Are You Kidding Me!!???

Read the excerpt from an article on MSNBC below about the current Financial Crises. This little excerpt says it all. All of us watched as houses went up and up and up in price and I know we all new that something was wrong. First we knew our children, never mind us, could not afford a new home at the prices that were out there. A house goes from selling for $100,000 and then 5 years later sells for $200,000. Come on! Who's kidding who!

Years ago I worked in the mortgage business for Manufacturers Hanover Bank. We all knew to look out for crooked appraisers inflating prices. We also knew basic financially sound formulas as to how much of a persons budgeted income they could afford for housing. Basically what has happened is this. The "dinosaurs" of the banking business either retired or were forced out by up and coming marketers that came into the banking business in the 80's and took over and shaped an industry from financial guardians of wealth to marketing conglomerates with a, "give the public what they want" sales pitch. Well sometimes (many times really) the public doesn't know their proverbial ass from a hole in the ground when it comes to managing money. That's where the old "dinosaurs" of past banking business years were invaluable. They kept a rein on the public's blind thirst for material wealth without the means to pay for it and the banking industries hunger for more and more clients. A.R.M.'s, interest only loans, no money down and a slue of other creative financing were dreamed up by the ravenous young banking marketers who all too often were in direct collusion with Real Estate brokerages and their sales force.

So here we are and its all falling apart and the question looming over us is, "do we go ahead and bail out all these "slick willies" that led us down the garden path? Or, do we revert to what is right and fire there asses and let the you know what hit the fan?" It's a tough question. We are sort of damned if we do and damned if we don't. The whole economy could crash, millions could be out of work and out of their homes (that many of them should never have been sold in the first place) and as a nation we could become the carrion prey of the vultures waiting to descend upon the remaining skeleton of our economy like Arabia, France, Venezuela, O.P.E.C. and others. We could let these guys off the hook and bail them out but is that a solution or a deferral of the inevitable?

As for blame it really doesn't matter. It was the home buyers, the sellers and the financiers. Every single one of them knew that this wonderful deal they sat down and agreed upon with everyone's signature was truly an American dream and like a dream, we all have to wake up some time and then reality sets in. Yeah, reality bites, but it is what we have to deal with. I don't know what the answer is but I lean towards taking our lumps and leaving something closer to a promising future for my grand kids.

article below:
"What happened to all the money these lenders lost? Where did it go?In many ways, it never existed. As lenders kept pushing mortgages to people further down the income ladder, they added buying power — based on credit, not real income — pushed up home prices much faster than incomes. Mortgage brokers pressured appraisers to inflate home values. Those higher values forced new home buyers to stretch further to buy a home; lenders were happy to sell credit to shaky borrowers.
The scheme was based on the belief that rising home prices would let stretched home buyers cash out their new equity and refinance into a new loan before low "teaser rates" reset, trapping them into loans they couldn't afford. When home prices started falling two years ago, adjustable mortgages reset to their true cost, and homeowners began defaulting and losing their homes to foreclosure. Those homes are being dumped on the market at fire-sale prices, pushing home prices even lower."

And they didn't know this??! Are you kidding me??!!