wrote in message
...
On Wed, 19 Oct 2011 15:47:20 -0400, "Robert Green"
wrote:

wrote in message
.. .

They were trying to stimulate the economy and what is forgotten here
is the guy who sold the land made money, the builder made money, all
of the contractors made money, everyone in the building supply chain
made money, the real estate broker made money and the mortgage broker
made money. That is a lot of money moving around. It wasn't just Wall
Street. All Wall Street did was create the money in the first place.

Again, respectfully disagree. They were the ones that were rolling up
good
mortgages with bad ones and then selling them off to investors,
collecting
fat fees and passing the seriously underrated risk onto the purchasers of
those collateralized debt obligations who couldn't even tell what they
had
bought and were unable to remove the bad debts from the ones likely to be
repaid. We've had real estate bubbles before but they never got anywhere
near as bad because in the past, there were no CDO's made up out of
rolled
up mortgages in the picture.

The flaw was that most people actually believed real estate would
always go up.

Agreed. Sort of like the premise that a college degree will always lead to
a better job with more pay and why so many kids are going so deep in debt
with loans that don't even have a house to foreclose on. This bubble could
be even worse than the housing bubble if it ends up that we're shedding so
many jobs to overseas and to robots that the job market will continue to
shrink and shrink.

The bad loans go all the way back to the point when they would allow
people to borrow 125% of the value of their house in an equity loan
(the Carter administration)

When mortgage lenders ran out of safe loans to make, they wandered off into
the dark forest of subprime loans where some very nasty Orcs with long,
shiny knives were waiting for them.

The derivative holders were
made whole by TARP and everyone involved in the house before the crash
took their money and ran.

I can't speak to how "whole" the derivative holders were made, but I will
agree that they probably made out a lot better as a class than the poor
shmoes who bought at the height of the market. My belief that they
weren't
made completely whole stems from the multi-billion dollar lawsuits still
in
progress against the sellers of the CDO's.

FWIW, the homeowner across the street that rented out to crack dealers
spent
his entire inheritance buying a house for $450K at the market peak that's
now worth about $300K and became so desperate for renters that he took
Section 8 clients. They destroyed his house and it's vacant again and
when
people come by and ask who lived there before they run. It's
unfortunately
not unusual for previous drug sellers and buyers to come back looking for
the previous tenants, sometimes with a grudge to settle.


That is really not bad. The house around the corner from me sold for
$455k in 2004, was immediately refinanced for $505k and just sold at
auction for $152.6k

It makes me sorta sick to think about. But I saw some of my pension holds
dip as deep. Fortunately they came back up, indicating the relative
soundness of the companies those holdings were in. Homes that rose in value
from $150 to 450K aren't showing anywhere near the rebound. My take on the
current market is that the only people selling are those forced to sell by
death, divorce or some other equally traumatic reason. The homes in the DC
didn't have nearly the big swings that other cities did. We've always been
a pretty expensive place to live.

--
Bobby G.