Let the "good" times roll!

[Dinner]

DinoDoc is a dirty post editor.

[DinoDoc]

Prove it.

[Imran Siddiqui]

I quoted your entire post as it was at the time, so nyeh .

You only added once you realized I made an excellent point

[PLATO]

You guys have pointed the finger everywhere but to the place the blame lays.

Investors continually demanded more and more subprime paper because of the expected yields. Everytime the Wall Street folks shook the book, it got fatter.

Now, if you were a business owner and your customers continually demanded more and more product, you would just say "no, even though you know this item is dangerous, and you are willing to take the risk, I will not sell it to you." Well, guess what...your competitor will. The "evil" lenders were in this position. If they even looked like they might not offer the latest thing then their market shares fell like a rock. The "evil" banks were in the same shape...you played or you got run out of town.

The broker's sold what customers demanded...and yes, there were cheats and frauds. The biggest cheats and frauds though were the customers who signed document after document stating things they knew were not true.

Of course there were failings in the rating agencies that may have led some investors astray, but in many cases the modsels being used were significantly similar.

So who is to blame? Maybe a little bit of everybody. From the customer, to the loan officer, to the lenders, to the banks, to the raing agencies, to the investors, and all the way to the Fed. Maybe it was everybody who bought or sold a house as the market spiraled to points where everybody knew if was B.S. I mean, does anybody really think a 1000 sq.ft, 30 year old rancher on a 1/4 acre lot in suburban California is worth $1.2 million?

Maybe it is the realtor that pushed these value inflated houses...or the builder that built them and reaped astronomical profits.

Maybe it was just an entire people really hoping that times were better than they really were...


I could write a VERY large explanation on the mechanics of how this all happened (in fact, I had started one, but realized just how in depth it would really need to be and stopped)...explain all the nuances of what is going on and why, but it would be so long that other than a handfull of people no one would read it.

Suffice it to say that there was a general multilevel failure in risk analysis complicated by overwhelming fraud on several levels. All in all, nearly everyone in the country profited by the bubble( to one degree or another)...and nearly everyone will suffer by its bursting (to one degree or another).

[Rufus T. Firefly]

Originally posted by PLATO
You guys have pointed the finger everywhere but to the place the blame lays.

Investors continually demanded more and more subprime paper because of the expected yields. Everytime the Wall Street folks shook the book, it got fatter.

Now, if you were a business owner and your customers continually demanded more and more product, you would just say "no, even though you know this item is dangerous, and you are willing to take the risk, I will not sell it to you." Well, guess what...your competitor will. The "evil" lenders were in this position. If they even looked like they might not offer the latest thing then their market shares fell like a rock. The "evil" banks were in the same shape...you played or you got run out of town.

The broker's sold what customers demanded...and yes, there were cheats and frauds. The biggest cheats and frauds though were the customers who signed document after document stating things they knew were not true.

Of course there were failings in the rating agencies that may have led some investors astray, but in many cases the modsels being used were significantly similar.

So who is to blame? Maybe a little bit of everybody. From the customer, to the loan officer, to the lenders, to the banks, to the raing agencies, to the investors, and all the way to the Fed. Maybe it was everybody who bought or sold a house as the market spiraled to points where everybody knew if was B.S. I mean, does anybody really think a 1000 sq.ft, 30 year old rancher on a 1/4 acre lot in suburban California is worth $1.2 million?

Maybe it is the realtor that pushed these value inflated houses...or the builder that built them and reaped astronomical profits.

Maybe it was just an entire people really hoping that times were better than they really were...


I could write a VERY large explanation on the mechanics of how this all happened (in fact, I had started one, but realized just how in depth it would really need to be and stopped)...explain all the nuances of what is going on and why, but it would be so long that other than a handfull of people no one would read it.

Suffice it to say that there was a general multilevel failure in risk analysis complicated by overwhelming fraud on several levels. All in all, nearly everyone in the country profited by the bubble( to one degree or another)...and nearly everyone will suffer by its bursting (to one degree or another).

Whether you intended it to be or not, what you just presented was a very compelling argument for tight regulation of the market.

Your position is that, basically, nobody can be trusted to control themselves -- not homeowners, not banks, not brokers, not investors. Everybody's brains and ethics go out the window the minute there's a promise of a quick buck.

If that's true, then there are only two solutions: plan for a never-ending boom-bubble-bust cycle based on greed gone awry, or regulate the damned market so that innocent people can be protected from capitalism's worst tendencies. Regulation is the better of the two options, by far.

[Imran Siddiqui]

That's a nice write up, Plato, and I agree with Rufus, that it seems based on that, tight regulation is the best way to go.

[Kuciwalker]

Originally posted by Rufus T. Firefly
You're right: screw the mortgage brokers, and screw the foolish borrowers. But if the article's correct -- and I have no idea whether or not it could be -- then the stupid loans will drag down the rest of the economy, harming lots of people who were not in any way stupid.

It makes sense, though. The whole economy failed to recognize that these were bad loans, and therefore thought we had more resources than we did. Now that those resources have suddenly "disappeared" (we realized they don't actually exist), it affects everyone whose plans were based in any part on those resources.

[Rufus T. Firefly]

Originally posted by Kuciwalker


It makes sense, though. The whole economy failed to recognize that these were bad loans, and therefore thought we had more resources than we did. Now that those resources have suddenly "disappeared" (we realized they don't actually exist), it affects everyone whose plans were based in any part on those resources.

That's nonsense. The "whole economy" didn't fail to recognize that. Even as the loans were being made, there were people refusing to take them, banks refusing to make them, and economists and business journalists predicting exactly this situation. All sorts of people behaved prudently. If they are now harmed by a general economic downturn because greed ran amok, aided and abetted by a regulaphobic Republican-controlled government, there's plenty of blame to go around -- but that doesn't mean everyone can, or should, be blamed.

[Kuciwalker]

That's nonsense. The "whole economy" didn't fail to recognize that. Even as the loans were being made, there were people refusing to take them, banks refusing to make them, and economists and business journalists predicting exactly this situation.

But people failed to correctly value the institutions that did make those loans.

[PLATO]

Kuci is right. Even the "responsible" parties contributed to this mess...and quite frankly, you would be hard pressed to find a bank that didn't participate in it.

Yes Rufus, I guess I did make a case for regulation. The problem is that most everything coming from the Congress and the White House is stupid. It all does nothing to address the problems and in many cases would make the problem worse.

What needs to happen is:

1.) Strict regulation of the rating agencies. The main part of the problem is that investors did not really know what they were investing in and thought that they were investing in a much safer product than they actually were. There is a market for "known" risk...there is no market for "unknown" risk.

2.) Strong penalties and strong enforcement on mortgage fraud. Customers need a big huge piece of paper that says "If you have stated anything falsely on this paperwork then you WILL go to jail and you WILL not be bailed out financially"

3.) National certification of loan officers through an education requirement and a continuing education requirement to maintain your licensure. One of the problems that occured is that a lot of people got in the business when the money was great and had no idea how to serve their customer...only themselves.

If just these three things happened, then I believe that the market could right itself and that confidence would be restored. Of course, it sure wouldn't hurt if "off balance sheet" transactions were eliminated from publically traded companies as well...so I guess that makes four things.

That is the official PLATO quick fix for the mortgage industry.

[Patroklos]

If you say "this is just like Japan in 1989" one hundred times fast, does it become true?

BTW, unless you are a constuction worker for a home builder or an idiot who bought a value inflated home, how has the bust hurt you again?

[LordShiva]

Originally posted by Patroklos
BTW, unless you are a constuction worker for a home builder or an idiot who bought a value inflated home, how has the bust hurt you again?

Is this a serious question?

[Dinner]

Sadly, Patroklos is slow to catch on.

[Imran Siddiqui]

Originally posted by LordShiva
Is this a serious question?

God, I hope not.

[Patroklos]

Is this a serious question?

This has done nothing but help me and everyone I know from every income bracket. We went from dicussing where to rent next to whether we want to put a pool in with the tens of thousands of dollars we will save while buying our houses.

To be huritng right now you have to done several stupid things or be really unlucky. Until our economy actually goes into recession, which again looks to be a mild one, you are not huring unless you pulled an Oerdin but didn't have his responsible planning, or are a bank who ****ed themselves. FACT.