<p>That’s because banks are closer to the center of corporate socialism than drug companies are. But the principle is exactly the same. We support the losers and the losses in order to keep the wheels turning. </p>
<p>If builders go belly-up, what’s going to happen to undocumented workers?</p>
<p>“If builders go belly-up, what’s going to happen to undocumented workers?”</p>
<p>Nobody cares except during election time. :)</p>
<p>I am not in favor of corporate socialism or personal socialism but recognize that both are necessary evils in some instances. If a bailout of banks is necessary in the national or global interest then I want there to be an appropriate amount of pain distributed to the people responsible and sufficient safeguards against risky behavior in the future. Unfortunately that is not what happens most of the time. Most of the time the banks and other companies exploit the corrpution in Washington to lobby Congress to use taxpayers’ money to bail them out with little or no pain to the responsible people.</p>
<p>The drug company analogy is not good because the country has an interest in promoting high-risk research that would not be undertaken if there was no governmental support. The 10% success rate for such high risk research is worth it. The companies develop life-saving drugs and the cost of these drugs would be even higher were it not for governmental support. Buying, selling and reselling mortgages is not in the same league.</p>
<p>I keep hearing that nobody put a gun to these borrowers’ heads and force them to borrow more than they could pay back.</p>
<p>CONVERSELY, nobody put a gun the heads of these bankers and forced them to loan money to people they knew full well could not afford to pay them back.</p>
<p>Meanwhile, most of us are the schmucks who dutifully make our monthly mortgage payments and would have to shoulder the burden of these bad loans.</p>
<p>Let the banks go under. It it THEIR fault.</p>
<p>The nation (or at least our owners) have an interest to promote banking, credit, home-buying, real estate development, building, and mobility. A far, far greater interest in fact than it does in life-saving drugs.</p>
<p>Yeah mini, so we need <em>good</em> banks that know how to use money and manage risk. Not all banks were engaging in predatory lending and the good banks would flourish if the bad banks went under. </p>
<p>Using your drug company analogy we should not be propping up the drug companies that deliberately and negligently develop and market drugs that they know will kill lots of people. The subprime loans were that kind of product.</p>
<p>is an OK analogy. But let’s look at all the sides. The Gun pointer; The Gun intended victim; The Observer; The Bar where the incident takes place; The Crowd that eggs both parties forward; The Undertaker; The Pall Bearers; The Guy-In-Black Hat that hired the shooter; The victim, when the shooter misses the first shot; The victim, when the second shot is taken; The shot person’s family; The insurance company that pays the claim; the Lawyer for the plaintiff in the wrongful death lawsuit; The Lawyer for the Shooter; the Gun manufacture who made a crooked barrel; the bullet manufacture that was implicated because of association and because the bullet performed as advertise; and Government which now picks up the survivor’s benefit; The Taxpayers who pay’s pays for the trial; The Taxpayers that pays the survivors benefit; The Jury; the sheriff; the audience at the trial (CC); News People who want a show; and finally the RealEstate Agent and the LandOwner who is selling the burial plot and started the who thing off-God only made so much Land. </p>
<p>Finally, dstark, who started this thread. Mini for taking who favors taking right steps, and others who keeps the thread going.</p>
<p>thisoldman, your post is more complicated than the housing and credit problems. :)</p>
<p>“Yeah mini, so we need <em>good</em> banks that know how to use money and manage risk. Not all banks were engaging in predatory lending and the good banks would flourish if the bad banks went under.”</p>
<p>A lot of the banks involved weren’t preying on anyone. They were putting people into homes, and into bigger homes, made affordable by interest-only loans that were quite rational during a real estate boom, keeping builders building, workers working, real estate agents selling, and municipal governments tax-collecting. People got to experience, at virtually no cost to themselves, a style of living they would never have been able to have afforded otherwise, in homes they never would have been able to rent, and with mortgage interest deductions to boot.</p>
<p>“They were putting people into homes, and into bigger homes, made affordable by interest-only loans that were quite rational during a real estate boom,”</p>
<p>Mini, are you playing devil’s advocate or do you really believe this bs?</p>
<p>I understand how America works. And I know lots of folks who got into bigger homes than they could have afforded at the time, sold them, and paid for their kids’ college educations that way. And then someone else bought the house. Realtors did well on both transactions. Home Depot flourished. Municipalities were pleased by the tax revenue. </p>
<p>Yes, many folks will now default on their homes, homes that for five years or so they’ve paid nothing but interest (all deductible) at rates significantly lower than for which they could have rented similar homes. Now real estate prices will come down, and in two or three years they’ll be able to buy again.</p>
<p>America did not have to work the way it did over the last several years.</p>
<p>I’m not a great believer in “subjunctive history”.</p>
<p>Decisions were made. They could have been made differently.</p>
<p>I’m a believer in “you make your decision, you handle the consequences”.</p>
<p>I am also a believer in “you learn from your decisions so you will benefit the next time you have to make a decision”.</p>
<p>mini has provided an accurate description of what happened during the real estate boom and why we are where we are. Still doesn’t mean we should bail the economy out. Let there be a painful recession. The depression era generation learned how to save money and conserve resources. Wouldn’t hurt for this generation to get a taste of that.</p>
<p>Virtually every industry has had it’s day of boom and bust. We have been through the auto boom where there were once scores of carbuilders and I’m sure many stock sales that over time became worthless. Then the entire stock market became a wave and a bust. Later we had the electronics companies, the first biotech/pharm wave, the dotcom wave and now the real estate wave. All ended up the same with billions or trillions of losses and we recovered and moved on. So far most of the losses in the end of the RE boom were on the financial end and the homebuilders. The jury is still out on losses on homes themselves–so far overall they have been minor. We’ll recover and move on and in a few years it will just be a somewhat painful lesson for some more speculative people.</p>