There is no question that professionals of many nationalities ”“ bankers, financiers, estate agents and regulators ”“ behaved badly. They got paid a lot of money and wilfully loosened credit restrictions to keep house prices rising and bonuses flowing. Many of them, although far from all, were American.
But I would like to propose another culprit for the difficulty that many economies are in: you and I. We home buyers and mortgage borrowers share the blame, whether we are American, British or Icelandic.
Take nationality first. A year ago, when the US subprime mortgage debacle was evident but the British housing market was still doing well, I took a trip to London from my home in New York. On a visit to friends in west London, I was struck by the number of houses in their street with “To Let” boards outside.
At the time, there was a lot of talk about how the UK housing market differed from that of the US because it was a small island with a limited housing stock, there was no equivalent of subprime lending and so on. But those “To Let” boards said something different to me.
They showed that cheap debt and rising asset prices had led to housing speculation all over the world; it just took different forms….
[blockquote] Bankers did many foolish – and, in some cases, unethical – things during the boom. But they did not force people to buy houses or take out mortgages[/blockquote]
They did not force me to take out a mortgage I could not afford, but they did cause me to buy a [b]paper schredder[/b] In order to safely dispose of all the blank pre-approved checks lenders send me every month.
“But I would like to propose another culprit for the difficulty that many economies are in: you and I. We home buyers and mortgage borrowers share the blame…”
Wrong, wrong wrong! Not everyone did this. As I have rehearsed before; I bought my house 7 years ago, below market and with a 5.75% fixed rate. I did not refinance to buy “stuff”. I did not run up my credit cards. In short, I did not do any of the irresponsible things I am being accused of. I am not alone. Millions of us, the VAST MAJORITY of people did not do this. It was something around 16% of the folks out there that behaved in so reckless a fashion. The rest of us DO NOT SHARE THE BLAME.
We are just being forced to pay for it.
So, enough with the moral equivalency, already. “WE” did not do this. About 16% of “YOU” did this. Trying to make us shoulder the blame so that “YOU” don’t feel guilty about it isn’t working, it is just making “US” more angry. Just shut up and let the grown-ups fix it.
#2, I think that is spot on. there appears to be a train of thought that if anyone made a profit or got a bargain price from buying or selling property, then that is somehow wrong, such people are to “blame.” this type of thinking has its roots in Marxist philosophy. and well know what Marx thought about Christianity….
I’ll “amen” that, from a slightly different perspective. I specifically did NOT buy a house, despite being assured by the mortgage company and realtors that I could borrow FAR more than I knew my budget would allow me to carry. (Especially after tithing; I wonder how many people take for granted that their home and mortgage takes a higher priority than God?) There’s a lot of talk now about all of us being in there together, having to share the pain. Well, frankly I feel like I’ve already shouldered my share in the form of “opportunity cost” – having to explain to my crying children that we can’t afford a bedroom for each of them and a big yard to garden in, because of the principles we try to live by.
Now the gov’mint wants to undermine those principles by forcing me to shoulder the risk and probable expense of the bailout, even though I did not reap any of the reward. I get only the downside, no upside. My children have learned that my principles are for “losers”; how much better it would have been to get in on the action with a low ARM, and then wait for the feds to force the lenders to renegotiate my loan for me. Such a deal!
Sorry, forgot one point: part of the reason we could not afford to buy a home at the payments that would have actually been responsible – all of those people now getting bailed out, who bought more house than they could afford, or tried to ride the “flip” wave, and drove prices up beyond reasonability.