Housing Collapse

I would like to hear some opinions regarding the collapse of the housing market.

It is my understanding that, while in the senate finance committee, Barney Frank and Chris Dodd used strong-arm tactics to force lending institutions to make loans to unqualified borrowers. It has been my experience that this is largely true based on the numerous people I met, through my business, who had purchased $400k homes on $100K /yr. household income, while driving Beamers and Lexus'.

Assuming this is true, my question is this; did they (the senate finance committee) do it intentionally or are they really that stupid that they didn't realize what the fallout would be?

If it was in fact intentional, my theory for motivation is that it was a fool-proof way for the government to get their grubs on as much private property as possible without making it obvious.

They give a loan to somebody who they know won't be able to see it through. The homeowner defaults, just like planned. The house goes back to the bank. The banks suffers a meltdown due to the sheer volume of defaults, the government bails out the banks and effectively puts their name on the bank's assets. Viola! The government effectively owns those homes.

Why would the government want to own a boatload of homes? Remember, the government bailed out the banks with "play money". The value of the dollar is largely perceived. Since it isn't tied to any real asset, and since the Federal Reserve is immune to public scrutiny, the government is not out anything other than the illusion of "money". So, they just took their pretend money and converted it to a real asset.

If we were still on the gold standard, a scam like that could never work for obvious reasons.

Many of these house are back on the market but I would argue that they represent a very small percentage of repo'd homes.

Keep in mind, this is just a theory I have, following it through logically. Perhaps I'm missing something. What say you?

also if we were on a gold standard houses would not cost 400k since we would not have inflation.. really the root of all the economic problems is a fiat currency based on nothing except faith in it.. the dollar in all actuality is worth only the paper its printed on..

Originally posted by General.Lee

... did they (the senate finance committee) do it intentionally or are they really that stupid ...?

They're really that stupid.

The housing collapse was done intentially, but not by these puppet bozos.

Viva la revolution


[edit on 8-7-2010 by In nothing we trust]

I understand that you would like to know the individuals and actions that specifically contributed to the collapse of the housing market. I think that your hypothesis is somewhat accurate, but it misses some of the basic issues at hand.

First, I wouldn't mistake the actions of Senators Frank and Dodd as malicious in intent. The easing of the mortgage regulations was more politically motivated than an act by a over-arching conspiracy. That is, the Frank, Dodd, and the other Representatives that supported the policy were made in the interest of garnering votes. Thus, the far reaching (farther than their current senatorial term) effects of the policy were of little interest and not considered.

The more basic reason that this policy was even necessary and possible was the lowering of interests rates via the so called federal funds rate. This a discretionary decision led by Federal Reserve Chairman Greenspan as a solution to the recession following the bursting of the "Dot-com" bubble. This lowered the cost of investment in housing (among other sectors). However, in this case of housing, banks are the primary financiers so once development outpaced the demand for housing some action had to be taken. This action came in the form of lobbying Congress to relax mortgage regulations and probably led to the particular event that you highlighted.

Obviously, much of your supposition is correct, but let's not give politicians too much credit. When you understand all the pieces, it is simple to see how the individual players are relatively short-sighted and their ethics are diminished for it.

There is much I could write about this topic, but I've given the gist of it.

Take care.

Shane

reply to post by randolrs1

... Obviously, much of your supposition is correct, but let's not give politicians too much credit. ...

True. 99.99% just do want they are told to do. 0.01%(Obama) is just still a CIA puppet, continuing cheney's work for the hiden elite.

The collapse of the housing market and the coming collapse of the commercial real estate market is wraped up with the derivative market.

the ptb bet on the collapse AND got the government to bail out the major players that underwrote the hedge funds like AIG after getting the laws fixed to allow this.

just a little rape ooops I mean wealth redistribution



[edit on 8-7-2010 by Danbones]

It's not over yet, bailouts have delayed the inevitable, we still need to face the music. Expect a 30-50% drop in value still on the horizon. I'm saving and waiting for the second shoe to drop before buying.

reply to post by randolrs1


Very well stated...thanks for the clarification. I am by no mean an economist...I only know what I see and I try to understand it. Your post was quite helpful.

OP: Don't forget Clintons role in Fannie Mae and Freddie Mac -