi]

What do you consider to be the MAIN driving force behind the 2008 economic meltdown?

In a word, GREED. Of course there is rarely one cause for a major event, yet to blame one party or one person is the stuff of talking heads and not us. It's clear the Congress is culpable, as well as the banking, insurance, real estate and financial services industries; the Fed, the President and his economic advisers and all those citizens who took out home equity loans to vacation and spend like drunken Marines.

Were people not greedy prior to 2007?

 

[editec]

YOu people keep looking for SIMPLE ANSWERS to COMPLEX QUESTIONS.

The various events, policies and practices that brought upon the latest meltdown have many elements working in conjunction to fry the economy.

It is NOT the world's fault that the answer to this what caused this economic problem? takes a TOME to describe.

Economies are highly complex states and what makes them tick cannot be described in a few sentences.

And demanding that we pin all the blame on one POTUS or ONE congress, or one policy or one law is just the sort of stupidity that one expects from the truly ignorant.

If we want to know all the things that had to work together to describe this or any other economy, be prepared to spend many many hours studying all those people, policies, laws and events that lead up to the economy in question.


Its like somebody is asking how does the human body work?, while at the same time demanding that we tell them what ONE ORGAN keeps us alive.

LIfe is complex.

Simple answers do not descibe it.

 

[KissMy]

The primary cause of the tech and housing bubbles is not politics but central banks. Politics played a role but both the housing and tech bubbles were driven by the excess creation of money and lax lending standards. When credit becomes too abundant, it can feed into asset markets and create bubbles. This wasn't the only reason - there were many - but it was the primary reason. And both the tech and housing bubbles are linked.

People trying to blame Democrats or Republicans or the GSEs or the CRA or whatever are missing the point. This was a global issue, not simply an American issue.

Cause ---> effect.

Effect = housing bubbles in many countries across the globe.

Ergo, the cause is global, and you must look for global causes.

Of course, politics in America had an affect, but the CRA or George Bush didn't cause housing bubbles in Spain, Australia, Canada, Ireland, etc.

The Fed was a big factor, but still not the primary cause. The Fed has been trying to get another bubble going for 4 years now with no success at zero interest because credit standards are tight. Low interest rates do not create bubbles! Low credit standards create bubbles! Lending to anyone who dreams up a dot.com name regardless of their business experience, income, or credit was lack of lending standards. Just as lending to any bum who wants to buy a house regardless of their credit or income was lack of lending standards.

The Fed can raise rates to help pop bubbles but then again, if you have no lending standards a bum will barrow money regardless of what the rate is. When someone is not concerned about paying you back, do you really believe they care what the interest rates are? The Pay-Day loan places make a killing at 650% annual interest rate (APR).

If Government created another GSE that said they would cover loan losses at 100% for any bad loan you make, we could get another bubble going tomorrow!!!

GSE's cause sub-prime bubbles by themselves. Just look back in history & you will see them.

"In spring 1972, a major scandal struck the Federal Housing Administration (FHA), which since passage of the Housing and Urban Development Act of 1968 and the creation of the Government National Mortgage Association (Ginnie Mae) had been responsible for helping the poor buy homes in inner-city areas via government-backed mortgages. This was financed by mortgage-backed securities, the first issues of which George Romney had announced in 1970. A number of FHA employees, along with a number of real estate firms and lawyers, were indicted for a scheme in which the value of cheap inner city homes was inflated and sold using those government-backed mortgages to black buyers who could not really afford them, and the government was stuck for the bad loans when owners defaulted. FHA was under Romney's purview, and he conceded that HUD had been unprepared to deal with speculators and had not been alert to earlier signs of illegal activity. The FHA scandal gave Nixon the ability to shut down HUD's remaining desegregation efforts with little political risk; by January 1973, all federal housing funds had been frozen."

 

[edthecynic]

I'm agnostic, Special Ed. You're making yourself look even worse. What part of the information is not factual from the article? Be specific. Show your work.

Invested Bigots Daily showed no work, all it did was pontificate an opinion that all the people who actually studied the problem are wrong simply because Invested Bigots Daily says so.

'That which can be asserted without evidence can also be dismissed without evidence.'
- Christopher Hitchens