"compound of many decisions over many decades coming to a head, sort of a perfect storm."
In a more simple manner, its just a result of liberal made government banks like freddie and fannie who let poor folks get in over thier head with homes they couldn't afford. And the growing market is just a result from an artifical injection of printed unbacked-up stimulus money which will cause inflation and can result in even worse recessions down the road. But i don't want to get into a political debate here because after all its a hardware forum lol
NOt really, it's not liberal or conservative, the issue is that our economics are reactionary to the fundamental flaw in capitalism, greed, as with any system too much of any one element is bad, capitalism is profit motive based, so the market as trend looks a strictly quarterly concerns. Fannie Mae nor Freddie Mac are not new entities, Fannie Mae was created in 1933, to provide liquidity to housing markets, because of the great depression, Freddie Mac came along in the 60's, both are GSO (government sponsored organizations) neither was actually government owned until after this latest melt down- contrary to popular belief. Actually, our government owns very little, they rely mostly on private sector contractors, aside from USPS (and for securitiy reasons) the government operates very few companies- contrary to the idea of our government or country as liberal we are far from it compared to democratic nations (although we are technically a republic, not a democracy), anyway back to Fannie Mae and Freddie Mac. 2008 was not the first implosion of the banking system, banking is our number 1 profit motive driven endeavor, as such it easily can take down our economy when profits stop. In the '30's there was a complete cash freeze, banks had no money as they had been as usual trying to make money on the stock markets with the money they collect- your deposits, and lost most everyones money (that's why your money is Federally insured now up to a point). So, anyway, the government created Fannie Mae, to provide liquadity so people who could buy homes could get loans, but the government didn't want to get into the lending business (again you think your government is liberal it's really not), so, what they did was sponsor a company which basically buys the loans from banks, this way, banks could make loans but don't have to sit around waiting 30 years, to collect their money, because if banks really can't afford to wait on money that long, and interest rates would go sky high, which would again slow economic growth.
So, back to the point, Freddie came along in the 60's same as Fannie, to spread out the business, so one company didn't basically get all the benefits, avoid (AIG) situations (2 big 2 fail), because they are after all a private company, although, people think of Fannie Mae and Freddie MAC as government owned they were not. So, many of the policies we lived by until the 80's were new deal endeavors, actually, even Medicare which was proposed in the 40's and finally passed in the 60's, was a response, to turmoil of the 30's, through no fault of ordinary people but banks, the economy collapsed and the nation felt that something needed to be done, so government steped in, and it was the right decision in that case. Anyway, fast forward to the 80's, and Reagan, was Reagan a great president yes, and no, Reaganomics makes no sense (trickle down) economically, but idealogically i.e. appeals to conservatives, but it's an idealogical debate not an actual economic debate, nor did laissez-faire capitalism, too much of anything is bad, namely the inherent trend of capitalism toward greed, so a trend towards deregulation, repeal of 30's legislation started, we get S&L scandal, black friday '87 crash, and so on ... these things should have been warnings they weren't, give the banking industry enough lee-way and they will screw everyone, or rather give people with enough money and power and they will screw everyone, because, well they'll be fine regardless.
Here's a note, you think you are have, you aren't, unless your family has some serious generational wealth, to be honest your opinion conservative or liberal makes no difference. But back to banking. In the early 90's there was a big push to loosen the requirements on what loans Freddie and Fannie could purchase, although, they were private owned they have more government oversight being (GSO's). Banks wanted the rules changed so they could , well, sell more loans, as their consumer pool was dwindling, and the government bought it great more people could get homes, ... that in itself, not all that bad by itself. Because, there was still a limit to how much damage they could do, because, Fannie and Freddie only buy a portion of loans to begin, many many many more are sold markets (well that's where things were going). By 1999 the banking industry pushed to repeal "Glass-Steagal Act" from the 30's basically it seperated consumer lending, insurance, and investment banking ... basically, this document kept the banking industry from bringing down the economy as they did in the 30's, they couldn't just go investing your money on the market, willy nilly, but after that repeal, they could. Enter mid-2000's and banking has come up with the derivates market, mortgage backed securities, and other exotic financial instruments. Ok, the storm is brewing, interest rates had been lowered dramatically ... the Fed again was setup in 1900's to address the problem of Banks had tooo much pull on the economy and lacked liquidity at certain times, could set the economy in panic mode. So, as a response, .com bubble, and then 9/11 interest rates had steady been lowered, taxes were cut, to promote growth ... etc ... so all those investors eventually shifted to housing with cheap rates, crazy loans backed by crazy financial instruments, and booooooommmmm ... the storm is perfect. Banking didn't care they warned in the late 90's, as they got more freedom to do XYZ, because, greed, profit driven, ... the collapse was not caused by sub-prime loans or people simply getting loans they couldn't afford, in fact, to the contrary the sub-prime market was quite lucrative, it still only made up a fraction of loans though ... the issue came when some market investors started looking at the derivatives, mortgage securities, ... and then credit default swaps and said, huh ... what the h*ll are these things, and what are they worth. Give me my money. The gravy train stopped. Fannie and Freddie stopped buying loan packages, and ... isht hit the fan.
So, again, you blame government , the defining factor was greed, and quarterly profits, at the end of the day in 10 years the banking industry managed to yet again, take down the economy once it was allowed some freedom, everyone took advantage, home buyers, bankers, corporations, etc ... contrary to popular belief our government is reactionary it creates policy to try and solve "problems". If it does nothing, then people say, why wasn't there more regulation ... well their used to be, and people said why do you have regulation ... much like now, we'll go through this cycle again, liberals will blame conservatives, conservatives will blame liberals, and the reality is the truth has nothing to do with any of these idealogies, it has to do with people with influence and power, and out to make money, ... we are just by standers. To prove my point about power? If you were getting foreclosed on were you bailed out? The banks essentially bet your money lost it, and still was bailed out. You can blame people getting loans they don't deserve, but the rich and powerful and banks get what they don't deserve all the time, but we the people are the only ones that want to play by rules, that don't apply to the people that need it the most. P.S. Bush's Treasur, Paulson, former president of Goldman Sach's said, give me a check for $750 biilion dollars and you can't question what I do with it. Liberals and Conservatives, the people, initially balked, in the end he got his money, the banks, I mean his friends were forgiven, and their house wasn't foreclosed, they still had their healthcare, oh and their jobs. I find it hilarious that people won't use their own money to help themselves, but help will use it to help those who need it the least or deserve it the least. Talk about irony. But hey it's the liberal government, or the conservative greed that's too blame. "Powerful people" have nothing to do with it at all?
I love this quote from the book Outliers, actually, it's from the bible, but I find a strange irony in this because it so fits our world today. And we do it to ourselves it was hilarious as I watched the insurance agencies railroad HealthCare reform, and those powerful people who run those companies count their money, amazing, the people won't help themselves, but they'll help them. Sure don't come up with a system that will benefit you, give us your money, your going 2 give your money to somebody it should be us. Comical.
"For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath."
Matthew 25:29