Posted by antonsirius on 5/7/2011 9:54:00 AM (view original):
We very much disagree there, padna.

If it weren't for the insane/fraudulent way Wall Street treated those mortgages, the collapse never would have happened. All the people you just labeled as 'at fault' were bit players.

Posted by silentpadna on 5/7/2011 7:52:00 AM (view original):
Swamp, gotta disagree on the real estate bubble.  It was a lot of people's fault.

It was republicans (the democrats are right)
It was democrats (the republicans are right)
It was consumers (very few people are willing to say so, but those who do are right)

It was the republicans fault for not doing anything to make loan restrictions tighter when there was an obvious problem being pushed into the future until it collapsed (much like out of control gov't spending today).  They didn't have the sack to go after the aggressive pressure that was put on the loan institutions caused initially by social agendas that began in the 70's and carried out through the 90's.  Any conservative who stood their ground against this would be labeled "racist" or "against the poor"...as we saw in the mid 2000's.

It was the democrats fault for putting their head in the sand regarding the social pressure they put on the institutions to loan money to those who couldn't afford to pay it back and for playing politics with that pressure.

It was ultimately consumers' fault too because of the refusal of the general population to understand even the basics of finance - which is why those that understand the basics of finance make a lot of money with that understanding, while those who don't pay for that ignorance.  (The subject of another future thread).

Oh and don't let me forget it was the lending institution's fault for taking the unnecessary risks with the capital and being greedy enough to "get theirs" before the house of cards collapsed (much like politicians and their power/spending cycle today).

Posted by silentpadna on 5/7/2011 1:01:00 PM (view original):

Posted by antonsirius on 5/7/2011 9:54:00 AM (view original):
We very much disagree there, padna.

If it weren't for the insane/fraudulent way Wall Street treated those mortgages, the collapse never would have happened. All the people you just labeled as 'at fault' were bit players.

Wall Street had the same mindset as the power brokers in Washington. 

Do you honestly think that consumers could have kept borrowing without being able to afford loans without the tacit approval of those in whose short term interest it was to keep them going?

Do you really think consumers don't share a huge portion of the burden of the problem by not understanding how money works?

It's absolutely amazing (and appalling) to me what I see all the time from supposedly smart people who are leveraged to the hilt because they don't understand the simple idea of compound interest.  And concept is extremely simple.

When the government is essentially forcing banks to compete for loans because of the different "affordable home acts" out there, they exacerbate the problem.  That's where they are at fault.

Wall Street speculators may have spead up the process, but even without them, the underlying problem of Fannie/Freddie and the overleverage of undereducated consumers would have brought down the housing house of cards.  There's blood on many hands in this.

I'm not fond of losing value on my home because other people can't pay their mortgage (i.e. live up to their contract).  I understand people lose jobs and life happens.  Sometimes foreclosures and short sales happen by necessity.  But in this case it happened a lot more than it should have because of the lax restrictions on Fannie/Freddie and the implications against the banks if they were to turn down loans to the under-represented.  With their risks limited by Fannie/Freddie guarantees, they had to compete for those loans at the behest of the programs.

The bubble may have been popped by Wall Street, but it would have popped anyway at some point because the fundamentals had been tampered with.

Posted by silentpadna on 5/7/2011 1:53:00 PM:
Bottom line to me is let the financial institutions determine risk appropriately

Posted by silentpadna on 5/7/2011 1:53:00 PM (view original):
It's not really the same though swamp.  Most people had their head in the sand.  I know I did... not that the bubble got to me directly.  Looking back, I see blame in a lot of places.  But where there is blame and fault, we ought to find a way to solve those problems.  Declaring that being the same as nobody's fault misses the learning opportunity IMO.

Going back to education, I learned financial concepts much later in life than I should have.  They are not terribly complex, but the reason most people don't know them is their fear of math.  In our culture, I find it amazing how little people are interested in or how little importance they attach to learning the basics.  Our pop culture only reinforces the notion that math is for nerds.  As a result, concepts that seem complex on the surface, like how money and finance works, become so  intimidating to the average person in this economy that they don't want to know.  So they ultimately leave themselves at the mercy of those who do and to those who are more than willing to use them as pawns.  And yes, that means a good portion of the blame does fall on the average consumer. 

In my early days I went on without a clue like most people...and made my own financial messes.  Although I never went bankrupt (I didn't want everyone else paying my debts so it took me longer to recover), I certainly was a prime candidate for it.  Why?  Because I didn't take the opportinity to learn how to be responsible about how it works until later.  Who's fault was that?  Mine of course.  I didn't need a college course to learn the basics.  All that information is out there.  Especially now, with the internet.  It's simple to find without paying for it.

There was nothing normal about the bubble.  Most of us had our heads in the sand because we didn't want anything to change.  Heck my house was appreciating at 15% per year - I didn't want that to stop...

Bottom line to me is let the financial institutions determine risk appropriately without government leaning on them to give loans out to people who can't afford them.  Government plays a role in the matter by overseeing banks' solvency and determining required cash reserves and things like that to help protect the consumers.  But the consumers need to learn how to not be preyed upon too. 

Out of time....

Posted by rcrusso on 5/7/2011 4:58:00 PM (view original):
There is an alternative swamp........kill capitalism! Democracy and capitalism can not co-exist and the sooner we come to terms with that the better. Oh and before you call me a socialist and think you are insulting me, I am one and have never denied the fact so save your outrage for another subject. Oh and by the way, show me where in the constitution it says what economic system we are to live by?

Posted by antonsirius on 5/7/2011 5:39:00 PM (view original):
I agree with you to an extent, swamp - bubbles and crashes are a feature of the system, not a bug.

What we can control is how often the bubbles form, how big they get, and how severe the crashes are. Saying "there's no alternative" as though we don't have that kind of control is just wrong.