View Poll Results: What Created The 2008 Financial Meltdown?

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  • 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%
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Thread: What Created The 2008 Financial Meltdown?

  1. #51
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    Re: What Created The 2008 Financial Meltdown?

    I wanted to select all of the above. Although, I would not have qualified the home buyers as poor.

    Yes, you had people buying homes as investments to sell in a couple of years and no real chance of ever paying off the loan. Yes, you had banks giving loans to people that could not afford the homes. Yes, you had regulation and enforcement that forced banks to give loans they didn't want to give (on top of the other bad loans they did want to give).

    Like any tragedy, if you remove one of those factors you prevent the event. I would have preferred less government regulation.
    You, my brothers and sisters, were called to be free. But do not use your freedom to indulge the flesh; rather, serve one another humbly in love.For the entire law is fulfilled in keeping this one command: “Love your neighbor as yourself.”

  2. #52
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    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by ksu_aviator View Post
    I wanted to select all of the above. Although, I would not have qualified the home buyers as poor.
    I agree that "poor" was a, well, poor choice of wording. They were people who did not borrow their money wisely.


    Quote Originally Posted by ksu_aviator View Post
    Yes, you had people buying homes as investments to sell in a couple of years and no real chance of ever paying off the loan. Yes, you had banks giving loans to people that could not afford the homes. Yes, you had regulation and enforcement that forced banks to give loans they didn't want to give (on top of the other bad loans they did want to give).

    Like any tragedy, if you remove one of those factors you prevent the event. I would have preferred less government regulation.
    In theory I would prefer government regulation as well. But, loosening the regs allowed human nature to kick in. As I get older I come to believe that human nature will always thwart the best theories if allowed to do so, thus some kind of balance needs to be found.

    You and I and some others may have the self-discipline to not do unwise things, but too many people do not. Regardless how much we would like to think otherwise, we do not live in a bubble protected from their actions.

  3. #53
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    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by radcen View Post
    I agree that "poor" was a, well, poor choice of wording. They were people who did not borrow their money wisely.



    In theory I would prefer government regulation as well. But, loosening the regs allowed human nature to kick in. As I get older I come to believe that human nature will always thwart the best theories if allowed to do so, thus some kind of balance needs to be found.

    You and I and some others may have the self-discipline to not do unwise things, but too many people do not. Regardless how much we would like to think otherwise, we do not live in a bubble protected from their actions.
    No matter how unwise, people have to be allowed to make their own decisions. If they are not, what is the difference between them and a slave?
    You, my brothers and sisters, were called to be free. But do not use your freedom to indulge the flesh; rather, serve one another humbly in love.For the entire law is fulfilled in keeping this one command: “Love your neighbor as yourself.”

  4. #54
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    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by radcen View Post
    You wouldn't believe how many disagreements I had with friends 5-8 years ago over whether or not their equity was "real". They were adamant that it was. I kept saying it was an illusion based on hype and excitement. They didn't want to hear that.
    Of course not. A lot of people took a lot of that false equity out of their house to blow on frivolous things and when the market crashed and their houses were revalued, they had a second or third mortgage hanging over their head and a house that wasn't worth what they paid for it.

    People are dumb.
    There is nothing demonstrably true that religion can provide the world that cannot be achieved more rationally through entirely secular means.

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    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by ksu_aviator View Post
    No matter how unwise, people have to be allowed to make their own decisions. If they are not, what is the difference between them and a slave?
    That's fine but they have to be fully responsible for their own decisions as well. That means nobody bails them out when they act like idiots.
    There is nothing demonstrably true that religion can provide the world that cannot be achieved more rationally through entirely secular means.

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    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by Cephus View Post
    That's fine but they have to be fully responsible for their own decisions as well. That means nobody bails them out when they act like idiots.
    Absolutely. What's to stop people from taking risks if there is no potential for loss?
    You, my brothers and sisters, were called to be free. But do not use your freedom to indulge the flesh; rather, serve one another humbly in love.For the entire law is fulfilled in keeping this one command: “Love your neighbor as yourself.”

  7. #57
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    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by Cephus View Post
    Of course not. A lot of people took a lot of that false equity out of their house to blow on frivolous things and when the market crashed and their houses were revalued, they had a second or third mortgage hanging over their head and a house that wasn't worth what they paid for it.

    People are dumb.
    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.
    “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” John Maynard Keynes

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    Re: What Created The 2008 Financial Meltdown?

    Quote Originally Posted by ksu_aviator View Post
    No matter how unwise, people have to be allowed to make their own decisions. If they are not, what is the difference between them and a slave?
    Spare me the 'slave' rhetoric.

    If you don't see the need for a balance between individual choice and some modicum of standards, that's fine. Just don't say one word of complaint when your investment portfolio takes a dive because a bunch of other people made their own decisions.

  9. #59
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    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.

    Other
    A combination of all three.

  10. #60
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    Re: What Created The 2008 Financial Meltdown?

    the 2008 meltdown was the culmination of more than three decades of failed economic strategy.

    put simply, we outsourced / eliminated too many middle class jobs. we attempted to replace earned income with easier credit. this allowed consumption to continue even in the face of reduced or stagnated wages. in 2008, we experienced a large part of the correction which we would have been experiencing all along had credit not been made more available to displaced workers.

    the moral of the story is that if you live in a country with a GDP that is largely consumer spending based, you had better hire some people domestically and pay them wages that allow for some discretionary spending without extensive borrowing.

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