The 2008 Recession Was Caused by Kindness

[Apone]

I know that a lot of people are really down on the 1% right now and it's all a conspiracy to profit from the pain of others and such, but I found this article to be a real pick-me-up of sorts in terms of believing in other people and the human race in general:

http://www.economywatch.com/economy...e-hidden-effects-of-the-income-gap.15-03.html

Basically what the article is saying is that the entire housing debacle that led to the crash was caused by a desire to HELP the poor and to CLOSE the income gap (by giving them a shot at gaining both equity and assets that would appreciate over time)… and that everyone including the non-rich would have actually been better off if the rich politicians had been MORE selfish and sought to increase their own profits instead of listening to their hearts over their wallets.

It identifies the main force behind the legislations that set it in action to be the typically left-leaning Democrats, as well as Republicans who lived in mixed income neighborhoods and were therefore more likely to have sympathies for the plight of the less fortunate.

 

[This]

ARMs weren't designed to try and "help" the poor, they were designed to get people locked into houses and then jack up their rates. It's the same thing they do with cars really only a little more over zealous in that it could be made adjustable, why do you think you can put hardly any money down on a new car now days? It's not an attempt to help the poor it's an attempt to lock them into paying 4x as much for a product through interest.

That being said that's only one part of the equation and the so called "1%" aren't solely responsible for the crash. the credit concept in general also has a lot to do with it. As does the government, right now the US government isn't receiving enough taxes to support itself. When the government doesn't receive enough in taxes who do they raise taxes on? Corporations, when corporations costs go up they have to cut spending to stay afloat, What's one of the most expensive assets in any corporation? your employees. Corporate taxes go up, employees get laid off, those laid off have no money to cycle back into the market and the market crashes.

As for why the taxes need to be high, this has a lot to do with it:

 

[Apone]

Guess you missed this part:

"Indeed, once the unintended consequences of their actions – more financial duress for the non-rich after the crisis – became clear, Bertrand and Morse show that the legislators in unequal districts moved against the financial sector to protect their constituents, voting to set limits on interest rates charged by “payday” lenders (who lend to over-indebted lower-income borrowers at very high interest rates)."

So it seems that they actually were designed to help close the wage gap and ended up being exploited by predatory lenders… unless it's all just right-wing propaganda, or whatever.

 

[bickelz]

Yeah, people got loans who shouldn't have because of these programs along with artificially low interest rates. The housing bubble was basically created by the government.

 

[This]

Yeah, people got loans who shouldn't have because of these programs along with artificially low interest rates. The housing bubble was basically created by the government.

Well only to some extent, the governments only real fall back in that was not making ballooning ARMs illegal in the first place.

 

[bickelz]

Well only to some extent, the governments only real fall back in that was not making ballooning ARMs illegal in the first place.

Well ARMs weren't given out to people with bad credit. Sub-primes and Liar Loans were more towards the root of the problem. ARMs only became a problem when housing prices stopped increasing. The whole point of taking out a 2 year ARM was that you were planning on flipping the house after the two years before the high interest caught up with you. The problem with the loan market was that it was way too easy for someone to get a loan. You could have worked for minimum wage and still qualified for an 800k loan for a while.

 

[Sai]

ahahah so its all poor peoples fault? xD dude i just cant believe this...

 

[the]

This is like Hitler saying he killed the jews for the good of Germany, except not as bad as that.

 

[Barnabas]

This is like Hitler saying he killed the jews for the good of Germany, except not as bad as that.

In Hitlers defense, he did a lot of good for Germany.

 

[the]

In Hitlers defense, he did a lot of good for Germany.

Thats fair to say.

 

[Barnabas]

Thats fair to say.

In fact, the more I think about it, Hitler pretty much saved the world in a Ozymandias sort of way.


Edit: not to say that he wasn't completely amoral and crazy.

 

[Sai]

i think my worst fears are true, the big bunch of people in this forum are extreme right wingers xD

 

[Barnabas]

i think my worst fears are true, the big bunch of people in this forum are extreme right wingers xD

I don't think he did it on purpose


Edit: and I'm apolitical, I don't even vote.

 

[JCPA]

The United States is not run by world-class leaders. Policy decisions in this country always have gaping loopholes big enough to drive a truck through. If it's there, someone will use it. Greed was the cause, pure and simple.

 

[Lerxst]

This is what happens when fiscal & social conservatives try thinking with parts of their brains that have atrophied over the years . The people and groups doing this who actually want to help people for the sole purpose of helping, start groups like Habitat for Humanity. The people that go into it with ulterior motives, start groups like AIG.

I don't mind people being Liberals or Conservatives, but when the two of them cross paths and try doing the other group's job, all hell seems to break loose.

 

[Apone]

This is not at all like saying anything about killing anyone, and that metaphor makes absolutely no sense whatsoever.

Some of the arguments I've been hearing make it sound like anyone with $500 in their pocket can't buy stock, or that personal debt is never caused by living beyond one's means, or that a lot of people out there aren't completely clueless about how dangerous it is to take on a lot of debt during a bubble, or how getting rid of debt, NOT taking more on, should be their number one priority at any given time.

If you don't have debt and there's a recession, then chances are you'll be okay. Even if you lose your job, you should have something set aside for a rainy day so that when things improve (like they have been since February of 2009), you'll be able to start making money again… it's the classic story of the ant and the grasshopper.

Actually, if you make the right kind of investments during a good economy, you can actually make MORE money after a crash than you could in your job! I know people working lower middle class jobs who have cleaned up because they've been buying and selling gold and silver over the past 4 years… they're not even close to being in the 1%, they're just not complete idiots who think that the trick to getting rich is taking on a lot of debt.

Anyone… absolutely anyone can buy something when it's at an all-time low (such as gold during a good economy), hold onto it, and then wait for disaster to strike and clean up with it. It's the stupid and the greedy who start going into hock to buy things when they're at an all-time high and have nowhere to go but down.

Greed has always and will always be there but had been largely kept in check... the problem was that stupidity, ignorance, and a desire to do good led to the conditions which enabled it. I'm not saying it was purely altruistic or charity, but I don't think it was necessarily exploitation either. It was probably seen as one of those win-win scenarios that hold so much appeal for policymakers.

I think it's lame that people are so determined to say that it's a big conspiracy and was all done on purpose, and so unwilling to believe that it could have been a stupid mistake which everyone tried to exploit to their own advantage without ever stopping to think of the consequences.

Look at any economic bubble and you'll see the same pattern of greed, debt, and greed producing debt. If people-- ALL people, not just the elite, stand a chance to make money, people will try to make money… and some people won't even stop to ask themselves if they're setting themselves up for a fall.

 

[Inquisitive]

Has anybody seen the documentary called "Inside Job"? If you're looking to understand what took place it's worth watching.

 

[this is only temporary]

....Some of the arguments I've been hearing make it sound like anyone with $500 in their pocket can't buy stock, or that personal debt is never caused by living beyond one's means, or that a lot of people out there aren't completely clueless about how dangerous it is to take on a lot of debt during a bubble, or how getting rid of debt, NOT taking more on, should be their number one priority at any given time.

If you don't have debt and there's a recession, then chances are you'll be okay.

(yep.)

Even if you lose your job, you should have something set aside for a rainy day

(Thank you for pointing this out! I now feel there is hope for humanity.)

so that when things improve (like they have been since February of 2009), you'll be able to start making money again… it's the classic story of the ant and the grasshopper.

Actually, if you make the right kind of investments during a good economy, you can actually make MORE money after a crash than you could in your job! I know people working lower middle class jobs who have cleaned up because they've been buying and selling gold and silver over the past 4 years… they're not even close to being in the 1%, they're just not complete idiots who think that the trick to getting rich is taking on a lot of debt.

(Also, it's all in the timing. People made a lot of money during the bubble if they got out soon enough. This wasn't the first bubble and I promise you all it won't be the last.)

Anyone… absolutely anyone can buy something when it's at an all-time low (such as gold during a good economy), hold onto it, and then wait for disaster to strike and clean up with it. It's the stupid and the greedy who start going into hock to buy things when they're at an all-time high and have nowhere to go but down.

I think it would be more accurate to call it irrational exuberance.

Greed has always and will always be there but had been largely kept in check... the problem was that stupidity, ignorance, and a desire to do good led to the conditions which enabled it. I'm not saying it was purely altruistic or charity,

I agree there was an element of kindness. That of course is not the whole story, but there was a prevailing idea "let's encourage everyone to be homeowners and help lower-income people enter the supposedly always rising and secure homeownership club." This was based in kindness. Truthfully, I no longer believe everyone does need to own a home; it is not appropriate for all people and frankly, too much responsibility for some. And at the same time this idea of making more people homeowners, other people said to themselves "maybe we can make some money out of it too". So there was a whole subprime mortgage industry born.

but I don't think it was necessarily exploitation either.

Some of both, IMO. Always is.

It was probably seen as one of those win-win scenarios that hold so much appeal for policymakers.

I think it's lame that people are so determined to say that it's a big conspiracy and was all done on purpose, and so unwilling to believe that it could have been a stupid mistake which everyone tried to exploit to their own advantage without ever stopping to think of the consequences.

I also think it is Lame-o

Look at any economic bubble and you'll see the same pattern of greed, debt, and greed producing debt. If people-- ALL people, not just the elite, stand a chance to make money, people will try to make money… and some people won't even stop to ask themselves if they're setting themselves up for a fall.

I would hug you now if I could.

There was an element of kindness and a ton and a half of across-the-board oppurtunism. For example, another thing that contributed to the whole mess is that people in China bought up lots of commodotized subprime mortgages in the hope to make money on a ever-rising market. They were not evil, just irrationally exuberant and a bit greedy. In other words, human.

(I use China because they were one of the biggest purchasers of subprime mortgage investments. Other countries too, did it.)

 

[Quiet]

Kindness? WTF. Greed, ignorance, fear and laziness. People living beyond their means and finding excuses to justify their negligent and inefficient behaviour. The 1% and the 99% included. If anyone really cares about this issue please look into this more. Dont just accept what mass media tells you- this issue is far to complex for that

 

[GracieRuth]

I essentially agree with the OP. It was caused by a desire to see all Americans own homes. The problem has never been with the hearts of the left, but with their brains. They never think through their ideas or do reality checks to see if their ideas actually work. And this is why it is so wrong of them to classify the right as evil -- often the right is also trying to help but simply has a more pragmatic way of doing so. If you judge by the RESULTS of the housing fiasco, you'd have to say the bleeding heart Left is very hateful. It really points out how much thinkers and feelers need each other, that heart alone and head alone just don't cut the mustard.