> Deregulation and market fetish provoked financial exploitation.
Caller, could you be a little more vague? Financial exploitation occurs even without deregulation and market fetish.
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Eric Beck writes:
> No doubt the bubble created some exploitation (though you should
> really use another word) of consumers, but is that all that happened?
One thing that happened, in the usual style of bubbles, was a massive shift of wealth from the have-nots to the haves.
> How many people actually used deregulation to their advantage, by,
> say, getting teaser mortgages that were way cheaper than any regular
> mortgage or rent they could have found?
It's not clear to me that you have to actually know that you're doing this in order to have taken advantage of it. The fact that people were "qualifying" for mortgages for which they would not have qualified under some stricter regimen of regulation is probably not immediately clear to the buyers. And a big piece of the deregulation that occured was the concordant lack of oversight. They didn't call them "liar loans" for nothing -- although more often than not I would guess that the broker was the one doing the lying ...
I also think it's fair to say that there were quite a number of people who used deregulation to their advantage in the process that became known as 'flipping' ... which, like I said, stoked the fires but did not "cause" the boom/bubble.
> What number of subprime mortgagees (aka black and brown
> people and women) were able to live in a style that their
> place in production would never finance?
For a while, sure. Until the music stopped. Is that supposed to be a plus?
> Yes, people were then kicked out of their houses, and yes
> that probably sucked, but I'd venture that to most in the
> subprime class, this wasn't a deal-breaker (as the saying
> goes); I'd tend to assume they knew this was a possibility,
> that it was part of their risk calculations, rather than
> that they were dupes of finance.
Maybe. But I think there were also plenty of people in there who were legitimately working toward what they thought was a life-goal: owning a home. And they were tempted to act sooner than they "should/could" have by things like teaser rates, lower down-payments, and the fear of being priced out of the market. And so they went all-in, so to speak, and today are much worse off for it. In a fantasy world where such people went to sleep in 2007 instead of buying a house and woke up today, they would be in a position to achieve their goal.
I agree that for some people who had nothing really to lose, the mid-to-late decade might have been a wild ride and maybe even fun -- but I don't think they are the majority. "Subprime" has gotten a stigma in the way that "free lunch" or "welfare cheese" has, and it's largely not warranted. Subprime was (and continues today to be!) a legitimate, useful category of home finance to millions.
/jordan