Monday, March 2, 2009

Sources of the Mortgage Crisis

This article, published in the New York Times in 1999 (that's right, 1999) helps indicate where our current mortgage crisis started.

It wasn't a Bush economy. It wasn't under-regulation. It was government intervention in the market. It spanned two presidencies and several congresses, with government control in the hands of both Democrat and Republican parties during that period.

Have a read, then ask yourself if you really want the government getting deeply involved in the mortgage industry again.

1 comment:

ajping said...

You are so right. The talk about the mortgage crisis is saying a forest fire was caused by a lightning strike or a careless camper. What really causes forest fires is drought and lots of dry timber.

But there are some truly heinous thinks that some banks did. To take this analogy a bit further, they went around the merrily spraying gasoline near campsites.

Portfolio ran an article by the guy who wrote "Liars Poker" way back in 1989 this December. In his own words: "I thought I was writing a period piece about the 1980s in America. Not for a moment did I suspect that the financial 1980s would last two full decades longer or that the difference in degree between Wall Street and ordinary life would swell into a difference in kind. I expected readers of the future to be outraged that back in 1986, the C.E.O. of Salomon Brothers, John Gutfreund, was paid $3.1 million; I expected them to gape in horror when I reported that one of our traders, Howie Rubin, had moved to Merrill Lynch, where he lost $250 million; I assumed they’d be shocked to learn that a Wall Street C.E.O. had only the vaguest idea of the risks his traders were running. What I didn’t expect was that any future reader would look on my experience and say, 'How quaint.'"