Our real estate bubble was the fault of irresponsible dead-beats who bought too much...

[Kurt_and_Hunter]

"Our real estate bubble was the fault of irresponsible dead-beats who bought too much House Shopping Mall"

For all the scape-goating of people who just wanted to own a home (which the RW even extends to a scape-goating of minorities) it's funny that commercial real-estate developers were on the same wild ride and obviously paying the same stupid prices.

It's always the little guy's fault...

Credit-card debt and expensive single family homes = irresponsible.

Building billion dollar office parks that nobody wants to rent = the genius of American entrepreneurial spirit.

[NJmaverick]

1. The bubble was a deliberate construct of the Bush administration

to artificially prop up their failed policies.

[mkultra]

19. +1

[n2doc]

2. Our real estate bubble was the fault of irresponsible dead-beats who bought too many House and

Senate members. And the White House.

[Nicholas D Wolfwood]

3. I don't think you're reading the chart properly.

The residential real estate market started its decline around March 2007 according to the chart. It wasn't until a year later that the commercial market started declining. One could very easily argue that economic circumstances surrounding the residential declined began to cause problems in the commercial real estate market as well. With people struggling to pay their mortgage or fighting off bankruptcy, there was less money in play for commercial interests, which caused demand in the commercial real estate market to decline.

[Hello_Kitty]

17. Which means the investors didn't plan properly. eom

[gorfle]

4. The real cause of the housing bubble.

The real cause of the housing bubble is that the people making the loans had zero interest in whether or not those loans could ever be repaid, because they immediately sold the loans to someone else.

As all of the "good" credit risk people got loans, they scraped the barrel lower and lower so as to keep selling loans. Eventually it caught up with them.

Listen to this article on the bubble from NPR:

http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1242

[flyarm]

6. +1,000!! you got it right! Op is mischaracterizing it too simplified.

this was a con job! By the most powerful!

[Kurt_and_Hunter]

7. In fairness to me, the OP is a jest and social/political observation more than policy analysis

I'm not saying the bubble was really due to shopping malls, just that saying that would make as much sense as what people routinely say about single-family homes.

Yes, the bubble was in large measure a product of the fact that loan issuers did not care whether the loans were repaid.

[flyarm]

5. many people were conned into being made to believe they could afford what they couldn't

with no money down loans and bullshit loans they didn't understand.

And our congress and senate..from both parties let this shit happen!

[Kurt_and_Hunter]

8. But that has to apply to Dubai at least as much as John Q. Citizen

The point of the chart is that the bubble was in all class of real estate, not something isolated in single-family housing.

I doubt people arranging financing for a billion dollar office park were innocent naifs duped by ARM mortgages and confusing terms.

[flyarm]

15. but many John Q Citizens were also conned investing in the Dubai

sand castles..the financiers..and they were probably sold on false prospectus's.

[TheKentuckian]

9. Even accounting for the bad decisions and taking on more than could be chewed

The horrible effects could have been avoided with the rawest semblance of oversight, regulation, and enforcement on the financial industry.

You can't have a gambling boat going on with credit default swaps, speculation, and betting 9, 20, and 30 times what you have to put down on the heads we win, tails the people lose high stakes table.

Blaming poor people, even just a little, when the fuckers that stole all the money and lost many times more are running off laughing down the street with a wheel barrow full of cash and the deed to the poor folks homes to boot, just plays into the bullshit frame the "winners" of this generational theft push so they can keep on keeping on.

[flyarm]

13. absolutely..that is what i was trying to say..you said it better! eom

[sudopod]

11. Let's not forget about the demolition of Glass-Steagal.

When the mortgages were bundled into securities and sold off, the banks' profit motive was uncoupled from the ability of the party making the loan to ever pay it off. After all, the bank would never see it again, they had their money!

[flyarm]

14. yep!! and yet some would blame the buyer who was conned! this was a scam from the get go! eom

[sudopod]

10. Yo Dawg!

I heard you like recessions, so I put mortages in your securities so you can sleep where you crash!

[xxqqqzme]

12. Rethugs have no memory cells

dimson bragged about his administration being the 'ownership society'. They were all so pleased by it then.

[busymom]

16. This is a mixed bag actually....

Though there are homeowners who worked their hardest to keep up and did so in good faith, we have 3 foreclosures and 1 short sale in our neighborhood. 1 family legitimately suffered through hardships that I believe truly were beyond their control and they had our hearts and support.

The others? Their kids had the most expensive shoes, clothes and ... they drove/drive brand new SUVs...every single family. Seriously, have I mentioned that my van is 10 years old?

I do think there was some personal responsibility in this mess to go along with bank culpability.

Also, I would never sign something and get into a financial investment without knowing exactly when a balloon payment is due etc....


So yes, the banks are responsible...but there are many homeowners who bit off more than they could chew, didn't read the loan information, made poor financial choices along the way and then have lost their homes.

Again...the family I mentioned where both parents lost jobs was a terrible situation and I feel that they were screwed.

The family who bought the house, didn't make a SINGLE mortgage payment, was finally kicked out of the home by the bank and then sued the bank when it sold their house and had posession of the house returned to them temporarily (after it had been sold) forcing the new homeowners out until another court overturned it ... they were just morons....And the people who took a cancun vacation and a disney vacation before foreclosing and then ripped out all appliances, put holes in walls, drove over the mailbox...yah...they were another fun bunch.

[Blue Meany]

18. Agreed, but those that knew what they were doing are

the most culpable.

When everything is going up, many people feel richer and smarter than they are. My mother-in-law, at 87, has started to play the stock market for the first time in her life and has been doing so since the beginning of the latest upswing. Every time she is on the phone she talks about how much money she has made and she is convinced she is a brilliant investor. I keep telling her that it's easy to make money when the market is going up, but it will go down, and then you have to be smart and/or lucky not to lose money. She won't hear any of this, and now that she is "rich," she spending money like never before.

I supppose that some of those in banks--certainly the brokers I dealt with over the years--must have succumbed to this mentality. But those who were creative credit default swaps had to know what they wee doing.

[paulsby]

20. yawn on binary thinking

it's not a EITHER it's the big guy's fault or the little guy's.

it's both.

and they feed off each other, kind of like a feedback loop

the real estate bubble is like ANY bubble. see: greater fool theory.

people buy at ridiculous prices because they believe that in the future they can sell for even MORE ridiculous prices

and that works.

for a while.

then... it doesn't

it's been true for CENTURIES. bubbles are NOTHING new.

and just like the tulip bulb scandal, the 1929 stock market crash, etc. etc. the little guy played a big part.

google "bucket shops" in 1929 for example. JP morgan famously decided to pull his money out of the market when an elevator operator bragged to a rider about the killing he ( a low wage worked) was making in the stock market.

the real estate market was no different.
i recall CNBC interviewing two former vegas strippers who were making a killing in real estate.

same mentality.

[Kurt_and_Hunter]

21. Yawn on people who don't read well

[paulsby]

22. as soon as you find those people get back to me. hth nt

[Kurt_and_Hunter]

25. The point being that the OP is about perception

The OP does not attempt to make an economic argument as to the full causes of the real-estate bubble. It is presented in the form of a joke that has a social observation to it.

The OP destroys a particular politicized argument, which is that it was the little guy's fault.

It does not exonerate the little guy, except from the charge of being the whole problem.

There is not a scrap of binary thinking in it... unless one read the statement that the cause of the thing was people buying too much shopping mall as literal economic analysis.

Since the chart shows that single family homes and commercial real estate moved in tandem it's obvious I wasn't making a specific claim of responsibility in one or the other, even if ones misses that the first line is a jest.

Sorry for the over-reaction... there is little I would less prefer to be called than a binary thinker. I'm a dynamic-systems guy to the core.

[paulsby]

27. i can respect that

and we can both totally agree it is not solely the little guy's fault or the big guy's fault.

while, according to gordon gecko, "greed is good", it can cause problems. the little guys were greedy, either wanting more house than they should have bought, or wanting to get the lowest possible payments and taking extra risks for it, because they could always sell to the "greater fool". and on the big guy side, lots of bankers, etc. were MORE than willing to stretch the law, and ethics, in order to get the mortgages. heck, they could split em up into planches and disseminate the risk, after all

it's happened SO many times before, and happened again. a bubble.

i remember when i bought my house for 190k, and put 50k down (in 2000), my realtor told me i could buy "a lot more house" and totally encouraged me to do so. of course. he gets a bigger commission.

i happily bought a modest house, and sold it for a nice profit in 2008.

my wife and i just bought our dream house, facilitated by the price drops and kick-ass interest rates (4.62%).

but we got a relatively crappy price on her house, although still a lot more than she paid for it.

but if we had done some funky ass financing, we would have been hurt

[TheKentuckian]

23. I acknowledge that but spreading the blame strengthens the frame

of the people who really made out and had systemic not just individual responsibility.

We have credit ratings, we are supposed to have standards, the people that over bought took their hit, but the those with the power to lend and worse those speculating on the whole mess have by far the highest level of responsibility because they had authority and power and they were the ones to profit from gaming the system.

The greediest, dumbest, and least reliable individual didn't fork over a loan to themselves, nor set criminal terms, nor bundled the mortgages, nor speculated on the bundle, nor had the Federal government bail them out.

If the system worked and wasn't being gamed by it's supposed custodian we wouldn't be here over a small percentage of defaults. Those with the most power and responsibility get the lion's share of the culpability. Some folks act like people just crept into the vaults, took a bundle of cash, and left an IOU or something. This stuff slipped through many layers of checks and it was on purpose.

[paulsby]

24. lots of small guys made out big though

i bought a house for 190k in 2000 and sold it for 300k in 2008. that's a great profit.

i totally agree that predatory lenders, etc. etc. were a BIG part of the problem.

my point was about the feedback loop./

the consumers demanded riskier and riskier loans (cause they got lower payments) etc. and the bankers etc. readily obliged.

the greedy facilitated the crooks and vice versa\

[levander]

26. You guys trying to peg the housing bubble to just one thing...

And, apply a partisan label to it nontheless...

Like anything as big as the housing bubble, there wasn't just one reason. And, it wasn't all either Democrats or Republicans. There were multiple things that led up to that. There were many lessons to be learned.

To try to tie the whole thing specifically to either Democrats or Republicans is just silly.

Now, if you have individual issues that helped lead to the collapse, then I could see it. But, just saying, "see, this one thing was the fault of the whole thing!" It just sounds stupid.