"Morris Dovey" wrote in message
...
Mike Marlow wrote:

He reversed it in light of very recent circumstances that nobody
predicted, or could predict.

[1] I think the only people who could have failed to predict it are those
who believed that the housing "bubble" would continue indefinitely.

In Des Moines, an average person earns 30-40K. The average price of a new
home here passed the quarter-million mark a year or two ago, and homes
were sold as quickly as banks could process mortgage applications.

[2] The legislature recognized that lenders had become too greedy and that
credit card debt had become a serious problem for many cardholders. It was
interesting to note that in the course of the congressional hearings, it
was the lenders' predatory practices that were identified as the most
significant part of the problem.

[3] Under pressure from lobbyists representing lenders who recognized that
borrowers were over-extending, the legislature tightened up the bankruptcy
laws to protect the lenders - a clear departure from the principle that
bankruptcy laws were to protect honest debtors.

[4] With the bankruptcy legislation in place, lenders exercised their
options to raise rates on ARM's - and foreclosure rates skyrocketed.
Unfortunately for the lenders, they had made mortages for homes whose
actual values were considerably less than the amount of the loan and,
following foreclosure, could not recover the principal by selling the
property in a rapidly disintegrating market.


Excellent points one and all. But - while they are all true, they only
point out the fundamental greed of the system and they only pessimistically
predict the future. What those points don't do though is explain the
suddenness of Lehman, AIG, Morgan, etc. That's what took everybody by
surprise. One would not have to agree with the prevailing practices to feel
more secure in the economy, up until Wall Street took a dive. That
suddenness is what I was making reference to in my statement.

--

-Mike-