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Superficially low interest rates? No regulation on the mortgage industry? Unchecked unscrupulous appraisers? Could the government have done more to prevent the current mortgage crisis? Do you think the government kept interest rates artificially low to keep the housing/mortgage industry booming to mask the fact that we would have been in a recession without the boom? According to the Mortgage Information Service (http://mortgage-x.com/general/historical_rates.asp) the average 30-year fixed rate from Sep 92 – Sep 08 was between 7-8%; miraculously right after the war started, rates began dropping dramatically until it hit bottom in the middle of 2003. Rates started to rise again in 2006 into 2007; around this time the housing market also began to see a correction, now that there are talks of a recession the rates starting to decline again in March of this year. Coincidence?
My related statement on this topic from another forum I frequent.
Quote:
“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.” -Joseph Goebbels
The True Price of the War in Iraq written 9/7/2008 11:43 AM
Perceived economic prosperity during the early years of the George W. Bush administration was based on the false assumption that home values were increasing at unrealistic rates. It has now become painfully evident that the wealth many Americans thought they had was really nothing more than an illusion to help pacify the masses.
Being a Republican I too strongly support the 2nd Amendment but I also feel that guns are ineffectual instruments against the real adversary that threatens American's freedoms the most, economics.
Full disclosure: Thanks to the corruption in the metropolitan Washington DC real-estate market I am now moderately wealthy and semi-retired well before my 45th birthday. Of course some savvy investments in the stock market didn’t hurt either.
By the way, the man most singularly responsible for the housing bubble is Alan Greenspan.
If you follow the trail of money, then yes, the government did create the crisis. Probably the best explanation I've ever heard (and also the most thorough) was on This American Life. It was an episode back in May called "The Giant Pool of Money" and it basically goes like this:
The Fed kept interest rates so low, that the global pool of money wasn't going to see any kind of return, so they went looking for other places to invest, and found it, in the US housing market. The demand for investments in the housing market became so great, that eventually mortgages were being given to almost anyone. That's the short version. Listen to the whole episode. It will make your head spin, but it will also help you to understand why things happened the way they happened.
I don't know if low interest rates were necessarily the root cause of the financial problems existing today. My view is that folks were able to purchase homes with less of a down payment than was historically required, and that documentation and verification of income for home purchases were significantly reduced.
Likely, the central beginning culprit was the HUD objective to increase the % of folks who were homeowners, a core objective of HUD under Clinton. Though this could be viewed as an admirable goal, especially in the area of minority home ownership, it appears to have opened the gates to loan abuse.
The Bush administration made this problem worse, in further espousing deregulation throughout government. Free markets are very good, but require some appropriate oversight and regulation to retain investor faith. At the moment, this is completely shattered.
Subsequently, I view Moody's, Fitch, and Standard and Poor's as being significant contributors to the problems by not appropriately analyzing loan risk, resulting in "inadequate pricing" of these higher risk loans, and inappropriately low mortgage rates for variable rate mortgages.
My husband believes its all a conspiracy. He has been researching conspiracy theories since Ron Paul has been in the "spotlight". I think he is going overboard. So are alot of people, I was scanning the radio today and came across a talk show that was talking about conspiracy theories and the government.
I don't know if low interest rates were necessarily the root cause of the financial problems existing today. My view is that folks were able to purchase homes with less of a down payment than was historically required, and that documentation and verification of income for home purchases were significantly reduced.
Likely, the central beginning culprit was the HUD objective to increase the % of folks who were homeowners, a core objective of HUD under Clinton. Though this could be viewed as an admirable goal, especially in the area of minority home ownership, it appears to have opened the gates to loan abuse.
The Bush administration made this problem worse, in further espousing deregulation throughout government. Free markets are very good, but require some appropriate oversight and regulation to retain investor faith. At the moment, this is completely shattered.
Subsequently, I view Moody's, Fitch, and Standard and Poor's as being significant contributors to the problems by not appropriately analyzing loan risk, resulting in "inadequate pricing" of these higher risk loans, and inappropriately low mortgage rates for variable rate mortgages.
I agree w/ your points, especially about HUD's objective to boost ownership. While the objective was noble, the method(s) to achieve the goals included drawing on "creativity of lenders" among other things. I'm picturing a "creative" machine at lenders' headquarters and the setting is on "ultra-high", the machine is going nuts spitting out ARMs and teaser rates and now their ducking and screaming..."too much creativity!! turn it down, turn it down!..".
The question I have now is long after we recover (if we do recover) from this mess, will we remember to not attempt to influence the free market in this manner? To create artificial availability of home ownership via creative lending?
Following is an excerpt from this link: http://www.huduser.org/publications/txt/hdbrf2.txt "However, Federal institutions, policies, and programs alone cannot
meet President Clinton's goal of record-high levels of homeownership
within the next 6 years. Under the leadership of Secretary Cisneros,
HUD has forged a nationwide partnership that will draw on the
resources and creativity of lenders, builders, real estate profession-als..."
I post this link not to blame any one person/president, for I agree as well that subsequent administrations weren't exactly eager to push the brake pedal.
I agree w/ your points, especially about HUD's objective to boost ownership. While the objective was noble, the method(s) to achieve the goals included drawing on "creativity of lenders" among other things. I'm picturing a "creative" machine at lenders' headquarters and the setting is on "ultra-high", the machine is going nuts spitting out ARMs and teaser rates and now their ducking and screaming..."too much creativity!! turn it down, turn it down!..".
The question I have now is long after we recover (if we do recover) from this mess, will we remember to not attempt to influence the free market in this manner? To create artificial availability of home ownership via creative lending?
Following is an excerpt from this link: http://www.huduser.org/publications/txt/hdbrf2.txt "However, Federal institutions, policies, and programs alone cannot
meet President Clinton's goal of record-high levels of homeownership
within the next 6 years. Under the leadership of Secretary Cisneros,
HUD has forged a nationwide partnership that will draw on the
resources and creativity of lenders, builders, real estate profession-als..."
I post this link not to blame any one person/president, for I agree as well that subsequent administrations weren't exactly eager to push the brake pedal.
Difficult to evaluate, because the Government, just like private industry, has to establish benchmarks and objectives to help justify how the current leadership is "better" than prior leaderships.
What goals will be set, and what processes will be used to assure that they meet these new goals?
Difficult to evaluate, because the Government, just like private industry, has to establish benchmarks and objectives to help justify how the current leadership is "better" than prior leaderships.
What goals will be set, and what processes will be used to assure that they meet these new goals?
Who knows?
Hard toooo hard to evaluate if one looks at the rest of the world thinks
of the dollar.Were the US not the largest econ would be 2 cents against
the peso.
You guys are boring me with facts. It is so much easier to just blame President Bush for everything negative!
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Government did not cause but...
