The "state income" loans are not the only problem though. They loaned out more than 100% of your home value (betting on house prices will grow 7-8% a year "forever"). Negative amortization - your monthly payment is less than the interest for the X-year/Y-interestrate loan. And the feeding frenzy: if you don't loan it, your competitors will. All of those (and probably more) pushed the credit bubbles towards their last spike.
Ever since David Faber moved off Squawkbox and got into documentaries I have quite a bit more respect for him. He is doing some really interesting work. Since I have my own ideas of what caused this mortgage crisis, I have to admit David Faber did a spectacular job showing that it was all parties involved. There was not single bogy... (as much as we would like one)
No it was not Bush... Bush was an actor... But also played a critical role is LTCM... You might think, huh? How does LTCM fit into this? Go back and look at the story. LTCM was a huge failure (ok peanuts when compared to what is going on today). But all of the actors of those days did not admit that the problem was leverage, nor bad ideas. The problem was that they did not have insurance! Yes folks, one of the errors of LTCM was not having insurance. Because if you look at all of the actors involved in bailing out LTCM, they were involved in this current mess.
Show was inline w/ what I heard about before. Great job by David Faber... also mentioning... sad story about small country that didn't do enough research before going into bubble mess.
The Ascent of Money was the first, and probably a bit better at summing up the mess. You can find it on the PBS website. Faber looked like he ripped his idea off of that show. I did see Faber's show, and the only part that I thought that was interesting was Kyle Bass making reference to the "great, Darwinian flush" to come.
The Reckoning: White House Philosophy Stoked Mortgage Bonfire http://www.nytimes.com/2008/12/21/business/21admin.html?_r=1&em=&pagewanted=all
Inaccurate. There is no SINGLE act responsible for the scope of this mess.... but if you want to point a finger at "who STARTED it all" (and I do)... it was the DemoCraps in CONgress in 1999 who initiated Affirmative Action Lending... that is, made it LAW that banks would make mortgage loans to financially non-qualified borrowers... especially racial minorities. Motivation, of course, was to buy political favor.
i'm no affirmative action champion, but i'm right about the cause of all this mess. that's why the bubble happened when it did instead of in other time periods. bush not only made it legal but also pressured banks to lend without verifying income. the sub prime lender in the documentary even says it. if documentary proof of income was required, then none of this would be possible. it all starts with the original mortgage. btw, if you support bush because you think he champions middle class white people, then you are just being misled and used.