Since it’s been over ten years since this crisis I thought it would be interesting to see what others think the root cause was. There’s obviously plenty of blame to go around.

Some might say the seeds were sown by the Carter administration with the signing of the Community Reinvestment Act of 1977 but it’s my opinion that HUD Secretary Roberta Achtenberg was the one who used this well-meaning law to force-feed mortgage money down the throats of people who had no business taking on debt they could never repay.

The bond rating agencies made a major contribution as well. Talk about putting lipstick on a pig!

Curious what everyone else thinks.......

Would you PLEASE post such threads in ODP&R?

Thank you.

You can ask a mod to do it. I don't think the op can unless he is a mod.

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[SIGPIC] Diesel loving autocrossing grandpa Architect. 08 Dodge 3/4 ton with Cummins & six speed; I have had about 35 benzes. I have a 39 Studebaker Coupe Express pickup in which I have had installed a 617 turbo and a five speed manual.[SIGPIC]

..I also have a 427 Cobra replica with an aluminum chassis.

To me the creative genius who came up with the idea of bundling worthless mortgages together and selling them as "investments" was the worst contributor. The people who rated them AAA also should have gone to jail.

The fact that nobody ever went to jail over this is my biggest disappointment in the Obama era.

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[SIGPIC] Diesel loving autocrossing grandpa Architect. 08 Dodge 3/4 ton with Cummins & six speed; I have had about 35 benzes. I have a 39 Studebaker Coupe Express pickup in which I have had installed a 617 turbo and a five speed manual.[SIGPIC]

..I also have a 427 Cobra replica with an aluminum chassis.

The aftermath of that event I find impacts many things since. Easy credit everywhere. The cost of anything interests me. A large segment of society does not seem to care what anything costs overall anymore. Their total focus is on how much per month for them to gain the use of it.

I am putting some time and effort into an auction item right now. There will be finance companies on the auction site with no payments for the first two years.

On December the 6th I will probably fail to buy the excavator. I have been looking at past prices and realized. There also seem to be an abnormal amount of units for sale. Almost to the extent a lot are being reposessed. Supply and demand as a factor do not seem to matter as much anymore either. I have to bid on perceived value. Plus what the the earning power and general condition are. Not manipulated values.

I am also starting to believe that many people must be in a horrific financial mess. Yet still persist in more debt loading. There are a lot of practices today that do keep the economy going. At the same time perhaps not in a healthy way. Was 2008 really solved? There exists adequate evidence that current practices can result in a very unstable society eventually. The wealth disparity that is growing is just the tip of a potential iceburg. It is said and until statistics indicate otherwise. Financial problems are the number one cause of marriage breakdowns and divorce. My guess is it just provides too much of a stress factor. Temporary adversary if fine but a continuous diet of it is not mentally healthy.

The guy that plows my driveway. Got so deep in the financial hole. He has had to commit to working in the far north for the next two years. His wife is less than happy with the situation I know. I mean really unhappy and I have lived long enough to realize what she may be thinking. This could result in the both of them walking away with nothing other some equity split on their house if it is not lost to creditors. She had a good paying job. She lost. She probably thought secure after 26 years. He had an average paying job. On that the endless buying on credit occurred. All of a sudden they could not manage the debt loading. She eventually found employment. It is a lower end job and she wasted two years to find something similar to what she had with no luck. Before she took what she could get.

Since the derivative over the counter action is much larger today than ever. Plus the way the banks have changed some things. Raise questions nobody really wants to think about. I have had no choice but to think the government has been printing far more money. This will fuel inflation. At some point more of it than desired might occur. It may also be about the only possibility of saving some things. In a less than expected way it already has occurred in Canada.

The thrust of this is I would like to purchase an excavator. It may not come to pass because of changes that make overbidding more of a possibility than the item is worth. We have to spend time and money to even establish the overall condition of the unit before the auction.

I also am not paranoid by nature. Phone bidding is allowed. In examining the past sales prices realized by this major auction house. The prices are far too close together not to expect something in the background.

For example the last 20 sales prices recorded on the identical model might be within a thousand dollars each with the same machine in different conditions. In far different regions of north America. Sold by them. That does not smell normal to me.

Even if all the models of that excavator where in identical condition I would expect more variance in the auction prices realized. This house sells 43 billion dollars of equipment per year on average.

I guess what I have been trying to describe is the amount of paper that was bad that existed in 2008. May be peanuts to what is floating around out there today in other than home morgages. I have never seen credit being pushed so hard in my lifetime and it probably never has been before. Yet once again the media remains quiet about this issue. As they seem to do with far too many.

I also have had to examine if the reality is just that I have outlived my time. I also have to use a certain amount of caution as some of the currant practices may not end well. If something where to occur that made real values appear again. You could take a real bath.

As a simple illustration a car that costs forty thousand two years ago. I saw some very low millage examples for sale for under twenty thousand. Supply and demand may be working in this case. Or the finance payments might be very similar on both. With not perfect credit you will probably pay higher interest on the used unit than on a new one. Actually with marginal credit nobody may take the paper on the used one other than at over 20 percent interest.

Being underwater today is becoming ever more the convention. According to what my local used car guy told me. He has people buying a 10K car that already owe 50K on cars and they are paying massive interests costs. It is really not helping people that the government asks the financial institutions to support new car sales. To the extent of financing where the risk is actually very high. Historically all governments have always feared the consequences of too much credit use in society. So what is it today with todays governments? Or has the financial industry gotten too much control? It also may be there was no other workable option possible.

I wish people that are on that Gerbil wheel. Would say at least to themselves. I got yet another liability. Rather than I brought a new car. Or house or whatever. When prices are manipulated to the extent we see today the depreciation factor can become massive.

The changes since 2008 have been massive in scope. Yet slow enough not to draw a lot of attention. You pour or force feed a lot of money into the economy it creates a recovery. It is an all too easy and bad approach to existing problems. It just kicks the ball a little further down the road. North America really needs a government with some form of realistic plan. Instead it is mentally bankrupt. Catering to the rich is not a solution. I had an investment meeting with people our primary bank called in. Out of curiosity I asked what my current credit limit would be. It was ridiculously low. The lady said they have to do this by formula now. Being a slow thinker it occurred to me. I get really low interest rates. Is their liquidity so low they no longer want to use whatever liquidity they have on loans with very low interest or returns. Even if they are really secure. When we cancelled the wives investments at her bank. They seemed a little too concerned if she was going to withdraw the funds. Again this type of issue was never present before 2008.

ODP&R? Politics and Religion?

My reference to the Carter administration notwithstanding, this thread has nothing to do with either of the aforementioned topics.

Thank You.......

Excellent point Tom, except that these “investments”, as you call them, existed long before the shiz hit the fan. Personal loans, auto loans, and credit card debt had been securitized long before the mortgage issue made the front page.

As previously stated, Lipstick on a pig..... Moody’s, Fitch’s, Standard and Poors..........

In my opinion the thread is most definitely political and potentially contentious. The economy is heavily effected by politics. Please post such issues in the proper forum.

Thank you.

.....and if a PP member gives a weather report about how cold it is in their neck of the woods they must be making a political statement about climate change?

C’mon man, I was just trying to start an intelligent discussion. Please forgive me

If it gets more than Tom complaining about what a poor job he thought Obama did I'll move it. I think it is a good point ILUVMILS.

I went through a divorce in 08 and did not really feel the pain. The ex had to buy me out and the house we were in was worth a lot more than we owed. She finally sold it I'm sure at a profit. Did y'all realize supposedly the shop did not add any value to it.

I think a lot of the Great Recession is because of peeps borrowing money that they should never have been lent in the first place.

I'm about to lose another house and shop to another crazy, greedy arse woman (sister this time) but that will be in another thread later on.

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Jim

So you think it was ok?

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[SIGPIC] Diesel loving autocrossing grandpa Architect. 08 Dodge 3/4 ton with Cummins & six speed; I have had about 35 benzes. I have a 39 Studebaker Coupe Express pickup in which I have had installed a 617 turbo and a five speed manual.[SIGPIC]

..I also have a 427 Cobra replica with an aluminum chassis.

This really all came down to business as usual with one exception: The bond traders were cooking the books.

Mortgage lenders are in business to lend. But they are not in business to take risks. So loans can be insured and all of them are through a private insurance company. The FHA also insures loans but they also add insurance to their loans. Unless you pay 20% down you are going to be paying insurance to someone for your loan.

So the mortgage company makes a loan and since it is insured it is risk free! The insurance company takes the risks.

But the loans are then sold by the mortgage company to a bank after the loans have been rated by a bond rating company. They are not insured. They are just experts in rating bonds and everyone trusts them. And they took bad loans, mixed them in with good ones, and called them all top shelf. The AAA+++ bonds sell for the most, so the bond companies rated a lot of loans AAA+++ and sold them on to investors like large banks. And the banks bought insurance to cover these loans going bad.

So far everyone thinks everyone is cool since only the bond rating companies know the loans are mostly bad.

The insurance companies, knowing that not all the loans could ever go bad on once, wrote insurance for far more then they could ever pay off. This is normal. Not every policy is going to cash in at once.

Then the loans started going bad. The bond companies didn't care. They had made their money and were out of the loop. The mortgage companies didn't care. They had sold their loans. The banks didn't care since the insurance companies covered them.

Except all the loans went bad about the same time and the insurance company could not pay off all the claims. And the insurance companies went broke. Then nobody could write loans because nobody could buy insurance.

Suddenly the housing market stopped. You could sell a house if the person had 780 credit but not enough people did. So it was a buyers market and when people could not sell their homes for what they owned a lot of folks just waked away. This only made things worse for the bond holders, i.e., the big banks.

Enter the TARP which both republicans and democrats said was the only solution. The government had to step in and offer some security in the business since private industry no longer could.

If the bond raters had not cooked the books investors would not have bid up the loan packages they bough. The demand for loans would not be there, mortgage companies would have written better loans and the insurance companies would not have been swamped by a flurry of bad loans.

And there would have been no great recession. But there would have also not been any burst of economic activity towards the end of the G. W. Bush era.

I'm not saying Bush did this. Nor is it accurate to say Bush's people ignored it. They were like everyone else: Happy the economy was roaring along and not stopping to ask why.

We may have seen nothing yet. The rich and white collar workers seldom see prisons. White collar crime is generally swept under the rug. Rigging is very typical today and ignored.

If convicted usually confined almost to a holiday camp and as soon as things cool down. Quietly released. Thanks to the publics short memory.

Also a criminal type conviction exposes them to civil suits. We do not want that do we. Let them keep the loot. They are all too aware of this as well.

If it takes the synthetic generation of an average standard of living. Being the endless supply of easy credit to enable it. The real standard of living has dropped substantially for many.

I am not smart enough to forcast this overall issue. If some form of a 2008 repeat is possible or not should be the real question. Or what will be sacrificed to stop it?

All I am positive of is this easy credit is a big issue to sustain things the wrong way. I see it as very distorting. The media of the time of the 2008 event did not go into enough depth.

The policy of forced easy credit evolved from it. North America has to have some kind of economy. Of course I am not certain but if credit pushing reaches any form of saturation. There will be changes. North America has become a consumer based economy with little doubt.

I think any serious further lowering of interest rates might be the first indication of the saturation starting to show. It should provide a warning.

For the first time in my life I believe circumstances totally beyond their control have overpowered a small but growing segment of the population. Where it is really not their fault it still has happened to them.

It is very understandable to me that people like ourselves wear blinders to some extent. We do not deserve what we have. We take it from others under a system that allows it. Ethical considerations limit the way we do this ourselves hopefully at an individual level.

We try to return at least something to the situation as a couple. In our case. It is discouraging that you cannot make some people think.

Although a therapist told the wife just today. In all their years of practice they have never seen anyone produce the results she does. Never. The wife will remain in very high demand until she decides to stop. There is a person assigned to make sure she is not overloaded.

I have concerns about all her highway travel. It should have been better than it was today. Where it was worse than forcast.