Sunday, September 21, 2008

Blame the poor obv.


I may or may not write something about the credit crisis, but I'll tell you for nothing, it's not the poor's fault for buying homes.

The crisis is not an outcome of Freddie Mac and Fannie Mae's problems. That's arse. Their problems are an outcome of the crisis.

Also, note that none of the bodies mentioned in the article--the mortgage guarantors and the Fed--was actually a government agency until recently. Not that the US government is blameless, nor those of other Western nations. The asset bubble didn't blow itself up; our finance ministers were all hard at the pump.


At 2:31 am, Blogger Arleen said...

Doesn't it make sense that if you give loans to people who either can't afford them or have a history of not being able to pay their bills, you're asking for trouble?

It seems to me that rather than pressure lending companies to lend foolishly, there should be a separate system to help the poor into homes. I don't know what or how, but I don't think that you can apply the same system that people with money can work within to people without money because even if you get people into homes and they do everything they can to hold on to them, the problems that were keeping them out of homes when the policies were stricter still remain.

At 9:12 am, Blogger Dr Zen said...

Arleen, lending companies do not need to be pressured into lending foolishly. That's why these stories (and you'll see this meme a fair bit) are bullshit. You have to *stop* these sharks from lending to people who can't pay, not force them to.

There's no doubt that the deregulation of lending, which yes, Clinton played a part in, is a symptom of the malaise. But only a symptom. The roots of the housing crisis are simple to see: interest rates were lowered until they were negligible, which fuelled a huge credit boom (this was to cushion us from the recession that was inevitable after the dotcom crash), and when they were increased fast and hard, dispossessions went through the roof.

I agree with the rest of what you say. A broader system of social housing would be a much better solution, but these people worship the "free" market.


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