Here's a posting on her CNBC Realty Check blog (permalink now on HP sidebar) mirroring my point that the subprime meltdown didn't cause the housing crash as the MSM, NAR and TCDL would have you believe. It's a symptom, not a cause.
What caused the bubble was pure, simple, human greed. Greed. GREED. Gordon Gekko Greed.
My take: Corrupt realtors, corrupt appraisers, corrupt mortgage brokers, corrupt homebuilder CEOs, corrupt congressmen, a corrupted MSM, an incompetent Fed and foolish naive homedebtors and floplords - all driven by one thing - GREED.
Here's her post highlights. Wadda ya think?
I'm getting a little annoyed with the premise that the subprime mortgage crisis and tightening lending standards are wholly to blame for the current headwinds in housing. Of course, they are contributing to the problem, and of course, it's important for us to keep on top of regulatory and institutional changes in the mortgage market. But here's the thing: I think we might be missing one of the boats in the blame game -- specifically, greed.
I want to talk affordability and I want to talk greed. As home prices climbed higher during the heady days of the housing boom, affordability crept lower, and -- inexplicably -- more people decided to get in on the game.
Yes, the mortgage products offered the venue, dare I say, and loaded buyers right on the bus to home ownership. But investors, speculators and everyday folks who wanted to live beyond their means bought into the products without looking back.
Now all those same folks have a big welt on their wrists where they got slapped. They finally see that what goes up must come down, even in the big, happy land of green-grassed neighborhoods and glitzy, glam condos... and they're getting out of the game.
11 comments:
You got to admit that there was a big PR cheerleading campaign of lies going on by the REIC that was hitting those greed or fear buttoms of buyers that went unchallenged by the media .
You got to admit that the money was so easy ,in a fraudulent way ,that people who didn't deserve loans were getting them .
On a mass level people can be brainwashed . Those drone realtors that the NAR were producing talking points for were brainwashed to . Real estate agents are suppose to service a real estate market ,not make a bogus real estate market based on real estate investmnet myths .
Yes ,greed was a big factor in this run-up of real estate prices because God know people didn't buy these places because they could afford them or wanted to live in them (we have thousands ,maybe millions ,of vacant houses to prove that ).
And the fact that millions of people thought that some fool was going to come along and over-pay for some house was the wishful thinking of greed or fear or need .
The sub-prime lending made it possible for unqualified buyers and speculators to get in the real estate investment greed game with little skin in the game .
Really silly that people would agree to mortgage payments that would take 75 % of their paycheck or more . Greed can even make you forget about needing money to eat.
I don't know if greed per se explains this? It's a bit simplistic, and I doubt an emotion (such as greed) is any more rampant now than in prior generations?
Instead I think what we're seeing is MORE people (including Joe W-2) getting an opportunity to EXPRESS their greed, or the desire for making easy money without having to work or possess any skills. Loose lending standards have basically allowed anyone to leverage to the point of gambling, regardless if they have capability to handle money or not! This is reminiscent of the Stock Market Crash of 1929, where even shoe-shine boys were buying stocks on margin.
Here's an article called the "Business of Poverty" which explains how loaning at predatory rates is actually quite profitable for the companies, and home loans are just a natural extension of the trend:
http://tinyurl.com/ynm4km
This is not a new situation. PBS ran a 'Front Line' episode about consumer credit (Called "The Secret History of the Credit Card") about 4 years ago that basically predicted the problems we're seeing now, and explains how it came to happen. Highly recommended:
http://tinyurl.com/3akc96
Greed it good until it kills you
The boys on Wall St. once again were up to no good. They found a way around regulations and exploited the sh*t out of it.
It's encouraging for me to FINALLY see the concept of "subprime as symptom" get broader acceptance!
I've been saying this for years (well at least since late 2005) and when I first began discussing the notion it was definitely an uphill battle. I had some heated debates w/ socalmtguy (another f@cked borrower) and the general consensus over at Ben's was that I was either suffering from bubble fatigue or had lost my mind completely.
Blaming subprime is such an easy explanation, and there's no doubt there's a connection! Through 2005 the definition of a "flipper" was someone that bought, fixed up and resold a home in a matter of months or even WEEKS! Since then we've had to revise our perceptions to include virtually anyone that sells every 2 years like clock work. The entire game was played WITHOUT even having to consider cap. gains (be it a sale OR a re-fi). When people will owe taxes (as they would on virtually any other investment) it seriously tones down "the greed".
DinOR
It wasn't greed; people have always been greedy. Why didn't it happen before? It was Greenscab.
it was greed on the seller side and insufficient funds on the buyer's side.
unless the market continues to defy logic, prices have to come back in line with wage growth.
so it's not subprime, but really the growth of wages that might put a check on what people can pay and what people can charge.
however, maybe the stockmarket bubble will trump wages?
Real estate keeps up with inflation usually . When they started selling real estate as a investment that exceeded wage growth caps, along with easy money lending it doomed us to crash .
There seemed to be a mass acceptance of the housing boom with inflated prices. Borrowers usually back off when prices/loans get unaffordable . Speculators usually back off if they can't get a postive cash flow on a rental .lenders usually don't lend when the number don't add up.
This time it was the flipping game with no capital gains tax . Wow this crappy adjustable takes 2 years to adjust ,just at the time I want to flip to get tax free money .So people were sold on the investment game and the loan didn't matter . The loans were set up to take a piece of the action in this churning real estate investment game .
It was a mass investment plan. Ask realtors and lenders how they sold inflated real estate and crappy loans . And just think , you don't even have to come up with a down payment or invest any money to get in this game .
The sane and the insane went for the real estate investment plan and the builders kept building. Some just went for equity extraction to party hardy and buy shit they could never afford usually .
Underfunded for retirement baby boomer went for the plan , young people looking to supplement lack of wage growth went for the plan . It wasn't the American dream for a house one could paint any color, but a money making machine that pays my bills tax free .
Than it just turned into a unchecked mania when even the dregs of society were sold the investment plan .Everybody gets to get into the investment plan because of easy money (fraud really ).
So I would say a lack of basic security to finance life that people were feeling about this world was the trigger button, but it got more greedy as time went on .Some people even quit their jobs to real estate flip . If I make 30k a year at my job but I can make 200k tax free every 2 years on real estate ,I got myself a new easy job . I can even pull out money to live on that was more than my cleared working stiff paycheck.
Greed or easy money or quick profit without working was the main button . Sub-prime lending made it possible to invest and sub-prime lending raised the demand which in turn raised the prices . But than the investment plan failed when they ran out of buyers to buy and than the cash back schemes and criminal rings came out in droves ,(course the crooks were there all along getting the appraisals inflated ).
THE REIC went wild with this gravy train of easy money and every advertiser that was real estate related financed the Big Cheerleading PR campaign that you can't lose with real estate ,or home improvement ,or buying a car.
The MSM started publishing the next great place to invest were real estate was underpriced .The investors were swarm to those places, never mind if they had any jobs in those areas or if the locals could afford the real estate . The cancer spread to the Nation . The builders built to sell to investors who in turn were told they could sell to rich baby boomers . Rather than people being left out or priced out, normal people became willing to mortgage 75% of their income for this short term investment plan with the logic they could get a new loan or extract equity if they ran into trouble .THE NAR kept saying," real estate always goes up","you can't afford not to buy". Biggest con job in history that reached a National level .
So I would say a lack of basic security to finance life that people were feeling about this world was the trigger button, but it got more greedy as time went on.
__________
This analysis seems much more insightful than Olick's. Wages have not been rising enough to cover all the inflation that's been buried by the government. No wonder people got a little crazy....
Americans are really hurting if they became so vunerable to a stupid real estate mania investment scheme.
BFD! Anyone can see that everything is based on GREED!!!!!
Post a Comment