Investing General Discussion

Tmac

Tmac

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Pogi.G said:
Isn't this the primary reason the housing market crashed in 08? Democrats like to erase history, so it makes sense that they would create the same issue 13 years later.
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Kind of.

The reason the market crashed isn’t bc The Big Short bullshit “stacking mortgages” in a shitty way.

The reason the market crashed is bc Fannie and Freddie told lenders they had to do XXX mortgages a month. The goal being to increase lending to (black people) low earners.

If a healthy market dictates 100 loans and the federal government tells you to do 250 loans, wtf do you think will happen? A big ass bubble followed by a big ass crash.

However, if they do what the article said, they’re still taking cash into account which is very different.
 
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swayze22

swayze22

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Pogi.G said:
Isn't this the primary reason the housing market crashed in 08? Democrats like to erase history, so it makes sense that they would create the same issue 13 years later.
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Anything involving JPMorgan and Wells Fargo I want to stay the fuck away from.

tldr: the crisis was caused by subprime lending but really the tranches of junk debt mix in with others that were then sold multiple times and the person at the end of the chain didn't know they were buying bags filled with shit on the bottom. so a few reckless parties not just people who were given loans that they couldn't pay. the lenders and securities companies all at fault.

i will say credit cards are better than mortgages, but cc debt is #1 way people go poor.

I was in school at the time so we studied this pretty heavily.
 
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Gravel

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swayze22 said:
Anything involving JPMorgan and Wells Fargo I want to stay the fuck away from.

tldr: the crisis was caused by subprime lending but really the tranches of junk debt mix in with others that were then sold multiple times and the person at the end of the chain didn't know they were buying bags filled with shit on the bottom. so a few reckless parties not just people who were given loans that they couldn't pay.

i will say credit cards are better than mortgages, but cc debt is #1 way people go poor.

I was in school at the time so we studied this pretty heavily.
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This is the correct answer. The "housing crisis" was bad lending. The "economic collapse" was bad MBS's (the tranches), and CDO's (the insurance/leverage sold multiple times).
 
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Jysin

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Gravel said:
This is the correct answer. The "housing crisis" was bad lending. The "economic collapse" was bad MBS's (the tranches), and CDO's (the insurance/leverage sold multiple times).
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Fully agree, but there should be some personal responsibility too. People were just deluisional thinking house prices would just carry on as they were. Just like stocks, past peformance does not equal future results. Otherwise reasonably smart people were just oblivious to the glaring issues.

I remember on a gov contract in 2006, I was talking to a Sr Chief Naval guy. Spent just over 20 years in service, smart electronics technician, but just simply irrational thinking. The guy was getting ready to retire in months and was all talking about how he got a big interest only loan on a $500k+ house. When challenged about the frothy bubble, he was convinced it would only ever go up in price. Dude was married with kids and everything. I can only imagine that fell underwater and was foreclosed. Repeat this a million times over in the US. Again, there should have been some level of personal responsibility.
 
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swayze22

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Was someone talking about inflation? oh Amazon how holy art thou after having slaves work for you as you gain monopoly power

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Fogel

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To add to the 07 crash debate, don't forget all the rating agencies rubber stamping everything as AAA investment grade.
 
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Wingz

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Loving this new economy...stocks reaching new 52 week lows and nothing in sight as a positive.
 
Gravel

Gravel

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PLTR further into the shitter. Into the 17's now. I really should've just cashed out and cut my losses instead of investing in this dud.

Really thought it'd soar with how much the Biden administration seems to love controlling and surveilling citizens.
 
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Tmac

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You guys talking about tranches are just quoting The Big Short. The tranches were a way for banks to try and make something out of nothing.

The reason they had so many shit loans wasn’t bc of the way they were stacking the mortgages. It was literally bc Fannie and Freddie demanded more mortgages be handed out like lollipops.

The tranches were a symptom of the disease created by our dear government.
 
Gravel

Gravel

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Tmac said:
You guys talking about tranches are just quoting The Big Short. The tranches were a way for banks to try and make something out of nothing.

The reason they had so many shit loans wasn’t bc of the way they were stacking the mortgages. It was literally bc Fannie and Freddie demanded more mortgages be handed out like lollipops.

The tranches were a symptom of the disease created by our dear government.
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Or I was in business school from 2009 - 2011 and wrote a paper on what happened with the mortgage crisis. Not everyone gets all their information from pop culture.
 
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Tmac

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Gravel said:
Or I was in business school from 2009 - 2011 and wrote a paper on what happened with the mortgage crisis. Not everyone gets all their information from pop culture.
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Without mentioning Freddie and Fannie what’s the catalyst for what happened?

Like how were there so many shitty loans to be tranched? Where did they come from? How were they legal when they were so risky?

Da gubment.
 
swayze22

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Tmac said:
Without mentioning Freddie and Fannie what’s the catalyst for what happened?

Like how were there so many shitty loans to be tranched? Where did they come from? How were they legal when they were so risky?

Da gubment.
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I received my economics degree in 2010. google CDO and MBS.

you aren't WRONG in saying freddie and fannie spurred along the housing crisis. but that in and of itself wouldn't have led to the total collapse of the economy. thats where the other two terms come in referenced above and where it takes multiple multiple parties for something like that to happen. (aka wall street)

my tl;dr posted earlier in the thread is the best summary without typing pages
 
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Tmac

Tmac

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swayze22 said:
I received my economics degree in 2010. google CDO and MBS.

you aren't WRONG in saying freddie and fannie spurred along the housing crisis. but that in and of itself wouldn't have led to the total collapse of the economy. thats where the other two terms come in referenced above and where it takes multiple multiple parties for something like that to happen. (aka wall street)
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Yeah, I don’t disagree. I’m just saying without the Fannie/Freddie mandate they would not have had the opportunity to make a bad situation worse.

Ultimately, imo, it’s another example of social engineering having the exact result we’ve come to expect.
 
Borzak

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I don't know the cause. I got to see the result and people didn't help their own cause. knew a number of people that "I got a raise we're selling the house and buying a new one". They only looked at houses within a certain area that reached the maximum they could get a loan for, and often boiled it down to X amount a month. I can get a loan that will be $1653/month I want a house that is $1653/month. Some of them with limited work history and first home.
 
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