[lit-ideas] Re: Was the Housing market like a Ponzi scheme?
- From: Jack Spratt <dosflounder@xxxxxxxxx>
- To: "lit-ideas@xxxxxxxxxxxxx" <lit-ideas@xxxxxxxxxxxxx>
- Date: Tue, 6 Sep 2011 06:51:30 -0700 (PDT)
The housing market was a bubble, not a Ponzi scheme. It's sloppy use of a word
that seems to be entering into the vernacular and expanding its range. What
Maddoff did was a Ponzi scheme, he kept recruiting new investors, pocketing the
money and sending out bogus statements that sang of double digit returns. It
was all phony. In the housing bubble people were buying houses and flipping
them, i.e. selling them for more than they paid, as an investment to make
money, because of Greenspan's idiotic interest rates. It's a Ponzi scheme to
the extent that it was supposed to go on forever until it didn't. The problem
isn't so much the flipping as that people were taking out mortgages that were
over their heads and also using their houses as credit cards, borrowing against
them for consumer items hoping to repay when they resold. When the bubble
burst they were stuck with all the debt. However, the banks and hedge funds
were the fuel behind
the fire. They bundled the bad mortages and sold them to each other and made
billions of dollars pushing them to consumers. Now they're happy to pass on
the blame and are sitting pretty financially while people are hung out to dry.
Social Security is much more a Ponzi scheme, and it's running out of workers.
Where there were six workers to one retiree in the 60's, there are three
workers for one retiree today. Bubbles are like a mass hysteria that sweeps
periodically, the tulip mania, the Japanese real estate market, now the Chinese
real market possibly.
J.S.
From: Lawrence Helm <lawrencehelm@xxxxxxxxxxxxxx>
To: Lit-Ideas <Lit-Ideas@xxxxxxxxxxxxx>
Sent: Tuesday, September 6, 2011 12:21 AM
Subject: [lit-ideas] Was the Housing market like a Ponzi scheme?
Jack Sprat wrote, “The mortgage market was not a Ponzi scheme. It was simply
handing out money to anybody with a pulse, whether they had a prayer of
repaying it or not. A Ponzi scheme borrows from Peter to pay Paul and borrows
from Paul to pay Harry and borrows from Harry to pay Susie until it runs out of
people to collect money from. Then it collapses, as it always does.”
I used the expression a “sort of Ponzi Scheme. Perhaps that wasn’t clear. I
meant “like a Ponzi Scheme – not that it was the same thing but like it.”
The following people say something similar:
http://daviddegraw.org/2011/07/this-is-what-a-collasping-ponzi-scheme-looks-like-housing-market-headed-off-a-cliff-as-a-shocking-10-8-million-mortgages-at-risk-of-default/
“
This Is What A Collapsing Ponzi Scheme Looks Like: Housing Market Headed Off A
Cliff As A Shocking 10.8 Million Mortgages At Risk Of Default”
http://www.bergenjerseyforeclosures.com/blog/info/entry/the_housing_market_was_a
“the Housing Market acted like a Ponzi Scheme.”
http://finance.yahoo.com/blogs/daily-ticker/housing-fix-end-government-subsidy-ponzi-scheme-says-184750774.html
“Housing Fix: End the Government’s Subsidy ‘Ponzi Scheme,’ Says NYU Professor”
http://www.independentaustralia.net/2011/business/the-government-run-australian-property-market-ponzi-scheme/ ;
“The Australian housing market is a Government run Ponzi scheme set up to
advantage governments, banks, developers and the real estate industry at the
expense of ordinary Australians.”
http://my.firedoglake.com/tucsonrobert1/2011/07/27/the-u-s-housing-market-what-an-imploding-ponzi-scheme-looks-like/ ;
“The U.S. Housing Market. What an Imploding Ponzi Scheme Looks Like.”
I’m surprised Jack can’t see the similarity, but then he hasn’t said that much
about himself so maybe I shouldn’t be surprised – that is, at this point I have
no idea what he knows and what he doesn’t know, but I’m learning.
Lawrence
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