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America’s housing system still has not been properly reformed

164 points by martincmartin 10y ago

formula1 10y ago
To sum it up, despite there being regulations on CDOs the real problem still exists. That problem is that loans are easy to get the gov stamp. Thos makes it easy for new home owners to get loans. And this makes it easy for sales people to sell the loans. Much of this opinion article is based on an other article [0] which seems less doom and gloom and more about the shift to a majority of state sponsored loans. This in itself its own issue in that capitalism isnt doing what it should be when everything is subsidized by the gov. Ultimately these two articles seem to be about responsibility. Banks are not responsible for homeowners making poor decisions. Banks are not responsible for investors trusting a market that is not self sufficient. And Banks are not responsible for the government to enable them with tax payer money. Meanwhile everyone can point the finger back to the banks and the bank depends on the fact that too many economies rely on them to fall [0] http://www.economist.com/news/briefing/21705316-how-america-accidentally-nationalised-its-mortgage-market-comradely-capitalism http://www.economist.com/news/briefing/21705316-how-america-...
- bradleyjg 10y ago
  Why does the government need to be involved in mortgage lending at all? Is there a specific market failure inherent in it people can point to that calls for government intervention to overcome (akin to the public good failure for e.g. roads)?
  - talmand 10y ago
    One specific market failure people can point at is government involvement.
  - jessaustin 10y ago
    When these institutions were first created no one imagined the harm they would inevitably cause. Now that they exist they can't be killed, because they help some people. Like a lot of things, really.
    - formula1 10y ago
      Thats not entirely true. England has had a number of economic scandals before the US recieved their independence. There is also certainly a president of "too big to fail" to the point that the king was invested [0]. [0] https://en.m.wikipedia.org/wiki/South_Sea_Company https://en.m.wikipedia.org/wiki/South_Sea_Company
      - afarrell 10y ago
        For an entertaining summary of this, I recommend the youtube series Extra History: https://www.youtube.com/watch?v=k1kndKWJKB8 https://www.youtube.com/watch?v=k1kndKWJKB8
      - jessaustin 10y ago
        Haha I thought we were talking about Fannie Mae, not USA itself. Although, the latter might be a better comparison to the South Sea Company...
  - TheSpiceIsLife 10y ago
    The government, acting as the collective will of the people, believes, due to recent experience, that a housing crash, and the concomitant cascade of mortgage defaults, is something worth making an effort to avoid? I think that's how the story is supposed to go. I guess the flip side is that quote by that fellow I read somewhere that went something like: democracy cannot last as a permanent form of government, it can last only until people realise they can vote themselves largess from the public purse. Let's wait and see what happens.
  - eli_gottlieb 10y ago
    Homeownership was a major pillar of post-WW2 cultural stability among the middle class, so subsidizing it was considered a social good.
    - internaut 10y ago
      Cringed while reading. We've got to stop transcribing intuitions into universal laws if we want to claim the sapiens in homo sapiens. Regardless of political stance, for any animal to require half its lifetime in effort to acquire a shelter, well that is retarded. And for some reason we consider ourselves more enlightened than our ancestors building functionally useless monoliths. At least the pyramids united the tribe or whatever.
      - formula1 10y ago
        I feel like I can relate to your position however I believe there is much more to this than simply "unevolved" - a hive mind (similar to that of bees or ants) likely considers death to be a reasonable loss to the point of canabalism being deemed reasonable. This is probably the closest to full centralization there is. - in gorillas there tends to be one male per multiple females and per area. There also tends to be a female pecking order where one stands dominant and weaker ones get scars. This is probably the closest to fully independent since each individual only gets what they take. We live in a world where money can be anywhere and we want to allow anyone to have the opportunity to get what they want (so long as it doesnt harm the collective good). What tends to happen is the money becomes centralized to trade centers or with rare resources like peaceful community or opportunity in entertainment. However, space is a scarce commodity in these locations because it attracts so many people. So isnt it fair to increase the prices? The people who are making the most money for the area should have the most convinient location. "unevolved" implies that there isnt rhyme or reason to this.
  - wahern 10y ago
    People who have nothing to lose tend to make poor economic decisions and poor social decisions. That's why home ownership matters. It's a poor investment vehicle only if you assume people would invest savings from renting into appreciating assets, rather than burn it on consumables. They won't. So, yeah, government is involved because it's a collective action problem. Individuals and the market left to their own devices will reach a suboptimal equilibrium. Is home ownership the _only_ answer? No. The problem is fundamentally cultural. But in the U.S. especially, subsidizing home ownership seems to be the most viable mechanism we can, as a society, agree upon. Probably because of our emphasis on individualism. In a society that highly values individualism, people will be more incentivized to strive toward home ownership than other alternatives. We went them (us) to delay other, less economically efficient forms of gratification. In some Asian societies, for example, different cultural preferences make alternatives more viable. For example, they're more likely to emphasize investment in education. I'm pretty sure the phrase "book learning" isn't derogatory in most Asian societies, even for low-skilled laborers who feel disenfranchised and lack any intellectual ambition. (Not that those things are necessarily related--I strung them together for emphasis.) In any event, the point is to keep people invested in the economy in such as way that their individual choices tend toward more productive activities. It's a channeling function.
- martincmartin 10y ago
  That problem is that loans are easy to get the gov stamp. It's more that the fee the government charges for its stamp is too low, such that if the loans sour, the taxpayer ends up paying back the loan. Partly because the state charges too little for the guarantees it offers, taxpayers are subsidising housing borrowers to the tune of up to $150 billion a year, or 1% of GDP. Since the government mortgage machine need not make a profit or have safety buffers, well-run private firms cannot compete, so many banks have withdrawn from making mortgages. If there is another crisis the taxpayer will still have to foot the bill, which could be 2-4% of GDP, not far off the cost of the 2008-09 bank bail-out.
- topspin 10y ago
  This in itself its own issue in that capitalism isn't doing what it should be when everything is subsidized by the gov. Thus $500k 800 sq ft bungalows. You show me a chronic bubble and I'll show you a 'market' riven with subsidies, tax incentives, government secured debt and pencil whipping regulators. Healthcare, education, housing.... Yet when the bubble pops and the too-big-to-fails have to be 'recapitalized' all we get from the ruling class is more hating on markets. Your last sentence is interesting: the fact that too many economies rely on them to fall I believe you meant that banks can't be permitted to fail. But it could also be read to mean that what we've self inflicted is a system whereby the greater fools are those found holding worthless CDOs (and all of their various derivatives) when the bubble pops; the market is ultimately expressing itself through the failure of financial institutions.
  - formula1 10y ago
    "Thus 500k 800 sq ft bungalows" This may sound cynical but that is one of the fair markets that likely will not fall. These are luxery that are likely only to be bought and sold to people looking for vacation spots or a crashpad. Much more likely to be paid off than a 4 bedroom in the midwest bought by a hardworking train engineer and his wife working part time in a restaurant. "We've self influcted a system wherevy the greater fools are those found holding worthless CDOs" I really appreciate the hot potato analogy! Exactly what I was thinking.
    - __derek__ 10y ago
      > 500k 800 sq ft bungalows For what it's worth, this describes a significant portion of the single-family housing stock in Seattle.
  - woodandsteel 10y ago
    >Yet when the bubble pops and the too-big-to-fails have to be 'recapitalized' all we get from the ruling class is more hating on markets. The reason this happens is that during the boom phase, the conservatives and libertarians, the defenders of the market, tell everyone things are going just fine. And then when it all blows up, they suddenly change their line and say it was all due to government subsidies and regulations. That is what happened last time, remember?
chollida1 10y ago
I'd agree that the US housing and derivatives markets are in a much better position than in 2007-2008. Atleast people who are getting mortgages now have some form of documentation, and risk manages are being asked to do their jobs. The crisis now is that, and this is just my opinion, low rates are here to stay. with the amount of money in the system, people are being priced out of homes and as time goes on the amount by which they are priced out in the big cities is only going to grow. As an aside... I'm not a lawyer but I've heard people say My cousin Vinny is the most accurate court room movie ever. In a similar vein, I'd nominate the Big Short as one of the more accurate wall street movies ever made. It showed the lone wolf who not only saw the coming crash, this was far and away the easiest part, but figured out how to profit form it by getting the banks to write him a CDS. The two smart kids working out of their garage that were smart enough to succeed despite all their mistakes. The hedge fund who did an incredible amount of due diligence, going to properties, knocking on doors, talking to people inside the industry to put together the pieces that no one else could. The wall street sales guy who sold the CDS knowing that it might bankrupt his company but figured he'd make a killing on his commissions long before that happened. And the most accurate part of the movie was that it showed the anguish that each of these people went through. They'd seen something no one else had, been right about it, had the event happen and even then everyone else continued to plug their ears and pretend nothing was going on while they continued to bleed money each month. It really did a good job of showing that you can be right about everything and still not make money if the rest of the market continues to act insane. In 2007 there really was a sense that people knew things were way out of hand but everyone was thinking, "If I can just get one or two more years on the bonus cycle, I'll be able to get out". To be fair, this type of thinking probably ins't going away anytime soon.
- martincmartin 10y ago
  Honest question: how many of them reverted to mean afterward [0], that is, thought they saw other things coming, bet on them and were wrong about as often as everyone else? John Paulson wasn't featured in the movie, but fit the bill. But I don't know about those in the book/film. [0] https://en.wikipedia.org/wiki/Regression_toward_the_mean https://en.wikipedia.org/wiki/Regression_toward_the_mean
Shivetya 10y ago
I am still of the opinion that the government's maximums for its lending are too high at 417k to 1.8m depending where you live.
- toomuchtodo 10y ago
  You should be more concerned about downpayment amounts (3% is acceptable, and some lenders will finance with 0%). This is what pushes home prices up artificially. I had a foreclosure where I stopped making payments in 2011. My foreclosure finally completed in December of last year (4.5 years later). I already have lenders who will finance me on a new mortgage. It's madness.
  - muninn_ 10y ago
    Yeah. Was speaking to a realtor yesterday actually about this (just an acquaintance) and homes in some areas in a particular midwest city have risen in value 23% in one year. As soon as a place goes on the market it has 10 offers over the asking price. This isn't good. But if you have a great job and good job security it is idiotic to not buy a house right now with the low interest rates assuming it's not way overpriced (and these can be found). I purchased a home that costs about twice my annual salary. I think it's reasonable. I put 0 down and walked away with a check at closing after seller closing costs for some items I wanted repaired. Anyway this is just my general commentary and my experience. I don't know enough about the market as a whole to make any real informed contribution, but just wanted to share anyway.
- wavefunction 10y ago
  Where are you getting those numbers? Looking at https://entp.hud.gov/idapp/html/hicostlook.cfm https://entp.hud.gov/idapp/html/hicostlook.cfm I see the majority of FHA limits in Texas (including 'hot markets' like Austin) for a one family house are $271,000. The average home price in Austin for a single family residence is $334,000.
  - toomuchtodo 10y ago
    https://www.fanniemae.com/singlefamily/loan-limits https://www.fanniemae.com/singlefamily/loan-limits Note: Those are conventional financing limits. Anything above that ($417,000 nationwide, with exceptions as high as $625,500 in certain high-priced markets) is considered a "jumbo" loan, and is typically not government/GSE backed.
gjem97 10y ago
Can anyone provide any background/documentation on the claim "Now 65-80% of new mortgages are stamped with a guarantee from Uncle Sam that protects investors from the risk that homeowners default"? I don't really doubt that it's true, I'd just like to learn more about what that is and how it works.
- mcnees287 10y ago
  Meaning, the mortgages (default risk) are guaranteed by the government, either explicitly (FHA) or implicitly through a government sponsored interprise (Fannie and Freddie). After the housing crisis the private market (mostly banks) left very quickly. FHA and the GSEs stepped in and took their share.
  - gjem97 10y ago
    Does the FHA issue bonds? (Turns out this stuff is nigh impossible to Google.)
    - mcnees287 10y ago
      Yes. FHA and the GSEs pool mortgages from banks, stamp them with their guarantee, and then sell the loan pools as MBS to investors. (Most) banks, especially small ones, are unwilling to sell and hold a fixed rate 30 year mortgage. There's way too much risk, price volatility (driven by rates) and uncertainty about what will happen over a 30 year time period. Banks only do a 30 year mortgage because they know they can sell it to FHA or the GSEs.
HillaryBriss 10y ago
>Partly because the state charges too little for the guarantees it offers, taxpayers are subsidising housing borrowers to the tune of up to $150 billion a year, or 1% of GDP. The current environment offers housing borrowers money at a price below the market. The simplest bet with this cash (buying a house and holding) has probably been overdone in the market. House prices are quite high now. Still, small but crafty borrowers should be able to profit with this cheap money.
- Domenic_S 10y ago
  Buy and hold is fine, but that's a strategy like buying Blue Chip stocks. Early 2000s real estate was like the options market -- super short term. If you can hold a house 10 years, chances are very, very good you won't be underwater at the end.
- jessaustin 10y ago
  Are you suggesting that small crafty borrowers spend the money on something besides the mortgaged house? I think that would be fraud. Or maybe you're just saying they should sell the house quickly? How would that profit?
cylinder 10y ago
The fact that we were not able to ban mortgage securitization after the crisis is appalling. IMO this is the root of the problems. Make banks hold their loans on their balance sheets! I also think the point about banks having capital buffers is laughable and not logical. It's like claiming we've solved chronic migraines because we have a stash of Tylenol. The cause has not been eliminated. And let's say there's a crisis and that bank capital is used to cover the losses. Now what? You now have banks which according to our own definition are under-capitalized. They used all their capital for yet another crisis. So now your banking system is weak again. Who is going to give money for these banks to capitalize again if they keep having crisis after crisis? Ah that's right, the taxpayer! A nation's banking system reflects its cultural values. This is quite true about the USA.
- mcnees287 10y ago
  It sounds like a reasonable theory on its face. However, the outcome of this is likely that banks will stop making loans all together. If they were to offer mortgages at all, it certainly would not be a 30 year fixed rate product. It's not correct to say that banks can sell off all of their risk through securitization. They do in fact retain some of the risk. Though most has been transferred. The buffer is (in theory) in excess of the losses. So, after a crises a bank would be left with the buffer and be able to continue to operate as a going-concern. The question is how to set the buffer and how big ?
  - woodandsteel 10y ago
    >However, the outcome of this is likely that banks will stop making loans all together. Really? We had a healthy mortgage market for a great many decades before mortgage backed securities were invented. And if mortgages are such a bad idea that banks can't make money off of them, then we shouldn't have them.
    - deleted 10y ago
      [deleted]
    - evanpw 10y ago
ssharp 10y ago
The last crisis was also heavily related to sub-prime mortgages. How much has sub-prime lending been mitigated? Before the last crash, you could get "no paperwork" mortgages, you'd just to have a little higher interest rate. Lenders would also squeeze people into ARMs so their initial rates were really low and then would go up after the adjustment period. And nobody cared about things like PMI because prices were going up so quickly. You'd have enough equity in your house if a few years and the PMI would go away. The general consensus was that if you were in the market to buy, you should buy as soon as possible before prices went up much more. Thankfully, I live in an area that didn't see the enormous run up of house values. The crash affected our housing and we still had the normal negative effects of a big recession. Housing prices have certainly recovered by now and I do wonder how much of it is still smoke and mirrors. But in markets like Florida and Arizona where house prices got really out of control, have those areas also recovered? That would be more shocking to me.
- fweespeech 10y ago
  > The last crisis was also heavily related to sub-prime mortgages. How much has sub-prime lending been mitigated? http://www.qualifiedhomeloans.com/campaigns/statedincomeloans/?gclid=CKG0g4ity84CFUGSfgoduV0GvA http://www.qualifiedhomeloans.com/campaigns/statedincomeloan... http://www.forbes.com/2010/07/02/return-liar-loans-personal-finance-no-doc.html http://www.forbes.com/2010/07/02/return-liar-loans-personal-... No. Its still essentially the same with no paperwork mortgages with higher interest rates and ARMs. Very little changed other than a few regulations that might stop a systemic collapse of large banks. > Thankfully, I live in an area that didn't see the enormous run up of house values. The crash affected our housing and we still had the normal negative effects of a big recession. Housing prices have certainly recovered by now and I do wonder how much of it is still smoke and mirrors. But in markets like Florida and Arizona where house prices got really out of control, have those areas also recovered? That would be more shocking to me. http://www.tradingeconomics.com/united-states/case-shiller-home-price-index/forecast http://www.tradingeconomics.com/united-states/case-shiller-h... The market as a whole is almost back to where it was in 2008.
  - Domenic_S 10y ago
roymurdock 10y ago
The linked article seems to be a bombastic summary of a longer, more neutral, and better-supported article [1]. Strangely enough, they were published on the same day and apparently are both featured in the print edition? It seems like The Economist is doing A/B testing to see what draws more outrage from its readers: "Nightmare on Main Street" or "Comradely Capitalism"? The linked article is confusing and uninformative. I suggest reading the longer version. [1] http://www.economist.com/news/briefing/21705316-how-america-accidentally-nationalised-its-mortgage-market-comradely-capitalism http://www.economist.com/news/briefing/21705316-how-america-...
- martincmartin 10y ago
  The linked article is an editorial, the other article the news article. The Economist calls their editorials "leaders," which I agree is confusing. But its standard practice to publish both an editorial and a news/information piece in the same issue.
dzdt 10y ago
Partly because the state charges too little for the guarantees it offers, taxpayers are subsidising housing borrowers to the tune of up to $150 billion a year, or 1% of GDP. The original post makes this claim without any citation. I don't think it is correct. Recent stress-test reports on Fannie and Freddie show that, even making provisions for future bailouts in the stressed scenario, the agencies are profitable to the government. [1] Instead of costing $150 billion per year, since the agencies were nationalised they have returned $60 billion to the government. [1] https://www.bloomberg.com/view/articles/2016-08-08/fannie-and-freddie-will-be-profitable-after-their-next-bailouts-too https://www.bloomberg.com/view/articles/2016-08-08/fannie-an...
- tokenadult 10y ago
  The claim of the article is more that current government policy has not correctly priced in the externalities caused by most mortgage funds ultimately being available through bonds rather than through bank deposits. "The public would have to foot the bill, of around $400 billion, making explicit the contingent liability for future losses that it already bears. The cost of mortgages, at a record low today, would also rise. But that would eliminate the ongoing hidden subsidy and create a level playing field so that private firms were able to do more mortgage lending. If that bill was too big to swallow, a second-best would be to impose the new rules on new mortgages, leaving the stock of subsidised existing loans to run down over the coming decades." Thanks, by the way, for linking to the Bloomberg article, about a different issue, but a good source in general for comments about economic policy.
- martincmartin 10y ago
  The post links to another article with a few more details: [Imagine that the securitisation industry] had to carry the same level of capital as banks do and to make an adequate (10%) post-tax profit on that capital. The higher costs entailed give a sense of the scale of the current distortion. On this basis The Economist calculates the subsidy on mortgages to be running at $150 billion a year, 1% of GDP. (This estimate includes the impact of the Fed’s bond-buying on interest rates and the cost of tax breaks on mortgage-interest payments.)
- evanpw 10y ago
grandalf 10y ago
One other thing to keep in mind is that there was a great boom in building in the US during the 1970s and 1980s, and many of the homes built during that period were built using substandard building materials and techniques, many of which are no longer up to code for new construction but were grandfathered in. How many of those millions of homes are actually solid, reliable structures? How many suffer from moisture damage, mold, or have been poorly maintained? What kind of cement was used to pour the foundation? What kind of insulation? How many insect or rodent infestations has the house suffered? There is a vast difference in quality between an old building in a city that has been renovated for apartments compared to a suburban home that has essentially gone unmaintained for decades and was built as part of a speculative housing development project by someone who had no long term interest in the quality of the construction. I think we'll start to see a gradual crumbling/disintegration of suburbia as the houses fall into disrepair and the mortgage debtors are in too far over their heads to afford proper maintenance. The right thing to do in 2008 would have been to let the prices fall and stay down, to encourage proper renovation and maintenance.
- tcoppi 10y ago
  Do you have any articles/books detailing construction practices during that time period? Also any numbers on what percent of housing in America was built during that time period.
- internaut 10y ago
  > I think we'll start to see a gradual crumbling/disintegration of suburbia as the houses fall into disrepair and the mortgage debtors are in too far over their heads to afford proper maintenance. This hits the nail on the head.
n00b101 10y ago
The simplest approach would be ... The nationalised mortgage firms that guarantee the bonds ... should be forced to raise their capital buffers and increase their fees Raising capital requirements seems like a minor tweak, a band-aid cure. I would argue that the systemic risk could better be managed by changing the fundamental economics of the financial instrument in question: the classic residential mortgage. I'm surprised the Economist didn't mention the short-selling idea which Richard Schiller has been pitching [1] since the Financial Crisis. The basic idea is to make it possible to accurately short-sell residential real estate. This would allow homeowners and lenders to be partially protected against declines in real estate prices (the risk being transferred to third-party speculators and investors). Just like a lender requires homeowners to buy property insurance, it could also require homeowners to enter into financial protection against declines in property value. This would protect the homeowner against negative equity (where the property value falls significantly below the borrowed principal). It was because of negative equity that so many homeowners defaulted on their mortgages during the Financial Crisis, leading to a vicious cycle of foreclosures, sales and declining property values. [1] http://www.nytimes.com/2015/07/26/upshot/the-housing-market-still-isnt-rational.html http://www.nytimes.com/2015/07/26/upshot/the-housing-market-...
- lintiness 10y ago
  the "protection" against negative equity is the down payment. negative equity only matters if incomes take a hit and sales are forced.
  - n00b101 10y ago
    The down payment is equity, it's not really the same as protection. Although the higher your down payment, the lower your leverage risk. Let's say you put $100k down to purchase a property for $500k (i.e. you borrow $400k). If the property value falls to $400k (20% drop), your entire equity is wiped out. If you sell the property, the proceeds go to the bank to pay back the loan, and you have lost 100% of your the original $100k down payment ... This is due to leverage. If the property value falls below $400k, then you are in a negative equity situation ... Get deep enough into negative equity and it becomes rational for some people to just default and "walk away."
dmh2000 10y ago
House prices are like bond prices. When interest rates are low, prices go up. When rates rise, prices will fall. People buy houses based on the monthly payment they can qualify for. Right now, prices are high because the low interest rates mean lowish monthly payments on inflated prices. But when rates rise, the value of the houses will fall because buyers will not be able to qualify at the previous inflated prices. This will mean that a lot of homeowners will be underwater again. Even though they should be able to afford their payment, there will be a similar level of panic.
davidw 10y ago
NIMBYism is already putting places like Palo Alto, Boulder, etc... well out of reach of the middle class, with a class of "haves" that live there, and "have nots" who have to drive in to work. What would happen to this situation if you killed the subsidy off? What would it do to the dynamic between generations: older people got a big leg up, and you get nothing?
- MollyR 10y ago
  It would cause alot of anger. I hear a lot of hatred at work towards the baby boomers about everything
  - internaut 10y ago
    Niall Ferguson called this several years ago. http://www.telegraph.co.uk/finance/financialcrisis/9338997/Reith-Lecture-Were-mortgaging-the-future-of-the-younger-generation.html http://www.telegraph.co.uk/finance/financialcrisis/9338997/R... His Reith Lectures on the subject (Burke's social contract and its implications today) are worth putting into your mp3 player. Ctrl-F niall http://www.bbc.co.uk/programmes/b00729d9/episodes/downloads http://www.bbc.co.uk/programmes/b00729d9/episodes/downloads
    - MollyR 10y ago
      Thanks didn't know about that, and podcast link is super great!
yuhong 10y ago
In retrospect, I wonder what would have happened if we let AIG and the banks fail. The FDIC would convert them into DINBs with the insurance limit raised to $250k per account holder. All debts including mortgages would be discharged tax-free automatically (making the topic of mortgage notes moot). Bank charter restrictions would be loosened so that new banks can be created as soon as possible.
- joe_the_user 10y ago
  Whatever the implications of letting the debt just "fall on floor" would have been, it's worth noting that the decision to not allow that outcome was reached years before the events themselves. Ben Bernanke's helicopter money speech was at least one demonstration of this.
jackcosgrove 10y ago
Yes it has not been fixed, but it's a supply-side problem and not a demand-side problem. More houses should be built to meet demand, but this is not happening in many cities.
donclark 10y ago
Has anyone heard of this business? Why did I not know about this company around 2010 when I needed a loan modification?!? They are in 42 cities in the U.S. and have been around for 22 years. No down payment, no closing costs, no fees, no income limit, no need for perfect credit! https://www.naca.com https://www.naca.com
donclark 10y ago
As I was driving into the office today, passing all these auto dealerships, big, small, and mom and pops small. I wondered if they have an exit plan. In 5 years or less, every automobile manufacturer will have a self driving car. Will it make their inventory obsolete or a lot less valuable? Will it make my car a lot less valuable? On a side note: http://www.visualcapitalist.com/chart-largest-companies-market-cap-15-years/ http://www.visualcapitalist.com/chart-largest-companies-mark...

164 points by martincmartin 10y ago

To sum it up, despite there being regulations on CDOs the real problem still exists. That problem is that loans are easy to get the gov stamp. Thos makes it easy for new home owners to get loans. And this makes it easy for sales people to sell the loans. Much of this opinion article is based on an other article [0] which seems less doom and gloom and more about the shift to a majority of state sponsored loans. This in itself its own issue in that capitalism isnt doing what it should be when everything is subsidized by the gov. Ultimately these two articles seem to be about responsibility. Banks are not responsible for homeowners making poor decisions. Banks are not responsible for investors trusting a market that is not self sufficient. And Banks are not responsible for the government to enable them with tax payer money. Meanwhile everyone can point the finger back to the banks and the bank depends on the fact that too many economies rely on them to fall [0] http://www.economist.com/news/briefing/21705316-how-america-accidentally-nationalised-its-mortgage-market-comradely-capitalism http://www.economist.com/news/briefing/21705316-how-america-...

bradleyjg 10y ago
Why does the government need to be involved in mortgage lending at all? Is there a specific market failure inherent in it people can point to that calls for government intervention to overcome (akin to the public good failure for e.g. roads)?
- talmand 10y ago
  One specific market failure people can point at is government involvement.
- jessaustin 10y ago
  When these institutions were first created no one imagined the harm they would inevitably cause. Now that they exist they can't be killed, because they help some people. Like a lot of things, really.
  - formula1 10y ago
    Thats not entirely true. England has had a number of economic scandals before the US recieved their independence. There is also certainly a president of "too big to fail" to the point that the king was invested [0]. [0] https://en.m.wikipedia.org/wiki/South_Sea_Company https://en.m.wikipedia.org/wiki/South_Sea_Company
    - afarrell 10y ago
      For an entertaining summary of this, I recommend the youtube series Extra History: https://www.youtube.com/watch?v=k1kndKWJKB8 https://www.youtube.com/watch?v=k1kndKWJKB8
    - jessaustin 10y ago
      Haha I thought we were talking about Fannie Mae, not USA itself. Although, the latter might be a better comparison to the South Sea Company...
- TheSpiceIsLife 10y ago
  The government, acting as the collective will of the people, believes, due to recent experience, that a housing crash, and the concomitant cascade of mortgage defaults, is something worth making an effort to avoid? I think that's how the story is supposed to go. I guess the flip side is that quote by that fellow I read somewhere that went something like: democracy cannot last as a permanent form of government, it can last only until people realise they can vote themselves largess from the public purse. Let's wait and see what happens.
- eli_gottlieb 10y ago
  Homeownership was a major pillar of post-WW2 cultural stability among the middle class, so subsidizing it was considered a social good.
  - internaut 10y ago
    Cringed while reading. We've got to stop transcribing intuitions into universal laws if we want to claim the sapiens in homo sapiens. Regardless of political stance, for any animal to require half its lifetime in effort to acquire a shelter, well that is retarded. And for some reason we consider ourselves more enlightened than our ancestors building functionally useless monoliths. At least the pyramids united the tribe or whatever.
    - formula1 10y ago
      I feel like I can relate to your position however I believe there is much more to this than simply "unevolved" - a hive mind (similar to that of bees or ants) likely considers death to be a reasonable loss to the point of canabalism being deemed reasonable. This is probably the closest to full centralization there is. - in gorillas there tends to be one male per multiple females and per area. There also tends to be a female pecking order where one stands dominant and weaker ones get scars. This is probably the closest to fully independent since each individual only gets what they take. We live in a world where money can be anywhere and we want to allow anyone to have the opportunity to get what they want (so long as it doesnt harm the collective good). What tends to happen is the money becomes centralized to trade centers or with rare resources like peaceful community or opportunity in entertainment. However, space is a scarce commodity in these locations because it attracts so many people. So isnt it fair to increase the prices? The people who are making the most money for the area should have the most convinient location. "unevolved" implies that there isnt rhyme or reason to this.
- wahern 10y ago
  People who have nothing to lose tend to make poor economic decisions and poor social decisions. That's why home ownership matters. It's a poor investment vehicle only if you assume people would invest savings from renting into appreciating assets, rather than burn it on consumables. They won't. So, yeah, government is involved because it's a collective action problem. Individuals and the market left to their own devices will reach a suboptimal equilibrium. Is home ownership the _only_ answer? No. The problem is fundamentally cultural. But in the U.S. especially, subsidizing home ownership seems to be the most viable mechanism we can, as a society, agree upon. Probably because of our emphasis on individualism. In a society that highly values individualism, people will be more incentivized to strive toward home ownership than other alternatives. We went them (us) to delay other, less economically efficient forms of gratification. In some Asian societies, for example, different cultural preferences make alternatives more viable. For example, they're more likely to emphasize investment in education. I'm pretty sure the phrase "book learning" isn't derogatory in most Asian societies, even for low-skilled laborers who feel disenfranchised and lack any intellectual ambition. (Not that those things are necessarily related--I strung them together for emphasis.) In any event, the point is to keep people invested in the economy in such as way that their individual choices tend toward more productive activities. It's a channeling function.
martincmartin 10y ago
That problem is that loans are easy to get the gov stamp. It's more that the fee the government charges for its stamp is too low, such that if the loans sour, the taxpayer ends up paying back the loan. Partly because the state charges too little for the guarantees it offers, taxpayers are subsidising housing borrowers to the tune of up to $150 billion a year, or 1% of GDP. Since the government mortgage machine need not make a profit or have safety buffers, well-run private firms cannot compete, so many banks have withdrawn from making mortgages. If there is another crisis the taxpayer will still have to foot the bill, which could be 2-4% of GDP, not far off the cost of the 2008-09 bank bail-out.
topspin 10y ago
This in itself its own issue in that capitalism isn't doing what it should be when everything is subsidized by the gov. Thus $500k 800 sq ft bungalows. You show me a chronic bubble and I'll show you a 'market' riven with subsidies, tax incentives, government secured debt and pencil whipping regulators. Healthcare, education, housing.... Yet when the bubble pops and the too-big-to-fails have to be 'recapitalized' all we get from the ruling class is more hating on markets. Your last sentence is interesting: the fact that too many economies rely on them to fall I believe you meant that banks can't be permitted to fail. But it could also be read to mean that what we've self inflicted is a system whereby the greater fools are those found holding worthless CDOs (and all of their various derivatives) when the bubble pops; the market is ultimately expressing itself through the failure of financial institutions.
- formula1 10y ago
  "Thus 500k 800 sq ft bungalows" This may sound cynical but that is one of the fair markets that likely will not fall. These are luxery that are likely only to be bought and sold to people looking for vacation spots or a crashpad. Much more likely to be paid off than a 4 bedroom in the midwest bought by a hardworking train engineer and his wife working part time in a restaurant. "We've self influcted a system wherevy the greater fools are those found holding worthless CDOs" I really appreciate the hot potato analogy! Exactly what I was thinking.
  - __derek__ 10y ago
    > 500k 800 sq ft bungalows For what it's worth, this describes a significant portion of the single-family housing stock in Seattle.
- woodandsteel 10y ago
  >Yet when the bubble pops and the too-big-to-fails have to be 'recapitalized' all we get from the ruling class is more hating on markets. The reason this happens is that during the boom phase, the conservatives and libertarians, the defenders of the market, tell everyone things are going just fine. And then when it all blows up, they suddenly change their line and say it was all due to government subsidies and regulations. That is what happened last time, remember?

chollida1 10y ago

I'd agree that the US housing and derivatives markets are in a much better position than in 2007-2008. Atleast people who are getting mortgages now have some form of documentation, and risk manages are being asked to do their jobs. The crisis now is that, and this is just my opinion, low rates are here to stay. with the amount of money in the system, people are being priced out of homes and as time goes on the amount by which they are priced out in the big cities is only going to grow. As an aside... I'm not a lawyer but I've heard people say My cousin Vinny is the most accurate court room movie ever. In a similar vein, I'd nominate the Big Short as one of the more accurate wall street movies ever made. It showed the lone wolf who not only saw the coming crash, this was far and away the easiest part, but figured out how to profit form it by getting the banks to write him a CDS. The two smart kids working out of their garage that were smart enough to succeed despite all their mistakes. The hedge fund who did an incredible amount of due diligence, going to properties, knocking on doors, talking to people inside the industry to put together the pieces that no one else could. The wall street sales guy who sold the CDS knowing that it might bankrupt his company but figured he'd make a killing on his commissions long before that happened. And the most accurate part of the movie was that it showed the anguish that each of these people went through. They'd seen something no one else had, been right about it, had the event happen and even then everyone else continued to plug their ears and pretend nothing was going on while they continued to bleed money each month. It really did a good job of showing that you can be right about everything and still not make money if the rest of the market continues to act insane. In 2007 there really was a sense that people knew things were way out of hand but everyone was thinking, "If I can just get one or two more years on the bonus cycle, I'll be able to get out". To be fair, this type of thinking probably ins't going away anytime soon.

martincmartin 10y ago
Honest question: how many of them reverted to mean afterward [0], that is, thought they saw other things coming, bet on them and were wrong about as often as everyone else? John Paulson wasn't featured in the movie, but fit the bill. But I don't know about those in the book/film. [0] https://en.wikipedia.org/wiki/Regression_toward_the_mean https://en.wikipedia.org/wiki/Regression_toward_the_mean

Shivetya 10y ago

I am still of the opinion that the government's maximums for its lending are too high at 417k to 1.8m depending where you live.

toomuchtodo 10y ago
You should be more concerned about downpayment amounts (3% is acceptable, and some lenders will finance with 0%). This is what pushes home prices up artificially. I had a foreclosure where I stopped making payments in 2011. My foreclosure finally completed in December of last year (4.5 years later). I already have lenders who will finance me on a new mortgage. It's madness.
- muninn_ 10y ago
  Yeah. Was speaking to a realtor yesterday actually about this (just an acquaintance) and homes in some areas in a particular midwest city have risen in value 23% in one year. As soon as a place goes on the market it has 10 offers over the asking price. This isn't good. But if you have a great job and good job security it is idiotic to not buy a house right now with the low interest rates assuming it's not way overpriced (and these can be found). I purchased a home that costs about twice my annual salary. I think it's reasonable. I put 0 down and walked away with a check at closing after seller closing costs for some items I wanted repaired. Anyway this is just my general commentary and my experience. I don't know enough about the market as a whole to make any real informed contribution, but just wanted to share anyway.
wavefunction 10y ago
Where are you getting those numbers? Looking at https://entp.hud.gov/idapp/html/hicostlook.cfm https://entp.hud.gov/idapp/html/hicostlook.cfm I see the majority of FHA limits in Texas (including 'hot markets' like Austin) for a one family house are $271,000. The average home price in Austin for a single family residence is $334,000.
- toomuchtodo 10y ago
  https://www.fanniemae.com/singlefamily/loan-limits https://www.fanniemae.com/singlefamily/loan-limits Note: Those are conventional financing limits. Anything above that ($417,000 nationwide, with exceptions as high as $625,500 in certain high-priced markets) is considered a "jumbo" loan, and is typically not government/GSE backed.

gjem97 10y ago

Can anyone provide any background/documentation on the claim "Now 65-80% of new mortgages are stamped with a guarantee from Uncle Sam that protects investors from the risk that homeowners default"? I don't really doubt that it's true, I'd just like to learn more about what that is and how it works.

mcnees287 10y ago
Meaning, the mortgages (default risk) are guaranteed by the government, either explicitly (FHA) or implicitly through a government sponsored interprise (Fannie and Freddie). After the housing crisis the private market (mostly banks) left very quickly. FHA and the GSEs stepped in and took their share.
- gjem97 10y ago
  Does the FHA issue bonds? (Turns out this stuff is nigh impossible to Google.)
  - mcnees287 10y ago
    Yes. FHA and the GSEs pool mortgages from banks, stamp them with their guarantee, and then sell the loan pools as MBS to investors. (Most) banks, especially small ones, are unwilling to sell and hold a fixed rate 30 year mortgage. There's way too much risk, price volatility (driven by rates) and uncertainty about what will happen over a 30 year time period. Banks only do a 30 year mortgage because they know they can sell it to FHA or the GSEs.

HillaryBriss 10y ago

>Partly because the state charges too little for the guarantees it offers, taxpayers are subsidising housing borrowers to the tune of up to $150 billion a year, or 1% of GDP. The current environment offers housing borrowers money at a price below the market. The simplest bet with this cash (buying a house and holding) has probably been overdone in the market. House prices are quite high now. Still, small but crafty borrowers should be able to profit with this cheap money.

Domenic_S 10y ago
Buy and hold is fine, but that's a strategy like buying Blue Chip stocks. Early 2000s real estate was like the options market -- super short term. If you can hold a house 10 years, chances are very, very good you won't be underwater at the end.
jessaustin 10y ago
Are you suggesting that small crafty borrowers spend the money on something besides the mortgaged house? I think that would be fraud. Or maybe you're just saying they should sell the house quickly? How would that profit?

cylinder 10y ago

The fact that we were not able to ban mortgage securitization after the crisis is appalling. IMO this is the root of the problems. Make banks hold their loans on their balance sheets! I also think the point about banks having capital buffers is laughable and not logical. It's like claiming we've solved chronic migraines because we have a stash of Tylenol. The cause has not been eliminated. And let's say there's a crisis and that bank capital is used to cover the losses. Now what? You now have banks which according to our own definition are under-capitalized. They used all their capital for yet another crisis. So now your banking system is weak again. Who is going to give money for these banks to capitalize again if they keep having crisis after crisis? Ah that's right, the taxpayer! A nation's banking system reflects its cultural values. This is quite true about the USA.

mcnees287 10y ago
It sounds like a reasonable theory on its face. However, the outcome of this is likely that banks will stop making loans all together. If they were to offer mortgages at all, it certainly would not be a 30 year fixed rate product. It's not correct to say that banks can sell off all of their risk through securitization. They do in fact retain some of the risk. Though most has been transferred. The buffer is (in theory) in excess of the losses. So, after a crises a bank would be left with the buffer and be able to continue to operate as a going-concern. The question is how to set the buffer and how big ?
- woodandsteel 10y ago
  >However, the outcome of this is likely that banks will stop making loans all together. Really? We had a healthy mortgage market for a great many decades before mortgage backed securities were invented. And if mortgages are such a bad idea that banks can't make money off of them, then we shouldn't have them.
  - deleted 10y ago
    [deleted]
  - evanpw 10y ago

ssharp 10y ago

The last crisis was also heavily related to sub-prime mortgages. How much has sub-prime lending been mitigated? Before the last crash, you could get "no paperwork" mortgages, you'd just to have a little higher interest rate. Lenders would also squeeze people into ARMs so their initial rates were really low and then would go up after the adjustment period. And nobody cared about things like PMI because prices were going up so quickly. You'd have enough equity in your house if a few years and the PMI would go away. The general consensus was that if you were in the market to buy, you should buy as soon as possible before prices went up much more. Thankfully, I live in an area that didn't see the enormous run up of house values. The crash affected our housing and we still had the normal negative effects of a big recession. Housing prices have certainly recovered by now and I do wonder how much of it is still smoke and mirrors. But in markets like Florida and Arizona where house prices got really out of control, have those areas also recovered? That would be more shocking to me.

fweespeech 10y ago
> The last crisis was also heavily related to sub-prime mortgages. How much has sub-prime lending been mitigated? http://www.qualifiedhomeloans.com/campaigns/statedincomeloans/?gclid=CKG0g4ity84CFUGSfgoduV0GvA http://www.qualifiedhomeloans.com/campaigns/statedincomeloan... http://www.forbes.com/2010/07/02/return-liar-loans-personal-finance-no-doc.html http://www.forbes.com/2010/07/02/return-liar-loans-personal-... No. Its still essentially the same with no paperwork mortgages with higher interest rates and ARMs. Very little changed other than a few regulations that might stop a systemic collapse of large banks. > Thankfully, I live in an area that didn't see the enormous run up of house values. The crash affected our housing and we still had the normal negative effects of a big recession. Housing prices have certainly recovered by now and I do wonder how much of it is still smoke and mirrors. But in markets like Florida and Arizona where house prices got really out of control, have those areas also recovered? That would be more shocking to me. http://www.tradingeconomics.com/united-states/case-shiller-home-price-index/forecast http://www.tradingeconomics.com/united-states/case-shiller-h... The market as a whole is almost back to where it was in 2008.
- Domenic_S 10y ago

roymurdock 10y ago

The linked article seems to be a bombastic summary of a longer, more neutral, and better-supported article [1]. Strangely enough, they were published on the same day and apparently are both featured in the print edition? It seems like The Economist is doing A/B testing to see what draws more outrage from its readers: "Nightmare on Main Street" or "Comradely Capitalism"? The linked article is confusing and uninformative. I suggest reading the longer version. [1] http://www.economist.com/news/briefing/21705316-how-america-accidentally-nationalised-its-mortgage-market-comradely-capitalism http://www.economist.com/news/briefing/21705316-how-america-...

martincmartin 10y ago
The linked article is an editorial, the other article the news article. The Economist calls their editorials "leaders," which I agree is confusing. But its standard practice to publish both an editorial and a news/information piece in the same issue.

dzdt 10y ago

Partly because the state charges too little for the guarantees it offers, taxpayers are subsidising housing borrowers to the tune of up to $150 billion a year, or 1% of GDP. The original post makes this claim without any citation. I don't think it is correct. Recent stress-test reports on Fannie and Freddie show that, even making provisions for future bailouts in the stressed scenario, the agencies are profitable to the government. [1] Instead of costing $150 billion per year, since the agencies were nationalised they have returned $60 billion to the government. [1] https://www.bloomberg.com/view/articles/2016-08-08/fannie-and-freddie-will-be-profitable-after-their-next-bailouts-too https://www.bloomberg.com/view/articles/2016-08-08/fannie-an...

tokenadult 10y ago
The claim of the article is more that current government policy has not correctly priced in the externalities caused by most mortgage funds ultimately being available through bonds rather than through bank deposits. "The public would have to foot the bill, of around $400 billion, making explicit the contingent liability for future losses that it already bears. The cost of mortgages, at a record low today, would also rise. But that would eliminate the ongoing hidden subsidy and create a level playing field so that private firms were able to do more mortgage lending. If that bill was too big to swallow, a second-best would be to impose the new rules on new mortgages, leaving the stock of subsidised existing loans to run down over the coming decades." Thanks, by the way, for linking to the Bloomberg article, about a different issue, but a good source in general for comments about economic policy.
martincmartin 10y ago
The post links to another article with a few more details: [Imagine that the securitisation industry] had to carry the same level of capital as banks do and to make an adequate (10%) post-tax profit on that capital. The higher costs entailed give a sense of the scale of the current distortion. On this basis The Economist calculates the subsidy on mortgages to be running at $150 billion a year, 1% of GDP. (This estimate includes the impact of the Fed’s bond-buying on interest rates and the cost of tax breaks on mortgage-interest payments.)
evanpw 10y ago

grandalf 10y ago

One other thing to keep in mind is that there was a great boom in building in the US during the 1970s and 1980s, and many of the homes built during that period were built using substandard building materials and techniques, many of which are no longer up to code for new construction but were grandfathered in. How many of those millions of homes are actually solid, reliable structures? How many suffer from moisture damage, mold, or have been poorly maintained? What kind of cement was used to pour the foundation? What kind of insulation? How many insect or rodent infestations has the house suffered? There is a vast difference in quality between an old building in a city that has been renovated for apartments compared to a suburban home that has essentially gone unmaintained for decades and was built as part of a speculative housing development project by someone who had no long term interest in the quality of the construction. I think we'll start to see a gradual crumbling/disintegration of suburbia as the houses fall into disrepair and the mortgage debtors are in too far over their heads to afford proper maintenance. The right thing to do in 2008 would have been to let the prices fall and stay down, to encourage proper renovation and maintenance.

tcoppi 10y ago
Do you have any articles/books detailing construction practices during that time period? Also any numbers on what percent of housing in America was built during that time period.
internaut 10y ago
> I think we'll start to see a gradual crumbling/disintegration of suburbia as the houses fall into disrepair and the mortgage debtors are in too far over their heads to afford proper maintenance. This hits the nail on the head.

n00b101 10y ago

The simplest approach would be ... The nationalised mortgage firms that guarantee the bonds ... should be forced to raise their capital buffers and increase their fees Raising capital requirements seems like a minor tweak, a band-aid cure. I would argue that the systemic risk could better be managed by changing the fundamental economics of the financial instrument in question: the classic residential mortgage. I'm surprised the Economist didn't mention the short-selling idea which Richard Schiller has been pitching [1] since the Financial Crisis. The basic idea is to make it possible to accurately short-sell residential real estate. This would allow homeowners and lenders to be partially protected against declines in real estate prices (the risk being transferred to third-party speculators and investors). Just like a lender requires homeowners to buy property insurance, it could also require homeowners to enter into financial protection against declines in property value. This would protect the homeowner against negative equity (where the property value falls significantly below the borrowed principal). It was because of negative equity that so many homeowners defaulted on their mortgages during the Financial Crisis, leading to a vicious cycle of foreclosures, sales and declining property values. [1] http://www.nytimes.com/2015/07/26/upshot/the-housing-market-still-isnt-rational.html http://www.nytimes.com/2015/07/26/upshot/the-housing-market-...

lintiness 10y ago
the "protection" against negative equity is the down payment. negative equity only matters if incomes take a hit and sales are forced.
- n00b101 10y ago
  The down payment is equity, it's not really the same as protection. Although the higher your down payment, the lower your leverage risk. Let's say you put $100k down to purchase a property for $500k (i.e. you borrow $400k). If the property value falls to $400k (20% drop), your entire equity is wiped out. If you sell the property, the proceeds go to the bank to pay back the loan, and you have lost 100% of your the original $100k down payment ... This is due to leverage. If the property value falls below $400k, then you are in a negative equity situation ... Get deep enough into negative equity and it becomes rational for some people to just default and "walk away."

dmh2000 10y ago

House prices are like bond prices. When interest rates are low, prices go up. When rates rise, prices will fall. People buy houses based on the monthly payment they can qualify for. Right now, prices are high because the low interest rates mean lowish monthly payments on inflated prices. But when rates rise, the value of the houses will fall because buyers will not be able to qualify at the previous inflated prices. This will mean that a lot of homeowners will be underwater again. Even though they should be able to afford their payment, there will be a similar level of panic.

davidw 10y ago

NIMBYism is already putting places like Palo Alto, Boulder, etc... well out of reach of the middle class, with a class of "haves" that live there, and "have nots" who have to drive in to work. What would happen to this situation if you killed the subsidy off? What would it do to the dynamic between generations: older people got a big leg up, and you get nothing?

MollyR 10y ago
It would cause alot of anger. I hear a lot of hatred at work towards the baby boomers about everything
- internaut 10y ago
  Niall Ferguson called this several years ago. http://www.telegraph.co.uk/finance/financialcrisis/9338997/Reith-Lecture-Were-mortgaging-the-future-of-the-younger-generation.html http://www.telegraph.co.uk/finance/financialcrisis/9338997/R... His Reith Lectures on the subject (Burke's social contract and its implications today) are worth putting into your mp3 player. Ctrl-F niall http://www.bbc.co.uk/programmes/b00729d9/episodes/downloads http://www.bbc.co.uk/programmes/b00729d9/episodes/downloads
  - MollyR 10y ago
    Thanks didn't know about that, and podcast link is super great!

yuhong 10y ago

In retrospect, I wonder what would have happened if we let AIG and the banks fail. The FDIC would convert them into DINBs with the insurance limit raised to $250k per account holder. All debts including mortgages would be discharged tax-free automatically (making the topic of mortgage notes moot). Bank charter restrictions would be loosened so that new banks can be created as soon as possible.

joe_the_user 10y ago
Whatever the implications of letting the debt just "fall on floor" would have been, it's worth noting that the decision to not allow that outcome was reached years before the events themselves. Ben Bernanke's helicopter money speech was at least one demonstration of this.

jackcosgrove 10y ago

Yes it has not been fixed, but it's a supply-side problem and not a demand-side problem. More houses should be built to meet demand, but this is not happening in many cities.

donclark 10y ago

Has anyone heard of this business? Why did I not know about this company around 2010 when I needed a loan modification?!? They are in 42 cities in the U.S. and have been around for 22 years. No down payment, no closing costs, no fees, no income limit, no need for perfect credit! https://www.naca.com https://www.naca.com

donclark 10y ago

As I was driving into the office today, passing all these auto dealerships, big, small, and mom and pops small. I wondered if they have an exit plan. In 5 years or less, every automobile manufacturer will have a self driving car. Will it make their inventory obsolete or a lot less valuable? Will it make my car a lot less valuable? On a side note: http://www.visualcapitalist.com/chart-largest-companies-market-cap-15-years/ http://www.visualcapitalist.com/chart-largest-companies-mark...