patrick.net

Tenouncetrout says

There was never a tech bubble, the tech market was sabotaged and hijacked. by old money.

If Greenspan (the most single authority on finances at the time) didn’t take it upon him self to single handedly destroy the tech industry by persuading all of the 401K pensioners to pull all of their money out at once.
So that old money could swoop in and buy up all of the interelctual property code and technologies.

Then you would buying iPhone service from Bob’s Cellular Shack and communications Co.

And Gretchen Smith an ex Secratary for a minimum wage job, would be the richest CEO in the country today. And we still would have never heard of all the ass bags that drove the banks into the ground later in the decade.
If there was a tech bubble, and it did indeed pop. Then ask your self, who is Google, and why are they on every browser and doodad known to man.
I mean Jesus there’s computerized Toilets in Japan for Christ sakes!
Tech bubble, my ass.

Tenouncetrout says

There was never a tech bubble, the tech market was sabotaged and hijacked. by old money.

If Greenspan (the most single authority on finances at the time) didn’t take it upon him self to single handedly destroy the tech industry by persuading all of the 401K pensioners to pull all of their money out at once.
So that old money could swoop in and buy up all of the interelctual property code and technologies.

Then you would buying iPhone service from Bob’s Cellular Shack and communications Co.

And Gretchen Smith an ex Secratary for a minimum wage job, would be the richest CEO in the country today. And we still would have never heard of all the ass bags that drove the banks into the ground later in the decade.
If there was a tech bubble, and it did indeed pop. Then ask your self, who is Google, and why are they on every browser and doodad known to man.
I mean Jesus there’s computerized Toilets in Japan for Christ sakes!
Tech bubble, my ass.

There are three reasons I think it was a bubble. 1. It didn't bounce back. 2. big money pushed the prices up regarding many companies that were really useless. They were IPO's by Goldman and they were a scam. 3. Big money took away the leverage and got out. They got out very slowly.

My first thoughts when I saw this post was "this will not end well."

schmitz_kris summed it up well with: http://patrick.net/?p=507475#comment-690526

It is ending just fine, don't you think? And besides, Schmitz used the wrong analogy. Ponzi victims are not drunks. I suppose in a perverse way some people could blame the Madoff victims. But only the people who looked into a pattern of returns could see what was going on. Looking back, as many do on this board, many things look easy.

"1. It didn’t bounce back."

Sure it did tenfold.

There were far to many companies out there that shouldn't have been been publically offered let alone sold on the market. The biggest problem with the "Tech Bubble" if you want to call it that.
Was the people not having a clue what technology was and exactly what they were investing in as companies. Nor did they have a realistic vision of what is possible through simply having a URL, and what is just Fantasy fancy talk, that just because they had a web address they would make millions. PET.com and Etoys.com are great examples. On like retailing was relatively new and not as nearly taken for granted as the hundreds of millions of online transactions take place today.

Pet.com paid hundreds of millions in advertisement and staff, and the reality was there were no sales. Unlike companies that were burgeoning, technologies that were on the cuspid of changing drive technology, chip technology, OS technology programming languages. Technology that resulting technologies still standing incorporated. This was intellectual property that was basically hijacked though acquiring or destroying these companies, then buying up what was left wholesale. No different than the way the best houses are being reserved in shadow inventory now.

Was it hyped and over sold, definitely that makes it a bubble in the dumb consumer sense. But many of the goods that were casualty to the knee jerk response, were still good companies. And was the only real competition to many of the companies left standing. Which Ironically those prospective companies now own.

Tenouncetrout says

“1. It didn’t bounce back.”
Sure it did tenfold.
There were far to many companies out there that shouldn’t have been been publically offered let alone sold on the market. The biggest problem with the “Tech Bubble” if you want to call it that.

Was the people not having a clue what technology was and exactly what they were investing in as companies. Nor did they have a realistic vision of what is possible through simply having a URL, and what is just Fantasy fancy talk, that just because they had a web address they would make millions. PET.com and Etoys.com are great examples. On like retailing was relatively new and not as nearly taken for granted as the hundreds of millions of online transactions take place today.
Pet.com paid hundreds of millions in advertisement and staff, and the reality was there were no sales. Unlike companies that were burgeoning, technologies that were on the cuspid of changing drive technology, chip technology, OS technology programming languages. Technology that resulting technologies still standing incorporated. This was intellectual property that was basically hijacked though acquiring or destroying these companies, then buying up what was left wholesale. No different than the way the best houses are being reserved in shadow inventory now.
Was it hyped and over sold, definitely that makes it a bubble in the dumb consumer sense. But many of the goods that were casualty to the knee jerk response, were still good companies. And was the only real competition to many of the companies left standing. Which Ironically those prospective companies now own.

No the NasDaq went to five thousand. It has never even approached 3k since. So, no the dot com bubble did not cause the Nasdaq to rebound at all. Individual companies rebounded and Google wasn't even in the dot com crash. I remember companies with no viable products making near billionaires out of their owners. And they had nothing.

tts says

OCExRenter says

BOOHOO! I took out a loan for $500K when I make 50K and now I can’t pay for it! It’s the banks fault! It’s the brokers fault!

Ignorance is not a valid excuse.

The gov. and banks and credit agencies do bear some responsibility in these situations. As has been already said, they were supposed to be making sure that the loans were actually practical and affordable to the buyer and met ratings standards. You also can’t forget that the bubble went on for a long time and people were bombarded daily by the news and their friends/family about buying homes.
People bear some fault for just blindly trusting what they were told, but the key point is that THEY WERE TOLD IT WAS OK BY PEOPLE IN AUTHORITY!!
**WARNING** CAR ANALOGY AHEAD:
I don’t know crap about cars, sure I drive one everyday, but I don’t know the first thing about fixing it. If it breaks and I take it to a repair man who says x,y, and z are broken on it, but they really aren’t but he charges me to fix them anyways.
Now maybe I’m interpreting/projecting here but it sounds like you’d blame me for being stupid/naive enough to trust the 1st repair man I went to and got my “just desserts” or “learned my lesson”, etc. And maybe it’d be true enough about me being naive/stupid, but that doesn’t excuse the repair man’s actions.
The repair man knew exactly what he was doing when he lied and ripped me off, and that is a crime. By blaming only the victim you allow the one who instigated the crime to walk away scott free, with the money too boot.

Nah, wrong analogy. Who decided to buy that car in the first place ? The fraudulent repairman did not make you buy it. The original poster is making the argument that you were duped into buying that car, therefore it is the fault of those who duped you, rather than your fault for getting duped. but you are the one who opened your pocket book which you have 100% reposnsibility for. I say it is 100% your fault for buying that car.

schmitz_kris says

tatupu70 says

Of course some people bought houses thinking they’d make money. Is that wrong? I thought that’s how things worked in a free market.

Keep strongly in mind THOSE INDIVIDUALS ALREADY HAD SHELTER. They were not homeless. They were fine - probably had plumbling, electricity, all the essentials.
It’s wrong to assume something that DEPRECIATES in quality, like a used house, ought to APPRECIATE in value. It’s ridiculous, in fact. They buy no other consumer good with that notion.

The land is increasing in value... Not the home so much. Land does appreciate with age/inflation!

marko says

Nah, wrong analogy. Who decided to buy that car in the first place ? The fraudulent repairman did not make you buy it. The original poster is making the argument that you were duped into buying that car, therefore it is the fault of those who duped you, rather than your fault for getting duped. but you are the one who opened your pocket book which you have 100% reposnsibility for. I say it is 100% your fault for buying that car.

So if i go to a doctor and he prescribes me poison (a toxic asset) and i take the pill that im told will make me healthy in 30 years and instead it paralyzes me... The doc says sorry. But keep buying and taking the pills and u should be able to walk again in 15-20 years.... Or u could say fuck u to the doctor... Stop taking the poison pills and walk the next day. See my stupid analogies work too

So, your premise is that the Tea Party only blames the customer and any other party? That unlike you, who does acknowledge that customers get some of the blame, though it has to be "shelled out carefully," the Tea Party does not give anyone other than the customers any of the blame?

Nomograph says

You mean those deadbeat losers who think they’ll get rich quick by day-trading on technicals instead of working?

A deadbeat is someone who does not pay their bills. A growing number of Americans fit this criterion. It is also growing in acceptance among the general American culture.

A loser is someone who loses.

I am neither. If I were I wouldn't have the time to spend my days on forums like this one interacting with all of you fine folks - I'd be at a 9 to 5 with a JOB (just over broke). That, like so much of mainstream culture, is propaganda for feeble-minded hamsters incapable of contemplating life outside of their wheels.

Working is NOT the way the wealthy get wealthy. INVESTING is the way the wealthy get wealthy. It's true the wealthy (I'm talking realistic, attainable wealth such as that portrayed in books like The Millionaire Next Door) live far beneath their means, but over the course of their lifetimes it's the INTEREST AND DIVIDENDS AND CAPITAL GAINS that propel them into that category, not the slaving away at some ridiculous job.

PPete says

Maybe Indebtedness can be re-classified as a disease, like with Alcoholism.

You cut off your ear Van Gogh and you are telling us about disease classifications? Just kidding.

schmitz_kris says

It’s true the wealthy (I’m talking realistic, attainable wealth such as that portrayed in books like The Millionaire Next Door) live far beneath their means, but over the course of their lifetimes it’s the INTEREST AND DIVIDENDS AND CAPITAL GAINS that propel them into that category, not the slaving away at some ridiculous job

And where exactly do you get the MONEY to invest? Unless you are born with a silver spoon in your mouth, you need to work. You get rich by working, living below your means, and investing. You need all 3.

Paralithodes says

So, your premise is that the Tea Party only blames the customer and any other party? That unlike you, who does acknowledge that customers get some of the blame, though it has to be “shelled out carefully,” the Tea Party does not give anyone other than the customers any of the blame?

The Tea Party primarily blamed the subprime borrower. The basis of the Tea Party movement was the Rick Santelli rant against the bailout of subprime. Hennessey, founder of the real Tea Party, not the Tea Party express, was on Kudlow numerous times, had the opportunity to call out the banksters and did not do so.

This is a divide-Republicans-with-money-from-Dems-who-owe-money movement. That is all the Tea Party is about. It is a more mainstream Republican in tactic than you know. Wall Street and CNBC support the Tea Party. That is pretty mainstream. Wall Street also wants social security money because many boomers are boycotting stocks forever. But that is another issue.

My point in all this is that the majority blame for the ponzi goes to Wall Street and the central banks of the west.

schmitz_kris says

Nomograph says

You mean those deadbeat losers who think they’ll get rich quick by day-trading on technicals instead of working?

A deadbeat is someone who does not pay their bills. A growing number of Americans fit this criterion. It is also growing in acceptance among the general American culture.
A loser is someone who loses.
I am neither. If I were I wouldn’t have the time to spend my days on forums like this one interacting with all of you fine folks - I’d be at a 9 to 5 with a JOB (just over broke). That, like so much of mainstream culture, is propaganda for feeble-minded hamsters incapable of contemplating life outside of their wheels.
Working is NOT the way the wealthy get wealthy. INVESTING is the way the wealthy get wealthy. It’s true the wealthy (I’m talking realistic, attainable wealth such as that portrayed in books like The Millionaire Next Door) live far beneath their means, but over the course of their lifetimes it’s the INTEREST AND DIVIDENDS AND CAPITAL GAINS that propel them into that category, not the slaving away at some ridiculous job.

No offense Schmitz, but you are a bit of a loser. You lack compassion for people who were swindled by the ponzi and you are not outraged by the facilitators of the ponzi. People can lose without even knowing it.

But don't take it personally, because your attitude is a product of a mainstream media caused scam upon you. I blame the media which is tightly controlled by Wall Street, bought by Wall Street, more than I blame you. The mainstream media wants you to divert blame from those who own it. And it obviously is working. :)

GaryA says

The Tea Party primarily blamed the subprime borrower.

So back to my question, you believe that the "Tea Party" only blames the customer/borrower and not any other parties?

GaryA says

The basis of the Tea Party movement was the Rick Santelli rant against the bailout of subprime.

Bailout of the subprime what ??? The subprime borrowers?

GaryA says

My point in all this is that the majority blame for the ponzi goes to Wall Street and the central banks of the west.

That was certainly *one* of your points. Another appears to be that the "Tea Party" (as defined by you) blames the customer/borrower and does give any blame to other parties. I'm trying to clarify whether you are in fact arguing against a degree of blame, or creating an illogical strawman by claiming the "Tea Party" holds a particular position that you cannot show it holds. Of course since they are "stupid," who knows why you would try to convince them, whoever "they" are, of anything anyway?

tts says

The gov. and banks and credit agencies do bear some responsibility in these situations. As has been already said, they were supposed to be making sure that the loans were actually practical and affordable to the buyer and met ratings standards. You also can’t forget that the bubble went on for a long time and people were bombarded daily by the news and their friends/family about buying homes.
People bear some fault for just blindly trusting what they were told, but the key point is that THEY WERE TOLD IT WAS OK BY PEOPLE IN AUTHORITY!!

I would say a majority of the people who bought and are in trouble bought under the assumption that they would be able to sell the property in a few years and make a huge profit. [GREED]

Yes the banks should not of loaned the money out, but the liars should not have applied for it.

I bought my home as shelter. I don't expect it to provide me an income or my retirement.

I knew it was a bubble in 2005 when I first started looking for a house. Look at the prices and ask yourself what supports this price and these huge price increases? It was the same in the dot com bubble, how were these comanies making money?

One thing I live by is never blindly trust anyone who has a financial interest in what you are doing.

When I buy a car I research it. I don't trust the salesperson. If it needs repaired and seems unreasonable i'll get a second opinion.

What is the Sharon Angle take on this issue?

Paralithodes says

GaryA says

The Tea Party primarily blamed the subprime borrower.

So back to my question, you believe that the “Tea Party” only blames the customer/borrower and not any other parties?
GaryA says

The basis of the Tea Party movement was the Rick Santelli rant against the bailout of subprime.

Bailout of the subprime what ??? The subprime borrowers?
GaryA says

My point in all this is that the majority blame for the ponzi goes to Wall Street and the central banks of the west.

That was certainly *one* of your points. Another appears to be that the “Tea Party” (as defined by you) blames the customer/borrower and does give any blame to other parties. I’m trying to clarify whether you are in fact arguing against a degree of blame, or creating an illogical strawman by claiming the “Tea Party” holds a particular position that you cannot show it holds. Of course since they are “stupid,” who knows why you would try to convince them, whoever “they” are, of anything anyway?

There were ideas floated to bail out subprime borrowers. It never happened, but the Santelli rant was not just opposed to bailing them out, but set a tone that the big banks were not really to blame in the first place. He is paid by Wall Street, and will go the way of Dillon Ratigan if he were to disc the big banksters too much.

I will say this again: Hennessey, the founder of the real tea party, not the express, goes on Kudlow from time to time and has never called out the banksters for their major role in this.

Listen, you all are brainwashed if you believe that the majority fault rests with the borrowers. You are brainwashed by the Wall Street controlled media.

If you can't see this then you aren't trying hard enough.

GaryA says

Listen, you all are brainwashed if you believe that the majority fault rests with the borrowers. You are brainwashed by the Wall Street controlled media.

Who forced the hand of the borrower to sign?

If I went and spent all my money on lottery tickets is it the states fault for advertising that I can become a millionaire?

Personally I think the banks/wall street/government sucks. Bush sucked and so does Obama. I don't trust the media. We need another revolution to clear all this crap out.

OCExRenter says

GaryA says

Listen, you all are brainwashed if you believe that the majority fault rests with the borrowers. You are brainwashed by the Wall Street controlled media.

Who forced the hand of the borrower to sign?
If I went and spent all my money on lottery tickets is it the states fault for advertising that I can become a millionaire?
Personally I think the banks/wall street/government sucks. Bush sucked and so does Obama. I don’t trust the media. We need another revolution to clear all this crap out.

It is well known that the lottery is gambling. It was not well known that buying a house was gambling as well. Why do people always come up with examples that don't fit?

If you don't blame the banksters, they get away with it. I don't mean that you should be racists, or anti this or that, but in general the bankers who control the central banks are at fault and should be called out. Our government should, and if it where sovereign it would, protect the middle classes from these financial thugs who are the richest people in the world.

And read what I wrote here: http://seekingalpha.com/article/207622-why-australia-needs-the-perpetual-loan

Turns out that ING was once owned by Lambert of Drexel Burnam Lambert fame. It is no doubt in the family still. And Lambert was great grandson of Barron Rothschild. This bank wants to ponzi profit shamelessly in Australia with the perpetual loan.

GaryA says

OCExRenter says

GaryA says

Listen, you all are brainwashed if you believe that the majority fault rests with the borrowers. You are brainwashed by the Wall Street controlled media.

Who forced the hand of the borrower to sign?

If I went and spent all my money on lottery tickets is it the states fault for advertising that I can become a millionaire?

Personally I think the banks/wall street/government sucks. Bush sucked and so does Obama. I don’t trust the media. We need another revolution to clear all this crap out.

It is well known that the lottery is gambling. It was not well known that buying a house was gambling as well. Why do people always come up with examples that don’t fit?
If you don’t blame the banksters, they get away with it. I don’t mean that you should be racists, or anti this or that, but in general the bankers who control the central banks are at fault and should be called out. Our government should, and if it where sovereign it would, protect the middle classes from these financial thugs who are the richest people in the world.
And read what I wrote here: http://seekingalpha.com/article/207622-why-australia-needs-the-perpetual-loan
Turns out that ING was once owned by Lambert of Drexel Burnam Lambert fame. It is no doubt in the family still. And Lambert was great grandson of Barron Rothschild. This bank wants to ponzi profit shamelessly in Australia with the perpetual loan.

Well I agree that banksters have done fraudulent things and they are to blame for that.

OCExRenter says

I would say a majority of the people who bought and are in trouble bought under the assumption that they would be able to sell the property in a few years and make a huge profit. [GREED]
[..]
I knew it was a bubble in 2005 when I first started looking for a house. Look at the prices and ask yourself what supports this price and these huge price increases? It was the same in the dot com bubble, how were these comanies making money?
One thing I live by is never blindly trust anyone who has a financial interest in what you are doing.
When I buy a car I research it. I don’t trust the salesperson. If it needs repaired and seems unreasonable i’ll get a second opinion.

Thank you! My thoughts exactly. When I moved to the bay area in 2005 EVERYONE was telling me how to "get rich" by buying a house, condo, anything. Flip it. Get equity. Take out a HELOC to buy a new car. Move up. "That's how it works". I smelled a rat and refused. Then they said, "you just don't get the market, it's different here".

Yes, I could have ridden the bubble/ponzi scheme for a while but I am not that much of a gambler. Besides, I didn't want to live in Crackton, even for 6 months.

GaryA says

If you don’t blame the banksters, they get away with it. I don’t mean that you should be racists, or anti this or that, but in general the bankers who control the central banks are at fault and should be called out.

So how do you blame the "banksters" on prices doubling from 1998-2000 ?

pkowen says

Thank you! My thoughts exactly. When I moved to the bay area in 2005 EVERYONE was telling me how to “get rich” by buying a house, condo, anything. Flip it. Get equity. Take out a HELOC to buy a new car. Move up. “That’s how it works”. I smelled a rat and refused. Then they said, “you just don’t get the market, it’s different here”.

Of course you are correct. You are telling the truth, but you need to realize the philosphy was across the entire English-speaking world, not just in the Bay Area. It's much the same in Minnesota, Australia, the UK, etc. Heck, folks in Ireland and Spain too for that matter.

They were/are all just gambling, speculating. There's nothing wrong with that, but what I can't stand is now that some of them have lost, they're unwilling to put up with the loss - they're sticking it to the public sector/taxpayer instead. They should have to face their losses like a real man/woman. Instead, we learn that delinquent HELOC debt and the like is difficult to recover even a portion of, and the Feds pass legislation to shield them from taxes due to forgiven debt.

We've ALREADY bent over backwards to kiss the butts of these pathetic, deadbeat, loser homedebtors - let them crash and burn already. That's what can happen when you invest in a leveraged market like real estate. Hopefully, they'll learn something from all of this and become smarter, more responsible citizens in the future.

How can anybody blame one faction of this mess more than the other? Every one of us, less renters like my girlfriend, partied hard and were more than willing to [recklessly] accept the [irresponsible] terms. I think we should put the scale away.

schmitz_kris says

We’ve ALREADY bent over backwards to kiss the butts of these pathetic, deadbeat, loser homedebtors - let them crash and burn already. That’s what can happen when you invest in a leveraged market like real estate. Hopefully, they’ll learn something from all of this and become smarter, more responsible citizens in the future.

Here's what I don't understand. What exactly are you complaining about? That they don't have to pay the tax on their forgiven loss? I agree that it's not a good policy.

But, otherwise, they are paying. Their credit is taking a hit. That's how it works.

no one in banking understood the macro economic forces causing asset inflation, let alone lay people who just wanted to buy a house. The only thing to blame is peoples greed and herd mentality. its easy to look back now and say you bought a house for half a million dollars? you were crazy, but no that was the market price, and if you didn't cough it up you were renting, period.

How can anybody blame one faction of this mess more than the other?
I've always said that every party in the securitization chain bears some responsibility -- from the home buyer all the way through to the buyer of the MBSes (and their derivatives). Any one party in this chain could have refused to participate and we would not be in this mess.
We have met the enemy and he is us. -Pogo

That said, near the bitter end, I think there was influence pedaling involving those who plied the Magnetar trade, making a bad situation even worse...

Thanks for posting the Magnetar Trade article. I've not seen that.

..."From what we've learned, there was nothing illegal in what Magnetar did; it was playing by the rules in place at the time."

Hand picking and packaging the worst cancer and than shorting it is like a boxer taking the fall for a payout. With all these big players involved, I hope this story gets continued exposure.

OT: "since they are stupid" caught my eye, GaryA. Friendly tip...shooting off that kind of shallow generalization at a party will get you neither laid (by someone who matters) nor respected (by someone who matters).

Common Sense says

How can anybody blame one faction of this mess more than the other? Every one of us, less renters like my girlfriend, partied hard and were more than willing to [recklessly] accept the [irresponsible] terms. I think we should put the scale away.

At least you're honest.
I think we need to put the Justice Scales away also, and pull out the hand cuffs.

I think all of those liar loans should be gone over with a fine tooth comb.
Just because they were accepted with out proof, doesn't mean they didn't sign and agree to that they could be prosecuted for miss representing their finances, and ability to pay.
Fraud is still illegal in this country after all.

But the problem has been there hasn't been much serious inquiry beyond Blog Jockeys and Forum hounds rehashing common knowledge that not one damn law maker has acknowledged.

Even as Big of a Grade A first class ASS and a Tool that I think Michael Moore is. He presented the facts of what went on during the fall of '07 through the summer of '08 immaculately, in a full feature film. Of course none of what he said was news to the average Patnet reader.
I remember I called him an Ass bag for coming out a year later, after Bloggers and Forums had rabble about it for a whole year.

But I must say, the Man put together as a Film Maker, a Case of Fraud on a Federal Level, to the out right Fraud on Wall Street. This was a stronger case than anything Robert Kennedy could have done, in a lifetime if he wasn't killed.

And not one bit of out rage from people to demand that some law maker look into the allegations. If nothing else he should have been sued for slander, he made some strong legal and liable allegations against most of the Democrat Congress and Senate.

I didn't care for him making the Loan takers out as Victims. They were no less greedy.

But rest assure you're in clear Common Sense. I don't think anyone is minding the store.

It's like the Villain in "Last Action Hero" where he tele-ported into Reality and shot a person. To no panic response from anyone. "Hello! I just SHOT somebody! I said I murdered a MAN!" "Shut up!"

Tenouncetrout says

Even as Big of a Grade A first class ASS and a Tool that I think Michael Moore is. He presented the facts of what went on during the fall of ‘07 through the summer of ‘08 immaculately, in a full feature film. Of course none of what he said was news to the average Patnet reader.
I remember I called him an Ass bag for coming out a year later, after Bloggers and Forums had rabble about it for a whole year.

CNBC had Michael Moore on one morning. So they asked him. If you dont trust Wall Street, where do you invest your money, do you save in stocks or bonds? His response was "I dont understand Finance, I put all my money into my house".

Ok, so Moore pours in all his money he has made into his over inflated home with some hope someone will overpay for is diggs in a middle class neighborhood of Flint Michigan. Brillint !!!!

Did he say he was selling it?

I'm buying a house that is making sense as it is.
I plan on doing 50-100K worth of work to.
Of course I wont be paying that much, most will be sweat equity.
But if I thought for a minute, I'll ever recoup the money in my life time I wouldn't do it.
I hope to buy an even nicer house, when the Train comes to a full stop. In a neighborhood that is a two times upgrade than what I am buying now. For as much if not little less than I paid for this one. I'll keep the second house, for my kids or rent it out.

It wont be for sale, it's in the family now.

But I'm sure what Michael meant besides actual physical work in his house. Perhaps he meant he hoards his cash at his house.

So why were unqualified buyers able to get a loan for a house anyway?

In 1995, the GSEs like Fannie Mae began receiving government tax incentives for purchasing mortgage backed securities which included loans to low income borrowers. Thus began the involvement of the Fannie Mae and Freddie Mac with the subprime market.[111] In 1996, HUD set a goal for Fannie Mae and Freddie Mac that at least 42% of the mortgages they purchase be issued to borrowers whose household income was below the median in their area. This target was increased to 50% in 2000 and 52% in 2005.[112] From 2002 to 2006, as the U.S. subprime market grew 292% over previous years, Fannie Mae and Freddie Mac combined purchases of subprime securities rose from $38 billion to around $175 billion per year before dropping to $90 billion per year, which included $350 billion of Alt-A securities. Fannie Mae had stopped buying Alt-A products in the early 1990s because of the high risk of default. By 2008, the Fannie Mae and Freddie Mac owned, either directly or through mortgage pools they sponsored, $5.1 trillion in residential mortgages, about half the total U.S. mortgage market.[113] The GSE have always been highly leveraged, their net worth as of 30 June 2008 being a mere US$114 billion.[114] When concerns arose in September 2008 regarding the ability of the GSE to make good on their guarantees, the Federal government was forced to place the companies into a conservatorship, effectively nationalizing them at the taxpayers' expense.[115][116]

I'm put off by the poster's urge to call the Tea Party stupid, as if the Tea Party was a group with a single united view. They aren't.

All players in the subprime meltdown were at fault for a variety of reasons - people who knew they couldn't afford a big house gambled they could outsmart the ARMs when they came. The government shifted regulations favoring subprime lending to make unqualified buyers suddenly qualified with a sense of entitlement, and the banks tried to cover the mess by repackaging it and trading it around. It ALL combined to create the problem.

The part that makes me mad is the fact that the government put the taxpayers on the hook for the liability. Without that factor, people who couldn't afford houses they bought would simply lose their house and have to rent. Banks with bad loans would have to eat the loss, but the rest of us wouldn't be footing the bill for this crap.

It's not magic or mystical - if you cannot afford it, do not buy it. If you cannot take the risk of lending money to someone unqualified in the credit arena, don't make the loan. And the government can piss off on asking everyone to pay for this stupidity. We're already paying our own mortgages, or rent, or whatever.

I suppose I don't see the Tea Party the same way as GaryA and perhaps some others on this board, because I do not see it as a particularly unified front. Though it may its roots in the Santelli rant against taxation, that rant did not provide any type of agenda for people, it simply drove home to people that all the problems, no matter who caused them, are being fixed with their tax dollars. This is not, then, about who is to blame for these problems, it is about cutting spending. Each member of the Tea Party seems to have their own idea as to where those spending cuts (with many opposed to cutting things they themselves benefit from; there is hypocrisy in pretty much every political party when it comes to their own backs getting scratched) should come from, but the general consensus seems to be anti-TARP and anti-Healthcare bill. I wouldn't call a group hatched from the ashes of animosity toward the bailouts (which mostly went to the banks) as being particularly pro-bank, honestly. From speaking with some Tea Party people, the vast majority think the banks should have been allowed to fail for handing out bad loans, which seems to indicate that they blame the banks for their own negligence. Tea Partiers are also, as a group, in favor of auditing the Fed and generally distrust the central bank. Just because two people, who you identify as founders of the Tea Party movement, and perhaps they are, don't rail against banks as much as you would like does not indicate that the average person who identifies with the Tea Party is pro-banker. In fact, the mainstream wing of the Republican party is far more pro-banker than the Tea Party, just as the mainstream of the Democrat party is far more pro-banker than the Progressives. I have not met many average Americans, from the Moveon.org and Huffington Poster to the Freerepublic and Liberty Poster, who actually are pro-bank in the slightest. Everyone blames the banks for making stupid loans, the question is how much blame should be assigned to the Realtors, the Appraisers, and the home buyers themselves. Sit back and think about the experts on each side, the Keynesian (usually espoused by the left) side versus the Austrian (usually espoused by the right) side and ask yourselves which is more pro-bank and pro-Fed. Have you ever seen a more pro-Fed, pro fiat-currency fellow than Paul Krugman, generally adored by the left (and who quoted Keynes on gold that gold is a "barbarous relic," and who adamantly opposed the movement to abolish the Fed, the best friend of banks and the source of their profits since TARP)? Isn't the entire Austrian push against allowing banks to loan at ridiculous reserve ratios as strong an anti-bankster position as one can have? Isn't allowing the banks to fail for their own stupidity (as Mitch McConnell recommended in April, drawing the ire of Krugman) anti-bankster? Even the Huffington Post grants that the Tea Party is anti-bankster at heart (http://www.huffingtonpost.com/robert-kuttner/question-for-the-tea-part_b_642379.html), it just questions their ability to see through the distortions of the Republicans.

Hand picking and packaging the worst cancer and than shorting it is like a boxer taking the fall for a payout.
In this analogy, it's the promoters -- who sold tickets to the fight and did not materially disclose to those in ringside seats (CDO buyers) that there may not be a fair fight -- that are the guilty party. Not easy to prove in a court of law. Magnetar could simply take their marbles elsewhere if the CDO manager didn't provide risky enough assets to get the return they needed on the equity tranche.

thomas.wong1986 says

GaryA says

If you don’t blame the banksters, they get away with it. I don’t mean that you should be racists, or anti this or that, but in general the bankers who control the central banks are at fault and should be called out.

So how do you blame the “banksters” on prices doubling from 1998-2000 ?

Easy money.

jljoshlee3 says

no one in banking understood the macro economic forces causing asset inflation, let alone lay people who just wanted to buy a house. The only thing to blame is peoples greed and herd mentality. its easy to look back now and say you bought a house for half a million dollars? you were crazy, but no that was the market price, and if you didn’t cough it up you were renting, period.

Sorry Patrick, I flagged this comment by mistake. It is early on Saturday and I hit flag instead of quote. Sorry.

As to the post, of course bankers at the highest levels knew exactly what would happen if you offered easy money as opposed to tight money. The ponzi systems are created. How can you say that the banksters at the top didn't know? Maybe your local banker didn't know.

lollyd says

So why were unqualified buyers able to get a loan for a house anyway?
In 1995, the GSEs like Fannie Mae began receiving government tax incentives for purchasing mortgage backed securities which included loans to low income borrowers. Thus began the involvement of the Fannie Mae and Freddie Mac with the subprime market.[111] In 1996, HUD set a goal for Fannie Mae and Freddie Mac that at least 42% of the mortgages they purchase be issued to borrowers whose household income was below the median in their area. This target was increased to 50% in 2000 and 52% in 2005.[112] From 2002 to 2006, as the U.S. subprime market grew 292% over previous years, Fannie Mae and Freddie Mac combined purchases of subprime securities rose from $38 billion to around $175 billion per year before dropping to $90 billion per year, which included $350 billion of Alt-A securities. Fannie Mae had stopped buying Alt-A products in the early 1990s because of the high risk of default. By 2008, the Fannie Mae and Freddie Mac owned, either directly or through mortgage pools they sponsored, $5.1 trillion in residential mortgages, about half the total U.S. mortgage market.[113] The GSE have always been highly leveraged, their net worth as of 30 June 2008 being a mere US$114 billion.[114] When concerns arose in September 2008 regarding the ability of the GSE to make good on their guarantees, the Federal government was forced to place the companies into a conservatorship, effectively nationalizing them at the taxpayers’ expense.[115][116]
I’m put off by the poster’s urge to call the Tea Party stupid, as if the Tea Party was a group with a single united view. They aren’t.
All players in the subprime meltdown were at fault for a variety of reasons - people who knew they couldn’t afford a big house gambled they could outsmart the ARMs when they came. The government shifted regulations favoring subprime lending to make unqualified buyers suddenly qualified with a sense of entitlement, and the banks tried to cover the mess by repackaging it and trading it around. It ALL combined to create the problem.
The part that makes me mad is the fact that the government put the taxpayers on the hook for the liability. Without that factor, people who couldn’t afford houses they bought would simply lose their house and have to rent. Banks with bad loans would have to eat the loss, but the rest of us wouldn’t be footing the bill for this crap.
It’s not magic or mystical - if you cannot afford it, do not buy it. If you cannot take the risk of lending money to someone unqualified in the credit arena, don’t make the loan. And the government can piss off on asking everyone to pay for this stupidity. We’re already paying our own mortgages, or rent, or whatever.

Bill Gross wants to nationalize the GSE's and the Republicans want to privatize the system and still have government guarantees. The 30 year mortgage will go away or be too expensive without government guarantee in a fiat money system that is being manipulated by the rich.

Yes, the GSE's bought subprime loans, but they didn't originate them. Wall Street and their cronie did. And Wall Street set up the system in bubble fashion. The GSE's never allowed liar loans until they started losing business.

The government guarantees were a given. But I guarantee you that if it was just subprime, as Henry Paulson thought, it would have been contained. But the prime and jumbo liar loans are what are killing the economy. Subprime was contained. But it was much more than subprime. And that is where the Tea Party is smoking funny stuff as they don't see it.

ahasuerus99 says

I suppose I don’t see the Tea Party the same way as GaryA and perhaps some others on this board, because I do not see it as a particularly unified front. Though it may its roots in the Santelli rant against taxation, that rant did not provide any type of agenda for people, it simply drove home to people that all the problems, no matter who caused them, are being fixed with their tax dollars. This is not, then, about who is to blame for these problems, it is about cutting spending. Each member of the Tea Party seems to have their own idea as to where those spending cuts (with many opposed to cutting things they themselves benefit from; there is hypocrisy in pretty much every political party when it comes to their own backs getting scratched) should come from, but the general consensus seems to be anti-TARP and anti-Healthcare bill. I wouldn’t call a group hatched from the ashes of animosity toward the bailouts (which mostly went to the banks) as being particularly pro-bank, honestly. From speaking with some Tea Party people, the vast majority think the banks should have been allowed to fail for handing out bad loans, which seems to indicate that they blame the banks for their own negligence. Tea Partiers are also, as a group, in favor of auditing the Fed and generally distrust the central bank. Just because two people, who you identify as founders of the Tea Party movement, and perhaps they are, don’t rail against banks as much as you would like does not indicate that the average person who identifies with the Tea Party is pro-banker. In fact, the mainstream wing of the Republican party is far more pro-banker than the Tea Party, just as the mainstream of the Democrat party is far more pro-banker than the Progressives. I have not met many average Americans, from the Moveon.org and Huffington Poster to the Freerepublic and Liberty Poster, who actually are pro-bank in the slightest. Everyone blames the banks for making stupid loans, the question is how much blame should be assigned to the Realtors, the Appraisers, and the home buyers themselves. Sit back and think about the experts on each side, the Keynesian (usually espoused by the left) side versus the Austrian (usually espoused by the right) side and ask yourselves which is more pro-bank and pro-Fed. Have you ever seen a more pro-Fed, pro fiat-currency fellow than Paul Krugman, generally adored by the left (and who quoted Keynes on gold that gold is a “barbarous relic,” and who adamantly opposed the movement to abolish the Fed, the best friend of banks and the source of their profits since TARP)? Isn’t the entire Austrian push against allowing banks to loan at ridiculous reserve ratios as strong an anti-bankster position as one can have? Isn’t allowing the banks to fail for their own stupidity (as Mitch McConnell recommended in April, drawing the ire of Krugman) anti-bankster? Even the Huffington Post grants that the Tea Party is anti-bankster at heart (http://www.huffingtonpost.com/robert-kuttner/question-for-the-tea-part_b_642379.html), it just questions their ability to see through the distortions of the Republicans.

You don't get it. Fox News strongly supports the banks. So does CNBC. These continually promote the Tea Party, and you cannot deny what I said about Hennessey, the founder of the Tea Party, not calling out the banks when on Kudlow. This happened more than once. I emailed him and he is a flake. He refused to discuss the issues in a return email. I don't buy anything the leaders of the Tea Party say because they are for Wall Street and against mainstreet. If you can't see this you are deceived.

And that link is a joke. The guy says they don't much like bankers, but I have watched the founder in action. I know better.

Be certain as you listen to this crap, that he never talks about the real problem, but rather wants to do away with social security, health care, welfare, and everything that filters any money from the top to the bottom. But I remind you that 10 percent of the people in the US control 93 percent of the wealth. This direction cannot continue or there will be societal meltdown. But Hennessey wants to keep his part of the pie. That is what the Tea Party is about. Wake up. They will continue to ruin America. Both parties are in the pockets of the rich. But the trickle down doesn't work. Didn't work with Bush, isn't working now as the banksters got bailed out and Wall Street is stronger while mainstreet is wobbling.
http://www.youtube.com/watch?v=1_fgg_E6cok

By the way, his kudlow interviews are missing from you tube. They may still be on the CNBC site, I don't know.