Posted on 08/07/2007 6:49:22 PM PDT by Kaslin
Amid all the hand-wringing and finger-pointing as housing markets collapse, mortgage foreclosures skyrocket and financial markets panic, very little attention is being paid to the fundamental economic and political decisions that led to this mess.
The growth in risky "subprime" mortgage loans by people buying homes they could not really afford has been a key factor in the collapse of housing markets, when the risks caught up with borrowers and lenders.
But why were homebuyers suddenly taking out so many risky loans and lenders suddenly arranging so much "creative" financing for these borrowers?
One clue is the concentration of such risky behavior in particular places and times.
(Excerpt) Read more at ibdeditorials.com ...
Don't forget that Clinton also started the trend of pressuring lenders to give favorable mortgages to those who had no business buying the homes they did.
—booms bust—never forget.
Not the first time this kind of thing happened. The Tax Reform Act of 1986 did away with passive tax shelters centered around a lot of commercial properties - essentially overnight. Commercial real estate prices plummeted overnight. Banks became undersecured overnight and cash flows based on tax benefits of interest and depreciation were reduced to levels unable to cover mortgage payments. Loans went bad and a bunch of banks failed as a result.
A$$hole congressmen like Ted Kennedy and Henry Gonzalez went on tirade after tirade about the lousy bankers that created the mess. There were excesses in the banking industry at the time, but the PRIMARY blame fell on Congress, and I am sad to say, Ronald Reagan also.
I am not saying that tax law allowing those abusive tax shelters should have remained on the books, but the way they did it created a lot of economic upheaval. And Congress got on their soapboxes and blamed all of it on the banking industry. It was total sickening BS, and the public had no clue.
Same happens with car loans. People buy what they want but can’t afford.
Yeah but W was also quick to pounce on the fact that minority home ownership was thr highest ever under his admin.
Dr Thomas Sowell has hit the nail on the head. Smart Growth and other political engineering in the housing market give politicians - many who were street sweepers before their elections - too much control vs market forces. Politicians can only control when they have money. When the money runs out, market forces make corrections.
None of this would have happened if Slick Willy didn’t force lenders to give loans to those who couldn’t afford them. This is clear proof that socialism does NOT work!
Just look at Europe. Their economy is going no where fast.
Politicians are to blame for everything.
Yeah, well instead of blaming Bush, all of these so-called unknowledgable buyers were represented by the lawyers that they paid for at closing.
If nobody explained that they were subject to large variation in their future monthly payments, they should sue their G-Damned lawyer for bad representation!
No personal responsibility.
What he never learned he can’t forget.
The “he” being the second poster on thread, et seq, when of same sentiment.
It was the "Fair Lending Act" and this clown at the behest of his three bosses - Clintoon, Rodham, and Reno - that rolled banks for not making risky loans in urban communities.
Now he's doing the same thing to Massachusetts that his former mentor Boss Splotch did to Monica. It's tough to feel sorry for the idiot voters in that State. They're long overdue to suffer the consequences of their bad choices.
Some people never learn ... yes, that’s right. That is until the sheriff arrives.
These interest rates won’t be around forever. If a person can find some good deals in growth areas and invest with fixed loans.... they’d be set for life...
Eventually, the pendulum will swing back.In no place, at no time in history, has there ever been a right without a corresponding responsibility. When you see a politician telling voters they can repeal the economic law of gravity, be very afraid. A certain percentage will always be stupid enough to swallow it.
Well there is something very wrong when a house I bought in San Diego for 25,000 in the late 60’s, and my brothers house in San Jose cost 150,00 in the 70’s, now fetch half a Mill. The bursting buble of houseing is going to get really ugly.
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