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The one thing I disagree on is that politicians couldn't be expected to understand that issuing loans to people that can't pay them back will cause future financial problems. That is something that any 5th grader could figure out.

And I disagree that the banks are the cause. Without the government mandate, those loans never would have been made.
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The one thing I disagree on is that politicians couldn't be expected to understand that issuing loans to people that can't pay them back will cause future financial problems. That is something that any 5th grader could figure out.

And I disagree that the banks are the cause. Without the government mandate, those loans never would have been made.
Man it really isn't that simple, a lot of financial experts fucked it up. It was a waterfall of mistakes that both sides let happen. A whole lot of passing the buck and complacency.
 
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Man it really isn't that simple, a lot of financial experts fucked it up. It was a waterfall of mistakes that both sides let happen. A whole lot of passing the buck and complacency.
I 100% agree with that. Wow, never thought that would happen! :clap:
 

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Ok, this is a big one and not an easy one to place blame on just one entity. Yes, there are multiple factors, such as, Congress and President Clinton basically forced lending institutions to issue subprime home loans to people whom were obviously unable to pay the loans back. These loans were "insured" by Fannie Mae and Freddie Mac. The entire collapse began with the bankruptcy of Fannie & Freddie, which started a waterfall effect of lenders and banks going tits up.

However, nobody was innocent in this. People took on loans they should never have taken, and some even took out multiple loans for multiple properties. Banks took that government mandate as carte blanche to make as much money as they can despite knowing what would happen. The Ratings Agencies all but sold their ratings which violates the entire point of their existence. And yes the Government instituted bad policy which allowed this all to happen and encouraged the behavior.

If anything I'd argue that the Banks and the Ratings Agencies are the most culpable. I don't expect Congress or your average Citizen to understand complex financial instruments and their implications but I DO expect our financial experts to use that knowledge for good. But again, that doesn't change what the average person did or what role the government played.


Now more into the repeal of Glass-Steagall, deregulation, and this is a LONG one, I'll try to break it up so that it will be easier to read.

The glass-steagall legislation which was enacted to avoid another Great Depression. Basically it separated investment and commercial banks. So the bank that you have checking account with can't be involved in the business of the bank that handles your stock portfolio etc. This being repealed meant that a lot of banks which would not have been able to invest in securities and such, suddenly could.

Government bonds are considered very stable investments. unfortunately the interest rates had been repeatedly cut so they were no longer appealing to the new investors (banks). At this point companies began bundling mortgages together and selling them to investors. The investor would pay to own the mortgages and the monthly payments made by the homeowners would go to the investor.


Because banks wouldn't, at this time, approve a mortgage loan without proper research to make sure that the recipient of the loan can afford to pay it back. So these mortgage backed securities were doing quite well. But at some point many of the people who could afford to get a mortgage and wanted to already had a mortgage. So banks became ever more lenient with checking on the ability to pay back the loan.


Here I will interject that a lot of banks would give large bonuses to employees based on the amount of a mortgage that they processed. This led to some employees of banks being dishonest and falsifying paperwork so they could get an approval for a larger loan. This meant that poor people were now on the hook for very large mortgage payments.

Eventually banks got to a point that somewhere issuing what was called a "NINA loan." Which is a no income verification and no asset verification. A person with simply walk into a bank, Tell them what job they had and how much money they made and how much they had in their bank account. The bank within check with a financial expert to see if hypothetically someone in that job would be able to have the money they claimed to. this gave a huge opportunity for dishonesty and some people took advantage of that opportunity.

While these mortgages were becoming less valuable because they we're not getting paid back, banks continued to buy up these mortgage backed securities. and selling them to other companies which would then sell them to another company and so on. The reason Banks were still buying these was they were still given a very high rating. There were a lot of tricks that were used to accomplish this.


Eventually companies had purchased mortgage back securities that they couldn't sell and they weren't getting any return on their investment. Because the artificial demand created by these bad mortgages was so high house prices continually rose.


As companies and banks began going out of business and people begin losing their homes the problem quickly became apparent.

What you ended up having was a lot of companies who had invested in something that would do nothing but lose them money. And you had people who had lost their houses after receiving what's called balloon payments for their mortgages. Essentially balloon payments mean that your monthly payment skyrockets. People no longer knew who actually had their mortgage anymore because they had been bought and sold so many times.

Now we had houses that were priced too high that not enough people wanted to buy. And a large amount of the money that had been invested in these home mortgages was lost.

This is glossing over a lot of other shitty financial practices (worldwide) that were going on at the time.
You also glossed over the reason why banks took these risky investments to start with. Housing prices, supply vs demand. And why people took on balloon payment loans. Realty prices are typically, and rightfully considered, a safe long term investment. They will, generally only increase in price. the problem though is that they should only be increasing in price at a rate commiserate with inflation, new construction, and population increase. basically, people were buying houses with the intention to flip after a short time where the price of the house would increase 5-10% in a year when it should have only increased 1-2%. So if you were going to flip it in a year, why not take out a loan that is very low interest but balloons in 18 months to a high interest, if you'll have closed out the loan before then. But once people started catching on, and started doing this a lot, it blocked up the housing avilibility until housing prices where jumping 10+% per year. So then the construction business catches up and starts building like crazy, but they don't have these horrid loan overheads that the resale market does. Of course the contructor wants to make his money, so he places massive markups on the houses he builds to increase his margins, instead of selling a 200k cost to build house for 225k for a nice 10% margin, he lists it for 350k to match similar housing prices in the area for a 42% margin.

This works until prices get so high people who buy a house to live in, for long term, cannot afford the inflated prices. And the investment buyer can't sell the house for less than they bought it for plus inflation so he can't drop his price from 350k, but the contructor can. he sells the house to the live-in buyer for 250k. Now the investment buyer is stuck with his 350k house he can't sell because everyone can just buy/construct the same house for 250k. So 18 months later the balloon payments hit, he hasn't made any equity yet, and can't afford the 50% larger payment. He forcloses, and loses his home. the bank is on the hook for the 350k house they made a loan on, but they can't get the 330k either they would need to break even. they can only sell for 250k. they take a loss. A few of these and they are in serious trouble. They crash.

Of course, hindsight, this all looks stupid. Why was the bank even making that loan in the first place? Because for a few years prior, houses where going up in price ridiculously fast, and people need houses. houses WILL sell. right? right fellas? Shit, they stopped selling. anyways, they'd make the load because it would sell, and they would make a tidy 35-45k profit on that loan over the course of a year, plus cut of closing fees etc.

but all of these involved parties didn't consider that the prices were only rising because the houses were selling from investor to investor, and the loans were basically just going from one bank to another bank. It was runaway greed.

Of course, some of the investors got lucky, and weren't far under on their loans, and were able to re-fi out of the balloon loan, and they just started renting. When the market crashed, and loans dried up, builders stopped building because people couldn't get a mortgage loan without some serious proof they could afford it. So construction ground to a halt. Now if you needed a price to live, you couldn't get a loan, even if you could noone wanted to sell for a reasonable price because they want to make money off of the house, not break even, so your only option is to rent. And now, people just trying to start out cannot afford to buy, only rent, so they make no equity, transferring all funds to the homeowning generations....and we are here in this clusterfuck of a mess we have right now.

Obviously, it was a lot of moving parts ended up in this gigantic mess we have right now. And a lot of people trying to get theirs right then and screw everyone else. Bankers, homebuyers, government and lobbyist. fun times.

Of course, this all helped lead to a major economic downturn, high unemployment, big money folks lost money so they stopped hiring, people couldn't find jobs, couldn't buy, couldn't prop up the market. just a big damn mess and people who were entering the workforce from 2007-2013 or so got really screwed, and are still paying for it. In fact, people who entered the workforce after all of this turmoil are generally in a better spot than people who entered the workforce during the turmoil.
 

watisthis

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You also glossed over the reason why banks took these risky investments to start with. Housing prices, supply vs demand. And why people took on balloon payment loans. Realty prices are typically, and rightfully considered, a safe long term investment. They will, generally only increase in price. the problem though is that they should only be increasing in price at a rate commiserate with inflation, new construction, and population increase. basically, people were buying houses with the intention to flip after a short time where the price of the house would increase 5-10% in a year when it should have only increased 1-2%. So if you were going to flip it in a year, why not take out a loan that is very low interest but balloons in 18 months to a high interest, if you'll have closed out the loan before then. But once people started catching on, and started doing this a lot, it blocked up the housing avilibility until housing prices where jumping 10+% per year. So then the construction business catches up and starts building like crazy, but they don't have these horrid loan overheads that the resale market does. Of course the contructor wants to make his money, so he places massive markups on the houses he builds to increase his margins, instead of selling a 200k cost to build house for 225k for a nice 10% margin, he lists it for 350k to match similar housing prices in the area for a 42% margin.

This works until prices get so high people who buy a house to live in, for long term, cannot afford the inflated prices. And the investment buyer can't sell the house for less than they bought it for plus inflation so he can't drop his price from 350k, but the contructor can. he sells the house to the live-in buyer for 250k. Now the investment buyer is stuck with his 350k house he can't sell because everyone can just buy/construct the same house for 250k. So 18 months later the balloon payments hit, he hasn't made any equity yet, and can't afford the 50% larger payment. He forcloses, and loses his home. the bank is on the hook for the 350k house they made a loan on, but they can't get the 330k either they would need to break even. they can only sell for 250k. they take a loss. A few of these and they are in serious trouble. They crash.

Of course, hindsight, this all looks stupid. Why was the bank even making that loan in the first place? Because for a few years prior, houses where going up in price ridiculously fast, and people need houses. houses WILL sell. right? right fellas? Shit, they stopped selling. anyways, they'd make the load because it would sell, and they would make a tidy 35-45k profit on that loan over the course of a year, plus cut of closing fees etc.

but all of these involved parties didn't consider that the prices were only rising because the houses were selling from investor to investor, and the loans were basically just going from one bank to another bank. It was runaway greed.

Of course, some of the investors got lucky, and weren't far under on their loans, and were able to re-fi out of the balloon loan, and they just started renting. When the market crashed, and loans dried up, builders stopped building because people couldn't get a mortgage loan without some serious proof they could afford it. So construction ground to a halt. Now if you needed a price to live, you couldn't get a loan, even if you could noone wanted to sell for a reasonable price because they want to make money off of the house, not break even, so your only option is to rent. And now, people just trying to start out cannot afford to buy, only rent, so they make no equity, transferring all funds to the homeowning generations....and we are here in this clusterfuck of a mess we have right now.

Obviously, it was a lot of moving parts ended up in this gigantic mess we have right now. And a lot of people trying to get theirs right then and screw everyone else. Bankers, homebuyers, government and lobbyist. fun times.

Of course, this all helped lead to a major economic downturn, high unemployment, big money folks lost money so they stopped hiring, people couldn't find jobs, couldn't buy, couldn't prop up the market. just a big damn mess and people who were entering the workforce from 2007-2013 or so got really screwed, and are still paying for it. In fact, people who entered the workforce after all of this turmoil are generally in a better spot than people who entered the workforce during the turmoil.
I stated that in jist at the start as I agree, real-estate bubble, fed reserve, everyone had a hand in the failure.
 

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Leftists always ultimately go after the middle class to get revenue, because that's where the money is at. If our govt took 100% of money made by super-rich they would be woefully short paying the bills. However, a modest amount of tax revenue multiplied many millions of times over is what makes this country run. Besides, many of those extremists are billionaires themselves so they aren't going to shoot themselves in the foot, so to speak. They like to talk a good game, it gets votes to say you are working against "the man". Problem is, they are part of that group. Go ahead and increase tax on rich business owners and they will find a way to keep the income stream going. Like... putting off that promised raise to their employees, putting a freeze on hiring, making you pay more of your health insurance premium, or raising prices on their products/services. Those little perks you might get at work? Yeah, that has to go too. Who does that hurt? The lower and middle class. We need to do something that nobody wants to talk about... control spending. None of the liberals have a plan that is even remotely fiscally sound. It's all a pipe dream.
 

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Leftists always ultimately go after the middle class to get revenue, because that's where the money is at. If our govt took 100% of money made by super-rich they would be woefully short paying the bills. However, a modest amount of tax revenue multiplied many millions of times over is what makes this country run. Besides, many of those extremists are billionaires themselves so they aren't going to shoot themselves in the foot, so to speak. They like to talk a good game, it gets votes to say you are working against "the man". Problem is, they are part of that group. Go ahead and increase tax on rich business owners and they will find a way to keep the income stream going. Like... putting off that promised raise to their employees, putting a freeze on hiring, making you pay more of your health insurance premium, or raising prices on their products/services. Those little perks you might get at work? Yeah, that has to go too. Who does that hurt? The lower and middle class. We need to do something that nobody wants to talk about... control spending. None of the liberals have a plan that is even remotely fiscally sound. It's all a pipe dream.
Bernie, Yang; and Warren all have good fiscal policies, as far as, leftists, but yes you are correct, not everyone is going to benefit such is a zero sum game.

As for those damn leftists: https://scholar.princeton.edu/sites/default/files/zidar/files/zidar_tcfw_jpe_2019.pdf the right do it too, both sides suck, however, both sides do have individuals who are for the betterment of the majority and not trying to make a quick buck. As for the rest of your reply, idk, I've already beaten most of those opinions to death.
 

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I agree with this idea. The more you buy, the more you pay. If you can afford to live high on the hog, you should pay more. If you can't, you don't.
Plus, no more tax forms ;)
And more importantly, no more irs!
 

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Leftists always ultimately go after the middle class to get revenue, because that's where the money is at. If our govt took 100% of money made by super-rich they would be woefully short paying the bills. However, a modest amount of tax revenue multiplied many millions of times over is what makes this country run. Besides, many of those extremists are billionaires themselves so they aren't going to shoot themselves in the foot, so to speak. They like to talk a good game, it gets votes to say you are working against "the man". Problem is, they are part of that group. Go ahead and increase tax on rich business owners and they will find a way to keep the income stream going. Like... putting off that promised raise to their employees, putting a freeze on hiring, making you pay more of your health insurance premium, or raising prices on their products/services. Those little perks you might get at work? Yeah, that has to go too. Who does that hurt? The lower and middle class. We need to do something that nobody wants to talk about... control spending. None of the liberals have a plan that is even remotely fiscally sound. It's all a pipe dream.
Already lost those work perks (healthcare) thanks to ACA. Way to go Dohbama.
 

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... but yes you are correct, not everyone is going to benefit such is a zero sum game.
Do you have a job as a spin doctor?

Yeah, some of us are going to get bent over pretty hard as a reward for being prosperous.
 

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What do you expect from someone who either won't admit, or doesn't recognize, that he is a socialist.
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