Bush and the housing bubble

[bigrebnc1775]

I am a multinational investor.

Please tell me how foreigners buying GSE debt increases the price of homes in Malaga and Dublin. Thanks.

Have you heard of how the bad debts were bundled and repackaged and sold as viable loans? Yes Foreign investors bought a lot of these bad loans

You don't understand.

There was a GLOBAL housing bubble. It is still going on in some places. How did Fannie and Freddie facilitate the flows of excess capital into housing markets of OTHER countries? How did Freddie and Fannie loans cause home prices to rise in Vancouver and Sydney?

When you have lost your money in bad investing ventures that will increase the demand for more money causing prices to sky rocket. Thats the best way I can explain iut.

 

[Toro]

Irrelevant and a red herring.
You look at phenomena in the U.S. to explain the U.S. And in any case the bubble in the U.S. was much greater than those countries.

Yeah, maybe if its 1910 you only look at the United States. But this is a globally integrated market. Anyone who knows a thing about modern finance realizes this.

Home prices in the US actually lagged much of the rest of the world. Countries that had higher increases in housing prices or as high or higher valuations during the decade include Australia, China, Spain, Belgium, Denmark, Ireland, New Zealand, the UK, France, Canada, and South Africa. America is in the middle of the pack compared to the rest of the developed world.

House prices: Safe as houses | The Economist

Unless you want to posit that large numbers of foreigners were responsible for buying houses it is still irrelevant.
Large numbers of foreigners did buy Fannie/Freddie paper, fueling demand for that paper and by extension mortgage loans. Fan/Fred thus were enablers in this, maintaining low standards to keep the paper flowing.

Well, put aside that you are, once again, factually wrong in your statement about America's housing bubble being bigger than those other countries, to say that it is irrelevant what happens around the world in one breath then note that foreigners can buy our mortgage bonds in the next is a complete contradiction of your argument. I can buy $1 billion worth of mortgage bonds with the click of a button in any country in the world. Yet, you say what only matters is what happens in the US?

There is little question that the GSEs played some roll in the debacle. You simply cannot be as large as the GSEs in the housing market and not have some affect. But to finger the GSEs as the primary cause is merely partisan conservative talking points looking for liberal boogie-men to pin the blame on a disaster that happened on their watch.

The GSEs were for the most part, followers, not leaders in the decline in lending standards, as they continued to lose market share throughout most of the housing bubble as their standards were higher than the private market's. It is also a puzzle for partisans making this argument that the non-qualifying mortgage market - i.e. those mortgages that could not be bought nor guaranteed by the GSEs - often were more bubbly than qualifying loans. If the GSEs were the cause of this debacle, how come areas that had no GSE loans saw greater home price appreciation? Often times, the greatest amount of speculation occurred in the higher end of the market, which were not funded with GSE loans.

 

[Toro]

Have you heard of how the bad debts were bundled and repackaged and sold as viable loans? Yes Foreign investors bought a lot of these bad loans

You don't understand.

There was a GLOBAL housing bubble. It is still going on in some places. How did Fannie and Freddie facilitate the flows of excess capital into housing markets of OTHER countries? How did Freddie and Fannie loans cause home prices to rise in Vancouver and Sydney?

When you have lost your money in bad investing ventures that will increase the demand for more money causing prices to sky rocket. Thats the best way I can explain iut.

I mean no disrespect but that is exactly wrong.

 

[Cuyo]

Have you ever heard of multinational investors? You didn't think that just Amercans bought stock or those bad debt loans in Freddy and Fanny?

Swing and a miss...

As much as you like to focus your little monocle on those damn evil Fannie and Freddy (which were private at the time BTW), what really took place was speculation run amok, amid an understanding by investors that either A> The old adage that "Real Estate always appreciates or B> They would be able to dump it all and get the fuck out of dodge before the big squeeze.

You can't blame the government for this one, except to say that the government should have prevented it (With evil Socialist Marxist inhibitions on the free market's right to pillage and plunder without fear of consequence). The responsibility here lays directly on the private sector.

Ground Zero of this current economic collapse is the FEDERAL GOVERNMENT. They deregulated banks--and under Clinton's treasury secretary--Robert Rubin and Alan Greenspan they also fully supported the derivities market and defended it against all warnings. In fact, both have already "apologized" for their mistakes in congressional hearings over this economic/banking collapse.

Read it and weap:

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

Fannie Mae Eases Credit To Aid Mortgage Lending - NYTimes.com

You might also want to read what is the Glass/Steagall act of 1933 (banking) that was in place until the 1990's (deregulated) that was a significant component to the foundation of our banking collapse. Our government should have NEVER done away with this one. Again--done away with in the 1990's aka the Clinton Administration.

Uhhhhhh yes, it appears that you think you've refuted me with this post, but you've actually said the same thing as me, but in a different way.

Ground zero is the Federal Government? Why? The Federal government didn't DO this, their failing was in NOT PREVENTING IT... Just like I said. It is the PRIVATE SECTOR that did the deed, enabled by repeal of Glass-Steagel and lack of OVERSIGHT... Two things I'm sure you APPLAUDED before they permitted the financial sector to pull a hari kari.

Yet now, as we begin to understand what was perpetrated by the PRIVATE SECTOR with a green light from the FEDERAL GOVERNMENT, I still hear dittoheads talking about how regulation is a BAD thing for the economy.

Get a grip dude. You can't blame everything squarely on the government when it's PRIVATE lenders that perpetrated the mechanics of the bubble. The government's only failing was in not seeing it and stopping it when it was happening.

 

[bigrebnc1775]

You don't understand.

There was a GLOBAL housing bubble. It is still going on in some places. How did Fannie and Freddie facilitate the flows of excess capital into housing markets of OTHER countries? How did Freddie and Fannie loans cause home prices to rise in Vancouver and Sydney?

When you have lost your money in bad investing ventures that will increase the demand for more money causing prices to sky rocket. Thats the best way I can explain iut.

I mean no disrespect but that is exactly wrong.

Well explain how is it that when Freddy and fanny had to be bailed out that everything in the world started to unravel. Are you saying that foreign investors did not lose their money due to buy bad loans from Freddy and Fanny? Its called the domino affect

 

[bigrebnc1775]

Get a grip dude. You can't blame everything squarely on the government when it's PRIVATE lenders that perpetrated the mechanics of the bubble. The government's only failing was in not seeing it and stopping it when it was happening.

LOL The democrats saw and the democrats wanted it. How else could they ram down their spending agenda bills on the American people.
“You never want a serious crisis to go to waste.” Rahm Emanuel

 

[The Rabbi]

Yeah, maybe if its 1910 you only look at the United States. But this is a globally integrated market. Anyone who knows a thing about modern finance realizes this.

Home prices in the US actually lagged much of the rest of the world. Countries that had higher increases in housing prices or as high or higher valuations during the decade include Australia, China, Spain, Belgium, Denmark, Ireland, New Zealand, the UK, France, Canada, and South Africa. America is in the middle of the pack compared to the rest of the developed world.

House prices: Safe as houses | The Economist

Unless you want to posit that large numbers of foreigners were responsible for buying houses it is still irrelevant.
Large numbers of foreigners did buy Fannie/Freddie paper, fueling demand for that paper and by extension mortgage loans. Fan/Fred thus were enablers in this, maintaining low standards to keep the paper flowing.

Well, put aside that you are, once again, factually wrong in your statement about America's housing bubble being bigger than those other countries, to say that it is irrelevant what happens around the world in one breath then note that foreigners can buy our mortgage bonds in the next is a complete contradiction of your argument. I can buy $1 billion worth of mortgage bonds with the click of a button in any country in the world. Yet, you say what only matters is what happens in the US?

There is little question that the GSEs played some roll in the debacle. You simply cannot be as large as the GSEs in the housing market and not have some affect. But to finger the GSEs as the primary cause is merely partisan conservative talking points looking for liberal boogie-men to pin the blame on a disaster that happened on their watch.

The GSEs were for the most part, followers, not leaders in the decline in lending standards, as they continued to lose market share throughout most of the housing bubble as their standards were higher than the private market's. It is also a puzzle for partisans making this argument that the non-qualifying mortgage market - i.e. those mortgages that could not be bought nor guaranteed by the GSEs - often were more bubbly than qualifying loans. If the GSEs were the cause of this debacle, how come areas that had no GSE loans saw greater home price appreciation? Often times, the greatest amount of speculation occurred in the higher end of the market, which were not funded with GSE loans.

There is a demand for mortgages by borrowers that is strictly a domestic phenomenon. There is a demand for mortgage securities that is international. The two are difference and distinct.
The melt down started with sub prime loans. But it quickly spilled over into A-credit stuff because Fannie/Freddie had been lowering the criteria for years and delving into the Alt-A market.
Yes, the Fed did a lot, maybe the most, to create the situation by keeping rates too low. But you cannot exculpate Fannie and Freddie and their Democratic handlers and enablers in Congress from the mess. The WSJ editorial page was warning about their non-transparent accounting long before the melt down. To ignore the role of Fan/Fred is dishonest.