Re: the "R' word
and augustsunshine.. the reason why im disagreeing with you is cus ur analogy does not make any sense...
Chicken Briyani, I spoke to the hubz lastnight and he explained things to me which made a lot of sense.. I dont disagree with you that the banks were at fault.
CB, I dont disagree that banks were part of the problem... lekin what im trying to say is that, people were at fault too for taking loans..
I'm not being naive... im just stating that some responsibility lies with the people taking loans
Sadzzz please don't waste ur time trying to explain anything. Everything you have said, I have already said and explained with great detail. Some people in this world are just hell bent on trying to be right that they don't open their minds to understand the issues.
Ive already explained that one of the major causes of this recession was people purchasing houses beyond their means. How a person on a $50,000 salary thinks that he can afford a $800,000 house is beyong the scope of my understanding. You don't need a loans officer to tell you that you can't afford that house. These homeowners were greedy. They either thought that interest payments would stay low( stupid thinking - interest rates were very low, they should have known that they were gonna go up since they fluctuate and they did sign up for an ARM!!!! So it's not possible for them to think that their mortgage payments would stay low). Some others thought that house prices would continuously go up and they would he able to sell at a huge profit (greed - what goes up must come down).
I have also told people here to research this topic because if they do they will realize how wrong they are! There is absolutely no economist or sane person in the financial world that would say that such homeowners were not at fault!
When people go to buy houses, they do their research. Just because someone tells u that u can afford something doesn't mean u become incomptent and trust them blindly. You must always do ur own homework, no ones gonna do ur work for u.
Btw, if u blindly believe doctors, lawyers, and bankers then I'm sorry to say you will be cheated out of a lot of money and will often do things recommended by others that are not in ur best interest. Whenever I get a prescription from the doctor, before even getting it filled I go online to see if she/he prescribed the right thing. If I get an opinion from a lawyer about a case, I ask another lawyer what he thinks and I research the issue a lot on my own. While deciding to purchase a house, my husband and I make spreadsheets all the time using different down payments and interest rates to figure out if we can afford it and our budget. God gave u a brain to think for urself, not to completely rely on and trust other people, even if they are professionals in their own areas!!
P.S. Doctors, lawyers and bankers are NOT regulators. They do not regulate their respective industries. There are independent regulating bodies for their respective areas. Obviously there would be huge conflicts of interests if the same people were regulating themselves. Yeh?
Re: the "R' word
I agree with sadzzz; there was fault on both ends- the banks and the people who applied for loans either
-knowing that with the way banks were at that time, it would be easier to get a loan
-or with the 'dekha jaye ga' mentality; just get the loan now and we'll figure out a way to pay it later
Why else are banks so stringent with their loan qualifications now? Because they know they lent to people in the past who they shouldn't have.
personally though; it's ridiculous how hard it is finding a job now. I never had a problem before this; but at this point I'm barely getting a call back! Maybe bc I'm still an undergrad? Even for an undergrad though, I like to think of myself of qualified beyond the average undergrad.
sigh it sucks! (excuse my language)
Sadzzz please don't waste ur time trying to explain anything. Everything you have said, I have already said and explained with great detail. Some people in this world are just hell bent on trying to be right that they don't open their minds to understand the issues.
Ive already explained that one of the major causes of this recession was people purchasing houses beyond their means. How a person on a $50,000 salary thinks that he can afford a $800,000 house is beyong the scope of my understanding. You don't need a loans officer to tell you that you can't afford that house. These homeowners were greedy. They either thought that interest payments would stay low( stupid thinking - interest rates were very low, they should have known that they were gonna go up since they fluctuate and they did sign up for an ARM!!!! So it's not possible for them to think that their mortgage payments would stay low). Some others thought that house prices would continuously go up and they would he able to sell at a huge profit (greed - what goes up must come down).
I have also told people here to research this topic because if they do they will realize how wrong they are! There is absolutely no economist or sane person in the financial world that would say that such homeowners were not at fault!
When people go to buy houses, they so their research. Just because someone tells u that u can afford something doesn't mean u become incomptent and trust them blindly. You must always do ur own homework, no ones gonna do ur work for u.
Btw, if u blindly believe doctors, lawyers, and bankers then I'm sorry to say you will be cheated out of a lot of money and will often so things not in ur best interest. Whenever I get a prescription from the doctor, before even getting it filled I go online to see if she/he prescribed the right thing. If I get an opinion from a lawyer about a case, I ask another lawyer what he thinks and I research the issue a lot on my own. While deciding to purchase a house, my husband and I make spreadsheets all the time using different down payments and interest rates to figure out if we can afford it and our budget. God gave u a brain to think for urself, not to completely rely on and trust other people, even if they are professionals in their own areas!!
P.S. Doctors, lawyers and bankers are NOT regulators. They do not regulate their respective industries. There are independent regulating bodies for their respective areas. Obviously there would be huge conflicts of interests if the same people were regulating themselves. Yeh?
exactly sumorani... u do a very good job of explaining things.
I need to learn from you..
the hubz and i have gone through the whole spreadsheet scenario as well, with high and low interest ratse and what can happen if one of us loses his/her job... u really have to think before u get into this stuff. Bankers will try to lure u in.. but U have to be smarter
LeMocker.. its very tough at the moment. My hubz just got retrenched yesterday and he used to get calls from recruiters at least once a week saying they've got a job for him.. now he's asking them to tell him.. sheesh
Phew! Wrote all that on my iPhone with one finger.
Lastly, no one on this thread has said that banks are not at fault. They are to blame but not wholly. Please do not misconstrue our comments!
Yeh it really sucks these days. I just graduated and had an offer with my top choice over a yr before I graduated. And I don't start work till later this yr. But I know they aren't hiring that much either. They hired about 5000 people anually across the US, don't know how many they will hire this yr.
You should post in the careers and academic forum with what ur undergrad major was. Maybe someone on GS will be in a position to help?
A few other things to try if people are unemployed are volunteer work, studying for other exams you may need later (GMAT, cfa, gre, etc.), start ur own business. :)
I agree with sadzzz; there was fault on both ends- the banks and the people who applied for loans either
-knowing that with the way banks were at that time, it would be easier to get a loan
-or with the 'dekha jaye ga' mentality; just get the loan now and we'll figure out a way to pay it later
Why else are banks so stringent with their loan qualifications now? Because they know they lent to people in the past who they shouldn't have.
personally though; it's ridiculous how hard it is finding a job now. I never had a problem before this; but at this point I'm barely getting a call back! Maybe bc I'm still an undergrad? Even for an undergrad though, I like to think of myself of qualified beyond the average undergrad.
sigh it sucks! (excuse my language)
Re: the "R' word
Sumorani just like you're hell bent on your stance, we're hell bent on ours. So please stop making it seem as if we don't know what we're talking about. We both have strong and equally passionate yet different opinions on this issue.
The investment banks created the sub prime mortgage crisis. They came up with sly ways to allow commerical banks to give loans to people left right and centre without even bothering to see if these people will be able to pay back the loan. They repackaged mortgages into nonsense bonds with a fake credit rating. If they had not done that none of this would have happened. They created the dominos effect, like it or not.
And resorting to the 'internet' to check if your prescription is right is really not a great idea........
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Omg! Please go do ur research. Like I've said already, any economist would beg to differ with you. I've given detailed explanations on everything. Yet you and CB repetitively say that the banks are the only ones to blame since they created the securities. Secondly, the banks didn't rate the securities, the rating agencies did. So there already you have two institutions to blame instead of only the banks as you proclaim.
The CDOs that you are referring to as bonds were one aspect of this crisis. Bit yet again I'm telling u to understand the reasons for the crisis. The crisis Would still definitely happen even if there were no CDOs!!!!!!! People were purchasing houses beyond their means because interest rates were low! The result of them purchasing these houses that they couldn't afford was the fact that securities backed by these payments became worthless. If homeowners were able to afford the payments, investors would still receive their yields and there would be no crisis. The main reason there is, is because interest rates went up, people couldn't afford to make their mortgage payments, incestors weren't receiving the money on their mortgage backed securities, so the securities became worthless, the market for these securities dried up, banks had huge assets which were these securities and they had to write them off and therefore credit dried up. Obviously this is a simplified picture for the layman to understand.
What I meant by the prescription example was that you should not blindly put your faith in a doctor just because you think he/she is the authority on medicine. They also don't regulate the medical profession. And you should also know what you are putting in your body even if that means reading online about it.
Re: the "R' word
Yup. Tomorrow is my last day of work. Only after 4 months this job is a goner and was supposed to last about a year.
Another friend of mine got laid off a week ago. Highly qualified chap.
Know if two others who got laid off within the last month and still havent found anything.
Re: the "R' word
I respect your opinion but I'm giving you facts that you can read about online in newspaper articles.
Re: the "R' word
Ok but Alan Greenspan lowered the interest rates precisely so that people can purchase their own house. The whole reason behind lowering the interest rate was so that people can realize their 'right to own'. Very flawed thinking indeed!
Also, why were the mortgages packaged into securities? Because that's the plan investment banks had come up with. I mean why couldn't we have a normal mortgage payable to the lender, in most cases your local commercial bank or any local mortgage lender. That's how mortgages were given out in the past before I-Banks came up with this scheme to profit off of the mortgage money. Why was each mortgage made so complicated and packaged into several small securities? Why was it given an unreliable credit rating and an equally unreliable insurance (Of course for that S&P and AIG are to be blamed). I understand the taxpayers who bought the houses beyond their means were stupid and greedy to jump on the bandwagon and not think it through but do you not agree that the banks were luring them into getting a mortgage? These banks were relying on people with an income of $50,000 to keep up with their payments so that various investors all over the world will profit from the securities they purchased from these very banks. Isn't that a very very very risky venture indeed?
In Canada, where we have a relatively stable financial system, banks refuse to give out an $ 800,000 mortgage to someone who is earning only $ 50,000. Coz they carry out their duty of due diligence. The banks failed to do that in the US and wanted to make quick profits so they packaged these mortgages into securities when they really shouldn't have. I am not saying the people who bought houses beyond their means are innocent bystanders....I am just saying the banks created the fiasco.....They should have never come up with such a disastrous scheme of having securities backed up by people's mortgage payments.
Re: the "R' word
^ again as we have pointed out... noone is arguing that the banks arent at fault...
August, you and I have given an indepth outlook on the situation … you have gone to the extent of presenting the facts and figures to the entire crisis …
The reason a few people here are finding it difficult to understand is because they are talking from a layman’s perspective.
They keep telling us to do the research and dont know themselves that some of the biggest banks Executive management heads have publically apologized on National TV for causing the crisis !!!
How many tax payers were asked to apoligize publically???
How many people who bought homes over the last five years were asked to apologize for the mortgage they took on?
But ofcourse none of them will answr this , they will instead respond with : do your research again …
Re: the "R' word
They apologized because they are CEOs of a company and are being held responsible. I never said that they shouldn't apologize. They are accountable to a certain extent. You have thousands and thousands of people that are going thru this, u really think the average homeowner going thru a foreclosure will come on tv to apologize to the American people?
It's obvious that augustsunshine gets it. And I agree with everything you said in your last post August. I agree mortgage lenders were luring people into getting houses and were not doing their due diligence, investment banks shouldn't have made the securities, rating agencies shouldn't have given then AAA ratings, regulatory bodies should have provided oversight, and average homeowners now in forclosure should have made smarter choices and not have been greedy.
Re: the "R' word
bump
Re: the "R’ word
Errr why did up bump a 3 year old thread? 
Re: the "R' word
The reccession was part of the reason I left my last job, however at the same time its a bit of a blessing in that its been an eye opener for me and allowed me to return to the sort of work I should have been involved in before.
Re: the "R’ word
I think it’s relevant, this was a situation that affected alot of ppl, and nto the typical life-1 thread.
Those who said it was going to be over in 2011/2012…well 2-3 years have passed, does anyone here find that any of it has changed for the better or worse?
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worse
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Well I just graduated, and am looking at my options. Should I try to DISCOVER myself or just follow my dad's plans