Scott Miller's Welcome to the Jungle Blog Part II

First the blame for the mess we are in is not only the banks fault. Politicians would love for you to blame the BIG BAD BANKS for all that lending of loans to people that could not afford their homes. Truth is most of those banks were filling a need. Now that does not excuse them from blame, but includes them into it with others.

The Bond Holders now who are crying, that it is not fair that our foreclosure rate is so high and they were sold a bill of goods in what the assets could do back in the early part of the decade, could not get enough of these loans. They wanted more and when the banks could not fill their need they asked the banks to soften up their standards to fill those needs. Of course the foreclosure rate at that time was not as high as it is today and the more the banks opened the coffers the more money they made. This of course made their shareholders happy. Bond holders had their needs filled the banks were making money and the shareholders were receiving dividends.

What a great world right, but let’s not forget the rating firms that kind of …….well……..sold the bond holders a bill of goods too. Check out the article in The Wall Street Journal October 7, 2011 Rating Firms’ Asset Game. Here is a quote from the article “Standard & Poor's, however, typically evaluated each asset assembled into the securities rather than relying solely on the so-called worst-case scenario, according to current and former rating analysts. But that left the firm more dependent on fictitious "dummy" assets, which were placeholders used at the time of ratings and then replaced with other actual assets over time, those analysts say”……Dummy Assets for value?….mmmm……sounds a little fishy to me.

And who in their right mind would have thought that the laborer who made $50,000 a year would really be so irresponsible to go out and purchase a $800,000 home right. No they were not responsible for the down fall either.

Well we also could not blame the person who needed to upgrade their house because their neighbors just moved into this deluxe house with all the bells and whistles, and we better get in before we cannot afford a house. Then leverage it to the hilt and purchase 3 new cars also leveraged to the hilt to sit in their newly acquired house with the 3 car garage. Then, to make more sense, fill the house with financed to the hilt furniture for the 9 rooms they now found themselves having to fill. Yeah it was the banks sole fault.

But let’s not forget the government who tried to push EVERYBODY who was taking air through their lungs to be a homeowner. Yeah it was the banks fault. Well I think based on the above commentary you will agree maybe there was a bigger at fault then just the banks. Maybe we all had a little GREED going on and we are now paying the price. Alright so what do we do?