A question.

[fancycwabs]

Does the housing crisis strike anyone else as largely fictitious?

I mean, obviously people are losing their homes, and one major lending corporation seems to have suffered a collapse, but aren't the numbers driving the interest-rate increases arbitrary, designed to screw homeowners over based on the inability to refinance as their interest rates grew beyond their ability to pay?

Did Bear Stearns fail because it couldn't walk the fine line of screwing their customers just enough to get them to keep paying mortgages, but still enough to keep the investors from pulling their money out of Bear Stearns and investing it in a company who could screw its customers even better than Bear Stearns could?

After all the COFI hasn't really changed THAT much over the past few years--it certainly hasn't hit percentages I saw (7.5%) when I bought my own house seven years ago.

Are we, as a nation, going to wind up paying a lot of money to bail out real-estate speculators, instead of letting them suffer the consequences of their folly?

Comments

[m0thy.livejournal.com]

In Michigan, where the housing crisis is more a function of nation-leading unemployment, it's hard to keep perpective. You bring up a good point, though, about all those get rich "systems" where people flip houses for profit, and all those people that refinanced after one year for home equity credit cards. I think some people should face the risks they took. No matter how hard it seems.

[snowy-owlet.livejournal.com]

I don't know about fictitious, but definitely overblown. I keep hearing "ONE HUNDRED THOUSAND PEOPLE HAVE LOST THEIR HOMES!!!"

Dude, the population of the US is 300 million. I'm sure all those people are sad, but that is hardly a nationwide tragedy. Yes, banks should not have been approving Stupid Danger Loans for everyone coming in off the street ... but neither should those people have been suckered enough to agree to them. I don't think they should get bailed out. I think they should have to deal with the consequences of the choices they made, however hard.

It's my opinion that the latter bit is the real root of the matter: very few people want anymore to have to deal with consequences. I have very little sympathy for that attitude, and I REALLY don't think that the grown-ups among us should have to pay (via taxes, bank fees, or whatever) for the screw-ups of the Big Giant Babies walking around.

[incyr.livejournal.com]

It appears the answer to your final question is, sadly, "yes". It irks me to no end, mostly because I know my mom has bought more than a few houses in the past decade (due to multiple moves, not owning multiple houses at once) and she's ALWAYS bought within her means, even if it wasn't her dream home. Yet now everyone who bought more than they could handle are getting bailed out, while people like her, who were responsible, aren't getting anything but screwed as their taxes will now be raised to help pay for everyone else. </soapbox>

[mosesandcompany.livejournal.com]

Gahh, you know, I had a whole long response to this, but I lost it when my boss came by my desk and I had to close the window. My answer is "no", it absolutely does not strike me as fictitious.

I would also add that it saddens me when the consumers who are hurt by this crisis are dismissed as "speculators". A substantial percentage of the borrowers who have been crushed by unfavorable mortgages are simply first-time homebuyers, who may not have fully understood the inherent risks of their mortgage when they took it out. Should a consumer have to deal with the consequences of their financial actions? Of course. Should a struggling first-time homeowner be buried under mountains of debt for the rest of her life because a predatory lender crushed her with a mortgage she couldn't fully understand, let alone afford? Tougher question.

[garoux.livejournal.com]

From what I hear, Bear was one of the more risky/shady institutions around, when it came to decision-making. It was a matter of everything coming back to them. At the client that I'm at right now, they called this around August, and shorted the HELL out of Bear. Guess who's partying?

[phonemonkey.livejournal.com]

Jeff says this article is well worth a read, because the whole thing is very regionalised.