Do you think this is correct in it's relation to the current financial crisis in America?

Answers:2   |   LastUpdateAt:2012-11-04 14:34:02  

i'm juz ChiLLiN'
Asked at 2012-08-13 20:55:02
The Real Deal

So who is to blame? There is plenty of blame to go around, and it is fixed only in one party or even mainly on what Washington did or did not. As The Economist magazine noted recently, the problem is "layered irresponsibility ... with hard-working homeowners and billionaire villains each playing a role." Here is a partial list of suspects:

The Federal Reserve, which cut interest rates after the bursting of the dotcom bubble, so that cheap credit.

Home buyers, who took advantage of easy credit to bid up home prices excessively.

Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive homes.

Real estate agents, most of whom work for the sellers rather than buyers and who earned higher commissions from selling more expensive homes.

The Clinton administration, which pushed for less stringent credit and downpayment requirements for working and middle class families.

Mortgage brokers, who offer less worthy of credit, home buyers in high-risk, adjustable rate loans with low down payments, but exploding interest rates.

Former Federal Reserve Chairman, Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.

Wall Street firms, which paid little attention to the quality of high-risk loans bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.

The Bush administration, it is not necessary to provide government oversight of the increasingly risky mortgage-backed securities market.

An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.

The collective illusion, or a belief on the part of all parties that prices would keep rising forever, no matter how high or how fast they were gone up.
Answer1Michael RondoAnswered at 2012-08-28 00:02:03
Sounds decent. I'm confused by the accounting standard. I'm not sure I understand. Maybe it's because I'm hanging in my appreciation for my townhouse that was worth $ 123,500 when he paid $ 117,900 for it. They interrogated me and closing, the "professionals", said that if he could sell for $ 123,500 to let them know. I had a deposit of 20% to $ 117,900. I made a 30 year fixed conventional mortgage. Reading this again, it seems that my situation plays no role here and is something different. MedlinePlus MedlinePlus Lenders believe that the assets are actually worth less according to their documents, but the market tells us otherwise? However, depending on the market, some homes are either not sold or take a very long time to sell (more than 13 months in some cases). MedlinePlus MedlinePlus Some people let their brains go on vacation? The monster took over greed? I understand finances and knew that real estate return 20% + returns was unsustainable and not right. Interest rates were very low. That was good, but led to higher prices. Many people could not afford to pay more for housing because wages and salaries are not keeping pace. Of course you would not. People were fine with it in the short term if real estate prices continued to jump giving equity. They could sell their house and move into a house he could afford to that equity. MedlinePlus MedlinePlus I think people are fooled. The only winners were the mortgage lenders and corporate executives. Some people who were intelligent and timely that just got lucky. But many people are in ruins. Jobs are not as stable. People move more. MedlinePlus MedlinePlus I think many people like Alan Greenspan had his head in the clouds. They are not attached to reality. They were ignorant, but not smart or savvy enough to notice or perhaps were too arrogant.
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