The Debt and Mortgage Crisis?

Question

I've been watching Ben Bernake speak to Congress on the mortgage crisis and all I have heard is that the dollar is falling because of this administrations rising of the debt and Iraq, etc, but they say we should start investing in education, healthcare and transportation and somehow that will somehow lower the debt. They never have offered any plans on how to cut back on spending that I have heard. Have you? And what is your overall opinion on the mortgage crisis.

Answer 1

Here is the ONLY answer to the mortgage crisis.

GREED. Greed by lenders, buyers, investors and sellers.

People go in over their heads with interest only loans while trying to flip properties.... and then suddenly there was a glut of homes in the market and it ground to a halt.

Now all of these investors are stuck with the property.... They bought high and can't get out. Now the interest only loans are coming due and they can't afford it.

And buys did the same.... and they can't afford it.

It is NOT the government's fault.

Answer 2

The banks win, either way...

There's still big-money on The Inside -- and the stock market is still robust (thanks to a ton of int'l money, and int'l business exposure). Listen, the gov't just send BILLIONS back into the system, to easy pressure on the lenders/banks that are wholesale'ing the loans. The prime rate has been lowered again (meaning banks get MORE profit from their 'wholesale' loans), and guess what? a 30/yr jumbo mortgage rate has gone UP another .50 pts. for me and you.

The little/small home buyers that are defaulting on their loans, sure... are they are of little consequence to anyone involved (I mean the 'Big Cheeses' that aren't the CEOs of the financial institutions that show losses -- and then again, can you find trouble with taking $150mil just to leave a job?)...

A 3-to-1 ARM for example, would have rising % costs, after the 3 years (for example). Anyone signing any document would have to have know what kind of a loan it was -- but people are pleading STUPIDITY NOW and that's working to some extent. There's also a sort of attempt at excusing home-loans/lowering the rates BACK if people are foreclosing AND they are of-color, have you seen that?

There's no PLANS on the whole, because no one cares. Fatcats are fat, and will be still fat -- if the mortgage rates were 10-14% (like they were, in the late-80's/early 90's). I'm sure older policy makers still feel that EVERYONE's ahead of the game, with the low rates of 2007.

Answer 3

The idea of 'investing' to deal with high public debt isn't to lower the debt in the near term, but to grow the economy, so the debt is a smaller proportion of tax revenues in the future. Inflation and/or a falling dollar accomplishes a similar thing - you pay off the debt with 'cheaper money.'

Answer 4

The Mortgage crisis has been caused by the greedy bankers and mortgage companys lowering the qualifications for loans, and their "creative" flexible interest loans. They've put themselves and the people who use them in jeopardy. I say let the chips fall where they may!

Answer 5

The mortgage crisis is a natural result of risk vs. return. All these lenders took huge gambles and it bit them in the ***. Now, the housing market is in a correction, and it's becoming quite the buyer's market (assuming you have good enough credit to get a loan, now).

Answer 6

I'm not sure what their intentions are but, investing in education will eventually diminish the number of people on the entitlement rolls because they will have the skill sets to function on their own.
Entitlements is a large portion of our spending budget.

Answer 7

They want to borrow our way out of debt.

Incredible.

Don't worry, the people will support this before they support benefit cuts or tax increases.

Answer 8

That would be the cons way of letting the market work it out instead of doing the job they should have been doing for the last decade.