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Theory on economy?
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<blockquote data-quote="flutterby" data-source="post: 319183" data-attributes="member: 7083"><p>There are a lot of factors. </p><p></p><p>We had a housing boom and the bubble burst. Property values were skyrocketing and then the bottom fell out. Banks were eagerly writing subprime (can't think of my words and not sure that is the right word) loans - loans to people with marginal credit, to people without verifiable income, and loaning more to people than they could afford to pay. They made a lot of money on those loans, but didn't look beyond their nose. A large percentage of those loans defaulted and banks were taking a huge hit and losing money hand over fist.</p><p></p><p>That created the credit freeze. Businesses that depend on loans from bank for cashflow couldn't get loans and couldn't make payroll. </p><p></p><p>It's a lot of factors and it just trickles down. People lose jobs, or take a decrease in hours or pay and all of a sudden those loans that they were stretched too tight for anyway can no longer be paid. Housing values fell dramatically and people couldn't sell their houses for what they owed on the mortgage. Even if you could, there weren't as many buyers. The more foreclosures around you, the more your property value falls.</p><p></p><p>It's a large domino effect, but most economists blame the banks, deregulation, as well as consumers for wanting more and more and more and getting in over their heads.</p><p></p><p>Our national deficit plays into this as well, but don't ask me to explain it.</p><p></p><p>I know a lot of people in my old neighborhood were "house poor"; meaning they were at the top limit for their mortgage and it only takes one snafu to knock them down.</p></blockquote><p></p>
[QUOTE="flutterby, post: 319183, member: 7083"] There are a lot of factors. We had a housing boom and the bubble burst. Property values were skyrocketing and then the bottom fell out. Banks were eagerly writing subprime (can't think of my words and not sure that is the right word) loans - loans to people with marginal credit, to people without verifiable income, and loaning more to people than they could afford to pay. They made a lot of money on those loans, but didn't look beyond their nose. A large percentage of those loans defaulted and banks were taking a huge hit and losing money hand over fist. That created the credit freeze. Businesses that depend on loans from bank for cashflow couldn't get loans and couldn't make payroll. It's a lot of factors and it just trickles down. People lose jobs, or take a decrease in hours or pay and all of a sudden those loans that they were stretched too tight for anyway can no longer be paid. Housing values fell dramatically and people couldn't sell their houses for what they owed on the mortgage. Even if you could, there weren't as many buyers. The more foreclosures around you, the more your property value falls. It's a large domino effect, but most economists blame the banks, deregulation, as well as consumers for wanting more and more and more and getting in over their heads. Our national deficit plays into this as well, but don't ask me to explain it. I know a lot of people in my old neighborhood were "house poor"; meaning they were at the top limit for their mortgage and it only takes one snafu to knock them down. [/QUOTE]
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Theory on economy?
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