The Housing Market: Facts, Myths, and Misconceptions

[The Big Daddy C-Master]

I wanted to make this discussion because America is obsessed with homes and follow it with religious zeal.


Do people have an understanding of what caused the housing bubble in the first place and what made it come to pass?

Why housing isn't guaranteed wealth like people think and why it doesn't grow an economy by itself, at least not honestly?

Discuss here.

[JACK-2]

What caused the housing bubble were banks giving mortages to people who have no business getting loans. Then when they default, are surprised by the fact that these people couldn't afford these loans. Then when the banks go under, they need ballouts. Because "That would be bad for the economy."

[The Big Daddy C-Master]

Aug 19, 2014 17:02:12 GMT -5 JACK-2 said:

What caused the housing bubble were banks giving mortages to people who have no business getting loans. Then when they default, are surprised by the fact that these people couldn't afford these loans. Then when the banks go under, they need ballouts. Because "That would be bad for the economy."

You're right about that, but I think people get confused on why the banks gave these loans. People said it was because of "greedy business owners", but what facilitated so much sub prime lending?

Why would businesses give loans to people who aren't worthy. What destroyed the natural incentives a business would have?

[JACK-2]

It's most likely government. Probably anti-discrimination legislation or something to that affect which allowed unqualified people bad loans. There may have been some bad business practices, but they all couldn't have been because lendors were "greedy".

Furthermore, if government wasn't involved then why the bailouts? If I owned a business and it went bankrupt due to bad management. Would I get a bailout?

[The Big Daddy C-Master]

Aug 19, 2014 17:18:34 GMT -5 JACK-2 said:

It's most likely government. Probably anti-discrimination legislation or something to that affect which allowed unqualified people bad loans. There may have been some bad business practices, but they all couldn't have been because lendors were "greedy".

Furthermore, if government wasn't involved then why the bailouts? If I owned a business and it went bankrupt due to bad management. Would I get a bailout?

Part of it was the anti-discrimination, but most of it was the simple fact that the government was printing money and backing these banks up like you said.


When a business has no fear of loss they can make the bad decisions without the consequences. So when the government socializes something they take out the fear when it comes to money making and it becomes all about giving losers houses. The same thing happens with student loans. No bank would give a young person such a large amount of money, it is the guarantee that allows these loans without fear which drives up the prices of the loans since people can bid them up artificially.

[JACK-2]

We went from a dotcom bubble to a housing bubble to a commodity bubble. I wonder what's next.

[The Big Daddy C-Master]

Our big fat inflation bubble.

[JACK-2]

I love how each party is playing hot potato making sure this bubble doesn't pop on their watch.

[The Big Daddy C-Master]

Aug 19, 2014 17:42:53 GMT -5 JACK-2 said:

I love how each party is playing hot potato making sure this bubble doesn't pop on their watch.

Of course. They'll keep it going just so they don't get blamed by the masses. One of the many flaws of democracy. You can't do the right thing because it isn't popular.

[JACK-2]

The more you pass the buck the bigger the damage when the bubble pops.

[The Big Daddy C-Master]

I think people are in denial about it popping or they just keep quiet about it because they don't want to cause an outroar and make people lose faith in our currency or anything else.

[JACK-2]

Were gonna end up like the Weimar Republic.

[The Big Daddy C-Master]

Aug 19, 2014 19:28:59 GMT -5 JACK-2 said:

Were gonna end up like the Weimar Republic.

We're going to end up like Zimbabwe lol.

[JACK-2]

lol

www.zerohedge.com/news/pictures-zimbabwe

Funny and scary at the sametime.

[The Big Daddy C-Master]

Fiat currency is a joke.