Tax Cuts are working, see!
If the tax cuts weren’t working this wouldn’t happen: The percentage of mortgages entering foreclosure rose to a record level during the three months ended June 30
I mean of course the tax cuts are working. Hundreds of thousands of people believed that prosperity was just around the corner. They believed that those awesome tax cuts were going to make them have more money and that they would participate in this great economy. Trickle down economics has to work at some point. right?
See, you say that something works, they believe you. Presto, it works. Duh.
Trickle down economics is the second worst hoax ever perpetrated on the American public. The first, of course, being Bush’s War.
You liberals don’t get it. Bush is trying to create an Ownership Society™.
The first step in creating an ownership society, of course, is to transfer “ownership” of your house to the bank.
It’s a religious thing. Only once you are free of your worldly possessions will you have the purity of character required for the Ownership Society™.
And your daughters should remain pure by practising abstinence so the Senate doesn’t have to worry about herpes.
wow, miles, I never thought of it that way.
This has far more to do with the tightening of bankruptcy laws than anything else.
That Tax Cut cartoon displayed the economic illiteracy of the left and a capacity for making specious linkages.
How many of those with ‘problem mortgages’ played by the conventional rules? Folks with conventional, fixed-rate mortgages and a 20% or more down payment and a loan balance less than 3X their yearly income are not worrying.
People who were too stupid to know that money is not loaned at a rate that was below prime and who could not comprehend the meaning of ‘negative amortization’ are the hurting ones. Note that Liberal Icon John Edwards took some time out from chasing ambulances and running for president to dabble in ‘sub-prime’ investments.
Blaming Delaware’s Representative for Life Castle for some mortgage problems is rather silly. While many Republicans long for a real Republican alternative to him in a primary, the nature of his General Election opponent assures that the GOP faithful will hold their noses on election day and send him back to Washington to round out the State’s Three Stooges.
Blaming Delaware’s Representative for Life Castle for some mortgage problems is rather silly.
Oh silly me, Castle only sits on the House Financial Services Committee. How stupid to hold him accountable for the housing bubble.
People who were too stupid to know…
Yes, because stupid people exist to serve as ATMs for conniving Republican corporations and if necessary, as tasty sources of protein.
Art’s fallacy is based on his blame placed on the uneducated who were taken to task by what truly amounts to unscrupulous lending practices. The upside is that these lending practices screwed the shysters that offered ‘2% Introductory Mortgages’. In addition, these lending practices screwed the John Edwards’ of the investment community who collateralized mutual funds with these high risk mortgages.
Lenders and investors in mortgages attempted to make the same profit margin as credit card companies by sucking in uneducated mortgagees with low introductory rates, then jacking the shit out of the rates, foreclose, then sherrif-sale the properties in a booming housing seller’s market. The lenders and investors got fucked. They did it to themselves.
And as to the banks the lending companies that are now bankrupt, where was the federal bank examination oversight which was supposed to prevent undercollateralized, high-risk loans? Were these federal bank examiners managed with the same care toward American businesses that was shown by the Attorney General’s office toward political enemies?
Let’s not forget that no less than Alan Greenspan publicly and strongly recommended ARMs (for reasons no one can really fathom.
Lenders also sought to increase their profits by selling these mortgages to folks with less than excellent credit, or lower incomes than optimal. They had little risk since they were going to securitize them and sell them off to other investors. More conservative lending institutions (those who did not indulge in this con game) are doing just fine…
Lenders and investors in mortgages attempted to make the same profit margin as credit card companies by sucking in uneducated mortgagees with low introductory rates, then jacking the shit out of the rates, foreclose, then sherrif-sale the properties in a booming housing seller’s market.
Not quite. They weren’t looking to make a killing by foreclosing. The mortgage originators were looking to make a killing on the mortgage initiation fees, and then by bundling and selling the mortgages up the chain to other banks and to Fannie and Freddie. Then the mortgage belongs to the “too big to fail” banks who will be bailed out.
The bankruptcy law benefits the sub-prime industry NOT by squeezing more payments from poor people, but by moving more and more people into the profitable sub-prime category.
… what OM said.
Learned a lot here today. Good Econ lecture gang.
Let’s not forget that no less than Alan Greenspan publicly and strongly recommended ARMs (for reasons no one can really fathom.
Partisan move. The ARMs allowed the housing bubble to float the economy on credit and prevent erosion of the middle-class standard of living, which would have exposed the fallacy of the Bush tax cuts before the 2004 election.
I blame Tony Robbins (he of the unnaturally white teeth): “Mortgage yourself to the hilt, buy another house, slap on a coat of paint and some granite countertops and the next thing you know old Jed’s a millionaire!”
Miles says, “Not quite. They weren’t looking to make a killing by foreclosing. The mortgage originators were looking to make a killing on the mortgage initiation fees, and then by bundling and selling the mortgages up the chain to other banks and to Fannie and Freddie.”
Fannie and Freddie do not buy non-conforming mortgages, i.e., ‘sub-prime’. The practice of selling the mortgage once it was executed didn’t work for these sub-prime hustlers. The only people that bought these sub-prime loans were high-risk mutuals. Where they (the sub-prime lenders and high-risk investers) thought they could make it was in higher return on the money loaned justified by accepting a greater credit risk. And if the deal came to foreclosure, the booming housing market would guarantee appreciation enough to cover the outstanding debt.
When the housing market went south, there was no way to cover the cost at foreclosure. Money supply to these sleazy lenders dried up because the big capital lenders got scared, therefore they couldn’t make more loans to cover the bad ones, and had insufficient collateral. The bright side to this is the sleazeballs got screwed.
Dis, you are correct about Fannie and Freddie and the sub-prime scenario… but the sub-prime market drove down rates all around, drove home prices up, and expanded the bubble for the conforming market too.