+1.....
Is modern Capitalism on it's last legs?
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+1.....
Jim Craik
Lifetime Supporter
Al, I totally agree, the housing mess is responsable for most all current economic problems.
This was an area where previously, Govenment had strict control over the % of down payment and income needed to buy a home.
Govenment relaxed their control, as you like to say, let the free market run things.
Al how did that work for you?
The "free market" screwed the pooch!
We need now, as we needed then much tighter control over the markets!
Things worked just fine until they desided to let he "free market" run things!!!!!
Al, would you not agree that if Government had kept strict controll, our economy would be much, much better?
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Gee I love a good discussion but there is never a good one here as both sides have entrenched views, which is the problem affecting the future today.
Let's all be on our best behavior and agree that we the people have been misled by both camps, the regulationists and the non-regulationists.
Any sane person knows that rules keep the games honest, as long as the referees are non-biased and enforce them fairly. So having limits to behaviors that affect your neighbors well being or peace or prosperity is important to reign-in the rogues.
Who amoung us wants a guy buying a house next door, tearing it down, and drilling an oil well like they did at the turn of the last century. Once they took the money out they left behind the oil pits, derricks, used and rusting equipment. They didn't look back. Common sense says that we cannot let that type of business behavior stand, so we set up some rules. That is what the majority of people did.
Responsible capitalists responded well as they have to live in the same neighborhood and they want a clean place to dwell as well. No problem.
As for the Regulationists, they have seen mission creep in the regulators agenda, and now we have a group of well meaning special interests citizens that feel if one rule is good, 100 rules are better. They have evolved into their own empowered constituancy that has enjoyed elite status and that special ability to tell everyone how they should behave...just like GOD. Ain't this fun!
Balance Gentelmen, is what we need. that and somewhere, we have to agree that society cannot make up for the loss in jobs due to technological changes and growing populations by granting more Government jobs to create a larger middle-class. At some point that is unsustainable and the world has reached that point.
We also cannot allow the Bankers(wankers) to control the government again either as they have sold the people a pipe dream of increasing prosperity is they work hard, all the while using slave-labor-like workers in third world countries and banking the profits. The profits are not bad, but they don't want to pay taxes to support the infrastructure, armies, navies, police, firemen, and other services that make them secure in their homes so they can enjoy it.Talk about eating cake! Can anyone spell revolution! Can anyone remember the French! It is time for the grownups to get together and start acting like grownups, something our generation has refused to do since the 1950's.
Garry
Let's all be on our best behavior and agree that we the people have been misled by both camps, the regulationists and the non-regulationists.
Any sane person knows that rules keep the games honest, as long as the referees are non-biased and enforce them fairly. So having limits to behaviors that affect your neighbors well being or peace or prosperity is important to reign-in the rogues.
Who amoung us wants a guy buying a house next door, tearing it down, and drilling an oil well like they did at the turn of the last century. Once they took the money out they left behind the oil pits, derricks, used and rusting equipment. They didn't look back. Common sense says that we cannot let that type of business behavior stand, so we set up some rules. That is what the majority of people did.
Responsible capitalists responded well as they have to live in the same neighborhood and they want a clean place to dwell as well. No problem.
As for the Regulationists, they have seen mission creep in the regulators agenda, and now we have a group of well meaning special interests citizens that feel if one rule is good, 100 rules are better. They have evolved into their own empowered constituancy that has enjoyed elite status and that special ability to tell everyone how they should behave...just like GOD. Ain't this fun!
Balance Gentelmen, is what we need. that and somewhere, we have to agree that society cannot make up for the loss in jobs due to technological changes and growing populations by granting more Government jobs to create a larger middle-class. At some point that is unsustainable and the world has reached that point.
We also cannot allow the Bankers(wankers) to control the government again either as they have sold the people a pipe dream of increasing prosperity is they work hard, all the while using slave-labor-like workers in third world countries and banking the profits. The profits are not bad, but they don't want to pay taxes to support the infrastructure, armies, navies, police, firemen, and other services that make them secure in their homes so they can enjoy it.Talk about eating cake! Can anyone spell revolution! Can anyone remember the French! It is time for the grownups to get together and start acting like grownups, something our generation has refused to do since the 1950's.
Garry
Jim Craik
Lifetime Supporter
Garry, about "entrenched views"
I know these discussions are often tedious, but I think that just in the last few posts that we have actually seen "entreched views" slightly changed.
Al has alway spoke against Government control, he has always felt that the "free market" ran things best.
But today, he seems to be saying that the removal of Govenment controls allowed the banks to qualify folks who under the previous controls would never be given a loan. Leading to the current economy.
I know its a small change, but a change none the less.
*********
Gary,
As to the rest of your post, I absolutly agree!
I know these discussions are often tedious, but I think that just in the last few posts that we have actually seen "entreched views" slightly changed.
Al has alway spoke against Government control, he has always felt that the "free market" ran things best.
But today, he seems to be saying that the removal of Govenment controls allowed the banks to qualify folks who under the previous controls would never be given a loan. Leading to the current economy.
I know its a small change, but a change none the less.
*********
Gary,
As to the rest of your post, I absolutly agree!
Al, educate me here, because I know less about the US property situation that you. I thought mortgage companies gave out those loans. I didn't realise that you could get a loan from the government. You certainly can't here...
The relaxation of financial regulation by the government is what caused the problem if I remember correctly. Relaxation of regulation is one of the great tenets of Capitalism (to bring this tread back on track). Surely you would agree with that Al?
I am with you Graham. It is my recollection is that the banks screwed the people and the economy, not the US Government. The government loosened the noose on the pitbull and the dog attacked with shady loans and derivative schemes to line their pockets. It was capitalism at it worst (unless you are a banker!).
or Al, is your position that the loan sharks were fine the way things were, didn't lobby for relaxed regulation, and didn't take advantage when the goverment threw regulation out the window like chum in the water?
I think this slide presentation explains it pretty well:
https://docs.google.com/present/view?skipauth=true&pli=1&id=ddp4zq7n_0cdjsr4fn
or Al, is your position that the loan sharks were fine the way things were, didn't lobby for relaxed regulation, and didn't take advantage when the goverment threw regulation out the window like chum in the water?
I think this slide presentation explains it pretty well:
https://docs.google.com/present/view?skipauth=true&pli=1&id=ddp4zq7n_0cdjsr4fn
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Mike,
If you haven't, you really must watch the documentary called "Inside Job". An absolutely damning endightment of the Government, and banking institutions and the disgusting practices of CDO's, CDS's and the gvoernments inability to deal with the issue. The really galling thing is that most of the people who instigated the problems are now in government themselves (Timothy Geitner being a perfect example).
Al, note that this is an issue with Obama as well as Bush. I am politically agnostic when it comes to repeating stupidities.....
Plus ca change, plus c'est la meme chose....
Edited to add: I am also frankly dumbfounded that Standard and Poors, Moody's and most other ratings agencies aren't in jail for the ratings that they gave some companies. Lehmann brothers were still rated AAA three hours before they went bust! Staggering
You know, the one thing that really pisses me off more than anything else is the fact that I saw this coming over ten years ago, yet it's such a shock to so many people and the ones who's job it is to see it apparently didn't. Before I even bought my first house, simple common sense told me that something was going to happen in next 10-20 years. It was real simple: wages go up about 5% a year on average (I don't know what exactly, but it's less than 10%), but housing prices go up typically on average 10% a year. Hmmm... something's got to give at some point because that trend cannot continue forever. My parents bought their first house (built from scratch) back around 1972 for something like $20k or $25k. I don't know what wages were back then, but I would "wager" my parents were together pulling in half that or a little more. If my wife and I were to buy the equivalent sized house in the equivalent type of area when we bought our first house in 2001, we would have been paying more than 3X, probably 4X our wages, not 2X. (and our jobs, if anything, were most likely higher paying jobs then my parents' back then.)
Also, the banks and lenders are definitely to blame, but the people taking out the loans carry much of the blame too. I know I did my homework before getting our mortgage. Hey, if someone wants to stretch themselves and get a mcmansion when they probably can't afford it, and then find out they can't afterwards - sorry, that's you're friggin problem.
Terry Oxandale
Skinny Man
I must disagree (in part, as some of what you said is in agreement) in that the housing collapse was simply the canary in the shaft of many other "spend more than we have", and "listen to others instead of determining my own ability to pay" herd mentality we have in this country. There is NO economy that can sustain indefinite growth. Our government tried to promote something that was already on the slide simply because of the global economics taking place, and ignorant folks trying to get something for "free". The economy was in a downturn, and the housing collapse was a result, not a cause. Our biggest problem in this country, as I see it now, is a reality check. The "right" thinks we can grow our way out of this, and the "left" thinks we can spend our way out. The truth is the growth will probably never ever be what it was in the past for this country, and that thrifty life styles, rather than consumerism, will bring us SLOWLY out of this mess.
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Why not? There are plenty of people who worked their asses off, made lots of money, and redistributed a good deal of it ...
They still kept a whole lot of it.
Ian
Look people - blame for the housing market collapse falls on all sides:
The sellers wanting to sell for as much as possible.
The buyers wanting to buy more than they could afford.
The agents looking to make the biggest commissions.
The lenders looking to make the huge commissions and reap the rewards of interest on outrageous loans.
The banks for easing their restrictions/policies on debt to income ratios.
The proliferation of ARMs and other "creative" loans to facilitate all of the above.
The push by the government to ease regulations and lift checks/balances to allow all of the above to occur. Which happened on both sides of the aisle.
Ian
The sellers wanting to sell for as much as possible.
The buyers wanting to buy more than they could afford.
The agents looking to make the biggest commissions.
The lenders looking to make the huge commissions and reap the rewards of interest on outrageous loans.
The banks for easing their restrictions/policies on debt to income ratios.
The proliferation of ARMs and other "creative" loans to facilitate all of the above.
The push by the government to ease regulations and lift checks/balances to allow all of the above to occur. Which happened on both sides of the aisle.
Ian
Jeff Young
GT40s Supporter
For our friends in the UK, while in the US the government doesn't generally issue housing loans, it did and does guarantee many of them through a variety of programs which did contribute to the crisis.
But the conventional wisdom on what happened in 2008 is becoming fairly settled and the causes are many. The story starts in the 90s, with the repeal of the Glass-Steagall Act that prevented banks from engaging in the investment/securities business.
The next step was the creation of mortgage backed securities. Basically, these were home loans packaged together and sold as a security like a stock. So, you ended up with banks making mortgage loans, and then bundling them and selling them like any other traded security. This divorced the banks from the risk of default in many ways, a trend that was encouraged (but not entirely created) by US govenrment policies intended to increase the percentage of home ownership.
Attempts were made to regulate these new derivative securities in the 90s and they were rejected. So, essentially, the US stock market in the 2000s gradually became a deeper and more complex house of cards all built on the stability of securities that were secured by mortgage loans. And the assumption that it was unlikely the holder of the security would be burned by a default since the value of the underlying property securing the loan, and the security, "would always go up."
Complicating this was the fact that players in the market began buying and selling these securities, and then even betting on their default via credit default swaps.
What was once a simple transaction between a bank and an individual where risk could be fairly evaluated turned into one of the largest portions of Wall Street invovling complex products, risks, etc.
Once the housing market started to tank and the value of the underlying properties began to decline, that was simply like throwing a match on a puddle of gas.
Economy went up like a torch, and only Government intervention saved us from a complete meltdown. Our credit markets were FROZEN -- meaning no one had any credit to lend even to solid risks -- for several weeks in the fall of 2008, which threatened to kill the economy.
But the conventional wisdom on what happened in 2008 is becoming fairly settled and the causes are many. The story starts in the 90s, with the repeal of the Glass-Steagall Act that prevented banks from engaging in the investment/securities business.
The next step was the creation of mortgage backed securities. Basically, these were home loans packaged together and sold as a security like a stock. So, you ended up with banks making mortgage loans, and then bundling them and selling them like any other traded security. This divorced the banks from the risk of default in many ways, a trend that was encouraged (but not entirely created) by US govenrment policies intended to increase the percentage of home ownership.
Attempts were made to regulate these new derivative securities in the 90s and they were rejected. So, essentially, the US stock market in the 2000s gradually became a deeper and more complex house of cards all built on the stability of securities that were secured by mortgage loans. And the assumption that it was unlikely the holder of the security would be burned by a default since the value of the underlying property securing the loan, and the security, "would always go up."
Complicating this was the fact that players in the market began buying and selling these securities, and then even betting on their default via credit default swaps.
What was once a simple transaction between a bank and an individual where risk could be fairly evaluated turned into one of the largest portions of Wall Street invovling complex products, risks, etc.
Once the housing market started to tank and the value of the underlying properties began to decline, that was simply like throwing a match on a puddle of gas.
Economy went up like a torch, and only Government intervention saved us from a complete meltdown. Our credit markets were FROZEN -- meaning no one had any credit to lend even to solid risks -- for several weeks in the fall of 2008, which threatened to kill the economy.
Sorry Al doesn't wash, these days ability a good education and a good degree in a good subject does not guarantee you a well paid job, times have changed.
There will always be people who earn more than their ability.
In my opinion an arguable example if you are interested.
http://www.warringtonguardian.co.uk/news/9007382.Brothers_locked_in_employment_dispute/?ref=rss
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Terry Oxandale
Skinny Man
Once again, big business must be regulated. As with the electric utility industry, as soon as regulation is relaxed, the wolves are no longer shackled (rinse and repeat). I suppose a mob mentality of burning the offenders at the stake would greatly reduce this, but at present, an uncomfortable discussion in front of congress, and a slap on the wrist is the worst most will get.
Terry, This is absolutely the crux of my point. Big business inherently DOES NOT CARE about people, only returns for their shareholders. This is why governments must take back some degree of control...
The government pushed subprime mortgages through fannie mae and freddie mac to allow people who were not qualified to buy homes. The goverment screwed up wanting everyone to have a home. They set the rules for the banks to lessen credit qualifications to borrowers with little or no downpayment and no payroll qualification.
Pete McCluskey.
Lifetime Supporter
That is my understanding also Al.
Because both institutions were backed by the U.S. government and were too big to fail. Also, the company mission is “Fannie Mae is a government-sponsored enterprise (GSE) chartered by Congress with a mission to provide liquidity, stability and affordability to the U.S. housing and mortgage markets.” (About Fannie Mae, 2010)
saw it...wish I hadn't. It made my toes curl.
I was going to address Nick and say that surely you must acknoweldege that there will always be dumbo's and losers. People that couldn't realize there potential if it were labelled and hung up on their bloody walls. But then I thought again and descided not to.
Then I decided to agree that a even those who work hard and educate themselves are not guaranteed a good wage. Bollocks. It's out there people, go and fucking find it and stop whining!
the government did not create the securities which were filled with the toxic loans and sell them off as insured higher grade investments. wall street screwed us with the governement's participation.
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