The poorly educated low skill blue collar workers weren't doing well under bush. That's when their jobs went overseas. That's why the housing market crashed for all those people doing well under bush.
That's like saying lots of people were doing real well right up until the great depression.
I think you are too kind to the bush years and too hard on Obama. Clearly bias
I may be biased but I know I did better under Bush as most people did. It was a booming economy not only in wages, but in confidence as well. There was just a good feeling around when he was President.
The housing crash was due to government getting involved in the banks business, particularly giving homes to the poor and minorities who had no business owning them. No money down and no credit check is what caused the collapse. Too many home buyers created a huge bubble. The bigger the bubble, the bigger the burst.
That is the popular explanation of the housing crash. However, the evidence does not support the conclusion.
There was a rapid expansion in overall mortgage origination during the time period, but the fraction of new mortgage dollars going to each income group was stable. In other words, the poor did not represent a higher fraction of the mortgage loans originated over the period. In addition, borrowers in the middle and top of the distribution are the ones that contributed most significantly to the increase in mortgages in default after 2007. Taken together, the evidence suggests that there was no decoupling of mortgage growth from income growth where unsustainable credit was flowing dis-proportionally to poor people.
Loan Originations and Defaults in the Mortgage Crisis: The Role of the Middle Class
Correct. It's called Hopping On The Bandwagon.
With low interest rates and housing purchase on the increase, it created the same as any supply and demand situation. The higher the demand, the higher the price.
House flipping was on the rise, prices kept getting higher and higher. People were making money hand over fist. Houses and even developments were being built without one buyer in mind.
When the government makes regulation, they can't make it for a specific group of people even if that's the group of people they had in mind. Weak lending practices set forth by the government applied to all, including real estate tycoons.
But you can't look at the middle of the problem nor the end to say what the problem was. You have to look at where the problem started, and the problem started by creating such weak standards for home loans due to the outcry of the minority and poor communities that didn't have access to purchase their own homes.
There were a lot of culprits in the crash. The Bush administration like the Clinton administration pushed for more home ownership which led to the lowering of credit requirements by Fannie Mae and Freddie Mac. It's popular to make the government the sole culprit but remember it wasn't government that actually made those risky loans and it wasn't government that sold those loans to Wall Street Banks and it wasn't government that packaged those loans into collateral packages in a manner that credit worthiness could not be determined, and it wasn't government that used those packages as collateral for bonds to be sold by the top names on Wall Street. And it wasn't government that sold or bought that crap or gave it AAA bond ratings. There was plenty of blame to go around.
Wrong. The only one that can rate securities is the federal government, and our federal government gave those bad securities a triple A rating.
If you wish to make a loan and sell it on the market, you have to abide to federal requirements. Prime loans are excluded since prime loans are loans where the bank uses their own money. But subprime loans are under the regulation of F & F which are under the supervision of HUD who creates the regulations.
Banks made a killing on processing the loans. They could care less about the security of the loans since they were not keeping them anyway. Those loans were going to be sold off. If you were running a bank at the time, you could either get in on the action or be totally left out as your competitors raked in all the money.
As you stated, many got in on the action, but the action started by reducing regulations on home purchases aimed at pleasing the minority communities that often complained about discrimination in loan practices. It had nothing to do with race, it had to do with savings, credit history, and ability to repay the loan--requirements that many blacks didn't meet.
And again, they couldn't write loan practices specifically for certain race of people. Those lowered guidelines were for everybody regardless who you were. I was a victim of all this as two of my best tenants left here because they both purchased homes with 0% down and no credit check. Both were working and made a decent living, but both were also very extended on their credit. One had a car payment, a motorcycle payment, and a new camper that cost him over $30,000. The other had two new cars for he and his wife, and they didn't even own their own television set. They rented it.
I warned both about what was going to happen, but they assumed I was looking out for my own best interest and went ahead and purchased their homes. A few years later, both regretted their decision and openly said they wished they would have listened to me in the first place.
