Housing Crisis – What housing Crisis?

I am beginning to wonder if my government is just stupid, or being deliberately obtuse. After a few milliseconds thought, I am coming to the "deliberately obtuse," conclusion. I hear from all over that the "housing crisis," was caused by people defaulting on their unrealistic mortgages. Ha!

What a joke. You could pay off every single defaulted mortgage in the USA today in full, and it would not make the slightest bit of difference. None. Zero. That ain't the problem folks. It sounds good. In fact, it sounds awesome. Silly people taking out loans they couldn't afford caused the mess.

What a load of bollox !

This is not the problem. The problem is this -

Bank ABC then said, "OK, we have a bunch of mortgages. They are worth xx million," and borrowed xxxxx million against those mortgages. They used the xxxxx million to buy up more mortgages and then sold them to bank XYZ, who said, "OK, now we have xxxxx million in mortgages," and borrowed xxxxxxxxxx million against them. And used the xxxxxxxxxx million as collateral - handing them over to bank CDE.

Bank CDE then realized they were on to a good thing and used those xxxxxxxxxx million in "solid mortgages," to borrow xxxxxxxxxxxxxxx million from bank ABC. Who didn't have the mortgages or the money to do so any more.

Get the idea?

Then one day, some one said, "Oh, those mortgages don't look so good any more. Let's set up an offshore company and shift them on to their balance sheets. Thus was born, offshore bank ABC. Radically different to bank ABC, but still in a position to sell, lend and borrow against these mortgages.

My best guess is - about 20,000 times the original "value" of these delinquent mortgages was lent, borrowed or shifted around until one day some one said," Hmmmm. I want my money back."

Bingo - Financial crisis. No one had the money because it had been spun up to a massively inflated value and the money was never there in the first place.

I have yet to see one single, solitary government official suggest anyone go to prison or be held accountable for this. What are the chances???????

Exactly. So what do they do? Pay some wanker at CNN to spread a the same bullshit. I have no idea who Colin Barr is, but I assume he got his writer's degree in Mickey Mouse school, because here he is blaming the delinquent mortgages as the problem and suggesting dropping the mortgage rate 2% and nationalizing Fannie Mae and Freddie Mac fully will fix the problem. Seriously - How dumb can you be?

Two scapegoats in the mortgage mess, Fannie Mae and Freddie Mac, could play a key role in a housing revival.

He is even quoting some banker (Len Blum) as saying,

If you're trying to stimulate demand, the best way is to bring down mortgage rates.Doing that attacks two of the big problems in housing right now.

Sorry sunshine. The two problems in the housing market right now are the banks and the governments. But every cloud has a silver lining. Perhaps this is a good recession?

And for a very simple explanation in powerpoint, try this little slideshow - how to make millions by f******* up the economy.