Tilted Forum Project Discussion Community - View Single Post - Who do you blame the current financial mess on???

ASU2003 · 12-21-2008, 12:59 AM

I'm not sure I would put too much blame on Bush. It true that he wanted the 'ownership' society, and it is good if you can afford it. But there were a lot of other things that created a bubble instead of a smooth and sustainable increase in homeownership and homes being built. The free market failed for most people. It worked for the people who bought up homes and condos as soon as they were built and then resold them for thousands more without ever having lived there. But, taxing real estate investors and speculators hard wouldn't be in line with Bush's policies.

http://www.cbsnews.com/stories/2008/...n4666112.shtml

http://www.nowpublic.com/world/60-mi...meltdown-story

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The bank's own greed got the best of them; all they saw was the dollar signs in their eyes, as fees and points that filled their coffers.

The borrowers were really no less greedy- like I said, I did my best to explain, even tried to talk some borrowers out of using a POA to buy the property that they were interested in. But most times, it was to no avail. They either didn't care about the risks or worse yet, their Realtor "over talked" me and told them that I did not know what I was talking about, and that the POA was their best choice:

Real estate always goes up, remember? It's different here! No need to worry about that negative amortization loan if you stick with the only payment you can really afford, the one with the 1% teaser, your house will be worth double what you paid for it in a year or two!

But, unfortunately, the problem as the banks saw it wasn't that these loans were going to fail in droves, nope.

The problem the banks saw was that the people were using these loans as short-term real estate investment loans with a really low initial payment, giving the investors time to remodel the property in order to "flip" the house and then move on to the next investment without having to sink so much capital into principle and interest with a higher interest commercial loan payment.

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I'm not real estate expert, but I was working in a planning department of a 200,000+ city. between 2000 and 2004. I would process plats for developers. I remember getting plats for 1000-lot subdivisions for homes that would probably go for $150,000 or so. The town where I live in doesn't have nor will it have enough jobs to generate income needed to buy such homes. I wondered, "Where's the money coming from for these homes?" I guess my gut was right. It was all surfers riding the bubble. And now the wave is crashing like a tsunami.