Well, as predicted, this morning the stock market is up some 600 points (largest intra-day gain in history) because after the scaredy-cats bailed out of their holdings, the bargain hunters came rushing in. But let’s not forget, the stock market is not our problem the economy is and we should discuss what is causing this turmoil.
Economists point the finger at DEBT as the cause of the meltdown. At fault are the debtors who took easy credit without a thought about re-payment and the companies that offered the easy credit without a thought to that person’s ability to re-pay. Even our government pushed Fannie May and Freddie Mac to make riskier and riskier mortgage loans just so every American could be a home owner without a thought to whether they could pay these loans back or not.
It’s as if the whole country got drunk and did things only a drunk would do and apparently, we didn’t sober up until now!
I was aware that the “loan” business was booming. Many people quit their regular jobs so they could make more money signing people up for mortgages; I just never though anything about that at the time.
Now in retrospect, I assign the first blame for our dilemma to our government which restructured lending regulations to allow non-banks to make mortgage loans. Every Tom, Dick and Harry was offering mortgages. Remember the commercials for Giant Mortgage or something like that, saying if you call before 5pm, zero down payment!
These so called mortgage originators like Rock Financial, Quicken Loans, etc. made their money when they sold the loans to financial institutions. Why didn’t those financial institutions ask about risk? Probably drunk like everybody else.
Why did our government loosen lending rules so much? I would say socialism (Republicans didn’t complain) which wants everyone, even those at the lowest levels of society, to enjoy the good life (home ownership).
Some are saying people should have known better and I agree but if someone in a suit and tie is telling you that of course you can afford this house; maybe he knows better than I what I can afford or not.
I do remember walking through my neighborhood and seeing these young families with all those young children in these up-scale homes and thinking to myself that when I was their age, I couldn’t afford shit; maybe they all hold high executive positions or something. But what really had me puzzled is that nearly all households with all those children had a stay-at-home Mom (not working) so single wage earner – wow!
Now we know the score. If lending rules remained as firm as they originally were, we would not be in this position right now. But also, our economy would not have shot up as it did with new home building and buying at a record pace and this feverish pace continued for a good long while, to the point that many thought it would never end - until it all came to a screeching halt.
Economists point the finger at DEBT as the cause of the meltdown. At fault are the debtors who took easy credit without a thought about re-payment and the companies that offered the easy credit without a thought to that person’s ability to re-pay. Even our government pushed Fannie May and Freddie Mac to make riskier and riskier mortgage loans just so every American could be a home owner without a thought to whether they could pay these loans back or not.
It’s as if the whole country got drunk and did things only a drunk would do and apparently, we didn’t sober up until now!
I was aware that the “loan” business was booming. Many people quit their regular jobs so they could make more money signing people up for mortgages; I just never though anything about that at the time.
Now in retrospect, I assign the first blame for our dilemma to our government which restructured lending regulations to allow non-banks to make mortgage loans. Every Tom, Dick and Harry was offering mortgages. Remember the commercials for Giant Mortgage or something like that, saying if you call before 5pm, zero down payment!
These so called mortgage originators like Rock Financial, Quicken Loans, etc. made their money when they sold the loans to financial institutions. Why didn’t those financial institutions ask about risk? Probably drunk like everybody else.
Why did our government loosen lending rules so much? I would say socialism (Republicans didn’t complain) which wants everyone, even those at the lowest levels of society, to enjoy the good life (home ownership).
Some are saying people should have known better and I agree but if someone in a suit and tie is telling you that of course you can afford this house; maybe he knows better than I what I can afford or not.
I do remember walking through my neighborhood and seeing these young families with all those young children in these up-scale homes and thinking to myself that when I was their age, I couldn’t afford shit; maybe they all hold high executive positions or something. But what really had me puzzled is that nearly all households with all those children had a stay-at-home Mom (not working) so single wage earner – wow!
Now we know the score. If lending rules remained as firm as they originally were, we would not be in this position right now. But also, our economy would not have shot up as it did with new home building and buying at a record pace and this feverish pace continued for a good long while, to the point that many thought it would never end - until it all came to a screeching halt.
PS: I just looked at the DOW and it is close to 1,000 points up for the day; another one for the history books.
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