(12-08-2017, 09:58 PM)JagNGeorgia Wrote:

(12-08-2017, 09:50 PM)jagibelieve Wrote: This was actually a very large part of the problem.  The cause actually goes back to the 1990's when "relaxed" borrowing rules took affect.  Think about how all of the "payday loans", "check cashing" places and "buy here pay here" car lots exploded on the scene along with the "rent to own" types of places.  The predatory lending practices escalated to include sub-prime mortgages.

The "0% down" and easy qualifications for mortgages was staggering, and it didn't include just the lower income portion of the population.  I personally know a few people that made a pretty good income ($50k + per year at the time) that were buying homes that they couldn't really afford.  We're talking homes selling for $150k and more back in the early 2000's.  At the time interest rates were also on a steady decline.  However, the demand for real estate and homes was on fire and prices were soaring.  People were buying homes with an Adjustable Rate Mortgage (ARM) often times with a balloon payment without really paying attention to what would happen when the rate got adjusted and the balloon payment became due.  Many figured that they could either re-finance or worse, sell the home at a higher price.

Another big part of the problem is when investors and banks figured out that they could package up a bunch of sub-prime mortgages together and buy and sell them like a stock (kind of like an ETF or a REIT but not the same).

When people started defaulting on their loans, those packages of sub-prime mortgages quickly became worthless.  Real estate prices took a major hit and many people lost their homes.  Banks that were holding these worthless assets failed (think Lehman Brothers and Merrill Lynch).

The bottom line as it relates to this thread, the fall of the stock market in 2008 wasn't solely a political issue and the part of it that was wasn't on one party or the other.  The rise after 2008 wasn't because of government policy (though there was some government influence) and the rise that we are seeing now isn't really directly related to government policy (though some of it is influenced by government decisions).

The stock market is way more complex than many people realize.

I understand that and I know that the gambling on mortgages influenced it. I can't disagree there.

I just can't see how one can attribute the burst with something that happened in 1999 when the housing market burst was already a concern in 2000 - 2001. The correlation between the lending of subprime mortgages in 1992 and the enforcement of the CRA go hand-in-hand.

The whole thing is pretty complex and convoluted.  I guess the point that I was trying to make is that it can't be pinned on one political party or another.  Both had their hands in it.  As it relates to this thread the same could be said about the recovery since then.  In all fairness, the banks were "bailed out" prior to Obama taking office and the initial policy was already in place.

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