The last bubble was more than just FED money printing. It was also very careless attitudes by lenders. Zero down, 1-3 year interest only arms, poor attention to credit history/income and sustained ability to pay, bringing in lots buyers who otherwise would never have bought a home. And there was the ease of reselling mortgage back debt as a "low risk" investment.
I'm curious if the same mistakes could happen again just 4-5 years after they got badly burnt the last time. Then again, maybe the fact that I even HAVE to ask such a question is an answer in and of itself.
The last bubble was more than just FED money printing. It was also very careless attitudes by lenders. Zero down, 1-3 year interest only arms, poor attention to credit history/income and sustained ability to pay, bringing in lots buyers who otherwise would never have bought a home. And there was the ease of reselling mortgage back debt as a "low risk" investment.
ReplyDeleteI'm curious if the same mistakes could happen again just 4-5 years after they got badly burnt the last time. Then again, maybe the fact that I even HAVE to ask such a question is an answer in and of itself.
Lysander
sure it can. Heard ads on the radio for Chrysler dealers for 72 months with no deposit for anyone with a pulse (or even a toe tag).
DeleteI case you missed it:
DeleteTHEY didn't get burned, WE (taxpayers) did.
And it was the Boston FED! who pressured lenders to lighten up and lend!lend!lend! to under qualified borrowers.
And it was the implied "Greenspan put" from the FED that backstopped all the moral hazard entailed in this scam.
Mistakes???? A guy comes into your house and steals the family jewels is NOT a "mistake"
Sorry, "IN CASE"
Delete"Americans are Starting to Borrow More to Buy Homes"
ReplyDeleteReally?
In the 1st quarter of 2011, Americans also were borrowing more, but the chart declined nonetheless.