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From Clinton to Obongo
- Thread starter jnevin
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javaguru
Banned
So "greedy bankers" caused the housing bubble? How exactly did these greedy bankers come to power in 2008 when we all know "greed" has been around since humanity.
It's interesting that Alan Greenspan wasn't mentioned; He brought out monetary WMD to deal with a run of the mill recession. The fed created real negative interest rates and then Bernake created negative yield curves that created more bad incentives. Federal government policies helped channel investments in housing which had an exponentially detrimental outcome because housing is a consumption good; At least commercial real estate would have been a capital investment, which exacerbated the crash.
Fannie and Freddie were a major part of the problem because of their pseudo government status that allowed them to have a greater impact on the secondary market than in a free market.
It's interesting that Alan Greenspan wasn't mentioned; He brought out monetary WMD to deal with a run of the mill recession. The fed created real negative interest rates and then Bernake created negative yield curves that created more bad incentives. Federal government policies helped channel investments in housing which had an exponentially detrimental outcome because housing is a consumption good; At least commercial real estate would have been a capital investment, which exacerbated the crash.
Fannie and Freddie were a major part of the problem because of their pseudo government status that allowed them to have a greater impact on the secondary market than in a free market.
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javaguru
Banned
People respond to incentives, you're correct in a sense but without government and pseudo government incentives the housing bubble never would have occurred. When you shift the demand curve to the left with low interest rates it creates a bubble.
You can't blame anyone but the consumers who were too stupid to read the fine print on the 100 some odd pages of lending papers they signed. It's the American dream to live beyond your means and not have to worry about paying for it.
The government knew how to take advantage of us and knew what would happen but you have to be smart enough to not put yourself in a bad situation.
The government knew how to take advantage of us and knew what would happen but you have to be smart enough to not put yourself in a bad situation.
You, apparently.
Captain FT said:
You can and should blame consumers for the deluge of foreclosures. You cant really blame them for AIG and Lehman collapsing (and our entire financial system nearly following suit). That's where Clinton / Wall Street come into play.
javaguru
Banned
I am an iconoclast but I'm also correct in this instance.
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