View Poll Results: What Created The 2008 Financial Meltdown?

Voters
109. You may not vote on this poll
  • Greedy Wall Street Investment Bankers /Deregulation of the financial Industry

    37 33.94%
  • Barney Frank, Chris Dodd and the CRA

    32 29.36%
  • Poor people buying houses they can’t afford

    27 24.77%
  • Other

    13 11.93%
Page 10 of 12 FirstFirst ... 89101112 LastLast
Results 91 to 100 of 117

Thread: What Created The 2008 Financial Meltdown?

  1. #91
    Professor

    Join Date
    Feb 2011
    Location
    MI and AZ
    Last Seen
    03-15-15 @ 01:29 PM
    Gender
    Lean
    Other
    Posts
    1,581

    Re: What Created The 2008 Financial Meltdown?

    I know that I commented on this about 6 months ago, but now here again. Many builders, e.g. the ones building hundreds of homes along the edge of north Phoenix AZ. They buy the property a year or more before building, design the plots and roads and get approvals. Get sewers, electric, drainage, etc. built. Buy trusses, air conditioning units etc. sometimes months before building. So, when the market goes south they are committed to finishing hundreds of homes. What do you think ‘small’ over supply of new homes does to the price? How hard would a builder or anyone selling homes ‘work’ with a lender to get a loan for a buyer? I sold our home in the north phoenix area when I understood this was happening. Could have got about 480k if I was quicker with the remodel, but got 450k. It dropped to 320K.

  2. #92
    Professor

    Join Date
    Feb 2011
    Location
    MI and AZ
    Last Seen
    03-15-15 @ 01:29 PM
    Gender
    Lean
    Other
    Posts
    1,581

    Re: What Created The 2008 Financial Meltdown?

    More: I was even advised by a realtor on a flight back to Phoenix buy a house to be built in these areas and sell it when it was done. I didn’t do it; but we had quite a few ‘investors’ doing this. Of course the investors were very small time, buy one sell it when it was done and make 10k or so, make 20k in a year, contribute to false demand numbers. Then owning two homes, loose 200k in when the market collapsed or default on the mortgage. You don’t need much false demand to drive up prices.

  3. #93
    I support ██ ███
    jasonxe's Avatar
    Join Date
    Jun 2011
    Last Seen
    12-16-15 @ 06:02 PM
    Gender
    Lean
    Undisclosed
    Posts
    1,405

    Re: What Created The 2008 Financial Meltdown?

    If a kindergarten teacher passes out pixie sticks & soda pops, leaves the classroom, and the kindergartens wreck the place...who do you blame?



  4. #94
    Phonetic Mnemonic ©
    radcen's Avatar
    Join Date
    Sep 2011
    Location
    Look to your right... I'm that guy.
    Last Seen
    Today @ 01:54 AM
    Lean
    Centrist
    Posts
    33,399

    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by jasonxe View Post
    If a kindergarten teacher passes out pixie sticks & soda pops, leaves the classroom, and the kindergartens wreck the place...who do you blame?
    The corporation with the deepest pockets... and a willingness to pay a settlement.

  5. #95
    Sage
    samsmart's Avatar
    Join Date
    Dec 2009
    Last Seen
    @
    Gender
    Lean
    Other
    Posts
    10,316
    Blog Entries
    37

    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by pbrauer View Post
    What Created The 2008 Financial Meltdown?

    Greedy Wall Street Investment Bankers /Deregulation of the financial industry

    Barney Frank, Chris Dodd and the CRA

    Poor people buying houses they can’t afford.
    I think all are responsible to a degree, but I think Wall Street and deregulation is more responsible than the others.
    Also, we need to legalize recreational drugs and prostitution.

  6. #96
    Pragmatic Idealist
    upsideguy's Avatar
    Join Date
    Nov 2009
    Location
    Rocky Mtn. High
    Last Seen
    Today @ 02:47 AM
    Gender
    Lean
    Progressive
    Posts
    10,068

    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by iliveonramen View Post
    I would argue differently. Cheap credit and easy credit will always be taken advantage of. Companies do it, Governments do it, individuals do it. Generally the restriction is that credit is not generally cheap and easy except for the most qualified of borrowers.

    The breakdown happened when banks and loaning agencies loaned out money, turned around and sold those loans that were bundled, then those bundled loans were stamped with a AAA rating due to this faulty logic that didn't account for mass foreclosures and mass dropping of housing prices.

    There was a serious breakdown of what consitutes risk. Some individuals made a killing because by going through AAA CDO's they realized that risk was misrepresented and bet against it. This is nothing new and constantly get played out. Some new financial instrument redefines risk, people buy into the hype, and when reality sets in the bubble bursts. The Junk Bond fad of the 80's played out the same exact way. By bundling Junk Bonds you decreased the risk and under a normal market the amount received in interests payments offset companies that failed. People bought into the hype and Junk Bonds made a lot of people insanely wealthy. Then reality sets in, bankruptcies of companies rise due to the cyclical nature of the economy and those bundled junk bonds go from a safe investment to a toxic asset.

    In the pase say, regarding the margin trading and the great depression people in government looked at the situation and asked "how do we prevent this from happening again?". Hence the regulations after the Great Depression. In the 80's people bought this bill of goods that A) Things are different, we understand risk and how the markets work so the idea of another Great Depression happening is ridiculous and B) That regulation created after the Great Depression was unneeded because financial firms are self regulating due to their better understanding of markets and risk.

    I personally see it as dumb by ignoring history and recent events and doubling down on deregulation.
    I had some first-hand exposure to what happened here as I did some strategic planning work for a mortgage producer in the middle of the decade. Here are my observations:

    This was a supply-side problem that was allowed to happen because of lack of regulatory oversight. Investment banks created sophisticated financial instruments around mortgages, then pushed mortgage companies to place money with large signing bonuses and kick-backs. These mortgage companies (including my client) created boiler-room sales operations with out-bound telemarketers to find people with financial needs. This mortgage company did re-fi’s, 2nd and 3rd mortgages and mortgages to finance vacation homes and real estate speculation. The firm I worked with had a $200M open line with Countrywide and a $100M line with Lehman. They did their own loan approval. Though Lehman and Countrywide had the right to reject a loan, they rarely/rarely did. Between discounts, commissions and spifs (kickbacks), a typical $150,000 mortgage created $15,000 in closing fees to the Company (first sign this stuff makes no sense: where is their room for a 10% commission in a mortgage?).... and that is just the commission the mortgage retailer earned. There were far more commissions to be earned upstream. The core financing of this endeavor looked much more like a pyramid scheme than banking. (second sign of a house of cards: This little mortgage company had revenue of about $15M, but $300M in open credit lines)

    The buyers of these mortgages were not poor (at least they way we think of the poor), but were doctors, lawyers, dentists, businessmen. They were generally overextended (living on home equity), had undocumented income or were real estate speculators (remember that?). Rarely did a warm body get a “no” on his mortgage app as very few deals were too ugly as there were good commissions to be made. This was a house cards and pretty obvious from my vantage point in 2005.

    I am also a big believer that a big problem in our economy is that highest marginal tax rates are too low. The current system is such that people are encouraged to move money from the business to their personal accounts. There is no incentive to keep money in the business and re-invest. In the case of the mortgage melt-down the net-net of the activity was the financiers effectively stole the real estate equity of others, created these sophisticated financial instruments on which they received personal fees (placement fees, origination fees and success bonuses). Remember, the hedge funds, which were often the money source and packagers of these financial products
    This is also a crude explanation of the meltdown, but a bit more illustrative. A meltdown of this magnitude could only happen if the very fiber of our financial system were threatened, as was the case in 2008, the problem was so sophisticated the very integrity of the world's banking and insurance system was in question.....

    Sorry, but those that think the Community Reinvestment Act of 1977 suddenly reared its ugly head 30 years later and caused (primarily or secondarily) this problem are either ignorant or….. For those that think that poor people over buying was the issue, please explain how AIG a financial insurance company could be brought down in the process....

    Sorry, this was just rape and pillage by Wall Street.
    Last edited by upsideguy; 10-23-11 at 01:47 PM.

  7. #97
    I support ██ ███
    jasonxe's Avatar
    Join Date
    Jun 2011
    Last Seen
    12-16-15 @ 06:02 PM
    Gender
    Lean
    Undisclosed
    Posts
    1,405

    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by radcen View Post
    The corporation with the deepest pockets... and a willingness to pay a settlement.
    corps are the kindergarten students :-D.



  8. #98
    Professor

    Join Date
    Feb 2011
    Location
    MI and AZ
    Last Seen
    03-15-15 @ 01:29 PM
    Gender
    Lean
    Other
    Posts
    1,581

    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by jasonxe View Post
    If a kindergarten teacher passes out pixie sticks & soda pops, leaves the classroom, and the kindergartens wreck the place...who do you blame?
    In this case there wasn’t a teacher. Just Free Enterprise. Rewards given to the highest private positions were based on quarterly performance, well maybe a few on the year. Some could see it coming, a few were issuing warnings, but there were punishments doled out to stop most of that. (That even happens in engineering, e.g. haw late, etc. was the 787?) Oh yes, there were a few rules being broken, but the enforcers, oh the teachers, were emasculated. After all, the enforcers aren’t from the free enterprise class.

  9. #99
    I support ██ ███
    jasonxe's Avatar
    Join Date
    Jun 2011
    Last Seen
    12-16-15 @ 06:02 PM
    Gender
    Lean
    Undisclosed
    Posts
    1,405

    Re: What Created The 2008 Financial Meltdown?

    It's a weird riddle but I imagine someone will get it.



  10. #100
    Educator Coin's Avatar
    Join Date
    Jul 2011
    Location
    Albania
    Last Seen
    12-09-17 @ 02:09 PM
    Gender
    Lean
    Undisclosed
    Posts
    907

    Re: What Created The 2008 Financial Meltdown?

    Rothschild family and USA's wars costs.

Page 10 of 12 FirstFirst ... 89101112 LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •