tag:blogger.com,1999:blog-1110014885778996459.post5679670285393681418..comments2024-03-28T11:48:09.419-07:00Comments on Idiosyncratic Whisk: Housing: Part 172 - A Bubble both rational and unmooredKevin Erdmannhttp://www.blogger.com/profile/07431566729667544886noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-1110014885778996459.post-59238493823160080522016-08-31T13:23:30.581-07:002016-08-31T13:23:30.581-07:00Yep. And, they got their payouts when the market ...Yep. And, they got their payouts when the market for the AAA securities collapsed in late 2007, before the actual number of defaults was that high. The securities collapsed because of expectations. Those expectations became true, but only because of credit and monetary policies that caused defaults to keep rising in 2008 and 2009.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-89927009483061336432016-08-31T12:00:09.746-07:002016-08-31T12:00:09.746-07:00Another irony of the Big Short - the main characte...Another irony of the Big Short - the main characters seemed to think that their positions would pay off when interest rates ROSE on those ARMs and forced defaults due to rising monthly payments. billnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-34052653834650349862016-08-16T12:06:20.291-07:002016-08-16T12:06:20.291-07:00I like this addition to your last post. Paulson re...I like this addition to your last post. Paulson really wants the GSE's for Wall Street. That is what this is about. There was an article at the NY times that said exactly that, years ago. The banks could then issue loans, and guarantee them themselves! I kid you not, Kevin. One of my first articles on Talkmarkets at my name expresses my view that the banks cannot be trusted with the GSE business. <br /><br />Also you point out that loans were made with little down, and that it was not particularly rational behavior. Well, people were promised the option of refinancing later. I remember those promises when I went to open houses. I thought they were crazy. But they were promising refi, almost with a certainty. You had David Lereah promising that RE's climb had not stopped. I think he was abandoned by the Fed, but I think he knew people were at risk. I really have mixed feelings about David Lereah. <br /><br />And of course the rates were not that low. The teaser, beginning rates were low. Yes, some people who held out did see the adjusting rates diminish. But I think big investors cashed in big at the foreclosure auctions. A lady who invests in foreclosures said big money brought suitcases of money. I assume she would know as she owns multiple properties. I can't confirm that. <br /><br />And about the rational/irrational part. It became easier for people to move into a house, no money down, than to pay first, last and deposit on a rental. Yeah, the financial system knew exactly what it was doing to people. Gary Andersonhttp://www.talkmarkets.com/content/us-markets/we-cannot-trust-big-market-rigging-banks-to-replace-the-gses?post=73668&uid=4798noreply@blogger.com