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Re: Who's to blame for the housing mess?
Posted by: RodgerRafter
Date: 03/19/2007 07:38PM
I went with "Individuals," although there is plenty of blame to spread around.
Individuals borrowing and paying too much to buy more home then they could afford is the real problem. Because of this, they're ruining their own financial situations and causing harm to the economy as well.
Most of them were too stupid to do the math and already hurt themselves. If your goal is to find someone to punish then you can also blame those who advised overexteded borrowers or made it possible:
1. The builders who sold to speculators - They invested in way too much land and started too many developments, then got caught by surprise when the market tanked too rapidly and speculators cancelled orders.
2. The lenders who extended credit too easily - They got caught up in the competitive race to squeeze margins and increase originations, meanwhile booking false profits on overly optimistic assumptions. They're getting surprised and burned right out of existence.
3. The Fed for allowing the easy lending and ignoring history - Wall Street was making too much money off of it all and of course the Fed serves Wall St.
4. Wall Street who underwrote, financed and invested in the builders and lenders, thus making the whole thing possible - Along the way profits soared and so did bonus checks for exectutives and traders. They'll take their short term lumps, but most of the pain will be reserved for borrowers, lenders and builders.
And don't forget the media for buying into the hype and enjoying the advertising revenue, and the government for taking donationations and serving Wall St. on a national level and builders on a local level (the governator was a huge recipient of donations from builders in California).
Individuals borrowing and paying too much to buy more home then they could afford is the real problem. Because of this, they're ruining their own financial situations and causing harm to the economy as well.
Most of them were too stupid to do the math and already hurt themselves. If your goal is to find someone to punish then you can also blame those who advised overexteded borrowers or made it possible:
1. The builders who sold to speculators - They invested in way too much land and started too many developments, then got caught by surprise when the market tanked too rapidly and speculators cancelled orders.
2. The lenders who extended credit too easily - They got caught up in the competitive race to squeeze margins and increase originations, meanwhile booking false profits on overly optimistic assumptions. They're getting surprised and burned right out of existence.
3. The Fed for allowing the easy lending and ignoring history - Wall Street was making too much money off of it all and of course the Fed serves Wall St.
4. Wall Street who underwrote, financed and invested in the builders and lenders, thus making the whole thing possible - Along the way profits soared and so did bonus checks for exectutives and traders. They'll take their short term lumps, but most of the pain will be reserved for borrowers, lenders and builders.
And don't forget the media for buying into the hype and enjoying the advertising revenue, and the government for taking donationations and serving Wall St. on a national level and builders on a local level (the governator was a huge recipient of donations from builders in California).
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