NY Mag: 10 Years After the Financial Collapse

[zoony]

1 minute ago, Kilmer17 said:

The GR could have been much much worse.

 

But being worse could have been better long term.

 

That remains to be seen.  Certainly a decade of QE is a concern

 

Its all just theory, nobody knows.  Thats why a basic intelligence assesment can be made of someone predicting recessions.  Whether it be MCD5 or anyone in this thread, theyre either a partisan hack or dumb.  Or both

[Sticksboi05]

1 hour ago, zoony said:

 

I actually think the great recession could have been worse than the GD.  The only difference was TARP, and a fed chief who had spent a lifetime studying the GD causes and fixes.  It was actually his PHD thesis.

 

Of course the Ron Paul dip****s knew more, and tarp was bad.  They read a blog and read atlas shrugged, after all.  Where are all those idiots anyway?  Some of them still post regularly, you all know who you are

 

Agreed. A big difference too is in many ways we have still not recovered from 2007-2009 whereas the turnaround after the Great Depression was actually pretty incredible considering the circumstances, and of course WWII made everyone forget about it.

 

The actual economic collapse itself though, 2008 was not in the same category - the U.S. had up to 25% unemployment in the early 1930s and in other countries it was over 30%. That is unheard of. The U.S. GDP dropped 28% in three years.

 

Then there's the fact that living in the 1930s even as a rich person sucked because you know, it was the 1930s.

[zoony]

21 minutes ago, Sticksboi05 said:

 

Agreed. A big difference too is in many ways we have still not recovered from 2007-2009 whereas the turnaround after the Great Depression was actually pretty incredible considering the circumstances, and of course WWII made everyone forget about it.

 

The actual economic collapse itself though, 2008 was not in the same category - the U.S. had up to 25% unemployment in the early 1930s and in other countries it was over 30%. That is unheard of. The U.S. GDP dropped 28% in three years.

 

Then there's the fact that living in the 1930s even as a rich person sucked because you know, it was the 1930s.

 

Grandparents on both sides used to tell me that not having any money during the GD wasnt that big of a deal, because there was really nothing to buy.

 

And think about that 25 percent unemployment number.  That was back when women werent really a part of the workforce.  That equivalent number today would be, what, 40-50%?

Also, from the crash in 1929 to wwii was essentially 13 years.  The country didnt really fully pull out of the GD before the war

 

So that would be 2021, we still have a way to go

[Renegade7]

Didn't WWII essentially pull us out the great depression?  Like New Deal put us in right direction, but stuff like government telling the factories to go in overdrive making war tools likea tanks and guns and women having to fill the workforce void because of all the draftees took us over the top, right? Great thread, btw.

[Larry]

1 hour ago, Renegade7 said:

Didn't WWII essentially pull us out the great depression?

 

Yes, I have seen what sure looks, to me, like a really gung ho effort to push that obviously false narrative.  (By people trying desperately to claim that FDR's policies had nothing to do with it, it was purely his blind luck.)  

 

The data:  Real GDP, per capita.  (GDP, adjusted for inflation, and population growth.)  (Source is one that I've never used before, but looks legit.)  

 

How to get to the data:  Take this link.  Tell it you want "Real GDP Per Capita", from 1928-1940

 

What you'll see:  (The historical events, are what I understand happened.  Big grain of salt.)  

 

1929:  Great Depression hits.  

1930-2 GDP plumets, average fall of 10%/year.

1933  FDR takes office, begins New Deal.  GDP falls 2%

1934-9 GDP grows by large amounts (with the exception of '38, where FDR tried to ease off).

            Average change during that time (including '38 in the average):  6%/year.  

 

Now, how the "reasoning" "works"  

 

1)  Real GDP Per Capita did not rise to equal what it was, before the crash, till 1939.  

2)  Therefore, announce that "The Great Depression didn't end till 1939".  (I actually believe that's a valid statement.)  

3)  Pretend that the depression ending in 1939 is something that happened instantly, in 1939.  (And wasn't the result of GDP growing by 6% a year for 6 years in a row.)  

4)  Point out, while the US wasn't actually in the war in 39 (Basically, we entered the war three years later.)  But, in Europe, there were signs in 1930 that a war was coming.  

 

5)  Presto!  The Great Depression ending was not the result of six years of government policy, causing six years of rapid economic growth.  The Depression ended instantly, in 1939, because of something that was going to happen, three years later.  

 

(In case you can't tell, I don't buy that "reasoning".)  

 

[Renegade7]

6 minutes ago, Larry said:

 

(In case you can't tell, I don't buy that "reasoning".)  

 

Apparently. 

 

This unemployment graph kinda lines up with that, slight uptick in 1938 then going down anyway at similar rate.  I'd say your right, full stop.

 

Guess question is given our major trading partners in europe were getting carpet bombed or taken over, would unemployment kept going down like that? I can see clearly what you saying that new deal was working, and had world war 2 not happened, it might if kept going down like that.

 

But we'd either have to start trading with Germany and Japan again or go to war with them to keep unemployment going down since world War 2 did happen, right?

[Larry]

Oh, I'm not going to pretend to have a clue as to what would have happened to our economy, if the war hadn't happened.  (Or if we stayed out.)  No clue.  

 

And I do think it's a no brainer that when you look at the decades of prosperity we enjoyed, from 45 till the 80s at least, the biggest factor in that was the fact that at the end of the war, the US had built a manufacturing capacity which far exceeded what we needed domestically, and all the rest of the world's factories had been bombed to ****.  (Although I also believe, again without a whole lot to support it, that things like The Marshal Plan probably had a real positive impact on the economy of the rest of the industrialized world, and also contributed a lot to that prosperity.)  

 

In short, I think that the folks who were running things, during those times, made a lot of decisions that turned out to be right.  

 

[PeterMP]

21 hours ago, JSSkinz said:

It was common to write prequal letters based on the maximum loan a customer can qualify for, it doesn't mean you have to leverage yourself to that extent.  The fact you fought with them for a reduced letter is probably because it made no sense to get one.  Showing an agent you qualify for much more than the house you are buying only makes you a stronger buyer and one that an agent and seller would want to transact with because the risk of the loan falling through is diminished.

 

What if they gave you a prequal for what you wanted and the wife falls in love with a house that's $10,000 more than the prequel letter (this happens), now you have to go back to the bank to get a new letter and by that time the house is probably gone because several bids have been placed.

 

We were asking for a letter for the maximum of what we thought we could afford, which was already much more than what we actually wanted to spend.  We asked for a letter based on what we thought was the best case scenarios (that we both kept our jobs) and extreme budget tightening on everything else.  The letter covered something $10,000 more than what we wanted because the letter covered the maximum we could actually afford.

 

And they didn't over shoot it by a little bit.  They over shot it by almost 3X what we wanted.  That was a huge amount of money (much more than $10,000).  They gave me a letter saying I could borrow enough money that I don't think I could have paid it back if you gave me a 60 year mortgage and if my wife and I both lived and worked until we were 90.

 

It would also have had the effect of the realtor showing us more homes out of our price range because oh we probably could actually get a loan to cover it and potential sellers actually thinking we could afford something we couldn't.

[JSSkinz]

1 hour ago, PeterMP said:

 

We were asking for a letter for the maximum of what we thought we could afford, which was already much more than what we actually wanted to spend.  We asked for a letter based on what we thought was the best case scenarios (that we both kept our jobs) and extreme budget tightening on everything else.  The letter covered something $10,000 more than what we wanted because the letter covered the maximum we could actually afford.

 

And they didn't over shoot it by a little bit.  They over shot it by almost 3X what we wanted.  That was a huge amount of money (much more than $10,000).  They gave me a letter saying I could borrow enough money that I don't think I could have paid it back if you gave me a 60 year mortgage and if my wife and I both lived and worked until we were 90.

 

It would also have had the effect of the realtor showing us more homes out of our price range because oh we probably could actually get a loan to cover it and potential sellers actually thinking we could afford something we couldn't.

It should be a cut and dry process of verifying employment, credit, and debt ratio before that letter is released to a prospective client, if you're saying they didn't follow those steps then the letter wasn't worth the paper it was written on.

 

[Sticksboi05]

Forbes: The Lie That Won't Die: 'Poor Borrowers Caused The Financial Crisis'

[DCSaints_fan]

On 8/10/2018 at 8:17 AM, JSSkinz said:

It should be a cut and dry process of verifying employment, credit, and debt ratio before that letter is released to a prospective client, if you're saying they didn't follow those steps then the letter wasn't worth the paper it was written on.

 

 

Verification of employment?  That's a pretty high standard.  When I worked an LO, we had two standards - one was called "pre-qualifcation", and it was basically just running total debt to income assuming a reasonable interest rate at current interest rates.  Credit wasn't considered.  

 

Then we had another standard called "pre-approval" which involved pulling credit and putting them through Fannie Mae's online software (forgot the name), which would give the level of approval and would allow us to be confident that the loan would go through if employment and assets could be verified (and the borrower didn't do anything crazy like suddenly stop paying all their bills, which happened one time and screwed over a purchase)    In this case, we would actually ask our borrowers how much they were looking to be approved for - because we needed an exact loan amount.

 

Most serious borrowers would have an idea of the price of homes they were looking for and want the pre-approval.    Now granted, this was all the mid 2000s before the crash, so I'm sure much as changed.

[JSSkinz]

4 hours ago, DCSaints_fan said:

 

Verification of employment?  That's a pretty high standard.  When I worked an LO, we had two standards - one was called "pre-qualifcation", and it was basically just running total debt to income assuming a reasonable interest rate at current interest rates.  Credit wasn't considered.  

 

Then we had another standard called "pre-approval" which involved pulling credit and putting them through Fannie Mae's online software (forgot the name), which would give the level of approval and would allow us to be confident that the loan would go through if employment and assets could be verified (and the borrower didn't do anything crazy like suddenly stop paying all their bills, which happened one time and screwed over a purchase)    In this case, we would actually ask our borrowers how much they were looking to be approved for - because we needed an exact loan amount.

 

Most serious borrowers would have an idea of the price of homes they were looking for and want the pre-approval.    Now granted, this was all the mid 2000s before the crash, so I'm sure much as changed.

2

Yep, that letter is supposed to be as close to a guarantee as possible so that the seller and REO agent aren't wasting their time on a buyer who can't obtain financing, if you were selling your house which would you prefer?

 

I believe the software you're talking about is called DU or Desktop Underwriter, I've been out of that industry for 10 years now, I know compliance and red tape has thickened but I think a lot of the core stuff has stayed the same.

[zoony]

8 hours ago, Sticksboi05 said:

Forbes: The Lie That Won't Die: 'Poor Borrowers Caused The Financial Crisis'

 

Its almost as damaging as the lie that it was a conspiracy among big banks.  But both are complete lies, and a substitute for thinking.

 

Anyone takes either position, i know immediately that they are an ignorant, partisan hack and should not be taken seriously

 

Dip****s on the right blame poor people.  Dip****s on the left are convinced the big evil banks did it on purpose.