It's hard to know where to start on this.
"You know why builders are predisposed to build higher end houses?? There's more money in it."
Hard to know where to start on that. What do builders do when the market for higher end homes is saturated? Go home?
Here's something I know a bit about. I know lots of people that can bang out straight ranches and capes all day long and few if any of them complain about the job not paying. I know a few who build McMansions as well, but there's a more limited market on the high end. Meanwhile wood and nails and time do still exist.. There's an excess of supply there, so people cobble together a few shacks for the other folks. Hey, they're warm in the winter... dry in the rain... stuff like that's still important, even outside of your masters' world.
The other thing that you bring up is this gem:
" Financing low income housing " = subprime loans
What the heck does that mean?
I guess what you're trying to say is that if you can't afford a McMansion you can't actually afford any home at all. Am I getting that right? What the hell's the matter with you?
I remember FHA and a similar program, CHFA here in Connecticut, that put lots of Americans in homes they could pay for. VA loans were arranged for these purposes as well. Hundreds of thousands of neighborhoods were built across this nation with just such programs. And yes, they were subsidized although at 5 percent interest like we had that may not really be necessary. People aren't defaulting on those. People are defaulting on a lot of trick products that reset to exorbitant rates.
How many loans are going bad where people could have afforded more reasonable products?
How many loans are going bad where people could have afforded more reasonable products, but the broker made more money on the trick stuff?
How many loans are going bad where the people actually qualified for products they could have afforded?
Let me ask you another question. If Fannie and Freddie are stuck with a lot of bad paper, OK. Apparently they are. That's poor management, and I have some ideas for that that I think might help, and you'd hate them. They involve renegotiating terms and allowing people to pay less interest... saves homes... saves neighborhoods... keeps people off the street. It's kind of a net gain, but like I said, you 'll hate it. And we forgo some profit, but in the end don't really lose or at least lose much less.
Again though. You're boy wasn't trying to get Fannie and Freddy out of the risky stuff, he was trying to get them out of the business of low income and affordable housing. Affordable housing by definition... is housing that people can afford.
But how does this all relate to the collapse of Lehman, Merrill Lynch and AIG? Surely you aren't saying that they were exposed to subprime loans and really had no idea what they were buying and selling. These are the multibillion dollar players. This is who built the house of cards here. You want to blame the poor slob who took the bait? Well, by all means, have at it. But if you're going to tell me the titans of the financial industry were actually duped, well, first of all I don't believe it. And secondly, if they were, perhaps they don't need to be titans of the financial industry anymore. Either way though, I guaranteed Fannie and Freddy. I didn't promise AIG or Lehman anything. Why's it my business if they fail?
