Hedge Fund Commercial Mortgage Lender
So let’s appear at how we got here:
ILLUSIONS
Huge part of what makes the American Dream is hope. However unrealistic, uneducated, and misinformed choices replace hope with illusions.
Buyers had the illusion that homes would often preserve growing quickly in value. Nonetheless, they failed to realize that the actual estate marketplace has cycles. Some of the aspects that produce a change in the marketplace are increased amounts of supply or demand, deregulation of the economic industry, effortless and available credit, low interest rates and much more.
Individuals who bought houses they could not afford did it since they saw an opportunity to “invest” their life savings and accomplish the American dream. They viewed this opportunity as attainable because banks produced it possible, unscrupulous agents/brokers produced them think it was probable, and simply because they lacked the understanding required to recognize the responsibilities, risks and benefits of owning a residence.
Other illusions buyers had was their wages. The had the illusion that their wages would go up enough year following year to cover their ever growing debt due to a lavish life style. This illusion, the lack of monetary education and self-control allowed for folks to live well beyond their means.
Right now people, banks, and our government are drowning in debt.
CREDIT
Competition in the market forces business to enhance on their goods and enables the consumer to acquire those goods at reasonably priced costs. Nevertheless, competition among banks in a booming economy and low interest rates designed a credit bonanza.
Rather of banks improving on their goods and services, they began utilizing creative financial tools to attract a lot more borrowers. They also lend funds to risky borrowers with little regard of their qualifications. Anybody that had a pulse could literally get a loan.
Banks can’t accommodate the demand for credit only with their cash reserves. So if they want to lend far more cash, they sell these mortgages to commercial banks and Wall Street lenders.
Financial Crisis: Who’s Fault Is It, Anyway?
Does not matter.
Since just about everybody is to blame.
Republicans opened the door by way of debt-based credit derivatives and deregulation. Democrats further contributed by turning a blind eye to Fannie and Freddie and insisting that even those who couldn’t truly afford mortgages be allowed to get them. The Bush Administration touted consumer spending as a means to boost the economy, and encouraged reckless consumer behaviors with billions in “stimulus”dollars, all although fueling the national debt by means of a disastrous war and tax cuts for people who do not genuinely require them.
And, of course, greedy banks and mortgage lenders went along, doing their greatest to bilk whoever came through door for whatever they could get — prior to passing the risk on to equally greedy investment banks and hedge fund managers. Shoppers came along for the ride, abandoning reasonable financial practices and making use of credit to fuel materialism — as well as generating poor decisions by purchasing homes they couldn’t afford with “creative” mortgage financing.
Almost everybody shares some of the blame. This is not the time to bicker over who is most at fault. It does not matter. The past is past. It is time to move forward and fix the dilemma. Really fix the dilemma. With practical solutions (that’s right, follow the link for just 1 alternative — and far better IMO — answer) that do not involve throwing a significant, arbitrary amount of money at the dilemma.
This is something that requires measured thought. And a alter in how our society now views debt, dollars and the economy. There is no reason to rush into a bailout plan correct now. Instead, a little far more analysis is necessary.
Answer by Rev-’em-up Wright
This is the real answer simply put:
Inserting socialist programs into a capitalist technique.
I believe you forgot to give credit where credit is due to the Democrats you have sitting in congress, they have a great deal to do with the financial crisis as well.
the CRA, inflation, and a fiat money system
while people took credit they couldn’t afford (poor behavior no doubt), the credit was artificial and would not have existed if it wasn’t created by the Fed.
The globalists who are destroying western civilization.
financial institutions
speculators
special interest groups with political influence
politicians with ties to influential special interest group
we are part of the problem, we are addicted to credit cards
It started with Reagan lifting tariffs that use to protect our industrial might. Clinton signing the Republican NAFTA agreement did not help. But the real mistake was listening to GreenSpan. He had this great idea to give everybody credit even if they cannot afford it which is good for interest business but now the outsourcing is catching up to us and we don`t have the wages to pay off anything so we stop buying.
Pelosi has targeted you for death….
You have figured it out, she has sent a squad after you. You are hereby sentenced to death by styfling suffocation under barney franks enormous A$ $ .
Right, blame everyone. One thing is clear — we have been lacking decent, responsible leadership for years and we are about to get a much better president in January. I hope Obama and Congress will be able to address the mess that has been made by the previous administration because we need to have various problems addressed sooner rather than later.
It’s very complex and many mistakes have been made by government as well as the mortgage industry but the one factor that stands out above all is the desire of people to “keep up with the Jones”. Without this factor none of this would have happened but how can you expect people to live within their means when you dangle enticing offers and gee whiz electronics in front of them and give them lines of credit that they should never really have had? It’s like the story of the Garden of Eden, Eve and the forbidden fruit that Satan made so enticing.
Here is an extremely good article that puts a good handle on what has happened over the years. It’s pretty long, but a definite must read.
Barney Frank for pushing Freddie Mac and Fannie Mae to hand out subprime loans. Chris Dodd, Obama, and others for taking tens of millions (Obama placed second at 90 Million dollars) of dollars from Freddie. The dems milked Fannie and Freddie. They also ran congress.
When people couldn’t pay off their loans, the money dried up. Banks didn’t want to lend other banks money. Without the flow of money between banks, our economy ground almost to a halt.
Then you have Obama, who flippantly says he will tax the bejesus out of us. So investors are withdrawing from the stockmarket in hordes, shocking the economy.
Obama is very involved with screwing up our economy already. He’s not even the president yet.