[Jfool]

Originally Posted by Bryan

no, what got us in this bad mess was the government encouraging the accumulation of bad debt. We are in the mess because FRE & FNM had rules changed so they could buy subprime loans so that poor people could get loans. The system was find working on its own. Government intervention caused this mess in the first place.


the answer is a market free of government influence to take risk. If FRE & FNM had never been expanded, we probably would not have been in this mess to begin with.

Amen and amen. The market needs SENSIBLE regulation, not political influence. If we are to hope for anything good in practice, it is only that government would do less damage than already done.

[TunerSteve]

Originally Posted by Epaphras

What's so bad about not being able to get a car or business loan in a credit crunch? Heaven forbid we have to save up and buy things with cash, or saving extra during good months to make payroll in bad months. ...

I tend to agree that a correction was long overdue. You can point the blame in so many directions. Marketing through media, that everyone needs new cars, bigger houses, etc. Also a generation that (in many instances) has been raised with a concept of entitlement. Well meaning parents, working long hours, tried to compensate by giving their children every material thing they could afford. I know young adults that are in a financial mess currently, partly because they were always handed everything (werent' required to work and save for it) as a child, and today as an adult, assume the marketplace will give them the same treatment. Too many parents don't instill a work ethic in thier children, and the children aren't prepared when they go out into the world on thier own.

One (of many) thing I don't understand about the mortgage meltdown...I would expect the assessed value of my home to drop, so I could possibly save on real estate taxes this year (you know, looking for a silver lining) but no, it's actually gone up an additional 3%!

[Ridley's Own]

Originally Posted by Bryan

no, what got us in this bad mess was the government encouraging the accumulation of bad debt. We are in the mess because FRE & FNM had rules changed so they could buy subprime loans so that poor people could get loans. The system was find working on its own. Government intervention caused this mess in the first place.


the answer is a market free of government influence to take risk. If FRE & FNM had never been expanded, we probably would not have been in this mess to begin with.

Wait... The gov't deregulated FRE and FNM to make morgtage rules easier, and the answer is less government? IN the words of Prof. Farnsworth...

WHA??

[Ridley's Own]

Originally Posted by JerryLove

What!

I'm used to you having well-considered posts, but are you seriously attempting to argue that teen and pre-marital sex is a new idea? Seriously? Pick your era!

It made sense in my head, then I read it. I don't think premarital sex is new; I think making it a commodity and selling it to prepubescents is, though.

I think regulation is neccessairy.

OTOH, I think market manipulation does not work... and I think we've been more focused o nthe latter than the former.

I'd rather form communities that have a sense of right and wrong than I would regulate through the state, actually.

[Chrysostom]

Originally Posted by Ridley's Own

Wait... The gov't deregulated FRE and FNM to make morgtage rules easier, and the answer is less government? IN the words of Prof. Farnsworth...

WHA??

The change wasn't exactly standard deregulation. It was political leaders wanting lower-income and minority households to own more homes. Profits were privatized, losses were socialized.

[Hopeful]

Originally Posted by Chrysostom

The change wasn't exactly standard deregulation. It was political leaders wanting lower-income and minority households to own more homes. Profits were privatized, losses were socialized.

Yes, you're very correct. It was called CRA - the Community Reinvestment Act which forced lenders to relax prudent lending criteria, such as income/debt ratios. On the commercial side, low income multifamily property ratios go as low as 1:1 - i.e., the net operating income of the property need only cover the annual debt service. In normal multifamily lending, the ratio is usually not less than 1.15:1 - so there is a cushion. Any hiccup in income or increased expenses puts the property under water.