I don't know if I'd refer to all of the economists who consider the subprime mortgage crisis as one of the causes of the financial collapse as "fringe".
The subprime mortgage crisis resulted in unqualified people getting mortgages.
What's worse is that, in a lot cases,the lenders knew these people could never pay them off.
Then these lenders,I believe "Countrywide" was one of them,"packaged" and sold them to large financial institutions.
When the people couldn't pay their mortgages,the financial institutions had a lot of worthless paper.
The fact that many more people were able to get mortgages pushed up prices, helping to create the "housing bubble".
In this area people were buying properties at inflated prices.They figured prices would keep going up and they could sell at a profit anytime.
As I said before,I do land surveying.
I still remember clients saying that they were buying property "A" for an investment.
They planned on holding it for a year or so,selling for a huge profit,then doing it again.
One client told me he figured that by doing this he could retire in few years.
Then the bubble burst.
All of sudden "prime" borrowers as well as subprime were "under water".
That led to properties being abandoned and foreclosed.
I've seen towns where whole blocks are empty.
That reduces property values around them and lost real estate taxes in those towns.
Municipalities can file liens for back taxes,but until the property gets sold,they still put a whole in local budgets.
It's like you don't even read the responses to your posts. I didn't say that economists pointing to the subprime mortgage crisis as a cause of the crash are fringe. The subprime mortgage crisis was absolutely the number one cause of the crash. What I said was that very few economists would say that "forced" loans were the reason. It was a dialing back of regulations by both parties that caused the subprime mortgage crisis, not the government "forcing" banks to give unqualified people loans. That's the point. There is a very big distinction.
Actually I do read everyone's responses carefully.
First off,if you read mine,you'd see that the term "forced loans" came from Monroe.
He equated "forced loans" with subprime mortgages, not me.
I merely used his term in my response.
In my original post I did say that banks were "forced".Pressured would have been a better word.
Based on the above post,I incorrectly presumed you were also using the terms "forced loans " and subprime mortgages" interchangeably.
Glad to see we both agree that the subprime mortgage crisis was the major contributing factor in the crash.
There's also no question that the blame for this goes beyond party lines.
Last Edited: 10/6/2016 3:14:01 PM by rpbobcat