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2009-03-27 Economy

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Posted by ed 2009-03-27 12:08|| || Front Page|| [11131 views ] Top

#1 I expect people to be greedy, selfish, shortsighted bastards. So I'm not exactly shocked that Wall Street and bank executives were trying to make money. What the hell else would they be doing?

The problem is and will always be a political one. Congress told banks whom to lend to. Everything else flowed as a natural consequence.

Posted by Iblis 2009-03-27 13:13|| 2009-03-27 13:13|| Front Page Top

#2 What Iblis said.

Posted by eltoroverde 2009-03-27 13:30|| 2009-03-27 13:30|| Front Page Top

#3 I do not believe that the current crisis is fundamentally a political one. The politicians did not force any businesses to generate tens of trillions of dollars in worthless/fraudulent credit default swaps. It is a classical credit collapse, similar to those that have been happening for centuries, and which will continue to happen as long as people do business using credit.

Posted by Anguper Hupomosing9418 2009-03-27 14:16|| 2009-03-27 14:16|| Front Page Top

#4 Long before the current mortgage racket, the bank/financial institutions got into the credit card racket. Back when the Carter administrative launched us into double digit inflation, most states had usury laws limiting the amount of interests that can be charged by 'legal' institutions. When the banks rightly pointed out they could not lend near or lower than what they borrowed from the Fed, their little agents at the state level got the governments to remove the laws rather than modify them to float with the Prime rate. So when the Prime came back down to the lower single digits, the interest rates remained in the upper teens and lower twenties for years. That's because the banks and financial institution began granting credit/credit cards to nearly everyone. Pre-Carter, you had to be very very qualified to get a card. Post-inflation, your dog would get invited to get a card. The banks never had to carry the losses, they simply passed it on to other card holders. The entire modus operandi was there and running by these institutions when the government gave them fuel, in the form of the mortgages, to throw on their running game. They are not 'victims'.

Posted by Procopius2k 2009-03-27 15:23|| 2009-03-27 15:23|| Front Page Top

#5 Post-inflation, your dog would get invited to get a card.

Forget the dog. He wouldn't know what to do with it. The real trouble starts when they give one to your teenage daughter.

Posted by Ebbang Uluque6305 2009-03-27 15:53|| 2009-03-27 15:53|| Front Page Top

#6 Perhaps AH9418, but if lenders hadn't been mandated to provide mortgages to risky borrowers via the Community Reinvestment Act and if FMae and FMac hadn't been around to buy up all of the risky mortgages created by said act, which they then bundled up for sale as "collateralized debt securities" to Wall St-- who in turn used them to engage in the various ridiculous credit default swaps which have since cratered-- could this whole mess have been avoided in the first place?

I grant that my grasp of the intracacies involved may be less than ideal but if my understanding is correct, the government got involved in the business of mortgage lending and borrowing "for the common good" and removed many of the free market guidelines. Simply put, had the free market not been tampered with, lenders would not have made the loans they did and we wouldn't be in the mess we are in today.

I realize I may be grossly oversimplifying the matter.

Posted by eltoroverde 2009-03-27 16:22|| 2009-03-27 16:22|| Front Page Top

#7 risky borrowers via the Community Reinvestment Act

Yeah, the Community Reinvestment borrower were risky and defaulted in large numbers - but they were largely defaulting on $50,000 homes, which does not add up to enough to account for trillion dollar problems. To get to the trillion dollar level you have to have risky loans on half million and million dollar homes being defaulted - in other words people with income and assets to own a reasonable home but ambitions for mansions or for 'flipping' homes for big short-term gains.

Posted by Glenmore 2009-03-27 22:43|| 2009-03-27 22:43|| Front Page Top

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