5 ms·

I see what you mean and I agree, but those buying overpriced homes with too good to be true mortgages should bear no responsibility? Especially in a country lik

by rplnt 8y ago

I see what you mean and I agree, but those buying overpriced homes with too good to be true mortgages should bear no responsibility? Especially in a country like US where people don't like to be limited/controlled (read protected) by laws.

dlisboa 8y ago
Most people don't have the financial wisdom to judge "too good to be true" on a macroeconomics basis. Specially not before the bubble burst, when even most experts regular people had access to thought there was nothing wrong with it. Someone offered them a great deal and they took it, simple as that. If a bank offers me a loan with very low interests should I consider the state of the whole economy and the impact of my loan on the country in 10 years before I take it? Compounding to that the fact that these people weren't even benefited by the whole scam. They lost their houses, their savings, everything. If they knew what was at stake they might bear some responsibility, but they didn't.
- phd514 8y ago
  I don't think it's fair to say that people who defaulted during the 2008 mortgage-backed securities crisis did so because they lacked sufficient macroeconomic knowledge to make prudent financial decisions. Some were offered loans (for a variety of bad reasons) that they could not repay if they encountered even the slightest setback in their current financial decisions. Those people should bear some responsibility for that poor choice as should those who offered them the loans for which they shouldn't really have qualified. Others exploited the process by strategically defaulting on mortgages after extracting money due to appreciation on the underlying property. IMO, that's unfair and borders on the fraudulent if they never intended to pay back the mortgages they took out. There were other problems that contributed as well, but none of the causes are so easily characterized that anyone who lost money should expect to see someone jailed as a consequence of their misfortune.
  - hedvig 8y ago
    The greatest recession since the 1930s, caused by the similar wild west speculative innovation, and the victims on the lower end get depicted as strategic wolves somehow.
michaelmrose 8y ago
The people buying the houses they couldn't afford took a bath financially. The companies did to a degree. The people running the show whose malicious actions an idiot could have predicted would lead to eventual collapse got a bonus. You can say people bear responsibility and they do but we rely on our professionals to use their greater education, and their expertise to manage systemic risk by making informed choices and creating systems that manage not create risk. No degree or number of idiot customers could have created the collapse because banks wherein the bank intends to hold the loan isn't insentivized to give out loans wherein it has a poor chance of being paid. Foreclosure is unlikely to yield but a fraction of the face value of the debt. In order to crash and burn you need an entire mechanism whereby banks can originate bad loans, get paid, and sell them off en mass as securities by outright lying about the nature of the loans being sold while securing this whole endeavor with insurance that can't possibly afford to pay for the collapse you are engineering. Then you need to pump the gas on the stupid until you run the economy into a ditch. The economy collapsed because a bunch of dumb people bought houses they couldn't afford is a myth that conservatives and the financial industry is retconning in hopes that we are too stupid and uninformed to read. There have always been idiots willing to sign on the dotted line for dumb financial products. There are a million idiots now. We expect the adults in the room not to sell them the same way we don't expect the invisible hand of the market to keep people from eating melamine in their food.
- josho 8y ago
  Then to add insult to injury quantitative easing to fix the problem was simply a fancy way of saying “let’s give those banks that profited from this situation trillions of dollars so they can trickle the wealth down”.
awakeasleep 8y ago
On one side you have the finance companies. They can lobby the government to change laws. They hire PHDs in the thousands develop attractive, tricky products. They hire million dollar marketing firms to influence us to buy. On the other side you have busy people trying to get by in a confusing world. They dont hire anyone to help them, but they trust the rules that allowed their parents to get by (how credit is allocated). Many of them are essentially innumerate, especially when compared to a quant at a bank or even an engineer. We’re talking about taking candy from a baby here. Is it the baby’s fault it can't defend itself? We dont live in a fantasy of every human having 100% self reliance where every person can handle every tricky situation thrown against them. We need laws and moral standards- and when those are revoked it is not enough to understand the consequences as “the victim’s fault”
- thablackbull 8y ago
  I completely agree with you, but the parent's comment is saying that the very people who need to be protected are the very ones who don't want government involvement. > Especially in a country like US where people don't like to be limited/controlled (read protected) by laws. Not sure what a good solution is, but it's difficult to help those who don't want to be helped.
TheOtherHobbes 8y ago
I vividly remember banks running mortgage scam paper mills that would try and foreclose on anyone and everyone, legally or not. https://www.vice.com/en_au/article/yvxajb/what-happened-when-the-fbi-investigated-foreclosure-fraud-in-florida https://www.vice.com/en_au/article/yvxajb/what-happened-when... Individuals have a responsibility to act realistically. But the ultimate responsibility for due diligence lies with lenders. And when banks commit fraud on an industrial scale, and get away with it, it stops being a problem of individual misbehaviour and becomes a problem of institutionalised corporate corruption.
- TuringNYC 8y ago
  Good reference for a shocking read: https://en.wikipedia.org/wiki/2010_United_States_foreclosure_crisis https://en.wikipedia.org/wiki/2010_United_States_foreclosure...

by rplnt 8y ago

dlisboa 8y ago

Most people don't have the financial wisdom to judge "too good to be true" on a macroeconomics basis. Specially not before the bubble burst, when even most experts regular people had access to thought there was nothing wrong with it. Someone offered them a great deal and they took it, simple as that. If a bank offers me a loan with very low interests should I consider the state of the whole economy and the impact of my loan on the country in 10 years before I take it? Compounding to that the fact that these people weren't even benefited by the whole scam. They lost their houses, their savings, everything. If they knew what was at stake they might bear some responsibility, but they didn't.

phd514 8y ago
I don't think it's fair to say that people who defaulted during the 2008 mortgage-backed securities crisis did so because they lacked sufficient macroeconomic knowledge to make prudent financial decisions. Some were offered loans (for a variety of bad reasons) that they could not repay if they encountered even the slightest setback in their current financial decisions. Those people should bear some responsibility for that poor choice as should those who offered them the loans for which they shouldn't really have qualified. Others exploited the process by strategically defaulting on mortgages after extracting money due to appreciation on the underlying property. IMO, that's unfair and borders on the fraudulent if they never intended to pay back the mortgages they took out. There were other problems that contributed as well, but none of the causes are so easily characterized that anyone who lost money should expect to see someone jailed as a consequence of their misfortune.
- hedvig 8y ago
  The greatest recession since the 1930s, caused by the similar wild west speculative innovation, and the victims on the lower end get depicted as strategic wolves somehow.

michaelmrose 8y ago

The people buying the houses they couldn't afford took a bath financially. The companies did to a degree. The people running the show whose malicious actions an idiot could have predicted would lead to eventual collapse got a bonus. You can say people bear responsibility and they do but we rely on our professionals to use their greater education, and their expertise to manage systemic risk by making informed choices and creating systems that manage not create risk. No degree or number of idiot customers could have created the collapse because banks wherein the bank intends to hold the loan isn't insentivized to give out loans wherein it has a poor chance of being paid. Foreclosure is unlikely to yield but a fraction of the face value of the debt. In order to crash and burn you need an entire mechanism whereby banks can originate bad loans, get paid, and sell them off en mass as securities by outright lying about the nature of the loans being sold while securing this whole endeavor with insurance that can't possibly afford to pay for the collapse you are engineering. Then you need to pump the gas on the stupid until you run the economy into a ditch. The economy collapsed because a bunch of dumb people bought houses they couldn't afford is a myth that conservatives and the financial industry is retconning in hopes that we are too stupid and uninformed to read. There have always been idiots willing to sign on the dotted line for dumb financial products. There are a million idiots now. We expect the adults in the room not to sell them the same way we don't expect the invisible hand of the market to keep people from eating melamine in their food.

josho 8y ago
Then to add insult to injury quantitative easing to fix the problem was simply a fancy way of saying “let’s give those banks that profited from this situation trillions of dollars so they can trickle the wealth down”.

awakeasleep 8y ago

On one side you have the finance companies. They can lobby the government to change laws. They hire PHDs in the thousands develop attractive, tricky products. They hire million dollar marketing firms to influence us to buy. On the other side you have busy people trying to get by in a confusing world. They dont hire anyone to help them, but they trust the rules that allowed their parents to get by (how credit is allocated). Many of them are essentially innumerate, especially when compared to a quant at a bank or even an engineer. We’re talking about taking candy from a baby here. Is it the baby’s fault it can't defend itself? We dont live in a fantasy of every human having 100% self reliance where every person can handle every tricky situation thrown against them. We need laws and moral standards- and when those are revoked it is not enough to understand the consequences as “the victim’s fault”

thablackbull 8y ago
I completely agree with you, but the parent's comment is saying that the very people who need to be protected are the very ones who don't want government involvement. > Especially in a country like US where people don't like to be limited/controlled (read protected) by laws. Not sure what a good solution is, but it's difficult to help those who don't want to be helped.

TheOtherHobbes 8y ago

I vividly remember banks running mortgage scam paper mills that would try and foreclose on anyone and everyone, legally or not. https://www.vice.com/en_au/article/yvxajb/what-happened-when-the-fbi-investigated-foreclosure-fraud-in-florida https://www.vice.com/en_au/article/yvxajb/what-happened-when... Individuals have a responsibility to act realistically. But the ultimate responsibility for due diligence lies with lenders. And when banks commit fraud on an industrial scale, and get away with it, it stops being a problem of individual misbehaviour and becomes a problem of institutionalised corporate corruption.

TuringNYC 8y ago
Good reference for a shocking read: https://en.wikipedia.org/wiki/2010_United_States_foreclosure_crisis https://en.wikipedia.org/wiki/2010_United_States_foreclosure...