Personally, I think this is amazing. Apparently, those folks targeted by the champions of subprime Barney Frank and Chris Dodd not only bought homes in the United States but bought them all over the world apparently (with China and Canada housing bubble popping imminent).

Clearly, this government intervention must be stopped and our citizens must be barred from driving up the home prices in countries around the world to the detriment of those nations inhabitants.

8/4/2010 7:42:49 PM

I guess I assumed there would be Dodd/Frank haters on this board like most of the other political blogs/boards (and hell, sci.electronics.design even) that blame them for this whole housing crisis. I guess there aren't, so, gg wolfweb.

8/5/2010 5:49:40 PM

no articles have been written about them lately, thus the silence

8/5/2010 5:56:01 PM

You have to give me more time to wikipedia these guys. I want my response to be really clever.

8/5/2010 6:05:07 PM

I never blamed Dodd and Frank for the entire crisis, but they certainly helped the process along.

Dodd and Frank denied that there was even a subprime mortgage in the run up to 2007. In 2003, they both were saying that Fannie and Freddie were perfectly okay, and that we shouldn't be pressuring them in any way. When the Bush administration tried to regulate Fannie and Freddie, Dodd and Frank both resisted it. They had both been pushing to have Fannie and Freddie give out even more loans to people that couldn't afford them.

Did they cause the housing bubbles? No, not entirely. They had something to do with it. The two GSEs in question, which are now receiving unlimited money from the government, are a huge problem. Trillions are gone forever, sucked up by Fannie and Freddie. Maybe if we had done something about those sooner, we wouldn't be so far in the hole.

Dodd was the head of the fucking banking committee throughout the whole thing too, so don't sit there and act like he had nothing to do with it. He had everything to do with it, and Dodd and Frank have proven time and time again that they're shills for the Federal Reserve. They play these games where they claim to want reform, yet they shut down any meaningful reform when it happens.

Our banking system is a complete scam. The banks are allowed to survive because of bailouts, but even before the bailouts, it was a scam. They make money (interest) by loaning out money that they don't even have. That's the beauty of a fractional reserve banking system. It works great for the ruling class, but regular people are getting ripped off and they'll never know it.

8/5/2010 7:26:02 PM

You need to look up, the point of this thread had flown right over your head.

8/5/2010 7:31:32 PM

Frank and Dodd didn't exist in a vacuum. Governments all over the world pumped resources into their housing markets. While Frank and Dodd's names were synonymous with the U.S. version of this debacle, it was just one form out of many. That said, it was the most extreme form, no government spent nearly as much as we did pumping up prices, and I think your graph shows this out.

[Edited on August 5, 2010 at 7:37 PM. Reason : .,.]

8/5/2010 7:36:52 PM

Sorry, but no. While those two may have been vocal proponents of easier credit, it isn't logically sound to conclude that there were equals in other government around the world that helped cause their bubbles. It's more likely there is a different common denominator.

8/5/2010 8:18:52 PM

Different, eh? Is it your belief that the other countries' governments on your graph did not fuel their housing bubbles in any way?

[Edited on August 5, 2010 at 8:59 PM. Reason : .,.]

8/5/2010 8:58:39 PM

I'll certainly believe they did when I see evidence of it. It's much more likely that Wall Streeters seeking yield flooded not just the US but the world with their cash. How this can be pinned onto Dodd, Frank, or the CRA is beyond me.

8/5/2010 9:34:37 PM

Dude, complete your own thoughts now and again. Where did the investors get all the cash? Investors existed in 1998. They even had lots of cash. But they didn't run off to invest in housing at whatever the asking price was. Something had to have happened to change their behavior. What do you believe that thing was?

I have seen the list of European government insured lenders, in effect their versions of our Fannie and Freddie, but I couldn't find it through a two minute search. All Google would give me were from Spain, where apparently a whole sector of their banking system has its bonds guaranteed by the government, just as Fannie and Freddie's were guaranteed here in America. They were called Cajas, and melted down predictably, wreaking havoc upon tax payers, just as Fannie and Freddie have.

8/5/2010 10:25:30 PM

Solid evidence right there! This is now a serious thread. I'd love to see your produce a reasonable explanation for housing bubbles in other countries. The Cajas blew up, so it looks like they didn't really have their bonds guaranteed afterall. Were they really that stupid, or was it something else?

8/5/2010 11:00:08 PM

LoneSnark

Greed wasn't invented until 1999

Dummy

8/5/2010 11:13:16 PM

^^ Was who how stupid? Last I knew, Frank and Dodd have not been punished for anything. As such, I suspect their European counterparts have not either. As such, everyone walked away happy, except for the tax payer, but the tax payer that is going to pay is not yet old enough to vote. So I don't see that anyone has acted stupidly. Everyone involved has acted with full understanding of their actions, including Frank and Dodd. Especially when most voters are just like you, and can't imagine how Congress putting the national treasury at the service of private investors could possibly be a bad thing.

8/6/2010 12:14:24 AM

So...still no evidence of what lead to the property bubbles in other countries? Since we don't like government, we'll just go ahead and blame it on them, right?

8/6/2010 6:44:52 AM

Oh I see! You don't want to have a conversation with me, you want to have a conversation with Google, with me as the intermediary. Fine, don't respond to anything I say, just keep pointing out that my words lack citation. Nevermind that you have not posted a single link either. You don't like "Wall Streeters seeking yield", so you'll "just go ahead and blame it on them, right?" Well, fine, I'll spend more than two minutes Googling that for you...
http://www.washingtonpost.com/wp-dyn/content/article/2010/05/11/AR2010051105049.html?hpid=artslot

Quote :

"These banks, based in each of Spain’s regions, are charged with lending for community development. They expanded rapidly during the boom years, often going far beyond their traditional regional borders. They are also politically connected, governed not by a corporate board of directors but by people chosen by local politicians. “Where the politicians were smart, they gave technical people the power to make business decisions,” said Federico Steinberg, a researcher at Real Instituto Elcano, a public-policy think tank. “But often the lending decisions involved politics, and credit was not rationally assigned." "

As economist Russ Roberts says:

Quote :

"I don’t know how much of the housing market boom in the late 1990's and early 2000's was due to Fannie and Freddie. It did not occur only in the US. It may turn out it was all due to monetary policy or a world-wide mania for housing as an investment. But I suspect it had something to do with implicit and explicit subsidies to home ownership, a viral policy mania that was not limited to the United States."

http://www.economist.com/opinion/displaystory.cfm?story_id=13492469

Quote :

" BANKERS, frauds, predatory insurers: there has been a stampede to punish the villains of the global meltdown. Yet one culprit is not only rarely seen as an offender, but is also being cosseted and protected. Governments' obsession about home ownership has contributed as much to the meltdown as any moustache-twirling financier. The bust began in America's housing market and soon spread to government-sponsored institutions created to increase home ownership, Fannie Mae and Freddie Mac. Part of the problem came about because of policy. In most rich countries the state subsidises private housing. Some places (America, Ireland and Spain) give tax relief on mortgage-interest payments. Others, such as Britain, eliminate or lower the tax on capital gains from sales of someone's main house. Still others use state-backed outfits to direct credit to housing or to make it easier for first-time buyers or the poor to buy their own homes. Subsidies are not to blame for everything-the housing bubble affected a range of markets regardless of how much they were subsidised-but the distortions aggravated the boom and bust by making housing artificially attractive."

8/6/2010 9:45:42 AM

Quote :

"Oh I see! You don't want to have a conversation with me, you want to have a conversation with Google, with me as the intermediary."

Not at all. I don't know if the story is the same here or not (I haven't been here that long), but on various other blogs/boards, you average anti-government or housing crisis ignorant tends to lay an outsized portion of blame on Frank and Dodd or the CRA. Yet, housing markets the world over blew up. Now, not surprisingly, you are claiming its obviously all the governments fault. I'm not going to do the diligence to prove your point.

For starters, I think it's rather funny that you quoted this:

Quote :

"I don’t know how much of the housing market boom in the late 1990's and early 2000's was due to Fannie and Freddie. It did not occur only in the US. It may turn out it was all due to monetary policy or a world-wide mania for housing as an investment. But I suspect it had something to do with implicit and explicit subsidies to home ownership, a viral policy mania that was not limited to the United States."

Who is echoing your sentiment. He has know idea about what caused the boom, but he is just darn certain it was government intervention.

Quote :

"Nevermind that you have not posted a single link either."

Of course I didn't. I'm 100% certain Frank and Dodd haven't passed legislation in any other country to start a housing boom.

Quote :

"You don't like "Wall Streeters seeking yield","

Where did I say that? I gave it as the more likely alternative than the CRA/Frank/Dodd. I'm not blaming bankers for being bankers.

Quote :

"“Where the politicians were smart, they gave technical people the power to make business decisions,” said Federico Steinberg, a researcher at Real Instituto Elcano, a public-policy think tank. “But often the lending decisions involved politics, and credit was not rationally assigned.""

Boy, that is certainly damning huh? I like this passage from earlier

Quote :

"Mirel Dobna, a Romanian immigrant, bought a four-bedroom unit two years ago for 238,000 euros, or about $300,000 at current exchange rates. He borrowed the entire amount he needed to buy the apartment. Dobna, 36, lives there with his wife and two children and has been pleased with the purchase: "I'm cheap, and we got a good deal," he said. But he's already behind on payments. Dobna works installing marble in building projects in Madrid, a business that has slumped over the past two years."

We don't know if that was a politically motivated loan or not. We do know that it's stupid as fuck to loan at 0% down. Remind me about which part of the CRA called for those terms? Which Spanish law, regulation, kick-back in cited for their blow ups? What about every other country? I guess we just assume they all copied the US in lieu of real evidence?

Quote :

"Subsidies are not to blame for everything-the housing bubble affected a range of markets regardless of how much they were subsidised-but the distortions aggravated the boom and bust by making housing artificially attractive.""

Blah blah blah. I'll ignore the fact that the CRA and mortgage interests subsidies existed for decades before the housing boom while I claim that they contributed to the housing boom.

Come on dude, is that the best you got? Does it kill you to admit capitalists fucked up in other countries too? We can still complain about governments not letting them die if it will make you feel better. Just so long as we can agree that governments didn't cause the blow up until proven otherwise.

8/6/2010 5:46:42 PM

what's up, baldy? nice waste of 5 bux, lol

8/6/2010 6:24:34 PM

Quote :

"Come on dude, is that the best you got? Does it kill you to admit capitalists fucked up in other countries too? We can still complain about governments not letting them die if it will make you feel better. Just so long as we can agree that governments didn't cause the blow up until proven otherwise."

Just so long as we can agree that liberty and unregulated markets didn't cause the blow up until proven otherwise. Fine.

What's good for the goose is good for the gander.

[Edited on August 7, 2010 at 10:45 AM. Reason : .,.]

8/7/2010 10:44:56 AM

Because never in the history of the world have their been bubbles without direct government intervention.

And the body of evidence is simply tilted towards liberty and reduced regulations actually did lead to the blow up.

This has been rehashed all over the internet and beaten to death. The only people that continue to cling to "the government did it" arguments are the libertarians. It's always the government did it with you people.

Hey, did you realize lending standards were relaxed and Johnny Burger Flipper bought a house he couldn't afford?
GOVERNMENT DID IT
Dude, my loan broker told me to lie about my income
GOVERNMENT DID IT

The sad thing is...I fundamentally agree with you about governments...it's just that I see both governments AND markets as being bubbleicious where you seem the think the government is doing it by edict or something.

8/7/2010 10:57:11 AM

Yes, 1% interest rates (and the resulting 1-2% teaser rates on ARMs) had nothing to do with the housing bubble. Pure coincidence. Artificially increased demand for housing due to the CRA...nothing to do with the housing bubble.

I'm happy to admit that private entities are also to blame for the bubble. In a free market, greed is always countered by risk...those that make bad investments are punished, and those that make good investments are rewarded. The crisis was never a case of private citizens being too greedy for no reason; the problem was that the risk, in many situations, was taken away, either through MBS or cheap money, and greed skyrocketed as a result.

8/7/2010 12:32:34 PM

Quote :

"Yes, 1% interest rates (and the resulting 1-2% teaser rates on ARMs) had nothing to do with the housing bubble."

This thread is generally about evidence of the blow ups in other countries. For instance, the base rate in England has been in the 4-6% range for the past decade. Why did they have a housing bubble? Was it simply abdication of lending standards as here? Did the government force lenders to make these type of loans? Countries the world over have/had housing bubbles. What are the reasons? I'm still interested in any bit of good evidence.

Oddly enough, you herald the free markets of which Alan Greenspan said would self regulate in an era of reduced regulation, then when it didn't, you blame the government for the low interest rates. Thats akin to blaming me for giving you a gun when you go out and shoot someone.

8/7/2010 1:01:24 PM

Quote :

"And the body of evidence is simply tilted towards liberty and reduced regulations actually did lead to the blow up."

Solid evidence right there! This is now a serious thread.

Quote :

"It's always the government did it with you people. "

Whenever the china gets broken, it usually makes sense to point out the bull rampaging through the shop.

Libertarians and economists are often quick to admit that liberty produces bubbles. It makes logical sense for them to occur, and we have historical evidence of them. However, the question you are asking is not whether free markets produce bubbles. They do. The question is whether this bubble was caused by free markets. The level of intervention we see in the housing and financial markets makes it impossible to say without doubt that the bubble of the 2000s would have happened exactly as it did without all the intervention. It is quite possible that absent the intervention the bubble would have been smaller, more regionally isolated, or not happened at all.

A metaphor would be the gun market. It is absolutely true that a free market in handguns results in gun deaths. It does not follow that many millions died between 1940 and 1945 because of liberal gun markets.

8/7/2010 1:58:20 PM

Quote :

"This thread is generally about evidence of the blow ups in other countries. For instance, the base rate in England has been in the 4-6% range for the past decade. Why did they have a housing bubble? Was it simply abdication of lending standards as here? Did the government force lenders to make these type of loans? Countries the world over have/had housing bubbles. What are the reasons? I'm still interested in any bit of good evidence."

I don't know why other countries had housing bubbles. Bubbles occur for many reasons. The justification for slashing interest rates after the dot com bust, per Alan Greenspan, was that it would make the recession more shallow, because people would be more likely to take out loans to purchase homes or other goods. He said ARMs were a great idea, because it increased accessibility to home loans. We know now that they weren't a great idea.

We haven't had free markets, and Greenspan knows that. Alan Greenspan always called himself a free market guy, and you could read articles from years ago with him talking about how we should go back to a gold standard. Of course, he couldn't say all that and be the Fed chairman, so he crumpled under the political pressure and did exactly what the Keynesians and monetarists wanted him to do.

In any case, what exactly do you think your chart proves? You can see very clearly that the United States house price index rate of change increases around 2003, then plummets back down to 2001 levels after 2007. That's consistent with the Austrian analysis of the crisis, which is that artificially low interest rates starting in the post-dot com bust era contributed to a housing bubble. Yeah, other countries had a downturn too, but it wasn't nearly as severe.

8/7/2010 3:28:44 PM

Quote :

"This thread is generally about evidence of the blow ups in other countries."

hahaha. once you got fucking OWNED about claiming the US market blowup was entirely the fault of reduced regulations you retreated to this. find a new hobby, baldy.

8/7/2010 4:11:34 PM

Quote :

"That's consistent with the Austrian analysis of the crisis, which is that artificially low interest rates starting in the post-dot com bust era contributed to a housing bubble. "

And that has what to do with Frank/Dodd/CRA?

^ Have you not read anything but the last few posts? The point of this thread was that Frank/Dodd, and the CRA are given undue blame for the housing crisis instead of lack of regulation and abdication of lending standards which has been shown to be the real cause. If we allow that the former were the causes, then we should find evidence of it in every other country where there was a housing bubble. So far, only Loneshark made an attempt to find the root causes in other countries. Hell, even the UK didn't have the low interest rates that we did so there has to be some other mechanism for a bubble there (ie, reduced lending standards brought more demand into the market for a somewhat inelastic supply).

8/7/2010 4:55:41 PM

troll troll troll your boat...

8/7/2010 8:56:04 PM

It's interesting to see how the rest of Europe is dragging Germany down.

8/8/2010 12:20:13 AM

My economic ignorance is gonna shine through despite my economic minor, but I can't quite grasp the concept of predatory lending. I understand the incentive banks have for making loans that can't be paid to an extent. However, there aren't, to my knowledge, any loans that are forced on someone. You still have to apply for said loan. If you know you can't afford the loan, how is that the fault of the bank? I do understand there are extenuating circumstances where something happens (lay offs, injury, etc) where payments become too much, but I missed the news stories in 2004 where everyone collectively broke their hips.

8/8/2010 3:45:31 AM

Oh, it's the ole personal responsibility argument. The types of people who are defaulting on loans cuts across all demographics, including prime borrowers http://tinyurl.com/2e5mvma, including rich developers http://tinyurl.com/yaoosqw as well as those who had no hope of affording it.

For the predatory lending aspect of it, loan brokers only had to guarantee the loan didn't default for 90 days to keep the fees they received from the securitizers. This led them to come up with some very crafty loan terms including negative amortization to help lower the initial monthly payment. People that had no business owning homes went to these folks, saw only that they could afford the (initial) monthly payment, and either were cognitively dissonant on the fact the payment would eventually increase, or didn't have a good idea by how much it would increase because they didn't understand the loan terms.

8/8/2010 8:55:23 AM