More Articles

[unforth]

I may not have time to finish my last post, unfortunately, but here are some other articles that I found interesting:
Why the Bailout was a Terrible Idea, according to the Nation.
Bailout Causing International Problems
Newsweek Gives an Overview of the Crisis - this was quite helpful, despite the fact that I was dubious of a few of the things that it said.
So What is a Credit Default Swap, Anyway? - another Newsweek article with some good overview type information.
Timeline of Events Since 2007 - the dow, aligned with a few news tidbits, but still vaguely interesting.
The Times Gives an Overview of Events Since Yesterday, but you might not be able to read without making an account - they're free, though, so I'd say it's worth it.
Yay, Bipartisan politics? "Mr. Boehner...said he could not remember a time when the muscle of both parties and the White House failed to produce a victory." (from the above article)

What's really starting to bug me is the way that everyone is blaming "Wall Street Recklessness." That is not what's caused this mess. The root of this mess is people who had poor credit being extended large lines of credit at high risk - credit they should NEVER have received because they couldn't afford to pay it back. The banks just did what they had to in order defer that risk - but they gave the people what they wanted. Blaming Wall Street over looks the part where there would not have BEEN subprime mortgages if the demand for them hadn't been astronomical.

Gotta go. Probably more later.

Comments

[mindstalk.livejournal.com]

And Wall Street was willing to give out those subprime mortgages because they'd found ways to hide or pass the risk on to others, plus beliefs in either "the bubble won't burst" or "Washington will bail us out". Or more succintly: mass lending to poor credit risks, backed up by securitization of those mortgages, is is the Wall Street reckleckness.

gave the people what they wanted

And it was the banks' choice to do that. Of course people want cheap/free money, doesn't mean the banks have to give to them.

Plus things I don't know much about, regarding deceptive lending practices and adjustable rate mortgages.

Or zero-down mortgages + ARM, where while rates are low you're basically renting the house cheap, and have no incentive to not walk away when rates rise or you lose your job. Housing prices go up because of mortgage fueled demand, then crash as people rationally walk off. Main culprit? Whoever thought zero-down mortgages were a good idea...

[unforth.livejournal.com]

Of course it was the banks choices. But there was money to be made. I'm not trying to claim that greed didn't play a part in what happened (and the ARMs are just criminal, I can't argue with that one). However I can't agree with

Housing prices go up because of mortgage fueled demand, then crash as people rationally walk off.

That's a MASSIVE simplification - but even if it weren't, that actually PROVES my point - if the crisis is at least in part because people decided to default on their mortgages because it was easier to do that than to rent, that's not the banks fault, it's those people's fault for being utterly fiscally irresponsible.

And the banks did make plenty of choices in this situation - but first, the word bank is not = to "Wall Street," and second, well...let's just say that I think there's plenty of blame to go around - to Wall Street, to the those behind the deregulation stuff, to politicians playing their own games or thinking only of their own constituents, to the banks, to mortgage brokers, and to regular people who treated credit as a way to get money far beyond their actual means.

[mindstalk.livejournal.com]

If you want to spread blame around, that's okay -- got to have been aggravating being a conservative home buyer (20% down, fixed rate) and seeing people doing insane things, then maybe getting bailed. Your initial post struck me as more of an apologetic, though -- even your reply here: "there was money to be made". Well, money, or cheap housing, or the hope of money, to be made by the subprime borrowers.

In a sense the blame ultimately lies with the politicians and regulators who deregulated in such a way as to set up cascading incentives, such that both bankers and borrowers were behaving short-term rationally. OTOH, the banks and Wall Street probably had more causal influence on the political decisions than the disorganized mass of borrowers, so I have a strong suspicion of "they started it" and "they were in a position to know better". Lots of borrowers were just getting hard sells "now you too can own a home! join the Dream! no money down!" Murky territory between financial immorality and simple innumeracy, because our schools can barely teach arithmetic competence, let alone basic financial analysis skills.