Unbelievable. Three guys, economists, who stood by and let the 2007 mess happen, causing much poverty and misery in the US and elsewhere in the world, get a Nobel-prize ???
Well, many others involved got rewarded too, so why not.
Yes. I lived in the CA Central Valley which was one of the epicenters. I called in 2005 and 2006 CA representatives, begging them to help, or to tell me whom to contact higher up, because housing prices, mortgages, it all did not add up, and apparently new banking-products were created from it. I told them if they did not intervene a financial crisis could be the result. The politicians were not interested.
And these three gentlemen, having completed studies in this area, being well-paid experts, having all relevant information at their fingertips, did not see it coming ? I think they did but too many profited from it - developers, builders, politicians, local and Fed. government, mortgage co.'s, brokers, realtors, banks, even the media (advertising) - so they hoped it would pass with not too much damage. Well, it did not. And no one took any responsibility, no one paid some back from what they should not have gotten in the first place. Au contraire, the government "rescued" those who had helped to create the mess.
Where I lived there were whole streets where just about every house was for sale, mostly a short-sale or bank-owned. So many people lost so much. But most managed to go on somehow, feed and cloth their kids, put them through school. Those people should get medals.
Good people endure even with bad politicians. Unfortunately we have a major disconnect between politicians and reality these days.
And what’s interesting is we are in no better a spot today. Homes are more expensive than 2007 and we are back in the same situation. No one seemed to care for 2 years, yet we get sold a bad narrative of ‘housing shortage’ and ‘work from home’ caused it. No discussion about QE, PPP, or low rates from major media or politicians.
The misery did not stop with many people losing their house. (And property taxes going down considerably.) As said, a number of people tried to hang on. Emptied bank accounts, 401-k's, etc., money intended for their kids going to college or for a trip back to the homeland. Prez Obama got elected and people expected/hoped that after the banks were saved, there would be some help for them too. They got nothing, were often humiliated for buying a house at the wrong place, the wrong time. Many were immigrants, they were sold the American dream, that buying a house was the best way to amass wealth. As the crisis deepened and businesses started to experience hard times, lay-offs followed. Many of those still-hanging-on lost their job and then they lost their house too. Still no help from the government. So when in 2016 a brash NY real estate "tycoon" turned reality-star told people he felt their pain, they elected him Prez of the USA.
Especially in areas with newcomers realtors/brokers/mortgage lenders could feast like never before. Houses went up in value so much that developers did not even print new flyers, they just crossed out the previous price and wrote the new one, often crossing that one out and adding the next higher price. I saw flyers with prices that way upped $25,000 in just three months. The Saturday and Sunday papers with real-estate sections were so heavy it felt like lifting at least half-a-tree. I applied for a mortgage and had to fight for 20% down/30 yrs fixed. The broker called me a few times explaining how stupid we were not to "take advantage of the beautiful new banking products". Like no down-payment but taking a second mortgage, and/or not paying off on principal & deciding how much interest to pay every month - not paying anything was OK too ! Variable interest meant lower interest and no worry you can reset a year later, when the house will be worth so much more ! Furthermore my husband would no doubt make promotion earn more money next year why did I not buy a better house ? It felt like a siren singing in my ear ! Later discovered that on a "new product" the broker made about $10,000 more than on a classic plain vanilla variety mortgage. In this way people who barely made a living were sold houses from $350,000-450,000. Mortgage brokers put notes in the files about (non-existing)secondary incomes - famous is the picture of an Hispanic gentleman's with a sombrero indicating his Mariachi-band. On this and similar elsewhere in the US, bankers created so-called derivative products: CDO, CDOsquared, CDOsynthetic, by slicing and dicing mortgages till no one had any idea what was happening anymore, all they saw that these products made a lot of money. Housing prices would never go down all over the country at the same time, wouldn't they ? Ratings agencies helped by rubber-stamping A+ ratings (and making a lot of money too). A few years earlier a woman named Brooksley Born had advocated that derivatives should be regulated. She was treated by a gaggle of men (bankers/politicians) like middle aged women usually are: with scorn and insults. A few years later they had to admit she had been right all along. She was given the ProfilesinCourage award along with another sceptic, Sheila Blair of the FCID.
Unbelievable. Three guys, economists, who stood by and let the 2007 mess happen, causing much poverty and misery in the US and elsewhere in the world, get a Nobel-prize ???
Well, many others involved got rewarded too, so why not.
They f’ed everything up. Created a mess. And now they are back to rub it in our faces with a 300k prize each.
Does it get anymore dystopian or do we need to go to Africa for that?
Yes. I lived in the CA Central Valley which was one of the epicenters. I called in 2005 and 2006 CA representatives, begging them to help, or to tell me whom to contact higher up, because housing prices, mortgages, it all did not add up, and apparently new banking-products were created from it. I told them if they did not intervene a financial crisis could be the result. The politicians were not interested.
And these three gentlemen, having completed studies in this area, being well-paid experts, having all relevant information at their fingertips, did not see it coming ? I think they did but too many profited from it - developers, builders, politicians, local and Fed. government, mortgage co.'s, brokers, realtors, banks, even the media (advertising) - so they hoped it would pass with not too much damage. Well, it did not. And no one took any responsibility, no one paid some back from what they should not have gotten in the first place. Au contraire, the government "rescued" those who had helped to create the mess.
Where I lived there were whole streets where just about every house was for sale, mostly a short-sale or bank-owned. So many people lost so much. But most managed to go on somehow, feed and cloth their kids, put them through school. Those people should get medals.
I can’t even imagine 😯😳. I know it’s been bad but couldn’t even imagine.
So what happens next in housing?
Good people endure even with bad politicians. Unfortunately we have a major disconnect between politicians and reality these days.
And what’s interesting is we are in no better a spot today. Homes are more expensive than 2007 and we are back in the same situation. No one seemed to care for 2 years, yet we get sold a bad narrative of ‘housing shortage’ and ‘work from home’ caused it. No discussion about QE, PPP, or low rates from major media or politicians.
The misery did not stop with many people losing their house. (And property taxes going down considerably.) As said, a number of people tried to hang on. Emptied bank accounts, 401-k's, etc., money intended for their kids going to college or for a trip back to the homeland. Prez Obama got elected and people expected/hoped that after the banks were saved, there would be some help for them too. They got nothing, were often humiliated for buying a house at the wrong place, the wrong time. Many were immigrants, they were sold the American dream, that buying a house was the best way to amass wealth. As the crisis deepened and businesses started to experience hard times, lay-offs followed. Many of those still-hanging-on lost their job and then they lost their house too. Still no help from the government. So when in 2016 a brash NY real estate "tycoon" turned reality-star told people he felt their pain, they elected him Prez of the USA.
Especially in areas with newcomers realtors/brokers/mortgage lenders could feast like never before. Houses went up in value so much that developers did not even print new flyers, they just crossed out the previous price and wrote the new one, often crossing that one out and adding the next higher price. I saw flyers with prices that way upped $25,000 in just three months. The Saturday and Sunday papers with real-estate sections were so heavy it felt like lifting at least half-a-tree. I applied for a mortgage and had to fight for 20% down/30 yrs fixed. The broker called me a few times explaining how stupid we were not to "take advantage of the beautiful new banking products". Like no down-payment but taking a second mortgage, and/or not paying off on principal & deciding how much interest to pay every month - not paying anything was OK too ! Variable interest meant lower interest and no worry you can reset a year later, when the house will be worth so much more ! Furthermore my husband would no doubt make promotion earn more money next year why did I not buy a better house ? It felt like a siren singing in my ear ! Later discovered that on a "new product" the broker made about $10,000 more than on a classic plain vanilla variety mortgage. In this way people who barely made a living were sold houses from $350,000-450,000. Mortgage brokers put notes in the files about (non-existing)secondary incomes - famous is the picture of an Hispanic gentleman's with a sombrero indicating his Mariachi-band. On this and similar elsewhere in the US, bankers created so-called derivative products: CDO, CDOsquared, CDOsynthetic, by slicing and dicing mortgages till no one had any idea what was happening anymore, all they saw that these products made a lot of money. Housing prices would never go down all over the country at the same time, wouldn't they ? Ratings agencies helped by rubber-stamping A+ ratings (and making a lot of money too). A few years earlier a woman named Brooksley Born had advocated that derivatives should be regulated. She was treated by a gaggle of men (bankers/politicians) like middle aged women usually are: with scorn and insults. A few years later they had to admit she had been right all along. She was given the ProfilesinCourage award along with another sceptic, Sheila Blair of the FCID.