Consequences of Massive Bailouts

[LuciferSam]

And while all this was going on, you know where I was?? I was at the condo taking a leak in the pool. But don't blame me, it's Anheuser Busch's fault.

Ha! Ha! I was over there earlier myself. I kept yelling at that guy "That's not a Baby Ruth!"

 

[30ashopper]

It might be interesting to see some stats on the cause of homeowner hardship. I think it's safe to say that all the sub prime defaults were due to bad decisions on the part of the borrower. But now that we are heavily into the prime loans, a larger percentage is probably due to job loss.

I haven't seen a break down myself though, so I can only guess.

 

[Geo]

You might be right in saying, " I think it's safe to say that all the sub prime defaults were due to bad decisions on the part of the borrower. "

OR

Change the last word in the sentence to any of the following:

Congress
Investment Banks
Mortgage Companies
Property Appraisers
Mathematicians named Fabrice

 

[30ashopper]

You might be right in saying, " I think it's safe to say that all the sub prime defaults were due to bad decisions on the part of the borrower. "

OR

Change the last word in the sentence to any of the following:

Congress
Investment Banks
Mortgage Companies
Property Appraisers
Mathematicians named Fabrice

Well, you and I look at these things differently. To each his own.

I would add, in regards to your original question, I don't feel there are any moral issues in walking away from a contract. In fact, in my life I have found that when you consider all available options, including those that are on the other side of those invisible lines society likes to paint, you sometimes find better options that really don't have as much downside as people would think.

 

[scooterbug44]

Congress
Freddie/Fannie
Investment Banks
Mortgage Companies
Wall Street
Everyone involved who knew it was a bad deal, but did it anyway for the profit.

I would add "AND" to the end of the sentence, then this list.

There was a huge cluster going on, but no matter what anyone says, no one was forced to take out or give out subprime loans. My bank wouldn't touch them with a 100 foot pole.

Canoehead bought a house during the boom and got a 30 year fixed mortgage - because in her words "ARMs are for people who flunked math class and think storefront payday loans are a good idea."

She has refinanced 2x since then and will probably have that 30 year mortgage paid off in less than 20 years. I'd say 15 but she budgeted for a new furnace, a kitchen upgrade, and a "new to her" car within the next 5 years.

Grandpa Scooterbug did tell us "buy more house than you think you will need" ............... but that was based on the sound idea of one's earning ability increasing over time, assumed a minimum of 20% down, and that the mortgage was the only debt you had.

And his grandchildren only have a 25% home ownership rate because they had the lessons of the Depression and fiscal responsibility beaten into them.

 

[Bob]

I viewed this in the same light as the 90s tech bubble. What I didn't see coming was the way this would mess up our whole economy, so in some way indeed we have all suffered as a result of this. Hard for me to feel sympathy for the movers and shakers on this one. And now there are these people: the new trend default on your mortgage and stay in your house!: Tech Ticker, Yahoo! Finance

The money "homeowners" are saving, meanwhile, which is really being paid for by the taxpayer in the form of ongoing subsidies to the banks, is creating some extra spending money for the economy. In the process, it's making the economy look stronger than it really is (at some point those chickens will come home to roost: people won't have free rent forever).

This would seem to indicate that the stock market rebound we've seen in the last year is a mirage.

it is a mirage of free money flowing from bank trading houses.

 

[Geo]

Shopper, I don't think we see it as differently as you might think. Scooter said it better for me when she said- change the OR to an AND. I absolutely place fault and blame on a borrower for borrowing. And I also believe everyone in that list made it possible. So to clarify (and beat the horse)-

on a subprime loan by loan basis I hold each borrower responsible for their mess. But at the 100,000 ft level if we are discussing who is to blame for the subprime crisis- well, I blame the folks in the bottom list of my earlier post. And finally, I agree with you completely regarding the options on the other side of those invisible lines.

Enjoyed the discussion...

 

[LuciferSam]

The buck stops with the borrower.

 

[Lynnie]

The buck stops with the borrower.

Especially since we bail out the big dogs.

 

[poppy]

The buck stops with the borrower.

So true. If the market had stayed strong would the same individuals blaming the financial insitutions for losses on loans they requested be praising them for their new found wealth? I doubt it, they would patting themselves on the back for their wise business decisions.