Did Housing Policy Cause the Crisis? - John Sununu

[optionsupdate]

no blame on the banks who created bad loans and got them rated aaa?

[IIKruZerII]

Freddie and Fannie had little to do with this, in fact, Freddie and Fannie could not even lend subprime loans. The Community Reinvestment Act had litte to do with this as well. I have never seen somebody draw the lines from the act passed in 1977 to a financial crisis that happened over three decades later - they have no connection. All the CRA did was prevent banks from redlining, banks have always been free to deny loans upon basis of income.

[funkalunatic]

Housing policy didn't cause the crisis. Firstly, the real estate bubble wasn't restricted to those targeted by loose housing policy. Secondly, even if there wasn't a housing bubble, there would have been an asset bubble somewhere due to too much money creation and the removal of barriers that otherwise would have kept inflated assets from infiltrating the entire financial sector.

[marsCubed]

funkalunatic, You can't really separate them though, the reason being that most people's collateral is their home.

Speculation on the market is defacto floating property as investment.

Making money cheap only can allow people to risk their homes as this is the asset which is owned and used as security by the vast majority.

The selling of social housing-stock was how Thatcher and Regan both launched the magic market.

It was an ideology of bubble; populism is another word for it, or myopic greed.

[eirefrance]

marsCubed, that doesn't explain why foreclosure rates among the wealthy shot up, too. If you look at the crisis realistically, not ideologically, you see that numerous causes came together.

[marsCubed]

Capitalism is a system in which a merchant employs workers to make goods which get sold at a market.

the capitalist pays workers and himself from sales, then uses the rest of the money (capital) to invest for competitive advantage.

Problem is that competitors do the same and investments soar,

this leads to saturation and crisis (squeeze) in profits.

some companies will fail; crisis.

In recovery the successful buy up failures, it takes years, is stupid and nasty.

Regulate & tax to keep it sane.

[marsCubed]

Ranchers are driven off their land by the mega corps in Colorado these days, Because big entities can collect more on property investments (rent) and thus have the funds to push smaller land owners aside,

It makes those Ranchers into tenants too.

Bush gave corps tax breaks, the richest can buy anybody they want now.

It tends to monopoly.

Tax and regulate it v. hard as required.

[eirefrance]

marsCubed, that doesn't explain why foreclosure rates among the wealthy have also risen by as much as 50%. Ideologically, govt housing policy is to blame. Realistically, however, the causes were numerous, and the banker's freedom to turn loans into securities was a huge part of the problem.

[marsCubed]

eirefrance, I think that basically sane people who want to operate towards sustainable wealth creation will make things work, they see advantage in regulation for market, employees & general well being.

In EU, Norway and Sweden tax very highly; low crime, excellent healthcare and education. flexible economy.

It seems always 'nasty' corps pull things down if they can. some are just mad.

It is playing football with swords which damages the game.

If all rationalize and tax sanely it works out IMO.

[artformeandyou]

hindsight is 20 20, what are we going to do about it? Obama's administration is making the same mistakes by spending more money than we have and encouraging consumers to become even in more debt (through programs like Cash for Clunkers)

We need real leadership, with real fiscal common sense. Like Peter Schiff and Ron Paul!