5 ms·

You know, if you really think about it, the banks were victimized by these cunning idiots.

by vernie 8y ago

matwood 8y ago
No one said that at all. The point is that there was plenty of greed to go around. I watched multiple friends get caught up in the hype. They called me stupid for not taking on a huge loan because "housing only goes up" or "you'll never be able to afford a house if you don't buy it right now" or "I'm going to sell this in a year for 100k profit". My thought was always I have a good job in software making way above the median income, and I can't comfortably afford a house. There is no way this can continue. It lasted much much longer than I would have guessed though.
sonnyblarney 8y ago
No, that's not what anyone, even the OP is saying. People were taking massive mortgages, far beyond their means, they were buying several houses renting them out. They were knowingly falsifying information they provided to the banks etc. etc.. Not all banks were doing dirty things, and not all people were doing things, but many banks were and so were many individuals, and so the rest of us pay the price. This crisis is truly an American style crises - people in most other countries are hugely risk averse when it comes to this kind of stuff. Even buying cars on payments is a newer thing in some advanced countries ie Spain. Not just attitudes though ... 'bankruptcy' is a survivable event for companies and individuals in America. Less so elsewhere.
- blub 8y ago
  In the land of zero privacy the banks weren't able to figure out if an individual would be able to pay back a loan? Or they didn't want to?
  - goodcanadian 8y ago
    They didn't care. They were selling the loans on to other institutions which in turn were repackaging them and selling them on and so on and so forth. In the end, it was often unclear who was left holding the bag. The banks, for the most part, were being rewarded for originating loans that they weren't going to hold, so they had perverse incentives to loan as much money as they could. There was massive fraud throughout the system from the the borrowers to the mortgage agents to the banks to the re-packagers (other bigger financial institutions, usually) to the credit agencies. It was a total shit show all around.
- smcl 8y ago
  You're taking the exception (people buying several houses and renting them out) and just declaring that it applies across the board. In many cases it wasn't like this at all - just families who had been duped into thinking they could afford something they couldn't. Sure you could point the finger and say they could have pored over every clause in their mortgage contract and produced their own models for what could happen to their repayments under various circumstances, but why would they? They had no idea whoever "sold" them the mortgage was acting in bad faith. It's only now we know that it was all a sham and that you shouldn't trust these guys as far as you can throw them. The idea that the financial crisis was brought on by some greedy underclass with ideas above their station is a myth that the banks have been pushing ... and it seems a few HNers have just bought it hook, line and sinker.
  - saiya-jin 8y ago
    You're simplifying the already situation well outlined in the parent comment. Maybe your argument is that people aren't responsible for their own decisions? Ie when they go to casino and blow their salary on gambling, it was not their fault, it was evil casinos. If they sell their used car too cheaply, it's fault of that sneaky dealer. From what I heard many people in US were (maybe still are) taking all kinds of non-necessary loans. Well that's really not the healthy mentality, nor is it standard anywhere else across the globe. People that can't do simple 2nd grade math on paper take those here in Europe, and often they suffer, together with their families. Seriously, there is something called financial literacy, and 101 of that is - don't buy shit you can't afford with a HUGE comfortable margin. 102 would be don't take loan on anything but your housing, unless you're starting a company. Any other loan, you're entering needless risk for not good enough reason. My personal opinion this is one of the failures of modern schooling - these things should be taught to every child, over and over. How to do taxes, how government works, how to become a better member of society and contribute to it, and how to effin' be financially smart whatever your circumstances are.
    - smcl 8y ago
      "Maybe your argument is that people aren't responsible for their own decisions" No, my argument is pretty coherent - you know exactly what I'm saying but you're deliberately misunderstanding it. The rest of your comment is a pretty worrying rant, I really hope you are trolling.
- consp 8y ago
  A person cannot go bankrupt in some EU countries. You will be placed under supervision and your income will be managed by a third party (usually government). This is also the reason why there are agencies which (by law) monitor debt so you cannot acquire more than you can afford. This includes everything from mortgages to pay-day loans.

You know, if you really think about it, the banks were victimized by these cunning idiots.

by vernie 8y ago

You know, if you really think about it, the banks were victimized by these cunning idiots.

No one said that at all. The point is that there was plenty of greed to go around. I watched multiple friends get caught up in the hype. They called me stupid for not taking on a huge loan because "housing only goes up" or "you'll never be able to afford a house if you don't buy it right now" or "I'm going to sell this in a year for 100k profit". My thought was always I have a good job in software making way above the median income, and I can't comfortably afford a house. There is no way this can continue. It lasted much much longer than I would have guessed though.

sonnyblarney 8y ago

No, that's not what anyone, even the OP is saying. People were taking massive mortgages, far beyond their means, they were buying several houses renting them out. They were knowingly falsifying information they provided to the banks etc. etc.. Not all banks were doing dirty things, and not all people were doing things, but many banks were and so were many individuals, and so the rest of us pay the price. This crisis is truly an American style crises - people in most other countries are hugely risk averse when it comes to this kind of stuff. Even buying cars on payments is a newer thing in some advanced countries ie Spain. Not just attitudes though ... 'bankruptcy' is a survivable event for companies and individuals in America. Less so elsewhere.

blub 8y ago
In the land of zero privacy the banks weren't able to figure out if an individual would be able to pay back a loan? Or they didn't want to?
- goodcanadian 8y ago
  They didn't care. They were selling the loans on to other institutions which in turn were repackaging them and selling them on and so on and so forth. In the end, it was often unclear who was left holding the bag. The banks, for the most part, were being rewarded for originating loans that they weren't going to hold, so they had perverse incentives to loan as much money as they could. There was massive fraud throughout the system from the the borrowers to the mortgage agents to the banks to the re-packagers (other bigger financial institutions, usually) to the credit agencies. It was a total shit show all around.
smcl 8y ago
You're taking the exception (people buying several houses and renting them out) and just declaring that it applies across the board. In many cases it wasn't like this at all - just families who had been duped into thinking they could afford something they couldn't. Sure you could point the finger and say they could have pored over every clause in their mortgage contract and produced their own models for what could happen to their repayments under various circumstances, but why would they? They had no idea whoever "sold" them the mortgage was acting in bad faith. It's only now we know that it was all a sham and that you shouldn't trust these guys as far as you can throw them. The idea that the financial crisis was brought on by some greedy underclass with ideas above their station is a myth that the banks have been pushing ... and it seems a few HNers have just bought it hook, line and sinker.
- saiya-jin 8y ago
  You're simplifying the already situation well outlined in the parent comment. Maybe your argument is that people aren't responsible for their own decisions? Ie when they go to casino and blow their salary on gambling, it was not their fault, it was evil casinos. If they sell their used car too cheaply, it's fault of that sneaky dealer. From what I heard many people in US were (maybe still are) taking all kinds of non-necessary loans. Well that's really not the healthy mentality, nor is it standard anywhere else across the globe. People that can't do simple 2nd grade math on paper take those here in Europe, and often they suffer, together with their families. Seriously, there is something called financial literacy, and 101 of that is - don't buy shit you can't afford with a HUGE comfortable margin. 102 would be don't take loan on anything but your housing, unless you're starting a company. Any other loan, you're entering needless risk for not good enough reason. My personal opinion this is one of the failures of modern schooling - these things should be taught to every child, over and over. How to do taxes, how government works, how to become a better member of society and contribute to it, and how to effin' be financially smart whatever your circumstances are.
  - smcl 8y ago
    "Maybe your argument is that people aren't responsible for their own decisions" No, my argument is pretty coherent - you know exactly what I'm saying but you're deliberately misunderstanding it. The rest of your comment is a pretty worrying rant, I really hope you are trolling.
consp 8y ago
A person cannot go bankrupt in some EU countries. You will be placed under supervision and your income will be managed by a third party (usually government). This is also the reason why there are agencies which (by law) monitor debt so you cannot acquire more than you can afford. This includes everything from mortgages to pay-day loans.