In alt.engineering.electrical krw wrote:
| In article ,
| says...
| daestrom wrote:
|
| Any of this sound familiar? Just replace 'broker' with 'mortgage
| broker' and 'stock' with 'real-estate'.
|
| After the crash, stricter regulations were put in place about buying
| on margin and most people got smarter about buying on margin. Probably a
| similar thing will happen now with mortgages.
|
|
| Won't happen.
|
| If stricter rules were employed in the mortgage market, those traditionally
| deprived, downtrodden, and discriminated against couldn't afford a home
| beyond their means. Further, segregated and gated communities would remain
| off-limits to other classes of citizens.
|
| That is not the problem at all. The real problem is "toxic CDOs"
| and the margins the people who rolled these instruments used. Add
| in any *slight* downturn and you have a instant busted bank. Like
| the crash above, the margins on these real estate budles is quite
| low (as low as 3%, AIUI). A *minute* downturn and it's in negative
| territory. When you start getting defaults...

Then the banks start cutting back on loans and the demand side of the
supply/demand ratio drops, leading to even lower prices, more upside-
down mortgages, more defaults, etc.


| The minions that determine the final regulations are committed to equality
| of outcome.
|
| True, but not really this issue.

it will affect the direction of the solution. The solution used in the
stock market can't be the same as used in the housing market because of
this.


| Whatever laws the legislative branch writes or whatever rules are
| implemented by political appointees, the silliness will prevail.
|
| That is definitely true. There is no end to silly season anymore.

Unfortunately, this is true way too often.

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