Our financial system is crumbling this week.

[Arthur Dent]

I deliberately chose to be a renter because at the time I made the decision, I researched, did my own analysis, etc., and found that home buying wasn't nearly as great a deal as people claim. I recommend that everyone do the same when faced with these decisions (research not decide to rent). That said, it's not at all reasonable to expect everyone to be a financial expert. That's one of the reasons I think encouraging everyone to be a homeowner or become their own retirement financial planner is a bad idea. I just yesterday found out that a family friend has lost half their retirement because they took a financial "expert's" advice to take their pension as a cash sum to invest on their own instead of getting guaranteed payments. Individual responsibility is extremely important, and I would certainly like to see more of it, but I'd also like to see a more realistic view of people and a recognition that society is more than just individuals. Bankers, who have far less excuse for not knowing better, fell in the same trap. Individual responsibility is not enough in the real world. Quoting Greenspan:

"Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief."

Well, he shouldn't be.

It's extremely irritating to hear this crisis described as an individual morality play when it's obviously a result of structural factors. If we want to solve this and avoid future crises, we need to address these structural factors instead of yelling at people for borrowing too much money.

[Leroy]

If we want to solve this and avoid future crises, we need to address these structural factors instead of yelling at people for borrowing too much money.

That's not what I'm doing.

[maddash]

Indeed. Why shouldn't people believe the supposedly expert advice they are given? Furthermore, banks are completely responsible for evaluating the default risk of borrowers. Accepting that risk is the economic justification for charging interest. It's really annoying listening to this all get blamed on greedy borrowers who supposedly spent money on the proverbial flat screen TV.

It's extremely irritating to hear this crisis described as an individual morality play when it's obviously a result of structural factors. If we want to solve this and avoid future crises, we need to address these structural factors instead of yelling at people for borrowing too much money.

These are all strawmen arguments. Or at the very least, I think it's unfair to tag them onto responses to people here who clearly don't share those same views.

[Arthur Dent]

These are all strawmen arguments. Or at the very least, I think it's unfair to tag them onto responses to people here who clearly don't share those same views.

I don't think so. If people want to disagree, that's fine. They can explain why.

[lukethedrifter]

I am just saying that any sane responsible economist should have recognized that the dramatic runup in housing values was unsustainable, and that borrowing beyond one's means to buy an inflated asset was dumb enough. And what was more dumber was borrowing against that inflated equity to finance a consumption binge.

Um, you are an economist. Most homebuyers are/were not.

FTR, I wrote "individual". You wrote "economist".

Well, of course. I didn't mean to imply that you did. What I was suggesting was that people were getting flooded with info/propaganda that refinancing was a reasonable and prudent thing to do and that many economists were suggesting such.
Sure people are responsible for their own (mis)deeds but isn't it relevant that the incredible force that is the world economy was pushing, promoting, demanding this?

Does not the necessity that our economy grow at a certain unrealistic rate in order to be "healthy" guarantee this sort of behavior?

[lukethedrifter]

Indeed. Why shouldn't people believe the supposedly expert advice they are given? Furthermore, banks are completely responsible for evaluating the default risk of borrowers. Accepting that risk is the economic justification for charging interest. It's really annoying listening to this all get blamed on greedy borrowers who supposedly spent money on the proverbial flat screen TV.

It's extremely irritating to hear this crisis described as an individual morality play when it's obviously a result of structural factors. If we want to solve this and avoid future crises, we need to address these structural factors instead of yelling at people for borrowing too much money.

These are all strawmen arguments. Or at the very least, I think it's unfair to tag them onto responses to people here who clearly don't share those same views.

I'm calling a penalty on the play. Incorrect but Typical Internet Usage of Strawman.

[maddash]

These are all strawmen arguments. Or at the very least, I think it's unfair to tag them onto responses to people here who clearly don't share those same views.

I don't think so. If people want to disagree, that's fine. They can explain why.

I'd love to see some examples of people who, as you say, are blaming all this on greedy borrowers. It certainly wasn't being presented that way in the NPR piece. Even Beim's part never represented borrowers as "greedy", simply that Americans have overborrowed. The household debt to GDP ratio backs that statement.

[lukethedrifter]

These are all strawmen arguments. Or at the very least, I think it's unfair to tag them onto responses to people here who clearly don't share those same views.

I don't think so. If people want to disagree, that's fine. They can explain why.

I'd love to see some examples of people who, as you say, are blaming all this on greedy borrowers. It certainly wasn't being presented that way in the NPR piece. Even Beim's part never represented borrowers as "greedy", simply that Americans have overborrowed. The household debt to GDP ratio backs that statement.

Every person I work with blames the problem on greedy borrowers. I guess that is an exaggeration since I haven't surveyed every one but that is the constant chatter I hear.

Oh, and HJ's tone certainly suggests it.

[PujolJunkie]

I can sum 150 pages up in one sentence:

This [expletive] all started when they wanted to stop circulating pennies.

[maddash]

Indeed. Why shouldn't people believe the supposedly expert advice they are given? Furthermore, banks are completely responsible for evaluating the default risk of borrowers. Accepting that risk is the economic justification for charging interest. It's really annoying listening to this all get blamed on greedy borrowers who supposedly spent money on the proverbial flat screen TV.

It's extremely irritating to hear this crisis described as an individual morality play when it's obviously a result of structural factors. If we want to solve this and avoid future crises, we need to address these structural factors instead of yelling at people for borrowing too much money.

These are all strawmen arguments. Or at the very least, I think it's unfair to tag them onto responses to people here who clearly don't share those same views.

I'm calling a penalty on the play. Incorrect but Typical Internet Usage of Strawman.

The NPR piece's position, my position, HJ's position, and Leroy's position never included statements about pinning all the blame on borrowers. Yet, AD makes these statements in the midst of the discussion, substituting a superficially similar proposition (the "straw man"), and refuting it - if that's not a strawmen, I don't know what is.

And who are these people anyway? They way AD describes it, he can't get away from their ramblings. Yet, to this date, I've not heard one person in the media pin the blame solely on borrowers (yes, even on Fox News). The statement that I hear over and over is that "there's plenty of blame to go around" (yes, even on Fox News).