āBut the explanations for what happened in housing are not, I think, to be found in the conventional data favored by economists but rather in sociologically important narratives ā like tales of getting rich through āflippingā houses and shares of initial public offerings ā that constitute the shifting mentality of the era.ā
I zone out after that. At least the author admits they are trying to use opinions to create an emotional response, and they donāt care at all about facts.
The time frame of 1997-2005 is interesting. In 1996, Clinton created the capital gains exemption for home profits. If you want to pay blame to the flipping boom, there you have it. People rushed into the business that promised tax free profits if you lived in the house for 2 years.
Flipping doesnāt automatically increase prices. Prices donāt increase unless buyers are willing and able to pay more. Buyers were able to pay more, because mortgage standards kept going lower.
All that foreign money parking in real estate holdings here is adding fuel to the fire. Instead of just fighting with local demand you have international demand now to contend with.
Bush overheated the economy in response to 911ā¦ Told everyone to shopā¦ Too many non quality home buyersā¦
Many could not even afford the first paymentā¦ Recipe for disaster
The lowering of lending standards was done under Clinton in the name of fairness and less discrimination against minorities who have lower credit scores.
And if I recall correctly it was a democrat from Massachusetts who was responsible. (Not that there are any republicans in MA. Those are just democrats who were up against an incumbant.)
Most of the times, due to my limitations of my broken English, I rely on something any smart person ought to know how to use: GOOGLE!
Before I look stupid, I look for some facts, though you can find left and right articles, most of them give you the core of the problem, REAGANOMICSāTRICKLE EFFECT!
Glass-Steagall was designed to prevent exactly the kind of collaboration that brought us the Goldman-Sachs fraud. <---------------Isnāt Goldman Sachs working for Twhitler?
Glass-Steagall was repealed in 1999 by a Republican-controlled Congress who pushed for the passage of the Gramm-Leach-Bliley bill.
Gramm-Leach-Bliley was named after its three sponsors, all of them Republicans: Congressmen Phil Gramm (R-Texas), Jim Leach (R-Iowa) and Thomas J. Bliley, Jr. (R-Virginia). The Gramm-Leach-Bliley Act tore down the regulatory framework that would have helped protect against the sub-prime mortgage bubble and the speculation that led to a collapse of the market where speculators traded the āderivativeā securities that were created from those sub-prime mortgages.
The passage of Gramm-Leach-Bliley represented the culmination of over two decades of implementing āReaganomics,ā which was a belief in two things:
1)free, unregulated capitalism would result in a level playing field in which the players could be trusted to abide by the rules, acting honestly and responsibly at all times and
2)massive transfers of wealth from the working class to the ultra-rich would result in increased capital investment, the creation of large numbers of new industries and jobs, and a general ārising tideā of wealth that would lift all of our boats. The passage of Gramm-Leach-Bliley represented Reaganomics in action.
WE ARE IN ANOTHER REAGANOMICSāTRICKLE EFFECTā¦ROUND 2
It was Andrew Cuomo who was head of HUD. The down payment requirement was reduced to 3% from 20%. They also made Freddie and Fannie go from a target of 30% subprime to 50% subprime in the name of increasing home ownership. If banks didnāt process enough risky mortgages, then regulators accused them of discrimination. They used the community reinvestment act to do it. The government used CRA to make banks do subprime loans, then they made Freddie and Fannie buy the loans. The biggest bailouts were Freddie, Fannie, and AIG. None of them were banks.
Itās also annoying that people still call it a bailout. The government made a profit off of it. All the money was repaid plus more. Also, all banks were forced to participate even if they donāt want the money.
LOLā¦LOLā¦LOLā¦How stupid a congress can be to let the minority over power them? Nahh! I think some people are delusional to not see how voting works. Majority wins, so, they assume responsibility for whatever they voted for.