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Post by fredorbob on Jun 13, 2010 18:57:23 GMT -6
After NAFTA and other FTA's, and as factories left the country, the rich and upper-middle class found themselves in pickle:
Option A) They could take their money and invest in foreign factories and foreign labor.
Option B) Or they can find other ways to let their money make money.
Option A is risky, you never know what unstable foreign governments and cultures are going to do. Since there is no more money to be made off of American labor and American factories many turned to option B. One way the rich and upper-middle class can make money is in real estate. So they bought up a bunch of real estate and sat on it.
How many real estate agents or other real estate dabblers do you know personally, not business relationship? I knew 3. Allot of people got into real estate, they bought a bunch of houses and sat on it. And what happens when you have a bunch of buyers and flat demand? The price goes up.
Also many people expected Amnesty and about 20 million new customers. So that is expected demand that didn't pan out.
And when people lose their jobs to free trade then they can't pay the mortgage. Duh.
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Post by kramer on Jun 14, 2010 12:40:04 GMT -6
After NAFTA and other FTA's, and as factories left the country, the rich and upper-middle class found themselves in pickle: Option A) They could take their money and invest in foreign factories and foreign labor. Option B) Or they can find other ways to let their money make money. Option A is risky, you never know what unstable foreign governments and cultures are going to do. Since there is no more money to be made off of American labor and American factories many turned to option B. One way the rich and upper-middle class can make money is in real estate. So they bought up a bunch of real estate and sat on it. How many real estate agents or other real estate dabblers do you know personally, not business relationship? I knew 3. Allot of people got into real estate, they bought a bunch of houses and sat on it. And what happens when you have a bunch of buyers and flat demand? The price goes up. Also many people expected Amnesty and about 20 million new customers. So that is expected demand that didn't pan out. And when people lose their jobs to free trade then they can't pay the mortgage. Duh. I think the government purposely drove up housing prices because they knew the economy was going to be shedding millions of jobs overseas and they wanted to hide those years of economic decline. That bubble conveniently masked the effects of those jobs being sent overseas. I doubt it was just a coincidence of timing. I also think we're being economically gutted to help end poverty in other parts of the world. Kramer
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Post by jeffolie on Jun 14, 2010 13:02:22 GMT -6
I think you are placing too much emphasis on the American government as the villian in the recent housing bubble.
Think worldwide and think historically. Housing bubbles have happen many times and in many countries. Just now China has a housing bubble that its rulers are starting to cope with changing loan requirements and considering creating property taxes.
Think FIRE industries (Finance, Insurance, Real Estate) worldwide.
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Post by jeffolie on Jun 14, 2010 13:21:00 GMT -6
If you want to think about bubbles, think about the over $500 Trillion in internationally issued derivatives worldwide now. Think about the bubble in US government debt instruments including backing the GSEs for $5 Trillion, including god knows how much in Social Securities unmarketable US debt instruments, including simple Treasuries, including 'unlimited' FED issued 'currency swaps'.
These are growing bubbles while the American housing bubble is collapsing.
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Post by kramer on Jun 14, 2010 14:38:01 GMT -6
I think you are placing too much emphasis on the American government as the villian in the recent housing bubble. Yes, I do ... It was the Federal Reserve who came out with a paper on how banks could lower their lending standards so that more people with bad credit could buy a home. The genesis of the crisis, was the deterioration of mortgage origination standards. - THE FINANCIAL CRISIS AND THE ROLE OF FEDERAL REGULATORS Subprime loans "essentially emerged" out of the CRA. - THE FINANCIAL CRISIS AND THE ROLE OF FEDERAL REGULATORS Franklin Raines: "We have to push products and opportunities to people who have lesser credit qua1ity." - THE ROLE OF FANNIE MAE AND FREDDIE MAC IN THE FINANCIAL CRISIS Barney Frank: "those of us on our committee in particular will continue to push for home ownership." Bill Clinton ended the capital gains tax on housing in 1997 (the year the bubble started according to the Case-Shiller graph). In 2000, HUD secretary Cuomo raised the number of affordable, low-to-moderate-income loans to 50 percent and dramatically hiked GSE mandates to buy mortgages in underserved neighborhoods and for the "very-low-income." www.villagevoice.com/content/printVersion/541234"Bush pushes ambitious home-buying plans" community.seattletimes.nwsource.com/archive/?date=20010311&slug=harn11I've got more reasons to blame government than these that I listed. I do also blame banks, appraisers, other private sector businesses, and greedy people (which is where you're coming from). Kramer
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Post by jeffolie on Jun 14, 2010 14:46:36 GMT -6
Kramer
I agree with everything you cited and more.
Still housing bubbles are happening across the world not just in America.
The FIRE industries have been making housing bubbles throughout modern times in many countries. Governments across the world have either conspired with them or been incompetent to stop them.
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Post by kramer on Jun 14, 2010 19:49:16 GMT -6
Kramer I agree with everything you cited and more. Still housing bubbles are happening across the world not just in America. The FIRE industries have been making housing bubbles throughout modern times in many countries. Governments across the world have either conspired with them or been incompetent to stop them. You could be right.
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Post by jeffolie on Jun 16, 2010 12:38:40 GMT -6
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Post by fredorbob on Jun 16, 2010 12:52:37 GMT -6
Then it's a convergence of many things. But still, in a bubble you have artificially high prices which means people have to be involved, fallible people. And there were allot of people who were heavily involved, or just dabbled, in real estate. A disproportionate amount of people.
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Post by spudbuddy on Jul 19, 2010 8:24:50 GMT -6
Could be good to ponder this: How does this bubble history over the past three years reflect back all the attendent attitudes that go along with it? Obviously some smart guy some time ago thought it was brilliant to ship a lot of toxic effluent along with the jobs that create it overseas - the ultimate consequence was that we stopped making much of anything.....except houses, which became our principle manufactured item. (If they could figure out a cost-effective way of prefabbing them in southeast Asia and shipping them across the water, I'm sure they would have done that too.) I think the bubble has many parents....and I think it's genesis goes way back, long before 3 years ago.
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Post by unlawflcombatnt on Jul 19, 2010 14:43:26 GMT -6
I think the bubble has many parents....and I think it's genesis goes way back, long before 3 years ago. Absolutely. It goes back to numerous individual governmental and Corporate actions in collusion with each other. Everything humanly possible was done to create a housing bubble by the Government, such as tax credits (which are functionally the same thing as Government handouts), Government insurance of almost all housing loans, regardless of how risky they were, and Fed Government blocking the enforcement of state lending regulations. Private industry has done it's part (with Government encouragement) by creating myriads of "innovative" financial products, whose sole purpose was to extend spending/investing power beyond the limits of actual income or existing wealth. The increase in non-wage/non-wealth financed spending power further inflated the housing bubble itself, and provided increased home equity, which could be used to support even further credit expansion. And with the insistence of Corporate America and Wall Street, the Fed government turned pension plans into new revenue streams for Wall Street, but discouraging defined benefits pension plans, while encouraging and even subsidizing defined contribution plans. These plans became a new revenue stream for the Wall Street Cosa Nostra, causing stock prices to rise astronomically. This provided massive increases in paper wealth for stockholders, which provided additional non-wage financed spending power. But even more so, it increased spending though the "wealth effect," due to the delusion of increased wealth from overinflated stock prices. Consumers were able to spend this delusional wealth. Investors were able to invest the delusional wealth. And Wall Street bankers were able to extract much of this delusional wealth and turn it into real cash, before anyone found out how illusory it really was. All of the delusional wealth created from this obscured how little real wealth was created. All of this increased non-wage financed spending power, which obscured the continuing decline in wage-financed spending power. It has been going on for a long time. Now the hollow nature of this illusory wealth is being laid bare, as the multiple bubbles created continue to collapse.
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Post by agito on Jul 19, 2010 22:26:26 GMT -6
the 81 S & L crisis was a screw-up- they ironed out the kinks and 10 years later they were able to run a 17 year scam.
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