3 ms·

You have it backwards. Buyers demanded the ability to buy homes they couldn't afford, the government required Fannie Mae, Freddie Mac and banks to finance them

You have it backwards. Buyers demanded the ability to buy homes they couldn't afford, the government required Fannie Mae, Freddie Mac and banks to finance them and the US Government guaranteed some of the loans. The buyer behavior was rational, at least on the surface, because homes almost always appreciate over long periods and were appreciating like crazy during the bubble. We are pattern matching monkeys, all of us, and it's only the few who can see the bigger picture during those times. Many didn't want to miss out on the big payday buying $300k homes and flipping them for $500k a few years later. All bubbles accelerate bad decisions/behavior and it's really difficult (if not impossible) to legislate incentive driven behavior away. It's obviously possible to not legislate bad market incentives, but we flunked that one to.

pnutjam 9y ago
Your wrong, people with money were looking for "safe" places to park their money and make interest. Savings accounts suck, thus all these financial products were born.
- valuearb 9y ago
  Saving some accounts don't suck, they are excellent at what they do. Which is providing a very secure place for your money that is quickly accessible and even pays a small amount of interest. There's obviously higher return investments, but they provide those returns by taking more risk, and more variance.
ubernostrum 9y ago
This is an interesting spin, in that it absolves a mortgage industry which did everything short of drag people in off the street and hold guns to their heads to try to issue more loans. Omitting that, when a major source of the massive drive to issue loans was the popularity of mortgage-backed securities as an investment vehicle and the incredible demand for such securities, is... well, it does make one question your understanding of the problem, or if you do understand it perhaps the motives behind your choice of framing.

pnutjam 9y ago

Your wrong, people with money were looking for "safe" places to park their money and make interest. Savings accounts suck, thus all these financial products were born.

valuearb 9y ago
Saving some accounts don't suck, they are excellent at what they do. Which is providing a very secure place for your money that is quickly accessible and even pays a small amount of interest. There's obviously higher return investments, but they provide those returns by taking more risk, and more variance.

ubernostrum 9y ago

This is an interesting spin, in that it absolves a mortgage industry which did everything short of drag people in off the street and hold guns to their heads to try to issue more loans. Omitting that, when a major source of the massive drive to issue loans was the popularity of mortgage-backed securities as an investment vehicle and the incredible demand for such securities, is... well, it does make one question your understanding of the problem, or if you do understand it perhaps the motives behind your choice of framing.