To everyone who has had trouble understanding all of the different explanations of the housing crisis (including mine), I recently found a VERY easy to understand and read article, which can be found here.
The article does a great job of explaining the housing situation and the analogy of a bar and home-buyers really helped me simplify the crisis. Because of the different choices unemployed and employed Americans made in terms of their home-buying, many other Americans were also affected. Because of the increase of homes bought on bad credit, other people with bad credit also thought it would be ok for them to buy houses.
The last part of the explanation is one that is pretty interesting- "Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion dollar no-strings attached cash infusion from their cronies in Government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Heidi's bar." The bias in this line implies the view of the writer that they do not really care for the fact that the government bailout of 2008 was paid for by American taxpayers, some of which had nothing to do with the initial housing crash.
What do you think about the bailout? Should the government have bailed out the financial institutions with money paid for by taxpayers? What are your thoughts?
I love how easy you made it to understand all of this housing stuff. I know the housing crisis is important in the world and pertinent to me, and that I will need to understand all of this jargon in the near future. This article was definitely a more attractive approach to attempting to decipher Derivative Markets, and was even funny. I will say, “PUKEBONDS” made me laugh a little.
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