Ahem. http://bit.ly/3QFeJd and http://bit.ly/1Myj3D

Christine and Karim:

Do you even understand what a credit default swap is? Blaming a product without having an inkling of what it is or what it does is inane.

Start here. Don’t worry, I’ll wait. http://bit.ly/3QuOgi

Now that you’re done with that, no leveraging? Even a traditional 30 year fixed mortgage at a good rate is LEVERAGE by the very definition. Most people could not EVER buy a house without the leverage of a mortgage. Be careful what you wish for.

At the end of the day, everyone here is right. Add up everything you all said and you have your answer. I don’t get this political posturing and pandering (like EZ, or maybe its racial), but all of this is correct. EVERYONE is responsible for this current situation. Companies, consumers, government (remember: you get the politicians you deserve), lenders, investment banks, mortgage brokers, NRSROs, and everyone else in between.

Remember the tagline from the movie “Traffic”? “No one gets away clean.”

Get over yourselves.

If people can do whatever stupid, greedy thing they want and know that the government will bail them out, they WILL keep doing it. If they know they can fail, they are more likely to stick to a more sound, sustainable business plan. Or the company will fall and others less stupid will take over their market share.

I agree though. I’m glad more (albeit at a trickle) opeds, articles, and opinions are surfacing placing blame and control at the consumer level. Thus far we have been very wanting of personal responsibility, because it is far easier to blame others for something we had full control over. Yes, many other things happened too, but we as consumers had a great deal of control over our spending behavior.

oh, and everyone really needs to stop trashing credit cards and debit cards, because i have huge positions in visa. swipe, swipe away (on visa of course), just do it responsibly and within your means…on VISA.

You look at the people who lived during the Not-So-Great Depression and you see people who learned to practice extreme savings. But as their kids grew up they were exposed to all the radio, TV and print ads telling them all the great stuff they could have. The only problem is that they didn’t have the money for all this stuff they were told was theirs for the taking.

Then along come the credit card companies to show them that they can have it right now! Instant gratification runs rampant and they get themselves into debt for things they really don’t need to survive. Then they have kids and pass their bad financial skills on to them and so on and so forth. We should change the national motto from “The Land of Opportunity” by adding a subline that says “Where You Will Receive 3-5 Opportunities to Get Deeper In Debt EVERY DAY!”

Now we have Check Cards or Debit Cards that look like credit cards. You may still be paying cash instead of incurring a debt with your purchase, but what do you think kids are learning when they see their parents use the card – swipe the plastic card and you get things! It reinforces that instant gratification mentality because nobody explains to them the importance of saving and living within their means.

So all this has compounded to where adult “children” are exposed to an opportunity to get into a brand new home with the latest in gadgetry and style. Do you really think they are going to consider too deeply how they are going to pay it off? Why? They haven’t so far. And those that do think about it are exposed to new and exciting terms like ARMs and the promise of the lenders that the rates will stay low, if not go lower. They did’t have the financial education to realize what a crock that was and signed on the dotted line.

We need to get back to practicing and teaching sound financial principles like earning the money you spend before you actually spend it and saving up for the things you buy. We need to get back to making the phrase “The Land of Opportunity” mean the opportunity to earn not the opportunity to spend. And we need to get away from government band-aid fixes that don’t have a chance of working and don’t really deal with the root of the problem.

What difference do you think it would make in terms of the impressions our children receive if the majority of the people in the U.S. went back to using cash instead of Check Cards? That may be a little bit inconvenient, but so is footing the bill for a $700 billion bail out package.

It all started out with predatory lending practices too. Many of these homeowners with sub prime mortgages were eligible for prime rate mortgages (source below). When applying for the mortgages, the banks presented the sub prime mortgage offer often not even informing the customer of their prime rate eligibility. The banks made more money selling mortgages at higher interest rates assuming the customers would be “fine” when the value of their houses were to rise.

The banks got greedy, and to patch up these risky loans that they willingly gave out as sound ‘insured’ investments was what caused this entire market meltdown to begin with where it otherwise could have been avoided.

Source of information on mortgage eligibility:
http://72.14.205.104/search?q=cache:F_S9MnWz7NsJ:jec.senate.gov/Documents/Releases/12.19.07brookingsspeechrelease.pdf+Charles+Schumer+eligible+subprime+mortgage&hl=en&ct=clnk&cd=1&gl=ca&client=firefox-a