this whole subprime fiasco has been an interesting and somewhat sad topic to follow. cnn money has a really good article that portrays the main parties responsible for the subprime fiasco and the blame game that is going on now. a good read.
here is a slightly different perspective on the actors involved and how they are impacted by this fiasco. there are a couple of extra ‘actor’s that i threw in into the mix.
the mortgage brokers and the appraisers
well they don’t have any financial stake in this game. they made their money during the good times. times are not so good now. but they ain’t losing any money.
the regulators
with all the problems going on in the political arena, nobody is going to come and chase them and question their actions or lack thereof. unless the problem explodes further and overshadows the existing problems and comes back into the media limelight.
the mortgage lenders
during the good times they had 2 good things going for them. the profit from the obscene interest rates that they were charging and wall street firms lining up to buy these mortgages. even though they are hurting now, they made enough money during the good times and the executives got paid pretty well. they will lay off a bunch of employees, reduce their expenses and continue to make money from the remaining mortgages.
wall street
it is wall street. during the good times, they bought all these mortgages and made a ton of money. they got their unimaginable bonuses and created records. they might not make the same amount of money this year. but they ain’t losing anything big either.
real estate agents
the ones who used to sell real estate before made a fortune. the ones who quit their job and moved to selling real estate are probably hurting. well, it is their stupidity. they deserved it. it is still a relative minority.
the builders
the builders claim that they are losing money and their financial results do not look very good. well, they are not really losing money. they just are not making the same amount of money they made during the good years. if you look at it, the inflation rate does not match up with the rate in which the housing prices increased. so, the prices went up overall and the builders are going to continue to make more money.
the government
the government entities all made more money. higher property taxes, higher sales taxes, a booming construction industry. it is all good money coming in.
borrowers – a.k.a. ‘the common man’
with this mad rush many things happened to the common man.
- the bunch who borrowed more than their capacity probably lost their house. they also probably lost a whole bunch of money they paid in interest. and all the mental strain, ruining of the credit score etc…
- the bunch who decided to buy ‘x’ number of houses to make a quick buck and got stuck with ‘x’ mortgages and lost their existing fortune in the whole process.
- the rest of the crowd who can’t afford a house now, because of the housing prices that skyrocketed. once they are up there, they will just hover there. they ain’t coming down anytime soon.
so, pretty much everybody in this game made more money with the exception of the common man. they will continue to make more money. the capitalistic economy is not going to stop them. all the ‘actor’s involved decided to stage a play and ’screwed’ the common man. and the play is not funny. definitely not funny for the folks who are losing their houses.
