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ORIGINAL: lronitulstahp

Spinner...your fact #4 actually proves the point.
Just because people "threw" credit at consumers didn't mean they had to catch.  i remember sitting at tables, or over phones talking with lenders, sales people etc, who would try to force me to pay for things with credit, or in installments when i had the cash in my hand!  Were they persistent? Definately!  But i listened when my great-grandmother told me lessons learned from the great depression...and it made common sense to me, that if i bought everything with money i didn't have, i in fact, owned NOTHING!  If calling the sense of entitlement to a middle class that went above and beyond the middle class "greed" makes people uncomfortable, i suppose we could call it something else.  But a thesaurus won't change much in the way of facts. 

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ORIGINAL: LaTigresse

Oh come now..........Reganomics

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ORIGINAL: SpinnerofTales

Every time I hear about how "irresponsible" people were to live on debt and not within their means, I can't help but think of a few rarely stated facts:

1) Productivity went up every year for the past decade. People were working harder, smarter and doing a better job.

What does this have to do with people taking on too much debt?

2) Real wages over that period stagnated. People were being asked to work harder, produce more and not see any benifits accrue from that work. While the higher classes speak of how it's not worth their time to work hard if they have to pay 4% higher taxes, the average working person was being told that they should not expect anything more than what their bosses could get away with giving them.

What does this have to do with people taking on too much debt?

3) During this same time, the income of CEO's and upper management grew by %500 percent. The phrase "high tide raises all boats" was clearly not working.

What does this have to do with people taking on too much debt?

4) During this time, credit was not only offered, it was sold like diapers, dogfood and antiperspirant. This was directly because the top credit providers learned just how much money they could make from usurus interest rates on credit cards, late fees, poor credit fees, etc. These financial institutions were making money by convincing people to take on enough credit that they were always somewhat behind. There was also the mortgage industry who was winning in both directions. What payments their customers could make were all to the good. If the payments became more than the customer could pay, they got to keep all the money they were paid as well as the house which they could, until recently, sell for more than they had loaned out against it.

You're wrong.  Credit card rates fell over the last decade, and if a lender sells a foreclosed property for more than the loan, and associated legal and management fees, they're required by  law to return the difference of the value of the loan to the borrower.

A lot of people made a lot of money on America going broke. And those people had interests in strongly encouraging these practices and did a very good job of it. To put this crisis off on the average person is a nice fiction, but it is the same vein of thought of saying of a victim of a confidence game, "He had it coming. You can't cheat an honest man."

Are you kidding me?  Do you really believe that the "average person" can't tell the difference between a monthly payment he could afford, and one he couldn't?  When all is said and done, there is a thing called personal responsibility.  The irresponsible home owners are trying to shirk their responsibility by allowing the overnment to bail them out on a home they shouldn't have purchased in the first place.

This doesn't mean that I dont hope that the American people get smarter. But let's stop talking about "greed" for people wanting to live the middle class life that was sold to them from birth as the measure of what an American life should be.

Fact is, people wanted to live better than the middle class, which is the reason the average home size has increased from 1600 sq. feet to more than 2000 sq. feet even though household sizes have gotten smaller.  Until recently, living within one's means was seen as the measure of what an American life should be. YFD

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ORIGINAL: SpinnerofTales
Ok....so we call it "middle class greed"...even if this is the case, why is it the middle class suffering from the meltdown while those who packaged and sold it are sitting on their gains and waiting to get back into the game?

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ORIGINAL: RacerJim

"If you have no record to run on, paint your opponent as someone to run from." -- Barack Obama, 2008

Or was that Barry Soretoro, or Barack Dunham, or Barack Soretoro, or Barry Dunham?

NObama is an outright FRAUD!

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WAKE UP "WE THE PEOPLE" - LETS TAKE BACK OUR POWER !!!!!!!!!!!!

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Are you kidding me?  Do you really believe that the "average person" can't tell the difference between a monthly payment he could afford, and one he couldn't?  When all is said and done, there is a thing called personal responsibility.  The irresponsible home owners are trying to shirk their responsibility by allowing the overnment to bail them out on a home they shouldn't have purchased in the first place.

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ORIGINAL: DedicatedDom40

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Are you kidding me?  Do you really believe that the "average person" can't tell the difference between a monthly payment he could afford, and one he couldn't?  When all is said and done, there is a thing called personal responsibility.  The irresponsible home owners are trying to shirk their responsibility by allowing the overnment to bail them out on a home they shouldn't have purchased in the first place.

Lets not let this become simply an issue of personal responsibility, when corporate responsibility fell down just as much. Banks should have known that packaging risky debt with other securities was no guarantee that it wouldnt go bad.  Where was their responsibility?

Here we go..... It seems as if you're forgetting that a "bank" and a "corporation" are simply pieces of paper.  The fact is that individuals within the banks and other corporations made decisions to offer a product to the marketplace.  Many products are offered to the marketplace with few takers (how many Zunes has Microsft really sold) and some products are devoured (like the iPod).  Mortgages were devoured.  The responsibility of the bankers who made these decisions has been dealt with by the marketplace.  Leahman Brothers no longer exists, Merrill is being absorbed by BofA, Wachovia, National City and a host of other regional banks have been purchased at fire sale prices.  Plus, the stock prices for all of these companies have fallen to near zero.  As I'm sure you'll agree, the falling stock prices have impacted the many decision-makers who had large portions of their net worth tied to the stock prices of thier companies.  The market has already rapped them on the knuckles for their irresponsibility.  Why shouldn't the homeowners who bought the mortgages be dealt with as well?

You can point at all the forced lending to unqualified buyers, but the banks found what they perceived (wrongly) as a way around that, and with all their newly crafted insurance instruments, actually chased more business among the unqualified borrower pool on their own, above and beyond the requirements of government mandated lending.  The profit is what drove the process that enabled greater participation by the irrational homebuyer.  Do not point to responsibility issues on the part of the individuals without addressing equivalent corporate responsibilities.  Just because banks felt they COULD do this safely doesnt mean they SHOULD have.  But they did.  And the bank's insurance schemes are what has magnified the problem of the irresponsible consumer 500 fold, taking the government response from 'manageable' to 'unmanageable and totally reactionary as we go along.'

I don't point to any forced lending.  I'm not even sure how one would accomplish that.  See my response to paragraph 1 for a response to the rest of this paragrah.

Foreclosures have moved beyond the 'idiot borrower' phase and are now affecting people who could afford their 2000 sq foot home, but are in trouble now from unemployment and inability to find work quickly.  Nobody, even "responsible people" who buy 1600 sq foot houses, can dodge that. The "irresponsible" ship sailed last year.  Now, its the 'caught up in conditions' group being affected. Forecloseures aren't restricted to only those properties 1600 sq foot and up purchased by the 'irresponsibles'.

I will argue that anyone who is being forclosed on without having become disabled was irresponsible in their financial planning.  The fact is that while we are discussing the 12% of homeowners who are currently behind or have defaulted on a mortgage, there are still 88% of homeowners who have avoided these fates.  How is it that they've been able to do this?  The size of the house has nothing to do with the responsibility of the owner.  There is no "caught up in conditions" group.  Economic cycles are a factor of market economies.  They happen.... often.  It's no surprise to most that, "what goes up, must come down" except for when they're conveniently living beyond thier means.  What would you guess to be the average savings rate of the folks experiencing mortgage difficulties?  How large would you estimate their emergency funds to be?  Better yet, how much credit card debt do you think they're carrying?  And, how many of them spend more than $400 per month on a car note instead of driving one that's paid off? 

We as a nation need to decide whether we should be treating our homes, the roofs over our heads, and an investment instrument. If we do, in pursuit of investment grade returns from the houses we live in, then we need to also accept the risk of losing our houses when investments go bad.  Most of the general population seems to want things both ways, they want the gains associated with their house as an investment, but when thigs go bad, they want government to save them under the auspices of "its the roof over our head". They really shouldn't have it both ways. But then again, Wall St seems to enjoy having it both ways.

This is by far, the most accurate statement you've made on this issue. By definition, the home you live in is not an investment.  It's an item of consumption.  Investment grade returns average in the 6-8% range. While housing values have historically increased at a rate right above the rate of inflation, many were looking for MORE from their homes than from their stock portfolio.  You are correct in saying that those who want to take the risks required to earn those types of returns should accept that risk causes movement in both directions (up and down).  There is no inalienable right to homeownership.  If you can't afford a house then you shouldn't be a homeowner.  It seems simple to Me.

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ORIGINAL: TDHO

The responsibility of the bankers who made these decisions has been dealt with by the marketplace.  Leahman Brothers no longer exists, Merrill is being absorbed by BofA, Wachovia, National City and a host of other regional banks have been purchased at fire sale prices.  Plus, the stock prices for all of these companies have fallen to near zero.  As I'm sure you'll agree, the falling stock prices have impacted the many decision-makers who had large portions of their net worth tied to the stock prices of thier companies.  The market has already rapped them on the knuckles for their irresponsibility.