[lit-ideas] Re: Was the Housing market like a Ponzi scheme?
- From: "Lawrence Helm" <lawrencehelm@xxxxxxxxxxxxxx>
- To: <lit-ideas@xxxxxxxxxxxxx>
- Date: Tue, 6 Sep 2011 09:39:41 -0700
Jack,
A response is located at
http://www.lawrencehelm.com/2011/09/was-housing-market-like-ponzi-scheme.html
Lawrence
From: lit-ideas-bounce@xxxxxxxxxxxxx [mailto:lit-ideas-bounce@xxxxxxxxxxxxx] On
Behalf Of Jack Spratt
Sent: Tuesday, September 06, 2011 6:52 AM
To: lit-ideas@xxxxxxxxxxxxx
Subject: [lit-ideas] Re: Was the Housing market like a Ponzi scheme?
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.
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