Comments on: Government intervention prime cause of sub-prime debacle

By: Graham Young

Graham Young — Sun, 11 Oct 2009 12:53:55 +0000

Who’s blaming the borrowers Barney?

By: Barney Langford

Barney Langford — Sat, 10 Oct 2009 22:36:54 +0000

Graham,
This is just another example of blame the victim.
To suggest it was the fault of the borrowers is like saying that Abu Graib was the fault of the enlisted personnel who carried out the humiliation and torture and not reflective of a wider culture.
Are you seriously suggesting that Lehman Brothers et al collapsed because they and the rest of the financial system were forced to lend money to people who couldn’t repay the debt? Are you seriously suggesting that the commissions sytem which underpins the sale of “financial products” was not the driving force which led to people being offered loans which they had no prospect of paying off or that people weren’t enticed into second mortgages in order to fund lifestyle spending?
The GFC has brought into sharp relief major structural faults in free market ideology. To suggest that it was the fault of over-regulation and government interference is clutching at straws.

By: Arjay

Arjay — Tue, 06 Oct 2009 15:48:50 +0000

Patrick B,the free market was not allowed to operate.It was Clinton who originally deregulated the finance system to provide cheap loans for the poor without real equity or responsibility. Yes the Federal Reserve was negligent in that it did not perform it’s prime most important function ie the responsible supply of credit.
I actually like Ron Paul,lay the whole debacle at the feet of the Fed.It’s power over the US economy and the world should end.

By: PatrickB

PatrickB — Tue, 06 Oct 2009 10:01:51 +0000

“These undoubtedly well-intended measures prompted a more general lowering of lending standards, as private sector mortgage underwriters came up with ”innovative” products”
I think this phrase carries more weight than the actual statements around the raising of mortgages against risky or non-existent collateral. The creation of CDOs and then derivative swaps on those CDOs was not mandated by legislation. In fact it was the lack of legislation that allowed these products to be traded. It was free market ideologues like Greenspan who oversaw the debacle. Attempts to pin the blame for market failure on the poor are unedifying and unconvincing. Poor effort by you and Eastlake. I suggest you read “The Two Trillion Meltdown” by Charles Morris.

By: Arjay

Arjay — Mon, 05 Oct 2009 17:29:34 +0000

Yes Graham,you and Saul are both right.We have to eliminate Govt taxes on building houses.37% of a land/house package is Govt taxes and charges.Imagine we put a 37% tax on food and clothing.There would be a national uproar.Shelter is a basic necessity.
The other issue is supply of land.Govts limit the supply of land to maximise their returns.Should this be the function of Govt? Profit?
The other way to put downard pressure on house prices is to have fast, efficient transport systems that make cheap land accessable.Now what do we do?Put in expensive tolled roads with only 2 lanes each way.
I’ve looked into doing developments myself and I have all the tools skills and workshop to do it myself,but it is not financially viable,so we in NSW have a housing shortage.They just won’t listen.