What caused the financial crisis of 2008?

[Derek]

It had been waiting to happen since the 1970's when it became too easy to get a loan. Bush tried to call on congress to solve it in 2003 and they ignored him. McCain proposed his own bill in 2005. Since the MAIN CAUSE was DEMOCRAT politicians not paying back their housing loans COMBINED WITH lazy citizens who had no intention of paying them back, others had to suffer and did not qualify for as much. Eventually the bottom gave out but books were cooked long enough so that the cry for help from the FAT CATS could be just in time for the 2008 presidential election. Barack Obama borrowed the second most from them in just 4 years.

[Bunwahaha [still dunno why, but well, so be it]]

Well, I guess I participated to it, even if just a very bit.

[Derek]

Well, I guess I participated to it, even if just a very bit.

Alot of people did but mostly democrats in Washington like Barack Obama and Chris Dodd. I believe the Clintons had a loan from Fannie and Freddie as well.

[KuntaKinte]

Voted both on the poll.

The irresponsible tax cuts in the US and other countries in the early 2000s were important too.  The state gave billions over billions to the very rich, and the money was used to blow up the bubble that burst in 2008.

[Derek]

Voted both on the poll.

The irresponsible tax cuts in the US and other countries in the early 2000s were important too.  The state gave billions over billions to the very rich, and the money was used to blow up the bubble that burst in 2008.

The state didn't give anyone anything. People earned their money themselves. People having alot of money doesn't cause a meltdown it's people living above their means who cause the meltdown. Had the banks not been allowed to give such bad loans, then we wouldn't be in this mess. And it's not necessarily that they were allowed but more that they HAD TO by order of democrats.

[opebo]

...The state gave billions over billions to the very rich, and the money was used to blow up the bubble that burst in 2008.

The state didn't give anyone anything. People earned their money themselves.

No, the money of the very rich is taken from the enslavement of workers, Derek.  They don't 'earn' it, it is given to them by the State, which exacts it by force from their serfs.

[Derek]

...The state gave billions over billions to the very rich, and the money was used to blow up the bubble that burst in 2008.

The state didn't give anyone anything. People earned their money themselves.

No, the money of the very rich is taken from the enslavement of workers, Derek.  They don't 'earn' it, it is given to them by the State, which exacts it by force from their serfs.

1936 called and the democrats want their talking points back.

[opebo]

...the money of the very rich is taken from the enslavement of workers, Derek.  They don't 'earn' it, it is given to them by the State, which exacts it by force from their serfs.

1936 called and the democrats want their talking points back.

Precisely Derek.  (though 1933 is a slightly better historical model, and it is worthwhile to note that the current situation is worse).

[Bo]

Voted both on the poll.

The irresponsible tax cuts in the US and other countries in the early 2000s were important too.  The state gave billions over billions to the very rich, and the money was used to blow up the bubble that burst in 2008.

I thought the Fed blew up the housing bubble by keeping interest rates too low for too long in the early 2000s?

[phk]

Other: Alan Greenspan's reaction to Russian default and Asian Financial Crisis in 1997.

[Bo]

Other: Alan Greenspan's reaction to Russian default and Asian Financial Crisis in 1997.

So, in other words, the Fed.

[Torie]

The US government primarily, but the stupidity of certain investors buying those  pools of subprime mortgages on leverage that were destined to blow up as soon as real estate prices stopped going up, didn't help.

[Derek]

...the money of the very rich is taken from the enslavement of workers, Derek.  They don't 'earn' it, it is given to them by the State, which exacts it by force from their serfs.

1936 called and the democrats want their talking points back.

Precisely Derek.  (though 1933 is a slightly better historical model, and it is worthwhile to note that the current situation is worse).

Yes but 1936 is when the GOP lost over that line. I agree with Torie that the government led by Chris Dodd, Barack Obama, and Barney Frank caused the housing collapse and it was the policies of Clinton in 1996 that made it possible.

[Derek]

...the money of the very rich is taken from the enslavement of workers, Derek.  They don't 'earn' it, it is given to them by the State, which exacts it by force from their serfs.

1936 called and the democrats want their talking points back.

Precisely Derek.  (though 1933 is a slightly better historical model, and it is worthwhile to note that the current situation is worse).

Yes but 1936 is when the GOP lost over that line. I agree with Torie that the government led by Chris Dodd, Barack Obama, and Barney Frank caused the housing collapse and it was the policies of Clinton in 1996 that made it possible.

You know call it a moment of realization by my above statement doesn't sound that educated or sophisticated. While I stand by the statement, let me clarify if you will. The housing collapse I view as a simple market correction. It became easier and more affordable to get a loan in the mid and late 90's so people were buying homes in herds. As prices of homes appreciated, it became easier to sell them for a higher value in less time. This resulted in a domino effect of buy/sell, buy/sell, buy/sell and got to a point that it passed the rate of inflation. In 2005-2006, we saw a sharp drop in home buying and it's likely that people couldn't sell their homes for anymore because prices had gone over the top. Many home owners were then stuck in a situation where they weren't able to pay off the loans that they never intended to pay off anyhow and this dried up money going back into the lenders. Yes, this is a clear example of greed and materialism, but I wanted to be more clear. I did not follow the interest rates in the 90's because I was 10, but I remember hearing that they were low throughout the better part of that decade as well as the 2000's. Does anyone have or know the interest rates from say 1996-1999? Also, what this country should have learned from the collapse is to live within their means.

[opebo]

Interest rates are only 'too low' because of inadequate redistribution, Derek.

[WillK]

It had been waiting to happen since the 1970's when it became too easy to get a loan. Bush tried to call on congress to solve it in 2003 and they ignored him.

Bush did not try to solve it.  In truth Bush wanted to make it even easier for people to get loans.  He was pushing something he called the "ownership society", advocating that everyone buy a house (even those who really couldn't afford it or didn't have a stable enough life to keep it).   

This is what Bush said in a speech in 2002:

"Now, we've got a problem here in America that we have to address. Too many American families, too many minorities do not own a home. ...  And so by the year 2010, we must increase minority homeowners by at least 5 1/2 million. In order to close the homeownership gap, we've got to set a big goal for America and focus our attention and resources on that goal. 
... 
And so here are some of the ways to address the issue. First, the single greatest barrier to first-time homeownership is a high downpayment. It is really hard for many, many low-income families to make the high downpayment. And so that's why I propose and urge Congress to fully fund the American Dream Downpayment Fund. This will use money, taxpayers' money, to help a qualified low-income buyer make a downpayment, and that's important.
...
Secondly, there is a lack of affordable housing in certain neighborhoods. ...  And so what I've done is propose what we call a single-family affordable housing tax credit, to encourage the development of affordable housing in neighborhoods where housing is scarce.
...
A third major barrier is the complexity and difficulty of the home buying process. There's a lot of fine print on these forms. ... And so therefore, what Mel has agreed to do and Alphonso Jackson has agreed to do is to streamline the process, make the rules simpler, so everybody understands what they are—makes the closing much less complicated. We certainly don't want there to be a fine print preventing people from owning their home. We can change the print, and we've got to.
...
But we also have got to bring others into the process, most particularly the real estate industry. After all, the real estate industry benefits when people are encouraged to buy homes. It's in their self-interest that we encourage people to buy homes.
...
That's why I've challenged the industry leaders all across the country to get after it for this goal, to stay focused, to make sure that we achieve a more secure America by achieving the goal of 5 1/2 million new minority homeowners. I call it America's homeownership challenge.
...
And let me talk about some of the progress which we have made to date, as an example for others to follow. First of all, Government-sponsored corporations that help create our mortgage system—I introduced two of the leaders here today; they call those people Fannie Mae and Freddie Mac—as well as the Federal Home Loan Banks will increase their commitment to minority markets by more than $440 billion.
...
Freddie Mac will launch 25 initiatives to eliminate homeownership barriers. Under one of these, consumers with poor credit will be able to get a mortgage with an interest rate that automatically goes down after a period of consistent payments.
...
Fannie Mae will establish 100 partnerships with faith-based organizations that will provide home buyer education and help increase homeownership for their congregations. I love the partnership.
...
The National Association of Home Builders will team up with local officials, home-builder associations, and community groups in 20 of our Nation's largest housing markets, to focus on how to eliminate barriers and encourage homeownership.

The Neighborhood Reinvestment Corporation will dramatically expand financial and home buyer education efforts to 380,000 minority families.

The Neighborhood Housing Services of America will raise $750 million to promote homeownership initiatives in many communities.

We're beginning to use the Internet better, so that realtors all across the country will be able to call up programs all designed to help minority home buyers understand what's available, what's possible, and what to avoid. The National Realtors Association will create a central databank of affordable housing programs, which will be made available to agents, real estate agents, to help people."

Karl Rover referred to subprime lending as "a valuable service to people who could not otherwise get credit." 

When the regulator (Armando Falcon) who oversaw Freddie and Fannie warned the Bush administration of problems in 2003, they tried to replace him with an industry hack but backed down temporarily until getting him to resign and replaced him with one of Bush's prep school buddies (James Lockhart) who a critic said was “pimping for the stock prices of the undercapitalized firms he regulates.” 


This is George Bush, Republican.  Not some Democrat.  This isnt Congress doing it; its the President.    And it worked -- he did increase homeownership and catered to the self-interest of the real estate industry, consequences be damned.

The bubble and the crash were Bush's babies. 

[opebo]

Loans were far, far easier to get back in the heyday - 1950s, 60s, and 70s.

My own father used to get what they called '110% loans', where the bank would value your project in such a way that you would get the full cost of building it, plus salary, etc., PLUS a 10% extra profit.  So you could simply live like a king of the borrowed money while the thing was being built, and then realize a fat profit when it was finished and sold.  The idea was to eliminate both the need for a down payment and for any resources to pay for your own living expenses while the project was underway.

I think young people really have no idea nowadays just how easy it was to make money in the post-war boom, and just how much worse everything has been since about 1980.

[Derek]

Loans were far, far easier to get back in the heyday - 1950s, 60s, and 70s.

My own father used to get what they called '110% loans', where the bank would value your project in such a way that you would get the full cost of building it, plus salary, etc., PLUS a 10% extra profit.  So you could simply live like a king of the borrowed money while the thing was being built, and then realize a fat profit when it was finished and sold.  The idea was to eliminate both the need for a down payment and for any resources to pay for your own living expenses while the project was underway.

I think young people really have no idea nowadays just how easy it was to make money in the post-war boom, and just how much worse everything has been since about 1980.

What you just described also contributed to debt when considering those who never paid their loans off. Those boom days are over and went through their correction phase as every economic boom does. The idea that the economy is great or horrible is only a short sighted statement. Things tend to run in cycles. Look at this past decade. It was all a showing of a market trying to figure out where it stands after the boom of the 90's. What goes up must come down and what goes down will bounce back up.

[Derek]

It had been waiting to happen since the 1970's when it became too easy to get a loan. Bush tried to call on congress to solve it in 2003 and they ignored him.

Bush did not try to solve it.  In truth Bush wanted to make it even easier for people to get loans.  He was pushing something he called the "ownership society", advocating that everyone buy a house (even those who really couldn't afford it or didn't have a stable enough life to keep it).   

This is what Bush said in a speech in 2002:

"Now, we've got a problem here in America that we have to address. Too many American families, too many minorities do not own a home. ...  And so by the year 2010, we must increase minority homeowners by at least 5 1/2 million. In order to close the homeownership gap, we've got to set a big goal for America and focus our attention and resources on that goal. 
... 
And so here are some of the ways to address the issue. First, the single greatest barrier to first-time homeownership is a high downpayment. It is really hard for many, many low-income families to make the high downpayment. And so that's why I propose and urge Congress to fully fund the American Dream Downpayment Fund. This will use money, taxpayers' money, to help a qualified low-income buyer make a downpayment, and that's important.
...
Secondly, there is a lack of affordable housing in certain neighborhoods. ...  And so what I've done is propose what we call a single-family affordable housing tax credit, to encourage the development of affordable housing in neighborhoods where housing is scarce.
...
A third major barrier is the complexity and difficulty of the home buying process. There's a lot of fine print on these forms. ... And so therefore, what Mel has agreed to do and Alphonso Jackson has agreed to do is to streamline the process, make the rules simpler, so everybody understands what they are—makes the closing much less complicated. We certainly don't want there to be a fine print preventing people from owning their home. We can change the print, and we've got to.
...
But we also have got to bring others into the process, most particularly the real estate industry. After all, the real estate industry benefits when people are encouraged to buy homes. It's in their self-interest that we encourage people to buy homes.
...
That's why I've challenged the industry leaders all across the country to get after it for this goal, to stay focused, to make sure that we achieve a more secure America by achieving the goal of 5 1/2 million new minority homeowners. I call it America's homeownership challenge.
...
And let me talk about some of the progress which we have made to date, as an example for others to follow. First of all, Government-sponsored corporations that help create our mortgage system—I introduced two of the leaders here today; they call those people Fannie Mae and Freddie Mac—as well as the Federal Home Loan Banks will increase their commitment to minority markets by more than $440 billion.
...
Freddie Mac will launch 25 initiatives to eliminate homeownership barriers. Under one of these, consumers with poor credit will be able to get a mortgage with an interest rate that automatically goes down after a period of consistent payments.
...
Fannie Mae will establish 100 partnerships with faith-based organizations that will provide home buyer education and help increase homeownership for their congregations. I love the partnership.
...
The National Association of Home Builders will team up with local officials, home-builder associations, and community groups in 20 of our Nation's largest housing markets, to focus on how to eliminate barriers and encourage homeownership.

The Neighborhood Reinvestment Corporation will dramatically expand financial and home buyer education efforts to 380,000 minority families.

The Neighborhood Housing Services of America will raise $750 million to promote homeownership initiatives in many communities.

We're beginning to use the Internet better, so that realtors all across the country will be able to call up programs all designed to help minority home buyers understand what's available, what's possible, and what to avoid. The National Realtors Association will create a central databank of affordable housing programs, which will be made available to agents, real estate agents, to help people."

Karl Rover referred to subprime lending as "a valuable service to people who could not otherwise get credit." 

When the regulator (Armando Falcon) who oversaw Freddie and Fannie warned the Bush administration of problems in 2003, they tried to replace him with an industry hack but backed down temporarily until getting him to resign and replaced him with one of Bush's prep school buddies (James Lockhart) who a critic said was “pimping for the stock prices of the undercapitalized firms he regulates.” 


This is George Bush, Republican.  Not some Democrat.  This isnt Congress doing it; its the President.    And it worked -- he did increase homeownership and catered to the self-interest of the real estate industry, consequences be damned.

The bubble and the crash were Bush's babies. 

That maybe their compassionate way of understanding but the fact of the matter is that loans result in debt and greed. The whole buying and selling technique of the stock market is the same thing. Our stock market was never meant to be buy/sell, buy/sell, but buy to invest and grow a business. The same goes for homes. Buying and selling homes or flipping houses as I call it, is an example of the horrible greed that took place in the 90's and early 2000's. Just ask Chris Dodd and he'll tell you all about how much Fannie and Freddie hooked him up with. As for Bush in 2002, that was his way of getting the minority vote perhaps and if you're on board that's fine, but leave me out of it.