In a BBC interview, economist Prof Joseph Stiglitz managed to edge in that Bush and Greenspan are responsible for the current Credit crisis. Bush because of his tax cuts and Greenspan for lowering interest rates.
What?!
Let me see...Bush made them buy the house, and Greenspan made them take adjustable rate mortgages, right?
All I could think when I was listening to this report was, "This guy's a moron!" And to think, he's a Professor of Economics at Columbia U and Former Senior Vice President and Chief Economist of the World Bank. You'd think the guy would have something on the ball.
But not once in his tirade did he mention people buying more home than they could afford, checkiing out interest rates or what would happen if the Prime rate went up even one-half of one percent, realtors pushing people into buying more expensive homes to boost their commissions, bankers pushing teaser rates to get people to sign, pressure tactics of both realtors and bankers, or ignorant or ill-informed purchasers.
Nothing was said about instant gratification of buying the house you really want RIGHT NOW! without regard for the future. Anyone here remember the "starter home"?
When my wife and I bought our first house, she wanted an adjustable rate because we could borrow more and have lower payments. But I talked to my friends, coworkers and realtors I knew personally and realized an adjustable rate mortgage was a Bad Thing. I eventually got this through her head. We bought a cute little cape for about $200 more a month than we were paying for rent. It wasn't exactly what we wanted, but it was a nice, cozy home and more than enough for our needs. After a few years, our mortgage was less than people were paying for rent. We sold it for a 'profit', and put our money down on a nicer home, also with a fixed rate.
Yeah, we paid a little more, and got less than we 'could' have, but then, in 1987, we didn't have any little surprises like a lot of our friends did, either. Our mortgage stayed at $685 a month, while friends who had been paying the same or less were suddenly paying $9-1100 a month.
Too bad Mr. Stiglitz didn't look at this aspect of things, but then, as a Democrat with an agenda, he wouldn't, would he?