I'm not an economist, but the handwriting was on the wall. The greedy bankers, loan salesmen and mortgage lenders all conspired to sell un- payable loans to wall street that somehow figured they'd make a buck by bundling them and when the mortgage payments, began to rise (ARMs) and people quit paying as the price of their homes fell, all those greedy motherfuckers lost their asses and now want a socialist bailout. Tell me what I'm missing in this picture. Tell me greed was not a factor. tell me that the fees for putting these unworkable loans together was not the driving factor, with no conscience on how they would be paid, yes, unregulated, unfettered capitalism was the cause. Prove me wrong.
And what about the people that accepted these loans. Reading a loan agreement is not rocket science. Understanding the difference between ARMs, IO, and Regular (Traditional) Mortgages is not rocket scientists.
It seems that you are trying to absolve the idiots that signed the mortgage agreements of their guilt and complicity. Those same idiots that listened to the media go on and on and on about how houses were a sure investment. Those same idiots that bought into all the hype about home prices
always going up. Hype that was pushed by advertisers of mortgages, and thus was clearly biased.
Free market, keep on thinking that Med, sooner or later history will flatten you. The crisis was the result of government interference in the markets. Feel good legislation that dictated that banks must make loans to people that could not afford them. When those loans were turned into securities, hedged, traded, insured, re-insured, and then had a massive derivatives market created, the entire foundation of the market was compromised.
Greedy bankers?
I don't see the bankers being any greedier than they were 400 years ago when the idea of Fractional Reserve Banking was created (another problem.)
Of course, the fact that banks are no longer allowed to invest depositor funds is also a contributing factor. Another place where the government interfering in the market has caused problems.
Add onto the fact that it became illegal or difficult for banks to own investment firms and you have another contributing factor in the crisis. Banks have changed their revenue models over the last several decades, but the investment firms haven't. With out access to the millions in revenues that the banks had the investment firms were incapable of covering their losses.
Losses caused by Greed, but the question is what spurred them to act in the fashion that they did. The answer to that must be government regulation.
Inflationary Money Policies that add 3 - 5%/year to returns required just to maintain purchasing power.
Taxes, which also add another 1 - 2% or more to the returns required to just maintain purchasing power.
Of course the bankers also want a real return of 5- 10%, so ontop of the 4 - 7% that the bankers need due to the interference of the government, they need an additional 5 - 10%. Which means they were searching for returns of 9 - 17%. Add overhead, and you probably add requirements for another 3 - 5% in returns, which boosts the total up to 12 - 22%.
There are no safe investments that can return that much. So the banks were forced to invest in higher risk items.
Government Interference in the markets caused this problem.
from our overlords?
