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  1. #141
    Order Now! pure_mercury's Avatar
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    Quote Originally Posted by ptgatsby View Post
    Because housing prices always went up
    Land generally does go up in value, because (except in the Netherlands) they aren't making any more of it. Housing does not, and you can't invest that way. I have no sympathy for house flippers.
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  2. #142
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    Quote Originally Posted by Udog View Post
    Willful ignorance (or willful lack of common sense) mixed with predation. The brokers got paid commission by making the loan, so they didn't take on any of the risk.
    It's not predation to give people what they ask for, though. Making money off idiots is absolutely ethical.
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  3. #143
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by pure_mercury View Post
    Land generally does go up in value, because (except in the Netherlands) they aren't making any more of it. Housing does not, and you can't invest that way. I have no sympathy for house flippers.
    Should go up at based on the rate of population + inflation, for sure.

    But the point is that actors tend to be blind to things, especially in a bubble. The principle that everyone is 'rational' is true only in a very narrow context - if you see house prices go up year after year, it is rational to assume they will continue to go up.

    Not everyone - in fact, most - do not react with a long term rational approach. We all tend to react to incentives in the short term. Bubbles are just the run away version of it.

    It wasn't just house flippers that based their 'economic' decisions on rising markets... capital appreciation also justifies buying more than you can afford. I mean, not knowing that it was a bubble, can you really turn down a 3-4% loan with 5, 10, 15% appreciation, plus rental income? Entirely rational, if you don't consider the reliability of the fundamentals.

  4. #144
    Order Now! pure_mercury's Avatar
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    Quote Originally Posted by ptgatsby View Post
    Should go up at based on the rate of population + inflation, for sure.

    But the point is that actors tend to be blind to things, especially in a bubble. The principle that everyone is 'rational' is true only in a very narrow context - if you see house prices go up year after year, it is rational to assume they will continue to go up.

    Not everyone - in fact, most - do not react with a long term rational approach. We all tend to react to incentives in the short term. Bubbles are just the run away version of it.

    It wasn't just house flippers that based their 'economic' decisions on rising markets... capital appreciation also justifies buying more than you can afford. I mean, not knowing that it was a bubble, can you really turn down a 3-4% loan with 5, 10, 15% appreciation, plus rental income? Entirely rational, if you don't consider the reliability of the fundamentals.
    I didn't mean to suggest that house flippers were the root cause of this crisis, just that I don't feel bad for them if they believed that housing would continue to rise indefinitely. And yes, I could turn down that loan. I hate loans, and I don't even have a credit card.
    Who wants to try a bottle of merc's "Extroversion Olive Oil?"

  5. #145
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by pure_mercury View Post
    I didn't mean to suggest that house flippers were the root cause of this crisis, just that I don't feel bad for them if they believed that housing would continue to rise indefinitely. And yes, I could turn down that loan. I hate loans, and I don't even have a credit card.
    I don't feel bad for them either. Most of them made a lot of money. It wasn't flippers that suffered - far as I can tell, it isn't the majority of them that were left holding the bag.

    It was amateurs following the herd. I do feel bad for them. But hey, humans are humans. No amount of free market or government control can prevent bubbles.

  6. #146
    Order Now! pure_mercury's Avatar
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    Quote Originally Posted by ptgatsby View Post
    I don't feel bad for them either. Most of them made a lot of money. It wasn't flippers that suffered - far as I can tell, it isn't the majority of them that were left holding the bag.

    It was amateurs following the herd. I do feel bad for them. But hey, humans are humans. No amount of free market or government control can prevent bubbles.
    This is true. I have a love-hate relationship with Jim Cramer, but he is right on when he says, "Bulls make money. Bears make money. Pigs get slaughtered." I will never be that when I have money to invest.
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  7. #147
    Protocol Droid Athenian200's Avatar
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    Quote Originally Posted by oberon View Post
    ...and the Dow is down 600+ points as a result.

    Hmmm...
    Well, I didn't particularly think the bailout was a good idea, anyway. I don't think we need that much government involvement in the economy. I agree with their decision not to pass it.

  8. #148
    Seriously Delirious Udog's Avatar
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    Quote Originally Posted by pure_mercury View Post
    It's not predation to give people what they ask for, though. Making money off idiots is absolutely ethical.
    Even if they do it by unethical means?

  9. #149
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    Quote Originally Posted by Udog View Post
    Even if they do it by unethical means?
    If they commit fraud or strong-arm people, it's bad. If they simply present a contract with bad terms to someone who signs it freely, then no, it's fine by me.
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  10. #150
    Senior Membrane spirilis's Avatar
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    Bailout Bill v2.0 has passed the senate.

    Bloomberg.com: Worldwide

    U.S. Senate Approves $700 Billion Financial-Rescue (Update1)

    By Nicholas Johnston and James Rowley

    Oct. 1 (Bloomberg) -- The U.S. Senate tonight approved a $700 billion financial-rescue plan that funds the biggest government intervention in the markets since the Great Depression. The package now goes to the House of Representatives, which rejected an earlier version of the measure.
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