So called experts

[Winstonm]

It's not that simple. Their intent was to spend the money while they were alive, not to make money.

 

But JT, it really is that simple. Debt creates risk. For example, say two earners can easily afford a house payment and a second mortgage; however, one of the earners becomes ill and dies; if those two had not purchased life insurance to cover that occurence, then suddenly the debt that was paid easily by two becomes unmanageable for one.

 

Regardless of how someone wishes to use the equity in his house, the fact is that it is an illiquid asset that requires disposal in order to capture its gains.

 

Certainly, anyone can chose to obtain a loan against equity, but in so doing must realize that along with the money comes an increase in risk of default.

 

Simply because monetary inflation targeted housing assets as an expression of pricing inflation does not imply that any real, lasting wealth was created. In asset bubbles, some early winners can make money, but in the end everyone else turns out to be big losers.

[pbleighton]

Yes, Peter, I agree. But you are not factoring in the last 2 critical years of the bubble, when the system broke down with no-document loans, appraisers using inflated values, and mortgage risk being sold so no hazzard was left with the originator - it was all about collecting fees along the way.

 

All this stuff was happening 10 years ago, Winston. Trust me, I was there.

 

Peter

[Winstonm]

Yes, Peter, I agree. But you are not factoring in the last 2 critical years of the bubble, when the system broke down with no-document loans, appraisers using inflated values, and mortgage risk being sold so no hazzard was left with the originator - it was all about collecting fees along the way.

 

All this stuff was happening 10 years ago, Winston. Trust me, I was there.

 

Peter

No disagreement - however, the magnitude of graft expanded with the bubble.

 

In this chicken of the egg scenario, the answer is quite obvious that it was the dramatic increase in foreclosures that has caused the problem with housing and housing lenders - and there has been no serious economic slowdown with accompanying job loss on which to place the blame.

 

The blame must fall squarely on both the borrowers for overextending and the lenders who allowed the shell game to get out of hand.

[Al_U_Card]

The context has also changed.....pre-9/11 there were fewer worries and less fear. Sheople needed to be placated and given a pacifier to help them forget about their imminent loss of rights and freedoms. So along with the E! network and its tripe, came home ownership! The suburban dream to get away from all those nasty things.