The simple truth is this….
IT DOESN’T REALLY MATTER MUCH WHO WINS THE WHITE HOUSE. Fixing the economy is not something a president can just do. He can only help, kinda like a cheerleader with some inside scoop.
Sorry.
By the way, you already knew this, didn’t you? It’s like being a Chiefs fan. Sure, it helps to motivate the team when the stadium is full, everyone is wearing red and cheering, screaming for the Chiefs to get er done. But when the team just isn’t good enough, well, in the end it matters not. We still lose.
For most people their bills are now overwhelming.
Their health care payment has nearly doubled in the last 10 years. What hasn’t? The house payment is tough enough, but what the hell is common area maintenance? Oh, another bill – “We plow the snow off your street and empty your trash, what more you want?”
Remember when the credit card companies sent you a credit card without you asking? Well, now they cut your available credit when they feel like it. They don’t want their money out there like they used too.
Today I get calls weekly, often more than one or two from people losing their homes, their cars, their place to live, even can’t afford their children’s upkeep. NO, not just from the girls I date, former employees, school chums, just regular people.
They’re all in trouble. Financial trouble.
It often can lead to worse issues, drinking, DUI’s, court issues, divorce, nothing good. Why?
Loss of job is number one.
Then there’s income staying the same but bills getting higher. And there are more of ’em. You don’t hear this one very often: “Hey, let’s go out to dinner tonight, I got that big raise.”
President Obama promised to STOP THE LARGE CREDIT CARD CRIME OF 29.9 INTEREST RATES. He failed to do that, didn’t he?
Why? They wouldn’t let him. Most people pay between 9 and 20% on their cards, yet we only get .5 % on our CD’s. Doesn’t seem fair, does it?
Here’s the answer: credit on cards, homes, property and business needs to be much, much more available. It’s the common man who is the economy, not just big business and Wall Street.
Because Wall Street doesn’t have to deal with this one; “Yeah, my kid’s college expenses are so high, I have to ask my son (daughter) to transfer closer to home, where we can help pay the bills.”
And remember this one, “Well, you can work your way through school, like we did.”
Really?
For the most part your monthly bills are the same or higher on most everything today. How’s that new summer electric bill looking? It all adds up. These are the real issues. These are the issues you and I live with daily, more than anything else. Getting our National Debt down won’t help much of these problems facing Americans on a daily, hourly basis.
These are the problems that America truly wants solved.
Now a President can move the chains on most of this, if he shouts loud enough and long enough.
If they let him.
P.S. How’s that retirement income looking? In 2001 CD’s paid 7 %. A decade later pretty much ZERO. That’s not good, not fair. After all it’s YOUR LIFE SAVINGS.
What a fantastic idea, borrow your way out of debt.
Hey Craig, you do understand that the rate on a CD is not indicative of the strength of the economy but merely the rate of inflation….right?
I could have gone out in 1980 and gotten a great 16% CD but that didn’t mean the economy was roaring.
CAM charges are things people know about going into a deal so if you don’t like it don’t make the deal or move.
Orphan is right borrowing your way out of debt is an insane idea, borrowing is what got people in trouble in the first place.
When you piss away your money on stupid shit like ho’s, cars, fancy living and high dollar trips all the time you deserve to be broke and a loser.
Many I know are doing good or as good as one can be right now, but all the smart ones have nest eggs, houses that fit their needs, and at our ages most paid off already.
So for those who was stupid and overextended themselves I in no way shape or form fell sorry for. Some lose jobs yes, but the smart ones weather the job less storm and the idiots lose it all.
Guys you can say that, but when there is little expendable money out there, well little will be spent…as for borrowing your way out..nobody said that…cut the rates on credit cards, up interest on savings…and yes in a sense debt is only a number if it comes with some controls…there is a happy medium…right now we are way too far right on this issue..the old…learn to live within your means…thats long gone, these Americans bought into the credit economy, most using their homes, not they are screwed…the government can help and needs too, they helped let it happen….the answer is somewhere in the middle…we have punished the nation long enough…lets lighten up and give these people a chance to ‘live’ a decent life without such feat and depression over their bills, saying ‘don’t spend’ pay them down..with what? They, no we need help on this right away…it can be done.
Sorry, but anyone who uses the equity in their home as some sort of an ATM machine, is a freakin moron. Fiscal responsibility is something everyone should learn. And “living within your means” is NOT an outdated idea. It’s one rooted in common sense. Ever heard of Dave Ramsey? Read his books and follow them.
What you are proposing is what caused the financial meltdown in the first place. It was too easy to get credit and people were irresponsible with it.
Bingo, people playing too fast and loose with money they didn’t have (BUT I HAVE CREDIT AND EQUITY!!!) got us where we are. Belt tightening all around, the party is over kids except for the beady eyed money changers in the temple. Their party has just begun.
No I’m saying why punish people with 29 per cent rates on credit cards, they can then almost never pay them off..as for EASY CREDIT, didn’t say that, said find a happy medium..so there is SOME….simple as that…if one is behind or slow or has less income or spends too much of their income on bills, they are met with HIGHER RATES, why? Those with good credit have low rates…why not have both with the same…rates, as long as they are paid timely…a guy wants to buy a car, his credit rating is 610 his interest payent is say 9%, another guy wants same car, has credit score of 750 his rate is 3%…why not have them both at say 5%…both sides are now happy…dealer and buyer…
Then what’s the incentive to have good credit? Why should I pay six points more to subsidize some deadbeat? Sounds like Obama’s Social Justice program.
Live within your means. Don’t spend more than you make. Use credit wisely. As GWSWOT wrote, spend some time with Dave Ramsey. You have any idea how much money he makes just doing local market radio ads for his “good friends”?
Dave Ramsey is a fucking idiot. He puts some sort of moral judgment on people who decide to file bankruptcy, encouraging them to pay off debt that they would be better off reorganizing. Literally tells people to eat beans and rice to pay off unsecured debts.
Naturally, he sought and received shelter under our country’s bankruptcy laws, allowing HIS debts to be wiped away.
YOUR DEBTS on the other hand need to be paid off. Now let me hear that debt scream (if you dont blow your head off with a fucking shotgun first)
BM would rather encourage you to shurk your debt responsibility rather than applaud someone who encourages others to be responsible. Nice. BM Encourage others to go on welfare because others are already on it. You have the answers to all our problems. I’d be willing to bet your the cause of alot of our problems.
As an aside to the ongoing discussion, I would mention that Jim Steele, author and former Star employee, will be speaking tonight (Wed., Aug. 15) at the downtown Kansas City library in connection with his new book, “The Betrayal of the American Dream,” since it’s basically the future of the American dream that we’re talking about here. The presentation by Steele, a two-time Pulitzer Prize winner, will start at 6:30.
Read this–
http://www.barlettandsteele.com/journalism/philainq.php
on Jim Steele, the guy Rick is talking aobut. It is a very interesting short look at what he will be talking about tonight.
It is, as I have said before, outta my pay grade, and I do take issue, with the unspoken (?) premise that the economy in America is a Zero Sum calculation, but his points are very well taken.
My feeble brain is torn between what could have, or should have happened when the economy went global (NAFTA, Jobs overseas, et etc.) and what Pat Buchanan says (Tarriffs!! NO IMMIGRATION!!), which is probably “horse outta the barn” commentary and what smartman and some of you other guys say in terms of the necessary exigencies of a real time economy, competing with the rest of the world.
Glaze’s comments are also well taken, and no matter what our views on where, or how this ship of state should continue, we can all symapathize with our fellow citizens, who have lost jobs due to world wide changing economic conditions.
Ya know I read that article and it was really on the money, then I realized, it was written in 1996.
Wow.
http://www.barlettandsteele.com/journalism/philainq.php
Pretty cool.
The American economy is NOT a zero sum game. Anyone that believes that has no understanding of economics, markets and capitalism. People that think it is a zero sum game are up there with the truthers, birthers and flat earthers.
Teh earth is round?!?!?
Now people who are having a tough time are deadbeats? So a guy loses his job, not his fault, can’t keep up, he’s no good? Why? I have feelings for those people, there are way too many of them…the answer is not making it HARDER on them…a guy who made say 75,000 a year gets fired, downsizing(right), and now he has a lesser job making say 40,000 he still has a life built on the 75,000, so he’s a deadbeat now? Don’t see it that way….that person didn’t see it coming….and has no out card…maybe some of you guys do, or have been lucky enough not to lose a job, or have big savings, or both, but your neighbor may not be in that boat…why take it out on him?
Glaze, we don’t have problems with the common joe that bought a normal sized house within his financial means that loses his or her job. I have issues with these bozos that bought way too much house for their salary range or took out a second mortgage to buy a rental house or finance a boat or other useless crap that people feel they need. Basically the idiot that lived way beyond his or her means (and there are a lot of people like this out there) are the people that helped contribute to this financial mess.
Rent a damn apartment if you truly cannot afford to buy a house and save up. Save up to buy that rental house you want or that house and boat on the lake.
The concept of saving is lost on most these days.
dude…tht wasn’t what caused the collapse. That was the
result of the collapse and what the banks and wallstreet
did to us.
The few people buying too much home didn’t cause
this shit. Sure there were loans made that
the lenders shold not have bought…but they were making
$10,000 a loan on the open makret when they sold that
loan off. If you’re using someone eleses money what do
you care…do the crappy loan..sell it off with a bogus
rating…and let the guy you sold it to get screwed…
Back to Dave Ramsey. In these shitty times you should have savings equal to 6 months worth of monthly living expenses. You may have to work two jobs. Spouse may have to get a job. Shit happens, life ain’t fair. Truth is that most Americans live well above their means. Just because you can afford it doesn’t mean you should buy it. Used cars, not new, are more practical. Do you really need a $500K house when a $300K house will do? Do you need a BMW 7 Series when a Camry will do. Make your kids get jobs instead of giving them $100.00 a week. When it comes to finance and economics we are some of the stupidest, greediest, most narcissistic, overweight on debt fucks in the history of mankind. You reap what you sew. You owe what you owe.
+10
This is a GREAT Craig comment and Im glad your step brother Harley hasn’t chimed in with his 1% holier than thou view. IT CAN HAPPEN!! Anyone who has worked at Sprint knows that.
You can be cruising along at $125K+ a year, bonuses not included, then see that wiped out in one “RIF”, reduction in force. Luckily, I didnt live all that up, I saved it so I could lose it in a DIVORCE!! And yes, I had a stunning home that would have been long since paid off, except for that ONE little detail.
So, best laid plans and all that, life really can catch you off guard. Craig, you make a great point and many do fall into that trap. I can take you out today and show you a former Sprint AVP doing landscaping. It WAS a hobby he loved, now he’s doing it for income because he needs to stay in KC and theres nothing else, given he’s the ripe old age of 50. Imagine that… all that experience, a great guy…. washed up in the employment world.. at 50.
Paul, I don’t disagree with some really bad things that happened to some really good people. But, the American public went absolutely ape-shit financially in the 90’s and early 00’s. If you made $30K annually, you could get qualified for a $250K house. No problem. Millions and millions of Americans bit off way more than they could chew. 90% of them were 1 or 2 paychecks away from not being able to pay their bills. This was stupidity, greed and lacked any common sense. People wanted the “American Dream” right freaking now! People didn’t want to save and pinch pennies to be able to move up the socio-economic ladder. Instant gratification was the order of the day and it came back to bite them in the ass!
Jim, that TOO is a totally valid point. Between people overextending their pife styles to keep up with the Jone’s and the governments interesting in pumping the sub prime market, you have a perfect storm that we’ve spent two years watching the results of. All good points.
If he’s truly happy doing what he loves he’s in a much better position than 70% of working Americans that loathe their jobs.
I’m in that other 30%, Smartman. You don’t know how lucky I feel about that. Way too many friends that dread the alarm clock every morning of their life.
Good for you Jim. I’m in the same boat and feel truly blessed and fortunate. The old saying, “A man that loves his job never works a day in his life”, really is true.
Glaze, there are a million stories out there about people losing their jobs, etc. The problem is that too damn many people don’t WANT to live within their means. They still want the smartphone. They still want the Cable TV. They still want the $300K house. They still want the new car. They still want to yearly vacations. They still want the 60″ flatscreen. They still want the $100/weekly bar tab. They still want the Chiefs/Royals/KU/MU tickets. People CAN live on a hell of a lot less money if they WANT to. Yes, it’s a tough economy. Really tough. As a dude that sleeps with a banker every night, the vast majority of the people that lost their house or got into deep financial trouble had gotten WAY over their skis because they were stupid with their money. The boats and jet skis and RV’s, et al that come along with the foreclosures are the rule, not the exception.
bull shit jim. Maybe sleeping with a banker caused you to not realize
what happened.
I know firsthand…the big scam….and i can go into complete details
about theoption arm loans that were sold…the bullshit loans
wall street resold…the huge bets made against the mortgage securities..
IT WAS PLANNED…EXECUTED TO PERFECTION.
don’t tell me what happened…i was there…the refinance rage reduced
the monthly payments…70% of the loans were refiance…the rest
purchase.
ask whoever you sleep with what % of those loans were investment
proerties…
sure there were some that were in over their head…but the
performance on those loans (except for the option arms) were
doing well til wall street and the banks in their greed to pus
trillions in loans off their statements.
Be truthful in what happened…the greed of the banks and wall street
in trying to make money caused the collapse. When the collapse
occurred because of the risky loans and crap they did amercias
economy shrank quickly. Don’t say anything different. They bet
both sides…got bailouts and got paid when they shorted the
securities.
get real!
.
OK, Harley. People WEREN’T buying houses they couldn’t afford. People WEREN’T living outside of their means. People WEREN’T trying to be 1%er’s on $50K/year.
I know why the collapse happened. That is NOT what the discussion was. The issue was why the MAJORITY of people got into financial trouble, not why the housing industry crashed.
If you didn’t take a flame thrower to every fucking discussion on this blog by telling people they are idiots and to STFU because YOU are the ONLY one that knows anything………..oh, nevermind. You are who you are.
You are right about that harlinator but it takes two to tango, somone has to accept that loan for it to happen.
That’s the point Harley was TRYING to make. Taking the bad loan, wrapping it up with 1,000 other bad loans and selling them off as AAA rated investments. Lenders pocketed the profit and passed it along to someone else. No doubt that’s all true.
My larger point was that the people shouldn’t have been seeking that loan in the first place. That’s the personal responsibility I was talking about.
You go dangling shiny things in people’s faces and some just can’t resist.
the loans went bad after the financial collapse..
remember refinancing (which was 70% of the
loans) reduced their payments.
the real problem were those option arm
loans (negative amortization)….but in reality
there were 97% of the loans were performing..
it was all a big scam.
GLAZE…SHUT THE F UP! THIS IS NOT YOUR AREA OF EXPERTISE!
YOU KNOW NOTHING ABOUT WHAT YOU ARE TALKING ABOUT SO STFU!
SORRY GLAZE…BUT I’VE LISTENED TO YOU TALK…BUT YOU KNOW NOTHING
ABOUT WHAT’S GOING ON…
#1: HOME SALES: because of what the banks and wall street did to the housing
market people are underwater in their mortgages. Can’t sell the home because
they have to bring money to the table to pay off the mortgage. So wall street
and the banks/lenders screwed us royally. Refinancing is easy right now but
the banks and wallstreet choked off all the smaller mortgage companies which
did 60% of the mortgages. They wanted it all for themselves…eliminiating any
one who would do loans. Now a loan from those banks takes extra long to get
done. There’s dozens of programs for buying homes…but the banks/lenders
don’t want to mess with them. 5 years ago brokers did those loans…theyr’e
gone…the banks and wall street now control it all. There were dozones of
lenders out there…new century/novastar…companies who did the loans for
those types of borrowers…they’re gone!!!! They’re history. Now the banks
control everything…financing is today at record low rates but its taking months
to get one done. Obama has a loan program that could refinance 1 million loans
but can’t get it through!!!!!!! Refinancing cuts monthly payments and people have
more disposable cash every month…but the banks control that.
There’s the fha streamlines that are popular now but some banks aren’t doing
them. This was part of the banks and wall streets attempt to control all the
housing lending in america…and they did it….they choked everyone else out…
now…you have just a few companies doing all the business…part of the big
plan.
2. autos: auto financing is stronger than its been in the last 4-5 years. Anyone can
get fianncinged. Its just a matter of rate. If you have good creidt …the lender
sees that as a less riskier loan and charges lower rates. If you have multiple
repos…bad credit you’re going to pay a higher rate…its always been that way.
Now you have fewer auto lenders…but the auto loans are performing well…
so subprime loans are coming back in a big way….but there’
s fewer lenders in that market and less competition going after those laons.
Finanincg right now is buying deep….so with auto loans unless you have
some tough really credit there’s still dealers who will finance you.
Credit cards…hae you been asleep glaze…this is rampant everywhere…
the banks control the credit cards and they have a license to steal.
Obama tried to control that…but he got no assitance in keeping rates
low….the banks/wall street control everything!!!!!!!!! Obama can’t
write the laws…congress does that…and remember who was running
that…presdient started a agency to fight fro the consumers and congress
won’t let the guy who obama wanted to run it through….this is all about
what i’ve been talking about for the last year and a half on here.
gas prices..don’t yu see what’s happening…the nation could be energy
indepedent…we’re shipping oil overseas for bigger profits…we’re shipping
jobs overseas…we’re crunching down hourly wages….we’re forcing
the downsizing of the economy….its all part of the plan i talked about and
which you glaze and everyone is seeing.
The deficit is mostly 2 unpaid for wars and the bush tax cuts…period!!!!!
Its all part of the plan. The politicians and the government have fucked
us. Obama took on the insurance companies…..
pharma…oil companies….banks…because he saw tht the income equality
iin the nation had spiked too far one way.
wtihout a strong middle class the nation sinks. period. The banks/corporations/
wall street/big lobbyists want to destroy the middle class. They want every
last penny they can extrreact from them…not just the bullshit bank fees..
but the casino gambling with pension fund money…DOES ANYONE THINK WE’RE
NTO GOING TO HAVE TO BAIL OUT THE BANKS AND WALL STREET AGAIN?
have you seen what they’re do ing…riskier and higher paying bets…..
this eelction is that last chance for the 1% to take this nation over. Its about to
happen. They’ll crash this country into financial collapse with their programs.
HERE’S WHAT ROMNEY RYAN PLAN DOES…..READ AND WEEP
PELL GRANTS: the only chance for middle income and low income kids to
get an education. There arev more job openings now in the nation than at any
time in the last 5 years. but the skills needed are not what the companisx need.
from computers to sales to welding to mechanical….we need trained people to
fill those jobs. Romeny ryan kills pell grants…10000000 of them…at a time
when we need to train the future of the nation.
FOOD STAMPS: HALFTHE food stamps go to kids…one fourth to the elderly
and disable….most go to the working poor. The corporations beat down wages
and now people working can’t live off the wages companies like wal mart pay.
so wall mart gets essetinally a government tax break..they pay their employees
nothing and offer no benefits so the workers are on food stamps and they government
has to pay for their health care…imagine 13 million people being kicked off
food stamps….when american hear this they will realize that romney/ryans is
not the answer……….
LOSS OF MORTGAGE INTEREST DEDUCTIOn romney /ryan gives millionaires
tens of thousands of tax cuts….income tax breaks. To p[ay for that they say they
will eliminate tax breaks to payfor that. what else is there besides EITC
orTHE BIG ONE…THE ONE WE ALL GET…THE BIGGEST AND REALLY THE
ONLY TAX BREAK…THE MORTGAGE INTEREST DEDUCTION…IMAGINE
THAT BEING ELIMINATED….THATS WHATS IN STORE FOR US.
THEN THEY WANT to increase defense spending..huh?
and they won’t balance the budget til 2040!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
an additional 30 million unisured…14 million becoming uninsured when the
repeal obamacare……..11 billion in cuts to veterans administration (imagine
the thousands of kids coming home from iraq/afghanistan and they come back
to this!!!!).
14 million people lose medicaid …..where do they go?
All the while the upper 1% get those huge tax cuts and breaks.
I said it before. This is the 1%’s last chance to take this nation. After this
year they’re out of every taking over. The demographics will kill any
future chance they have to running this nation. It’s their last gasp.
They’re sending trillions in profits overseas to avoid paying taxes…laws
they bought from the politicians so they could avoid paying taxes and the
rest of america would be left paying the bills.
This is their last chance. so they’re all iin on this one. Why do billionaires
care so much about this election? because we’re just stating to see what
they’ve done while we were asleep. We let them game the system…change the
laws…allow them to avoid taxes…give them breaks (like paying for romneys
ballet horse!)…they’ve sucked everything out they can. Now they control
the politicans and they’re trying to buy the u.s. government.
I’ve said it before…
WE’RE NOT BROKE…WE’RE FUCKED.
wake up…everything here is proven…they want social security…and if
they get it we’ll see another 2008 collapse.
We’re asleep at the whell…..
Watch what you wish for…you just might get and see that we’re in
a world of shit!!!!!!!
The sub-prime loans have moved from real estate to autos, particularly through GE Credit for purchases and leases of GM cars and trucks, all being ENCOURAGED by the Obama administration as a way of trying to shore up the governments investment in GM. Wait til this shit hits the fan and GE winds up with a chunk of GM, taxpayer subsidized, stock.
If you wanna get your credit life in order go to creditkarma.com. It’s free, offers great advice and suggests offers for getting lower interest on your credit cards and lets you see how your credit score changes month to month.
Those are points well taken guys. I agree with most of it, however, more people fit into the average or above that got hit, not the rental home, the 500,000 dollar home and season tix to two or three sports…if you are that guy, granted its a bitch and you have to bring it down…but as you all know, just selling your home today can take months, many months, its a buyers market and THE BUYER’S CREDIT IS IN ISSUE TOO OFTEN, even on homes of under 200 thousand….yes it can be done, but again, we need a little more help from the banks on those as well…I’m just saying credit is too too tight right now…again happy medium.
After reading Craig’s commentary I once again thank God few people ever took him seriously as a political candidate. Borrowing rates are higher for people with bad credit because they default more often than people with good credit. The higher the risk, the higher the premium you have to pay for the loan. That’s a pretty basic principal of economics. In fact, the credit crisis of the past five years came about specifically because lenders did not recoup enough money to offset the defaults they had to absorb. They were giving out too many loans on far too generous terms to shaky borrowers. And now you want to do that all over again? Good grief.
Have to disagree with you Craig. Like several have said, easy access to credit has resulted in too many people getting too deeply in debt. Many have or will have to declare bankruptcy. The problem isn’t credit, but many Americans’ inability to manage their own money. It’s pretty simple. Spend less than you earn. Dave Ramsey has it right. Track your spending and see where the money goes. It’s beyond surprising to see how money goes out the door and we have no real idea where it went. My wife and I have paid cash or used debit card for everything from groceries to cars over the past decade. We control our money, and as a result we have more in the bank than we ever thought we could. Best of all, other than our house, we’re debt free.
Congratulations!
Mazel tov!
the reason most people declare baknruptcy is not what you said…
most of the time is deals with medical bills…….yes medical bills.
Wow I need you at my house!
Glaze had a good time at TJ a few weeks ago. Damn you’re right Legends was bananas on Saturday night. I had to do the valet parking (chump change for us Johnson County set)
We crashed in 08 and basically have been in extend and pretend mode since. While we are staring at 1% on a 5yr CD and 1.75 on 10yr Treasury. We are also looking at 3.7% 30 year Mortgages. So if you can get refinanced you are looking at substantial and immediate free cash savings.
If you have bad credit and you can even get a 25% card well all the power to you pal.
So the new normal is your house ain’t ever coming back but we will do our best with your 401K. Housing for the last 50 years has been the main source of confidence in America. Now that that has crashed, all that’s left now that can be manipulated is Stocks. Mini bubble being created in dividend paying stocks with money flowing out of CD’s and into AT&T , Utilities, etc. we all know how this ends.
Fraud and crime everywhere I look at MF Global, Fixed Libor, Knight Capital, JPM Whale, PFG, Facebook & Groupon IPO’s— geez this is just the last 6 months. Doesn’t even matter anymore. Stairs up Elevator down.
Good Post and Good thread…
I’m ready for some football…. I would take a MAC game right now –AKRON V. BALL ST. would be ok with me.
Here is an article on “Technical Optomism vs Economic Pessimism.”
Really excellent.
http://www.thedailybeast.com/newsweek/2012/07/29/niall-ferguson-don-t-believe-the-techno-utopian-hype.html
Since nobody has mentioned this before, here are the reasons why the collapse happened:
1) Glass-Steagll act allowed banks to be both commercial banks and investment banks. That meant that huge conglomerates like CITIGROUP were created. Conglomerates that now had mortgages on their books that they didn’t want. So the Mortgage-backed security was created. Now the bank that wrote your loan no longer owns it. That gives them no incentive to loan to worthy people. It gives them an incentive to loan to anyone with a pulse.
2) The fraudulent ratings of AAA assigned to these Mortgage Backed Securities. This means in practical terms that they can be sold to normal investors as an alternative to other AAA investments such as Missouri State General Obligation Bonds (at the time rated AAA) or US Treasury Securities (AAA). The rating is a reflection of the risk of default. It was absurd to rate these AAA, and everyone in the industry knew it but looked the other way. So now the average 401k middle manager dolts are filling their portfolios with MBSs in preparation for the inevitable fall. Naturally people like Goldman and CITI were going ‘short’ on these MBS tranches while telling most of their investors that the investments were solid.
3) As touched on by Craig and others, the general greed of the baby boomer generation. It was all 40k cars and 400k houses until the well ran dry. Secured credit (credit backed by a title) was extended to people who never should have gotten that much, or any at all. This is both the fault of the borrower and of the lender. As for unsecured credit (like credit cards, credit not backed by title) the credit card companies make so much on people who carry a constant balance that they could wipe everything clean and all that would happen is people would start slowing working their way back into debt again. The high APR rates of credit issuing banks on cards indicates they anticipate some sort of debt forgiveness/bailout in the future.
NICE writing balboni….most of the banks now are carrying their own
loans….
You forgot to mention AIG and the insurance on all these bad bets that had no money to cover them.
Owe the bank $1000 that’s your problem.
Owe the bank $25,000 that’s their problem.
Lesson learned…stay liquid my friends…