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Old 11-14-2012, 11:28 AM   #51
Jailblazers7's Avatar
Join Date: Jul 2006
Location: Pittsburgh, PA
Posts: 21,006
Default Re: Hey you! Yeah, you, conservative person.

Originally Posted by joe
What? That's not what I'm saying at all. It's not that it "must" be the governments fault, it IS the governments fault. The behavior we seen from the banking sector was a result of government manipulation of the markets. Did the bankers act crazy? Did they screw over poor people? Yes- and you would have done the exact same thing in their shoes. The government was pushing the banks to act a certain way and they did. If the government starts handing out a million dollars to anyone who wears a Yankee hat, don't be surprised when everyone starts wearing Yankees hats. And if the government starts pushing banks to give out unpayable mortgage loans, don't be surprised when that's what they do. When the federal reserve is pumping money into the banking system and promising to bail them out, don't be surprised when they take risks.

Not only did the government cause the housing bubble, but that was the fricken plan all along. To ease the pain of the tech crash, the federal reserve created a new bubble in housing. Paul Krugman has an article where he talked about that in the early 2000's.

Or are we supposed to believe that every bank in the economy just coincidentally (and simultaneously) decided to hand out mortgage loans to poor people who had no hope of paying them back? Yeah, that makes more sense. Because banks just naturally like to give out $100,000 to people who earn $30,000 a year and live check to check. That's how you become successful in a free, deregulated market, which of course is exactly what we had. Kind of like if you want to become rich in life, lend money to your Uncle who has no job. That's how people manage their finances absent government regulation.

The federal reserve didn't pump the banks full of cash, the government didn't guarantee loan repayment, the government didn't make a concerted effort to keep housing prices above market level. I made that stuff up. And if I didn't, it doesn't matter. The banks are just greedy and they just need to be more regulated, and stuff.

Will comment later tonight. I am by no means saying the government didn't play a big role in the erosion of loan standards but I'm also saying that investment companies and rating agencies played a significant role in the crisis.
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