The Blame Game: Who Killed the Economy?

[marmar]

via Yahoo!:



Portfolio.com
The Blame Game
Tuesday June 24, 6:00 am ET


It's a classic Wall Street “whodunit," complete with a collection of greedy investment bankers, slow-witted policymakers and numbskull Florida home buyers. But with so many suspects, how will Americans ever figure out who killed the once-vibrant and cheery U.S. economy?

"There were a lot of people who contributed to the real estate bubble and the easing of lending standards that led to the subprime debacle," says Ethan Harris, chief U.S. economist at Lehman Brothers. So many, indeed, that he and other pundits find it difficult to point the finger at any single player.

You can, though. Play the Portfolio.com brackets and pick your own culprit.

Real estate speculators took foolish risks because lax lenders such as Angelo Mozilo's Countrywide Financial let them; mortgage bankers and investment bankers allowed greed to override caution; credit-rating analysts and central bankers alike relied on risk-management models that proved inadequate to the task at hand.

"Bubbles grow because nearly every player pitches in to make them grow," argues Tobias Levkovich, market strategist for Citigroup.

Of course, at the core of any bubble is an apparently rational demand for a rational good or service that at some point tips over into irrationality. So the quest to assign blame should start with whomever it is that is demanding the free lunch—the purchasers of tulips, dotcom stocks, or, as is the case today, townhouses in Naples, Florida, or on the outskirts of Phoenix.

"The speculative fever that swept through the ranks of home buyers was quite astonishing," says Jason Trennert, co-founder of Strategas, a market-analysis firm. "Everyone wanted to cash in on what they saw as a one-way ticket to riches by buying real estate."

The problem wasn't just the greed of the buyers, however. Lenders were equally hungry for quick profits and all too willing to satisfy that buyer's need for immediate gratification, waiving the requirements for income or job verification in exchange, of course, for only slightly higher interest payments on the mortgage. ......(more)

The complete piece is at: http://biz.yahoo.com/portfolio/080624/dcra3a5db5b9fb57d758a0f90ee15eb8125.html

[fascisthunter]

1. Who or What?: Deregulation

[stillcool]

2. " No one could have predicted"..

we were all duped.

[notesdev]

3. One man above all

Alan Greenspawn.

Alternate spelling intentional.

[iquiring mind]

4. "Irrational Exuberance" by all parties involved

Speculators looking to get in on the 'action' would pay any price.
Appraisers would sign off on any price as a 'fair market price'.
Mortgage Brokers would forward any application.
Lenders would accept all of this without any question.

All were looking for a quick buck and are now reaping what they sowed.

"Past performance is no guarantee of future returns!!!"

[Demeter]

5. America's Premier Business Schools and Their Graduates

Masters of Fraud, exporting to all nations and supplying enough at home to destroy the greatest nation in the world.