Books – The credit crisis has inspired a new version of the old question: What did you know and when did you know it?
How hard was that. Anybody with half a brain could see this coming in the sub-prime lending that concentrated on ARMs. I'm a web developer with all my training in engineering, and I knew this was coming. Are all MBAs brain dead?
ETproductions:
"Are all MBAs brain dead?"
No just mostly greedy and full of themseves. LOL
I took accounting and was employed as a full charge bookkeeper for a while. Had to get out of it. Bored me to tears.
I saw this comming back in 2004 and was telling people. But you know greed is like a fever. It can leave one delirious.
It's not only the ARM's it's also a case of real value being over estimated in relation to affordability. In other words if you can't afford it but think that the price and value will continue to increase. Well you play the rob Peter to pay Paul game until you have enough equity to pay both. LOL
People never fail to amaze me. They don't make enough to afford it yet buy it on hope and a prayer.
And businesses will do anything to show their profit now. That bonus the executives receive makes them happy.
I never took accounting and I'm not even that good at math but I could tell this was a boondoggle from the beginning.
I started looking for a house in 2002, when I felt financially ready to do it, and was immediately priced out by two-income families bidding up outrageous amounts on anything in my price range. Realtors pressured me to stretch for something I could not afford, but I resisted. I put a bid on one place I could afford and 18 hours later others had bid the price up about $40k over asking. Any nitwit could figure out that was not based on the actual value of the property.
Everyone on that food chain figured out how to increase their own commissions and pass the liability to someone else -- realtors, appraisers, brokers, banks. You would think institutional investors would know better. And maybe they did. How many were sitting in boardrooms planning to seek government bailouts when the inevitable happened? Who cares, as long as they got bonuses and commissions.
Amen to that. When I was looking for my first house I found ne I really liked. As I did the numbers for mortages and downpayment I was coming up short. The real estate broker ( a die hard Republican btw) suggested I contact a relative or any0ne who would vouch for me making more then I was. I declined knowing that fictional amount wasnt going to materialize out of thin air and I really couldnt afford that house.
When Ronald Reagan was in office they had a (grand old) party on us -- using taxpayers money. So why was everyone so surprised when "Black Monday" hit?
Well since Bush was in office, the rich had another big bash using taxpayer's money. And, now they want to use taxpayers money to bail them out of the mess that they created because of their selfish and tragic indulgences (Iraq War).
Will Americans ever smarten up?
The war is to blame for plenty of the economic problems in the U.S. now, but not this one directly. If it was the root cause then other countries would not be suffering to the same degree.
The relationship is one of sleight-of-hand. The government and institutions used this as a distraction. As long as Americans felt flush, the weren't complaining about Bush's war.
What's even worse is that now that people are in trouble, the politicos and moguls are using *that* as the distraction to keep people from opposing the war.
I have posted this before:
If this is old hat info sorry.
"The Garn-St Germain Depository Institutions Act of 1982 was a United States federal law enacted in 1982 that deregulated the Savings and Loan industry. This Act turned out to be one of many contributing factors that lead to the Savings and Loan crisis of the late 1980s"
"TITLE VIII, ALTERNATIVE MORTGAGE TRANSACTIONS, allowed Adjustable rate mortgages"
http://en.wikipedia.org/wiki/Garn_-_St_Germain_...
When I was reading about this I also read that the tax reform act that followed made it profiable and no-taxable to bundle and "securities" (spelling?) mortgages.
Moral Hazard::
The funny thing is, this happened before in Orange County, Calif. -- one of the epicenters of the bubble -- when it went bankrupt in the '90s.
A gadfly named John Moorlach kept going to the County Board of Supervisors telling them that their derivative investments amounted to a ponzi scheme that was bound to collapse, and nobody listened. The county went bankrupt and when it did, he got elected treasurer.
People are stupid and will ignore all the long-term warning signs if it means they can have immediate comfort. They are paying for it now. I'm glad I didn't fall for it and have no sympathy for people who did.
No bailouts! Greed got you into this situation, learn your lesson and get yourself out. Bailouts on the backs of taxpayers send the wrong message -- that you can get away with being greedy and stupid if you wait long enough. Those of us who made the decision to live within our means should not have to pay for the ones who treated housing like an ATM.
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This guy Morris predicted our current mortgage/credit crisis before it happened. Maybe he should be doing Bernanke's job.
Tell ya what Jovial, lets just kick the Fed and it's ridiculousness policies out in the street and then we won't have to worry about what these numb nuts are stealing and how much. BTW. There have many books that have been written about the things that are happening now. Morris, while very good, is just jumping on the bandwagon started by others.