# The economy - should anyone feel guilty? **URL:** \ **Category:** Great Debates\ **Created:** [September 25, 2008, 1:17pm UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143 "2008-09-25T13:17:47Z")\ **Posts on this page:** 15\ **Page:** 4
**Author:** ![sovtawen](https://avatars.discourse-cdn.com/v4/letter/s/7ab992/32.png) [@sovtawen](https://boards.straightdope.com/u/sovtawen)\ **Post date:** [September 30, 2008, 4:41pm UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/61 "2008-09-30T16:41:55Z")
> [@devilsknew](#): > > Like I said, I blame the **Capitalist System** and its **Ideology** as well as **Corporate Fascism**. I would say it’s not even capitalism, but market fundamentalism – the belief that regulation is a kind of pollution that makes capitalism impure. The belief that capitalism is an end in itself, rather than a means to create and distribute wealth. A disdain for a democratically elected government, and its ability (however inefficient) to look out for the common good. ---
**Author:** ![Dinsdale](https://avatars.discourse-cdn.com/v4/letter/d/97f17d/32.png) [@Dinsdale](https://boards.straightdope.com/u/Dinsdale)\ **Post date:** [September 30, 2008, 4:43pm UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/62 "2008-09-30T16:43:56Z")
> [@Mosier](#): > > Lenders didn’t care about saving people from themselves because they WANTED people to default on these loans. They assumed the value of the homes were going to go up, and if the current buyer defaults they just get back a property that was worth more than they paid for it, plus whatever interest the person had already paid. Subprime lending was a racket. Everyone knew it and nobody stopped it. I don’t think this is the case. For the most part, I do not believe lending institutions want to become property owners or landlords. Moreover, it is rare for a lender to hold a mortgage these days. ---
**Author:** ![eleanorigby](https://avatars.discourse-cdn.com/v4/letter/e/ee7513/32.png) [@eleanorigby](https://boards.straightdope.com/u/eleanorigby)\ **Post date:** [September 30, 2008, 4:51pm UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/63 "2008-09-30T16:51:41Z")
> [@sovtawen](#): > > I would say it’s not even capitalism, but market fundamentalism – the belief that regulation is a kind of pollution that makes capitalism impure. The belief that capitalism is an end in itself, rather than a means to create and distribute wealth. A disdain for a democratically elected government, and its ability (however inefficient) to look out for the common good. I think this is sensible. It’s more a cultural mindset than anything else–most everything else stems from that. ---
**Author:** ![Mosier](https://avatars.discourse-cdn.com/v4/letter/m/7ea924/32.png) [@Mosier](https://boards.straightdope.com/u/Mosier)\ **Post date:** [September 30, 2008, 4:53pm UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/64 "2008-09-30T16:53:23Z")
> [@Dinsdale](#): > > I don’t think this is the case. For the most part, I do not believe lending institutions want to become property owners or landlords. Moreover, it is rare for a lender to hold a mortgage these days. Whoever held the debt didn’t care whether the person paid or not. It doesn’t matter whether the original lenders held the debt (which does happen, sometimes) or whether the debt was sold to some other villain. The point is that it didn’t matter whether a person defaulted on a home loan or not, because if the price of housing goes up, it’s impossible to lose money by lending it to people to buy houses. The only thing banks cared about was creating as many mortgages as possible in a market where housing prices were going up. They KNEW the boom wouldn’t last forever, because the prices were being artificially driven by the artificial demand THEY CREATED by making these loans so accessible. It doesn’t take a fucking genius to see that model is NOT sustainable, but no individual who made decisions to sell sub-prime loans will ever have to answer for it. Or if they do, they’ve already made their money, so who cares? ---
**Author:** ![jsc1953](https://avatars.discourse-cdn.com/v4/letter/j/5daacb/32.png) [@jsc1953](https://boards.straightdope.com/u/jsc1953)\ **Post date:** [September 30, 2008, 5:01pm UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/65 "2008-09-30T17:01:38Z")
I’m a poster child. Here’s my story: We were homeowners for 10 years, and for the first 7 we used our equity as an ATM. Of the money we took out, about 1/3 went to paying for our children’s college. About 1/3 went back into the house: remodeled kitchen, bathrooms, floors, carpets, exterior paint, roof, furnace/ac. And about 1/3 we spent on hookers & blow (figuratively speaking). So our mortgage kept getting higher; so did the value of our home. But we were getting seriously stretched, and found a monumentally stupid solution: we re-fi’d into an interest-only mortgage. 2 years of low payments that we could afford; which would then “adjust” (with a huge prepayment penalty which would keep us from re-financing for another year). We signed, crossing our fingers that it would all work out. The “adjustment” took our mortgage up 50%. We paid this dutifully for 1 year, by maxing out our credit cards…hoping that we could just stagger to the finish line, and then re-fi into a more reasonable mortgage. When the prepayment penalty expired, we were turned down for a re-fi because our credit was shot. We went to the lender and asked for a loan modification, and were turned down. So, at the lender’s request, we put the house up for a short-sale (about $100k less than we owe) in June; left the house spotless and tidy; and moved into an apartment. We’ve had 3 offers, but the lender hasn’t even reviewed our file yet. You would think that they would realize that the value of the home is not going to go up anytime soon, so there is value in haste. But they do not appear to be thinking very clearly. So yes, we were stupid, but we paid a lot of money in good faith, and our rapacious and usurious mortgage company is left holding the bag. I feel a tiny bit guilty; but I’m sleeping fairly well. ---
**Author:** ![Hank\_Beecher](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hank_beecher/32/7275_2.png) [@Hank\_Beecher](https://boards.straightdope.com/u/Hank_Beecher)\ **Post date:** [September 30, 2008, 5:19pm UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/66 "2008-09-30T17:19:40Z")
Well Obama is still in as much denial as everyone else: “I know this is especially frustrating for young people, because, you don’t even have any money…I know I remember what it was like, eating pizza every night” :rolleyes: How much does that cost, about $5k per year? I am told that around here, during the last depression, you couldn’t find so much as a rabbit within a mile of town. We are incredibly spoiled and this is going to be a massive shock to many people. ---
**Author:** ![mazinger\_z](https://avatars.discourse-cdn.com/v4/letter/m/5f9b8f/32.png) [@mazinger\_z](https://boards.straightdope.com/u/mazinger_z)\ **Post date:** [September 30, 2008, 5:24pm UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/67 "2008-09-30T17:24:29Z")
> [@Auntbeast](#): > > My mortgage company, Countrywide, is charging me an additional $100 a month to cover the possibility that my homeowners insurance might go over $4000 a year and therefore, cause an escrow deficit. I can breathe easily, (sarcasm) I’m only paying $3600 a year for a house currently valued at $200k. Countrywide did this to me (and additional $100 month) on my rental property because the next town over is the poster-child of defaults (said the nice lady on the phone, though the stated reason on my form letter is that my taxes went up). I could split out the insurance and taxes from my mortgage, but this is considered risky by the industry because I could neglect to pay both and the house/asset would be in jeopardy. For that added risk, Countrywide was going to raise my rate an extra .25%. So, I refinanced with my mortgage broker friend in LA. Countrywide quickly re-bought it after 3 months or so of payments. If you can’t refinance, you can save yourself the extra $100 a month, and try to negotiate not being slapped with that extra .25%. I heard it worked, though it didn’t work for me. Though, a threat to refinance might work, assuming you have enough equity. No offense intended, but my rental property even in the depressed market is valued at more than your house, but my mortgage before refinancing was still $1600 a month less. Is there no other home insurance game in town? ---
**Author:** ![MsWhatsit](https://avatars.discourse-cdn.com/v4/letter/m/eb8c5e/32.png) [@MsWhatsit](https://boards.straightdope.com/u/MsWhatsit)\ **Post date:** [September 30, 2008, 5:25pm UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/68 "2008-09-30T17:25:45Z")
> [@Hank\_Beecher](#): > > Well Obama is still in as much denial as everyone else: > > “I know this is especially frustrating for young people, because, you don’t even have any money..I know I remember what it was like, eating pizza every night” :rolleyes: > > How much does that cost, about $5k per year? I am told that around here, during the last depression, you couldn’t find so much as a rabbit within a mile of town. If you buy the Totino’s frozen pizzas when they go on sale at the grocery store around here, you could have one every night and it would cost you $365/year. Just FYI. ---
**Author:** ![mazinger\_z](https://avatars.discourse-cdn.com/v4/letter/m/5f9b8f/32.png) [@mazinger\_z](https://boards.straightdope.com/u/mazinger_z)\ **Post date:** [September 30, 2008, 5:45pm UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/69 "2008-09-30T17:45:18Z")
> [@gonzomax](#): > > And the next 3 are repubs. Half the top 10 are repubs. But does that mean they own them?. Does that mean they will get all their votes? > Two players in McCains campaign were lobbyists for Fannie and Freddie. Lobbyists actually paid to work to influence politicians. How much tighter can you get. Two names: Barney Frank, Chris Dodd. The finger pointing should be to everyone’s greed, ultimately. People wanted bigger houses and more stuff. People felt the right to do something with their home equity. Politicians like the political capital of the FNMs because they can say that they wanted to put more people in homes and live out the American Dream. Investors loved the returns they were getting. The GSEs were fundamentally wrong for the economy. Nobody had the balls to kill the goose laying the golden eggs, and now it’s too late. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [September 30, 2008, 11:13pm UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/70 "2008-09-30T23:13:56Z")
[Freddie Mac Money Trail Catches Up With McCain](http://www.newsweek.com/id/161218) McCain is intimately involved with Fannie and Freddie lobbyists. They run his campaign and are his advisers. [McCain's Lobbyist Friends Rally 'Round Their Man - ABC News](http://abcnews.go.com/Blotter/story?id=4210251) If you are trying to get away from their influence McCain is not the place to go. ---
**Author:** ![JXJohns](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jxjohns/32/469_2.png) [@JXJohns](https://boards.straightdope.com/u/JXJohns)\ **Post date:** [October 1, 2008, 1:02am UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/71 "2008-10-01T01:02:10Z")
[Is Obama any better?](http://www.politico.com/blogs/bensmith/0908/Johnson_to_lead_Obama_briefing.html) ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [October 1, 2008, 2:41am UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/72 "2008-10-01T02:41:13Z")
> [@JXJohns](#): > > [Is Obama any better?](http://www.politico.com/blogs/bensmith/0908/Johnson_to_lead_Obama_briefing.html) Yes. McCain always claimed he was anti lobby and he is buried in them. When he pays them off we will be in the hole even deeper. Hypocrisy ,thats the diff. ---
**Author:** ![BrainFireBob](https://avatars.discourse-cdn.com/v4/letter/b/e495f1/32.png) [@BrainFireBob](https://boards.straightdope.com/u/BrainFireBob)\ **Post date:** [October 1, 2008, 2:58am UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/73 "2008-10-01T02:58:22Z")
> [@Carmady](#): > > This is how I understand it as well. > > The cause of this crisis is misrepresentation. Banks rushed to make bad loans precisely because they could repackage them in a form which was completely unregulated and opaque. A form which was impossible to know the true value of. > > And then they could sell them to someone else. > > Because of the ability to seemingly unload the risk on someone else, banks felt the need to make more and more bad loans or be left behind. > So who should feel guilty? > > The people who should have been regulating these mystery sales of what we now know to be valueless assets. > > The banks who intentionally made bad loans so they could repackage them in an unregulated, mysterious form. > Since misrepresentation is the cause of the crisis, I don’t think homeowners should feel guilty unless they actually lied. If they told the truth, then they aren’t the ones that lied and caused the crisis. Close, I think. In my view, it’s that banks tend to be conservative, oddly enough. They were ordered to provide these loans to low income families, and did not want to assume the risk. So one firm, at least- JP Morgan- hired a bunch of whizkids from MIT and U Chicago to figure a way to minimize the potential loss. They came up with credit deferral swaps- which meant, in this case, rebundling the loans, and either reselling them, or insuring them. They made piles of money, so other accountants spammed the method, not understanding how it worked, and created a housing bubble. ---
**Author:** ![BrainFireBob](https://avatars.discourse-cdn.com/v4/letter/b/e495f1/32.png) [@BrainFireBob](https://boards.straightdope.com/u/BrainFireBob)\ **Post date:** [October 1, 2008, 2:59am UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/74 "2008-10-01T02:59:51Z")
> [@devilsknew](#): > > I blame the intrinsic greed of the capitalist system itself and its Corporate Fascist Engineers, Architects, and Overlords. Spercifically, The Republican party, its members, and the President that serves as its political arm. > > Housing should be affordable and available to everyone. People shouldn’t be exploited for this basic need. It’s actually the people. The banks rebundling made piles of money. Investors wanted the massive returns these methods funded. The market responded by serving its investors- all of us- _as was desired_, and that meant spamming the methodology. Which meant failure. ---
**Author:** ![JXJohns](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jxjohns/32/469_2.png) [@JXJohns](https://boards.straightdope.com/u/JXJohns)\ **Post date:** [October 1, 2008, 3:22am UTC](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143/75 "2008-10-01T03:22:27Z")
> [@gonzomax](#): > > Yes. McCain always claimed he was anti lobby and he is buried in them. When he pays them off we will be in the hole even deeper. Hypocrisy ,thats the diff. I guess it’s a matter of perspective. One has lobbyists in his inner circle, the other has a former CEO of the same place. I fail to see much of a difference. [Previous page](https://boards.straightdope.com/t/the-economy-should-anyone-feel-guilty/465143.md?page=3)