What does the sub prime melt down mean and who gets the blame
Right now all we seem to hear about in any economic news is the subprime meltdown and how it is responsible for everything. Now the sub prime meltdown is bad but it is also misunderstood in both cause and effect. Let’s look briefly at both sides
The Cause - Everyone wants to blame the lenders for this. To me they get say 20-40% of the blame at most, sure they were stupid and sure it is biting them in the ass right now, as it should but they are not the real ones to blame. Our nation is so fixated on passing the buck and not actually blaming the person who is guilty our grandparents may not recognize our nation if they were with us today.
So who should get the blame for taking rapidly accelerating ARMs, hybrid mortgage loans and borrowing to the absolute limits of their budgets? Doesn’t really take a genius to figure it out does it? The people that took out mortgages that were too high or had bad terms are to blame. That is your fellow Americans and or you yourself if you took out these loans. It is so ever loving easy to blame corporate America but in the end if you borrow money and can’t or don’t repay it the blame is on you, not the company that loaned you the money.
The Effect - The news about the subprime market makes me think of El Niño. Remember El Niño the weather pattern back in the 90s that we blamed for everything. To me that is the sub prime meltdown today. A stock goes down, blame the sub prime lenders. A company lays off workers blame the sub prime market. To many illegal aliens are crushing our educational and health care systems, blame it on the subprime market. Our nation has over spent and is in a 58 trillion dollar hole just for social security alone, blame it on….OK you get the point.
The reality is the subprime bust is bad, very bad but it is also being used as an excuse for other problems in the market. Even the lenders are probably more effected by toxic unsecured (credit card) debt then bad sub prime loans. Yet make no mistake lending institutions are going to loose an estimated 300-400 billion or more before the whole thing comes to an end. Some banks will get bought by other banks, some will flat out shut down and all and all this is going to be another reason for the coming recession or more accurately depression.
Yet when it hits don’t let the talking heads on the idiot box tell you it all because of the greedy sub prime lenders First they are taking a bath you would not believe right now and getting what they deserve, lost money and some going under. Next the real reason for our recession is the US Government is spending far more money then we have and has been for 35 years, the bills are coming due.
So what can you do about all this?
First I advise you to read my post from yesterday about the overall weakness in the economy and watch the video with Comptroller General David Walker to get some specific understanding of what our real problems are and to learn some ways you can protect your assets.
Second I recommend you visit MorCap Fund Advisors, LLC and read their excellent article on the subprime meltdown to better understand it and its’ impact our our economy.
Filed under Business & Marketing |2 Responses to “What does the sub prime melt down mean and who gets the blame”
Leave a Reply
People don’t take loans out on their HOMES unless they think they won’t become HOMELESS.
No matter how you rationalize this, the blame stays with the financiers- 100%.
Either they lied about the impact of their predatory lending schemes or they made the loans seem attractive in which they obviously never were.
Also the majority of the lost homes belong to a demographic which is not educated well enough to understand that these businesses will take their money and don’t care about their customers future.
It’s the downfall of america at the hands of the rich. If we still have internet access in 40 years, come back and shame yourself by reading your post.
Do you even realize that if a person asks for a mortgage and a lender has ANY loan they qualify for that the lender is REQUIRED by FEDERAL law to tell the person about the loan? Sure the lenders get some blame as I said but if you take a loan you can’t pay that is your fault not the person that loaned it to you.
To say, “People don’t take loans out on their HOMES unless they think they won’t become HOMELESS” is true but pointless.
I could just respond with, “lenders never loan money if they expect the person borrowing the money to stop paying”.
You clearly see anyone who takes on a role higher up the food chain then employee as “the enemy”. Well gee wiz ace can you tell me just who is going to hire people with no companies, owners or corporations.
The down fall of America is on businesses, the government and the consumer, everyone gets some blame. At least everyone that is spending money they don’t have to spend. The government is the biggest problem though because they steal the money from companies AND individuals any time they want more, they then still spend far more money then they have.
You Mr. LOL speak like a half educated and half informed individual that has been fooled by one side of the class warfare machine.