Princess_Tina posted:Lowbacca_1977 posted:Which other factors, exactly? At the end of the day, people got loans that they couldn't afford for houses they couldn't afford. And they were adults. The companies that gave them the loans are going to feel the pain of it too, of course, but they still took those loans. You're overlooking the fact that the mortgage crisis has expanded to well beyond those who comprise the "subprime" market -- affecting even those who were responsible borrowers and had good credit histories: Like subprime mortgages, many prime loans made in recent years allowed borrowers to pay less initially and face higher adjustable payments a few years later. As long as home prices were rising, these borrowers could refinance their loans or sell their properties to pay off their mortgages. But now, with prices falling and lenders clamping down, homeowners with solid credit are starting to come under the same financial stress as those with subprime credit.
Lowbacca_1977 posted:Which other factors, exactly? At the end of the day, people got loans that they couldn't afford for houses they couldn't afford. And they were adults. The companies that gave them the loans are going to feel the pain of it too, of course, but they still took those loans.
Princess_Tina posted:And again, you're overlooking the complexity of the situation, and the repercussions that went well beyond just the borrowers and lenders in the subprime market. Don't forget that a lot of the loan portfolios ended up with other financial institutions that were not even the original lenders.
Lowbacca_1977 posted: And I don't believe that getting a house that you will only be able to afford if you can refinance because the value went up is responsible. If you can do so and it frees your income up more, then fine, but you shouldn't be relying on that, prime OR subprime. Again thats a house that you can't afford and are banking on the value going up so that you can manage the payments.
Lowbacca_1977 posted: You say ended up like the other financial institutions that ended up with the loan portfolios had it happen against their will.
Lowbacca_1977 posted:Which is EXACTLY why I oppose the bailout.
Princess_Tina posted:Look, here's a piece from another recent op-ed that might make this easier to understand - since you seem to be having trouble understanding my position.
Princess_Tina posted:When the Fed is worried about the state of the economy, it basically responds by printing more of that green paper, and using it to buy bonds from banks. The banks then use the green paper to make more loans, which causes businesses and households to spend more, and the economy expands.
Princess_Tina posted:Even George Soros, certainly not someone unexperienced with global finance, warns that this could be one of the worst crises of recent times, and blames the government regulators for not doing more to prevent the current crisis: “I consider this the biggest financial crisis of my lifetime,” Mr. Soros said during an interview Monday in his office overlooking Central Park. A “superbubble” that has been swelling for a quarter of a century is finally bursting, he said. Mr. Soros, a fierce critic of the Bush administration, faults regulators for allowing the buildup of the housing and mortgage bubbles. He envisions a time, not so distant, when the dollar is no longer the world’s main currency and people will have a harder time borrowing money.
the NY Times posted:Mr. Soros, a fierce critic of the Bush administration, faults regulators for allowing the buildup of the housing and mortgage bubbles.
Kimball_Kinnison posted:What do you mean, "all but entirely unregulated for all practical purposes"? The mortgage industry is one of the most heavily regulated industries out there! They are under not just federal regulations, but numerous state ones, too. Again, I used to work at a mortgage company, and I saw first hand many of the regulations that they were under.
Princess_Tina posted:Didn't you say you used to be in the mortgage business yourself? I think you should have a much better idea of just how regulations failed to prevent the situation from getting out of hand.
Kimball_Kinnison posted:What do you mean, "all but entirely unregulated for all practical purposes"?
Jabbadabbado posted:I think that you have to blame high-level policymaking as much as stupid individuals and institutional/business stupidity. Remember Bush's "ownership society" speech? That was at heart and openly a top-level endorsement of the path America was taking into the real estate crisis. Basically, George Bush encouraged institutions to make these stupid loans and individuals to take them. It was almost a promise that the gravy train of upward real estate prices would keep on chugging along.
Kimball_Kinnison posted:[quote=Princess_Tina]Ordinarily I would agree with that, but the latest crisis has shown that when a whole sector of the economy is all but entirely unregulated for all practical purposes, bad things can happen that affect the whole economy. You could argue that people who are prepared for a recession regardless of cause, will be able to get through it, and I wouldn't disagree with that. However, if just a little bit more regulation could make the difference between a strong economy (which benefits all) and a wobbly economy (which sometimes affects people who behave responsibly) I would prefer the former. It's possible that a majority of Americans would prefer stronger regulations in place, because as we have now seen, the effects of a crisis in one sector can sometimes spill into the whole economy. In any event, I'm sure that if there is enough popular support for such measures, they might conceivably be enacted by the future administration.
Princess_Tina posted:Jabbadabbado posted:I think that you have to blame high-level policymaking as much as stupid individuals and institutional/business stupidity. Remember Bush's "ownership society" speech? That was at heart and openly a top-level endorsement of the path America was taking into the real estate crisis. Basically, George Bush encouraged institutions to make these stupid loans and individuals to take them. It was almost a promise that the gravy train of upward real estate prices would keep on chugging along. Yes, I would totally agree with that. I think there's an old saying, and I'm just trying to paraphrase it somewhat, that goes "If you owe the bank $3,000 and you can't pay, you're in trouble. If you owe the bank $300 million and you can't pay, the bank's in trouble."
Princess_Tina posted:KK - see my earlier post. I just answered that.
Kimball_Kinnison posted: 2) No, you didn't answer that. You posted another op-ed. You have basically said that it is unregulated because someone else thinks it was mostly unregulated.
