Fed chairman, in Atlanta, tracks housing bubble to its source

Ben Bernanke, whose term as Fed chairman is likely to be extended soon by the U.S. Senate, was in Atlanta over the weekend to speak at the annual meeting of the American Economic Association. His topic: How did we get in this mess?

As the AJC’s Mike Kanell reports, Bernanke put most of the blame on the exotic loan products that mortgage lenders invented to put hundreds of thousands and perhaps millions of people into homes that they could not afford, and on the failure of federal regulators to intervene:

“Borrowers picked and were permitted mortgages that no one expected them to service long term, (Bernanke) said: Everyone involved believed that home prices would only keep rising.

“This description suggests that regulatory and supervisory policies, rather than monetary policies, would have been more effective means of addressing the run-up in house prices.”

The chart below from Bernanke’s presentation offers pretty stark evidence for that claim. It documents the rising percentage of various alternative-rate mortgages (ARMs) closed during the buildup of the real-estate bubble. A negative amortization loan, for example, allowed the borrower to pay less each month than the interest he or she was being charged, meaning they were paying nothing toward the principle and were actually getting deeper into debt each month. The assumption, of course, was that it didnt’ matter because they could always sell that house for a lot more than its purchase price. Pay-option loans — sometimes called “Pick-a-payment” loans — allow borrowers to set how much they initially pay in monthly house payments. By 2006, those accounted for a huge percentage of ARMs.

(H/T Calculated Risk

(H/T Calculated Risk

Let me also note — because you know we’re going to hear it — that like most economists, conservative or liberal, Bernanke does not try to blame the collapse on the Community Reinvestment Act, which encouraged banks that took deposits from poorer neighborhoods to also make loans in those neighborhoods.  That explanation fits the emotional need in some quarters to blame all this on poor people, but it fits none of the facts.

Most of the bizarre loans documented in Bernanke’s chart were made by institutions and lenders not affected by the CRA. CRA-regulated institutions — standard full-service banks with local branches — were also more likely to keep the loans they did make, meaning that they did not shuffle off the risk to Wall Street and thus were less likely to offer low-documentation or no-documentation loans. Those traditional banks still had their own skin in the game, and thus monitored the risk more closely.

232 comments Add your comment

I Report (-: You Whine )-: mmm, mmmm, mmmmm!

January 4th, 2010
7:51 am

You almost have to wish away the Fannie and Freddie debacles, with all your might, don’t you, Bookman?

Everybody else, just walk back the actions of these two failed government entities and make note of how it all began with CRA.

Hold your breath Jay, maybe it will all go away.

jt

January 4th, 2010
7:53 am

“borrower to pay less each month than the interest he or she was being charged, meaning they were paying nothing toward the principle and were actually getting deeper into debt each month.”

Kinda like the Federal government today.

USinUK

January 4th, 2010
7:59 am

and, whilst we’re at it … WHO encouraged banks to develop these “exotic loan products”??? Alan Greenspan.

“American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.” (Feb 2004)

I’m sorry, Bosch, but he’s much more evil than Cheney.

arnold

January 4th, 2010
7:59 am

I sold a home in Tampa, FL in 2001. There were some offers to buy that had strange financing arrangements to them. Such as, the buyer could end up getting a $10,000 gift. These financings were from off the wall named mortgage brokers. I suspect this type of thing was just starting to blossom then.

We should never have deregulated banking. Savings and loans should handle mortgages. Too many of our checks and balances from the Depression have been undone in the last 20 or so years.

USinUK

January 4th, 2010
7:59 am

“Kinda like the Federal government today”

um. actually nothing like the Federal government today. but thanks for playing.

Taxpayer

January 4th, 2010
8:01 am

The CRA. You are indeed correct, Jay. There will always be those that look to blame their woes on the poor and all those perfectly good houses that were built and wasted on them whilst so many wealthy folks were turned away, cash in hand. hehehe

Jenifer

January 4th, 2010
8:04 am

“Let me also note — because you know we’re going to hear it — that like most economists, conservative or liberal, Bernanke does not try to blame the collapse on the Community Reinvestment Act, which encouraged banks that took deposits from poorer neighborhoods to also make loans in those neighborhoods. That explanation fits the emotional need in some quarters to blame all this on poor people, but it fits none of the facts.”

Oh Jay, you’ve burst some bubbles today.

larry

January 4th, 2010
8:07 am

I remember those commericals from the early 2000’s that were pushing interest-only loans. I remember thinking then what a big mistake that was.But, oh im sorry , thats the federal governments fault.

Doggone/GA

January 4th, 2010
8:08 am

“you’ve burst some bubbles today”

Jenifer…don’t bet on it. You’re making the assumption that “some” people actually read past the headline!

USinUK

January 4th, 2010
8:09 am

I second Doggone – Jen, there are none so blind as those who will not see.

Robert

January 4th, 2010
8:10 am

“These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. “The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

electrician

January 4th, 2010
8:12 am

it’s not about poor people…just a lot of folks,and I know a few, that bought houses that were beyond their means to pay for using conventional loan guidelines.nothing new about that,I once had a lifestyle that I couldnt afford, living beyond my means,thanks to dave ramsey,I learned how to dig myself out. wont make that mistake again.

Gale

January 4th, 2010
8:13 am

I am more than willing to blame the housing bubble on greed. Greedy speculators that borrowed to build or flip on the cheap. Greedy buyers who didn’t think about the paper they signed. What fool would sign a mortgage that applys nothing of the payment to the principle and has an automatic interest increase or balloon payment?

Redneck Convert (R--and proud of it)

January 4th, 2010
8:15 am

Well, I reckon it was nice while it lasted. Some fancy mortgage guy would say, “I’ll give you 10,000 bucks if you’ll just move into this house and pay, say, 100 a month. Don’t be worried about the $400,000 price tag because you can sell it for a million bucks in a couple months.” Heck, there was people that made 30,000 a year and bought four houses and people were lined up to buy them when the people got tired of owning them. Some people just quit their job and kept refinancing their houses and buying Mercedes and living high on the hog.

I reckon long as people kept seeing a big pile of hog doo-doo as worth alot of money, everything was fine. Then about 2008 around 10 million people stepped back and took a look and said, “Why, that’s nothing but a big pile of hog doo-doo!” And that’s when all the trouble started.

Anyhow, there’s a big lesson in all this. Trailers. There ain’t nothing like a good trailer. You can live in one and when you get tired of where you live you can just put wheels on it and move it somewhere else. And you didn’t see people mortgaging four or five trailers and refinancing them to make a living. No sir, you can’t blame this housing mess on trailers. And I bet there’s lots of people dead broke and wishing they had a old, broken down trailer to move into.

Have a good day everybody.

USinUK

January 4th, 2010
8:15 am

“What fool would sign a mortgage that applys nothing of the payment to the principle and has an automatic interest increase or balloon payment?”

the fool who was told not to worry, that housing always appreciates in value, that they would be able to refi when the time came … and they were told this by the experts at the bank or other lending facility that gave them the loan in the first place.

Taxpayer

January 4th, 2010
8:16 am

You’re making the assumption that “some” people actually read past the headline!

Even if “some” made it past the headlines, those “some” would still need to be able to understand the meaning behind the text. Clearly, that ain’t happenin’ with “some”.

Robert

January 4th, 2010
8:16 am

It seems that the lesson learned here is that we should all live within our means. Unfortunately, the federal government still hasn’t learned this lesson.

USinUK

January 4th, 2010
8:16 am

“Anyhow, there’s a big lesson in all this. Trailers.”

:lol:

thanks for that, Redneck -

Jenifer

January 4th, 2010
8:17 am

Those darn poor people. I say let’s starve them, make them do without health care and shelter.

We will get rid of them once and for all.

We will be victorious!

Robert

January 4th, 2010
8:20 am

Democratic Rep. Artur Davis: “Like a lot of my Democratic colleagues I was too slow to appreciate the recklessness of Fannie and Freddie. I defended their efforts to encourage affordable homeownership when in retrospect I should have heeded the concerns raised by their regulator in 2004. Frankly, I wish my Democratic colleagues would admit when it comes to Fannie and Freddie, we were wrong.”

FrankLeeDarling

January 4th, 2010
8:20 am

These type loans where intended for people who thought that they could buy a house,paint it,then flip it for twice the price.

Taxpayer

January 4th, 2010
8:20 am

What fool would sign a mortgage that applys nothing of the payment to the principle and has an automatic interest increase or balloon payment?

Some were misled to believe that they were purchasing their dream instead of signing a very expensive agreement that was much worse than any rental agreement would have ever been on them.

Taxpayer

January 4th, 2010
8:24 am

These type loans where intended for people who thought that they could buy a house,paint it,then flip it for twice the price.

And the first time this scenario showed up as a TV show should have been the sign. The one that says “RUN” or something similar.

@@

January 4th, 2010
8:25 am

Aahhhh yes, I was reading Bernanke’s excuses in an article just yesterday, thinking ‘Heck, Bernanke needs to make up his mind! Low interest rates are good, they’re bad, they’re good again.’

A better analysis of Bernanke on the Housing and Other Bubbles

Be sure to check out the links.

My personal opinion, for what it’s worth? Bernanke needs to GO!

Robert

January 4th, 2010
8:26 am

“I want to roll the dice a little bit more in this situation towards subsidized housing” – Barney Frank

“We do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines” – Democratic Rep. Maxine Waters

“The Obama administration pledged Thursday to provide unlimited financial assistance to mortgage giants Fannie Mae and Freddie Mac, an eleventh-hour move that allows the government to exceed the current $400 billion cap on emergency aid without seeking permission from a bailout-weary Congress.

The compensation packages, including up to $6 million each to Fannie Mae and Freddie Mac’s chief executives, come amid an ongoing public debate about lavish payments to executives at banks and other financial firms that have received taxpayer aid. But while many firms on Wall Street have repaid the assistance, there is no prospect that Fannie Mae and Freddie Mac will do so.”

http://www.washingtonpost.com/wp-dyn/content/article/2009/12/24/AR2009122401588.html

Gale

January 4th, 2010
8:27 am

“Poor people” have always had housing available, rentals. I am not talking about homeless people with no income. Owning a house is expensive and there is much more to it than the monthly payment. Rent is just a monthly payment and if no one in your family ever owned a house, I can see how one might think owning was a better deal because the monthly payment was lower. However, as with many plans to try to help the underprivledged, they end up getting screwed because they don’t get the whole picture. It’s the adage of the gift horse in another level.

Gale

January 4th, 2010
8:27 am

“Poor people” have always had housing available, rentals. I am not talking about homeless people with no income. Owning a house is expensive and there is much more to it than the monthly payment. Rent is just a monthly payment and if no one in your family ever owned a house, I can see how one might think owning was a better deal because the monthly payment was lower. However, as with many plans to try to help the underprivledged, they end up getting screwed because they don’t get the whole picture. It’s the adage of the gift horse in another level.

USinUK

January 4th, 2010
8:27 am

Taxpayer –

I agree – much like daytrading, it’s the Man-on-the-Street indicator – when you have people with NO experience in real estate or development quitting their day jobs to jump on the bandwagon, that should be your first sign of trouble. (we had a show called Property Ladder, here, that was all about people trying to dive headlong into property development as a career … let’s just say that last season’s episodes were painful)

Gale

January 4th, 2010
8:27 am

sorry about the double post.

v racer

January 4th, 2010
8:29 am

You can write it and repeat it, but you can’t convince most of us that it wasn’t the liberal CRA like thinking that caused the problem. Help the poor, regardless of the irresponsiblility that got them where they are got us where we are. Jay, hold all columns until you sober up from New Year’s Eve.

stands for decibels

January 4th, 2010
8:31 am

the fool who was told not to worry, that housing always appreciates in value, that they would be able to refi when the time came … and they were told this by the experts at the bank or other lending facility that gave them the loan in the first place.

And, of course, that you’d be a complete and utter fool not to take advantage of this opportunity to achieve prosperity because The Only Risk is in Not Taking One (R).

FrankLeeDarling

January 4th, 2010
8:33 am

Oh yeah,Taxpayer I forgot about that TV show,our bubble must have been filled with nitrous oxide.

Dave R.

January 4th, 2010
8:36 am

No, of course it’s not the CRA’s fault! Can’t be!

Just that the same POLICY within the CRA was the guiding principle behind the non-CRA loans – let’s let people who can’t afford to borrow money do so.

Now why would any financial institution make such risky loans in the first place, if they couldn’t pawn them off onto a government institution once made? These were stupid and greedy lenders and borrowers who looked to profit from a scheme that was ultimately protected by the taxpayers, so they got to gamble with our money.

And all the libs could do was to bail them out of their mistakes, and hope that they’d never do it again.

Letting these stupid greedy people fail would have cured them of trying it again in many cases, but the nanny-statists who run our government simply can’t allow people to fail. Even a poor parent knows that never disciplining a child when they do something wrong will always produce a worse response next time.

The adults are in charge? Not hardly.

Robert

January 4th, 2010
8:38 am

hmmm, let me see. We had hundreds of thousands of people signing up for exotic mortgages to get into a house they could not afford, which caused the real estate bubble to burst. This reckless behavior can be blamed on the lender (greed), the borrower (stupidity), and the government (stupidity) for encouraging it. Do you think the next bubble to burst will be the federal government? After all, we are borrowing trillions now and making monthly interest only payments of several hnudred billion dollars a month. How long can this go on before this house of cards collapse?

I Report :-) You Whine :-( mmm, mmmm, mmmmm!

January 4th, 2010
8:42 am

The loss cap is being lifted because the government has directed both companies to pursue money-losing strategies by modifying mortgages to prevent foreclosures. Most of their losses are still coming from subprime and Alt-A mortgage bets made during the boom, but Fannie reported last quarter that loan modifications resulted in $7.7 billion in losses, up from $2.2 billion the previous quarter.-WallStreetJournal

I don’t know, maybe someone could explain why the government is being directed to buy up all the bad mortgages, almost as though they know the private lenders would never be foolish enough to guarantee them on their own.

Bosch

January 4th, 2010
8:46 am

“but you can’t convince most of us that it wasn’t the liberal CRA like thinking that caused the problem”

Of course, they may be convinced if they’ve ever READ the CRA orr any of its amendments which say nothing about forcing banks to loan money to poor people.

Yeap, it’s always easy to blame the poor folks. Damn them.

USinUK,

Good morning! Nope. Can’t agree with cha. – Cheney is the most evil.

FrankLeeDarling

January 4th, 2010
8:46 am

Then the other side of the problem, banks developers and politicians get together to use state backed loans to build overpriced housing that nobody wants.Banks and developers get sacked,politicians blame poor.

USinUK

January 4th, 2010
8:49 am

Bosch –

“Good morning! Nope. Can’t agree with cha. – Cheney is the most evil”

I say, let’s let them duel for it!

meanwhile … guess what starts this weekend???!!! The new season of Being Human!! woowoo!!!

Taxpayer

January 4th, 2010
8:51 am

Of course there is plenty of credit/blame to go around depending on which bouncing ball one follows at any given instant. For example,

Sylvain Raynes, an expert in structured finance at R&R Consulting, said: ”The simultaneous selling of securities to customers and shorting them is the most cynical use of credit information that I have ever seen. When you buy protection against an event that you have a hand in causing, you are buying fire insurance on someone else’s house and then committing arson.”

A Goldman spokesman said: ”We respectfully disagree with this view.”

The proper regulations and enforcement of said regulations would go a long way in dealing with some of the known problems. The problems can all be ultimately linked back to greed as the underlying culprit but you cannot directly translate this “greed problem” into an actionable item or meaningful metric in a capitalist environment unless you first accept socialism or an equivalent as a viable solution. Do we really want to go there. Perhaps in an ideal world… At the other extreme, we have the free-reigns approach of the followers of all things Ayn and we’ve already struggled (as a society although there will be those that proclaim themselves winners and are perfectly happy with the way things have turned out) through enough of the destruction that such a philosophy has wrought, haven’t we! I do wonder with some people though.

Sigh---

January 4th, 2010
8:52 am

How often are your liberals going to keep posting the same straw-man argument about the CRA not causing the bubble? because you are to dense to do any research about how the market works? O wait you probably know but since most common people dont it is best to just not point it out?

When he says “et me also note — because you know we’re going to hear it — that like most economists, conservative or liberal, Bernanke does not try to blame the collapse on the Community Reinvestment Act, which encouraged banks that took deposits from poorer neighborhoods to also make loans in those neighborhoods. That explanation fits the emotional need in some quarters to blame all this on poor people, but it fits none of the facts.”

he is only being partially truthful. Yes the direct CRA numbers from these big banks were low. How ever with the Riegle-Neal act which loosend up banking regulations. This gave power to consumer advocacy groups to which they could hold these banks hostage with their CRA numbers. often gaining billions in guaranteed under-writing. *note the loan isnt written by the big bank so it doesnt count as a CRA loan per the Straw-man argument the author posted. which is how he can claim this.*

now the bank doesnt want to sit on this toxic nonsense so it gets packed and sent off to wall street.

I dont blame the poor, i blame the inept idiots who think they are doing the poor a favor by helping them get something they 1. Dont understand 2. Cant afford and 3. Dont know how to take care of.

jt

January 4th, 2010
8:53 am

Even though Ben Bernake HAD a redeeming aspect (born in Georgia), this bleached it out——–

“] Bernanke spent his undergraduate years at Harvard University where he lived in Winthrop House and graduated with a B.A. in economics summa cum laude in 1975.”

Nuff said.

Outhouse Go-Kart

January 4th, 2010
8:54 am

“A negative amortization loan, for example, allowed the borrower to pay less each month than the interest he or she was being charged, meaning they were paying nothing toward the principle and were actually getting deeper into debt each month. The assumption, of course, was that it didnt’ matter because they could always sell that house for a lot more than its purchase price.”

SUCKERS!!! LMAO…anyone who relied on that idea is a complete dumbass!!! Too funny!!

USinUK

January 4th, 2010
8:54 am

Sigh---

January 4th, 2010
8:55 am

Doggone/GA

January 4th, 2010
8:57 am

“How often are your liberals going to keep posting the same straw-man argument about the CRA not causing the bubble?”

As often as it takes you idiots to realize that it was NOT THE CRA that was the root cause of the problem. Why don’t you try actually READING the CRA to find out what it “forces” banks to do? Then try understanding that it was NOT MOST BANKS that were the root cause of the houseing “crisis” – it was mortage companies, which – AS JAY HAS POINTED OUT – were not bound by the provisions of the CRA.

Education is your friend, try it sometime.

Outhouse Go-Kart

January 4th, 2010
8:58 am

Taxpayer

January 4th, 2010
8:20 am
“What fool would sign a mortgage that applys nothing of the payment to the principle and has an automatic interest increase or balloon payment?”

Some were STUPID enough to believe they could get something for nothing and got screwed in the process.

There…Much better. LMAO!!

thomas

January 4th, 2010
9:00 am

Outhouse,

“SUCKERS!!! LMAO…anyone who relied on that idea is a complete dumbass!!! Too funny!!”

Thats not fair, everyone knows that the people you speak of are not dumbasses. They were tricked by the evil bankers and their fancy numbers talk.

There is not a single person who’s home was forclosed that had any option. They were forced to buy a home and were also forced, at gun point most likely, to sign the loan without reading and understanding what was written. The ones taking the loan had no responsibility in this, their stupidity is a non issue as they could only rely on what the evil mean bankers told them. Just read above it is the bankers fault, and no others hold any responsibility.

@@

January 4th, 2010
9:02 am

…standard full-service banks with local branches — were also more likely to keep the loans they did make, meaning that they did not shuffle off the risk to Wall Street and thus were less likely to offer low-documentation or no-documentation loans. Those traditional banks still had their own skin in the game, and thus monitored the risk more closely.

And yet it’s the traditional banks whose doors are closing while the government’s “To BIG to Fail” buddies are rewarded with our tax dollars.

Conflicting Messages

President Barack Obama has denounced “fat cat bankers” and told them to lend to small business. Blamed for taking too many risks, the banks are thus being told to take more risks, at the same time that their once-burned-twice-shy regulators are tightening control over bank lending. The bankers must be dizzy!

As the economy gradually improves, with the help of unprecedented deficits, fear of an aftershock of inflation grows. The nation’s economic future has become clouded.

There’s that word “clouded” again.

In the era of economic complacency that ended in September 2008, economists in and out of government by their advocacy and actions planted the seeds of an economic crisis that has shifted economic power from free markets to government. The consequences may be dire.

May be? MAY BE!!?!!

Dave R.

January 4th, 2010
9:03 am

Take your own advice, Doggone.

USinUK

January 4th, 2010
9:03 am

“Thats not fair, everyone knows that the people you speak of are not dumbasses. They were tricked by the evil bankers and their fancy numbers talk.”

yay!!! it’s the Zero-Sum game!!! everybody play along … it’s ALL poor people’s fault!

no! it’s ALL the bankers’ fault!!

no! it’s ALL the gummint’s fault!

(me, I’m still sayin it’s all Alan Greenspan’s fault)

Robert

January 4th, 2010
9:03 am

“I won’t have to worry about putting gas in my car. I won’t have to worry about paying my mortgage”

Anyone remember when this woman said this? This is the mentality that has gotten us in trouble.

Southern Comfort

January 4th, 2010
9:09 am

Geez…

Another topic so people can blame the housing bubble on the poor. Yet, not one example of someone poor building and refinancing a McMansion, buying a home in John’s Creek, or anything else. People were living beyond their means, and it wasn’t just poor people.

Greed, and greed only is what I think caused this problem. Underwriters saw gullible victims to make money off of hand over fist. Then the mortgages were repackaged and resold and someone else made money off them hand over fist. But no one sees a problem with greed, even though it is one of the seven deadly sins.

One question before I leave you all to your needless bickering, were any of the mortgage companies, not the banks that wrote mortgages, required to follow the CRA rules? I’m talking about companies who were or are just mortgage companies only.

AmVet

January 4th, 2010
9:09 am

Electrician is correct, this is not about poor people. As is Gale; with the correct observation how sheer, unbridled, unethical avarice damn near drove capitalism off the tracks.

But more than anything else this is about stupid people. Stupid lower, middle and upper class Americans.

Tragically, as the very first post of the day on this matter demonstrates, (and not at all shockingly several subsequent ones) there is a large segment of our society that is going be forever ignorant. Intentionally so. Worse, they simply will not or cannot learn. Their ideology and faith precludes it. Not from their endless mistakes nor from any amount of education. (As years of education has produced these brilliant minds.) Of primary importance to these louts is being mindlessly stuck on Fannie stupid. Or Freddy stupid. Or CRA stupid. Or…

You get the picture.

They don’t get the big picture. Being a good Republican demands that.

And the white collar criminals on Wall Street, K Street and Main Street laugh all the way to the “too big to fail:, bailed out bank as they walked off with all of that money. Three trillion dollars worth of it.

And the conned as they have perfected over the past three decades, do their damnedest to pretend that nothing criminal has happened.

Why did they become the Anti-Law & Order Party?

thomas

January 4th, 2010
9:09 am

Ahhh USinUk,

Thats sweet!

If you will notice with your tiny little eyes I never said it was ALL poor peoples fault. I never mentioned poor people I was referring to anyone who lost a home from not reading the mortgage. As you will note there have been poor and RICH people to suffer forclosure.

The only difference in my argument is I believe ALL had fault, unlike you who from your post I assume that you believe this was only the fault of the rich and NO others share any blame.

Why do you feel people who sign contracts are not to blame for signing their own name?

Remember their lack of self education is not a credible reason why it is not their fault.

FinnMcCool

January 4th, 2010
9:10 am

sounds like Cheney is not too pleased with Obama’s strategery for the War on Terror

thomas

January 4th, 2010
9:11 am

USinUk,

Was it not Hilliary Clintons fault for saying there were WMD in Iraq, because she was tricked?

Or do people now bear no responsibility for the words that come out of their mouths either?

Anyone know what anyone is responsible for anymore?

Southern Comfort

January 4th, 2010
9:12 am

Nevermind that question, I had forgotten what Jay had written by the time I read the comments.

See y’all next topic. I’m tired of this one.

Taxpayer

January 4th, 2010
9:12 am

Outhouse Go-Kart

January 4th, 2010
8:58 am

Since you did not copy what I wrote, only what I had copied from another’s post, I do not follow your logic in giving me your “response”. Then again…

@@

January 4th, 2010
9:14 am

Bottom line….the federal government, through temptation by policy, exposes the middle-class to financial collapse. Under “their guidance” (which too many of you accept as GOOD) we’ll all be poor. They win, we lose.

Ray

January 4th, 2010
9:17 am

Bottom line….Big business, through greed by policy, exposes the middle-class to financial collapse. Under “their guidance” (which too many of you accept as GOOD) we’ll all be poor. They won, we lost.

Sigh---

January 4th, 2010
9:19 am

@Doggone/GA

You didnt even read what i posted did you?

Steven Daedalus

January 4th, 2010
9:19 am

If Cheney is critical of something, then it should automatically be done.

Taxpayer

January 4th, 2010
9:22 am

If only Greenspan’s first name were Dick. I could get two birds with one stone. Cheney is evil. By the way, is GW’s nickname Dick by any chance.

USinUK

January 4th, 2010
9:22 am

thomas –

“unlike you who from your post I assume that you believe this was only the fault of the rich and NO others share any blame”

please point me to anything I have said that supports that asinine assertion.

g’head. I’ll wait.

“Was it not Hilliary Clintons fault for saying there were WMD in Iraq, because she was tricked?”

wow. talk about a stretch. make sure to ice yourself to prevent injury.

(and, for the record, when people are asked to make decisions based on limited information, no, it isn’t their fault if they make an incorrect decision based on edited facts … if you are blindfolded and I tell you that intelligence says that the road is clear – but I omit the fact that I’m only giving you information on the east-bound lane – you cross the road and are then hit by a west-bound truck, would you consider that your fault?)

stands for decibels

January 4th, 2010
9:22 am

See y’all next topic. I’m tired of this one.

Well, I’m tired of the topic it becomes in the comments fields–the usual “It was SO Fanny-Freddy-Barney and po’ colored folk!” / “Was NOT”.

If at least half the folks who feel compelled to bring their playground taunts actually bothered to read, or at least skim

1) the linked article from Michael E. Kanell

and

2) the calculated risk blog from which the charts had caught Jay’s attention highlighted (and really, if you’re at all interested in the present-day economy, that site ought to be in your rotation)

it’d be somewhat interesting here.

As it is, I’m with SoComf. Later, all.

Outhouse Go-Kart

January 4th, 2010
9:22 am

Bottom-line. Now as always its Buyer Beware!

Doggone/GA

January 4th, 2010
9:22 am

“You didnt even read what i posted did you?”

I replied to what I quoted. And no, I didn’t read any further. If a post starts out stupid, I stop reading it at that point.

Soothsayer

January 4th, 2010
9:24 am

All the ingredients of a classic speculative bubble:

1. a complacent belief that the “investment” can never go down for long

2. a speculative market supported by cheap, easy credit and government policy

3. an oversupply of product generated to meet speculative rather than organic demand

4. a thin re-sale market which will plummet once selling begins

5. unsustainably rapid appreciation of assets due to speculative demand

USinUK

January 4th, 2010
9:26 am

“If only Greenspan’s first name were Dick. I could get two birds with one stone. Cheney is evil.”

reminds me of one of my all-time favorite campaign buttons: Dick Nixon before he dicks you.

c-LASSIC.

Matt Foley

January 4th, 2010
9:26 am

If some of you idiots dont pay attention you’ll be livin in a van down by the river.

Hillbilly Deluxe

January 4th, 2010
9:33 am

“Poor people” have always had housing available, rentals.

I can only speak for my area, but up here, rentals were so expensive that you could make house payments easier than rent payments. Given that scenario, you’d be crazy to rent.

Greed, and greed only is what I think caused this problem. Underwriters saw gullible victims to make money off of hand over fist. Then the mortgages were repackaged and resold and someone else made money off them hand over fist.

And even after everything tanked, they all still had those commissions. Didn’t cost them a dime.

I knew things were going to eventually come to this when, back in the late 80’s, a guy I worked with told me he was buying a house with no money down. My response, “What are you? Crazy?” Admittedly though, I never dreamed of the schemes they’d come up with.

Oh and Ben Bernanke isn’t part of the solution, he’s part of the problem. He’s from the same banking culture that gave us Greenspan, Hank Paulson, and Timothy Geithner.

LA

January 4th, 2010
9:33 am

Democrat stupidity.

SPIEGEL: Madame Secretary, in your first testimony to the US Congress as Homeland Security Secretary you never mentioned the word “terrorism.” Does Islamist terrorism suddenly no longer pose a threat to your country?

NAPOLITANO: Of course it does. I presume there is always a threat from terrorism. In my speech, although I did not use the word “terrorism,” I referred to “man-caused” disasters. That is perhaps only a nuance, but it demonstrates that we want to move away from the politics of fear toward a policy of being prepared for all risks that can occur.

* The 9/11 terrorists came through the Canadian border
* Illegally crossing the border into the United States “isn’t a crime per se”
* The DHS memo about the right wing extremists
* Terrorism will no longer be referred to as “terrorism” but as “man-caused disasters”

LA

January 4th, 2010
9:35 am

TSA is in big big big trouble.

White House defends its TSA nominee

HONOLULU (AP) – Acknowledging he has given inconsistent answers to Congress, President Barack Obama’s pick to lead the Transportation Security Administration wrote to lawmakers to explain a reprimand he received for running background checks on his then-estranged wife’s boyfriend two decades ago.

Erroll Southers, a former FBI agent whose nomination has been delayed by Republicans for unrelated concerns, sent a letter to senators in November to correct what he called a distortion of his record. As Democrats push for his speedy confirmation, the chairman of the Senate Homeland Security Committee said he maintained faith in the nominee.

http://apnews.myway.com/article/20100101/D9CUQQB01.html

LA

January 4th, 2010
9:36 am

The Joke’s on Us
The Pantybomber wasn’t the big joke. We are.

By Mark Steyn

On Christmas Day, a gentleman from Nigeria succeeded (effortlessly) in boarding a flight to Detroit with a bomb in his underwear. Pretty funny, huh?

But the Pantybomber wasn’t the big joke. The real laugh was the United States government. The global hyperpower spent the next week making itself a laughingstock to the entire planet. First, the bureaucrats at the Transportation Security Administration (TSA) swung into action with a whole new range of restrictions.

http://article.nationalreview.com/?q=N2M4ZjFlMDUzZDAxZGNlYjdiMzc3NjNjZDhjNjJlN2Y=

Ridgerunner

January 4th, 2010
9:37 am

Yawn ………………..

LA

January 4th, 2010
9:38 am

Bye bye Democrats!!!!!

Dem recruits continue to head for exits

Democrats have lost yet another touted recruit, this time in Kansas.

State Sen. Laura Kelly (D) just announced her withdrawal from the race to face Rep. Lynn Jenkins (R-Kan.). She becomes the fifth formidable recruit to bow out in recent weeks.

http://thehill.com/blogs/blog-briefing-room/news/74007-dem-recruits-continue-to-head-for-the-exits

LA

January 4th, 2010
9:39 am

And…..more Democrat stupidity.

U.S. to Lose $400 Billion on Fannie, Freddie, Wallison Says

Dec. 31 (Bloomberg) — Taxpayer losses from supporting Fannie Mae and Freddie Mac will top $400 billion, according to Peter Wallison, a former general counsel at the Treasury who is now a fellow at the American Enterprise Institute.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2Z5GnTAPcuo

USinUK

January 4th, 2010
9:40 am

btw – happy birthday Sir Isaac Newton!! And thanks for all the physics!

jt

January 4th, 2010
9:42 am

Someone asked———

“What fool would sign a mortgage that applys nothing of the payment to the principle and has an automatic interest increase or balloon payment?”

The answer is………………………
a coupla hundred million every April 15.

You are not sheeple.

You are Government Mules.

http://www.youtube.com/watch?v=Fb0yG2WDtFc

LA

January 4th, 2010
9:44 am

DAMN GLOBAL WARMING!!!!!!!

Briton pulled alive from Swiss avalanche as record freezing weather grips Europe, north America and Asia

Read more: http://www.dailymail.co.uk/news/article-1240319/As-Britain-told-expect-snow-10-days-rest-world-coping-Arctic-weather.html#ixzz0begc4yTn

thomas

January 4th, 2010
9:50 am

USinUK,
to respond to your 9:22

Are you claiming that you have not on this blog today been a repaet offender as one who has used ridicule and even prejudemental decsions to say in a mocking manor that it is the poor people’s fault. Furthermore I have never once seen you post anything that places any of the blame on those who took out the loans you consistantly defend them.

Please show anything to the contrary!

And about responsibility and fault. Your scenario would be true about you leading me if I don’t know I was not a senator and had acess to other sources of information with which to base my decision. In other words if I was dumb enough to let you blindfold me and dumb enough to trust you then yes i would bear some if not most of the responsibility. especially if i had connections and power to be able to peak under the blindfold (as hilliary did, but chose to accept the information given) and just didn’t want to, then it would be entirely my fault.

See i think we are all responsible for our own lives and anything that happens therein is our fault. either from a bad decision or from trusting the wrong people.

What exactly are people responsible for in your world?
Let me guess this will be an attempt at something clever that falls in line with many liberal philosophies.

Taxpayer

January 4th, 2010
9:50 am

If some of you idiots dont pay attention you’ll be livin in a van down by the river.

Was that the yellow river. I hear that “trickle-down” economic philosophy may have had something to do with it.

Mrs. Godzilla

January 4th, 2010
9:59 am

I see the sky is a lovely shade of pink this morning……

USinUK

January 4th, 2010
10:00 am

Thomas –

“Are you claiming that you have not on this blog today been a repaet offender as one who has used ridicule and even prejudemental decsions to say in a mocking manor that it is the poor people’s fault. Furthermore I have never once seen you post anything that places any of the blame on those who took out the loans you consistantly defend them.”

wow. so if you’ve never seen it, then I must have never said it. ever.

“Please show anything to the contrary!”

nope. you’ve made the accusation. you find the proof.

for the record, I do believe there’s plenty of blame to go around – the banks and other lending institutions decided to ignore prudential standards, borrowers forgot that the housing market can go down as well as up (so relying on refi-ing at a higher valuation is a HUGE gamble), and the bank regulators who ignored the huge amount of risks that the banks were taking on.

“Let me guess this will be an attempt at something clever that falls in line with many liberal philosophies.”

wow. pre-judge much?

as for the Clinton/WMD scenario – neither she nor the other congress critters had the same access to ALL the same information that the WH has (via the NSC). so, whether you like it or not, my comparison applies.

@@

January 4th, 2010
10:02 am

Ray @ 9:17. Economically speaking, you’ve been sold on the dem’s haves & have nots mantra. Business is nothing without you and vice versa. The problems occur when government gets in between or in bed with. Keep believing that it is they (business) who is the culprit and you’ll end up dependent on the only alternative….government.

Taxpayer

January 4th, 2010
10:03 am

USinUK,

Darn you “liberals” and your, well, clever ways.

Outhouse Go-Kart

January 4th, 2010
10:03 am

Weather channel calling for Snow Thursday and night then Friday morning…any news of possible accumulations?

pat

January 4th, 2010
10:05 am

Was this some lame attempt to present a vigorous bias as fact? Blame poor people, WTF? There is a large segment of so-called poor people who went waaaaay beyond their means simply because they were allowed to. If your living in a 300K house, you ain’t poor, but you can be living way beyond what you can afford. People who knowingly and willingly lived way beyond their means are as culpable as the lenders who enabled them and the politicians who enabled the lenders. If you only make 50k, you cannot afford a huge house so don’t buy one…These are not hard concepts and individuals made huge mistakes as well as lenders and politicians. There is plenty of blame to go around. But you live in fallacy to perpetuate the myth that capitalism is the sole proprietor of evil in the world. Further, that the government should solve all these problems because their track record of fixing stuff it so impeccable.

USinUK

January 4th, 2010
10:06 am

Taxpayer – what I’ve gathered from today’s comments:

clever = bad.

harvard = bad.

smart = bad.

good grief, we’ve definitely gone down the rabbit hole.

Donovan

January 4th, 2010
10:08 am

This is the mind-set of a liberal; “Don’t blame me or the obvious”. Blame someone else and spin it hard. Bookman fails to understand or chooses not to state that our #1 Banker likes his job. Therfore, he is not about to blame the most basic cause for the implosion of the housing market(Freddie, Fannie, and Democrat Congress)as deadly combinations leading to the event. Granted, once the banking industry was handcuffed to the mandates of a liberal Congress with the authority and threat of sanctions to their survival, it found other ways to make up profit margins. Ethical or not, the core cause was initiated by the Democrats (Barney Frank and Chris Dodd) and the twisted ideology of vote-getting legislation. Empowerment and control by the Democrat Party relies soley on the means of deceiptful practices and snake oil salesmanship. Your latest example is the health care package that is trying to be rammed down the throats of the American public. It offers little to so few, but pays dividends in the end to enhance the vote buying of the Democrat Party from the “unfortunate poor” who don’t have medical insurance. At the risk of being banned from this blog site like I am from his associate Tucker’s blog site, Jay Bookman poisons the well with his contribution to the Democrat Party’s propaganda rhetoric that no liability rests with the Democrat Party. We all know the score and we all know the drill. Those who try to sell snake oil try their darndest to convince the prospective buyers. However, most of us aren’t buying.

Doggone/GA

January 4th, 2010
10:08 am

“People who knowingly and willingly lived way beyond their means are as culpable as the lenders who enabled them ”

And I don’t agree. The lender is always MORE culpable…because (theoretically) they should be MORE cautious, as it is they who stand to lose the most if the loan is defaulted. The “people” can still go out and rent a place to live. The lender is stuck with a defaulted loan and a devalued property.

Taxpayer

January 4th, 2010
10:08 am

Well, at least the head of our state (Georgia, that is) DOE had enough sense to bail back when the housing market started taking a serious nosedive. Well, the “family” business to be more precise. I never did hear if the banks were able to claim her million dollar prize as theirs in order to help pay off their debts.

Bosch

January 4th, 2010
10:09 am

Did someone say snow? I must go get hotdogs…

Sam

January 4th, 2010
10:10 am

focus go-kart…

Willie

January 4th, 2010
10:13 am

Please do not give me any more liberal scientific studies! Of course they are skewed to reflect the progressive liberal agenda just like climategate. Liberals have no integrity in the scientific world or any study where facts can be omitted or changed to fit the progessive agenda. Liberal congress like barney frank demanded that banks loan to unqualified people. Now skew that however you want and barney frank could be the hero of mortgage loaning.

Sam

January 4th, 2010
10:16 am

Doggone/GA

January 4th, 2010
10:16 am

“Liberal congress like barney frank demanded that banks loan to unqualified people”

I’d like to see some proof of that.

Joey

January 4th, 2010
10:16 am

“Bernanke does not try to blame the collapse of the Community Rinvestment Act….”

No S___ Sherlock! Bernanke likes his job. He probably believes he is the best person for the Fed Chairman position and he may be. So why would he forfeit that job by blaming enforcement of the Community Reinvestment Act for the Housing Collapse? That would acknowledge that Congress holds a large chunk on the blame. At that point Bernanke would be expendable.

Another question: How can Jay purport to write a honest column about the Housing Collapse and not once mention Frank or Dodd? Answer: He cannot.

Doggone/GA

January 4th, 2010
10:19 am

I stand by my “idiot” comment.

Sam

January 4th, 2010
10:19 am

doggone, no proof necessary. say it and its true. its all skewed…