A new documentary on CNBC, “House of Cards,” analyzes the economic meltdown and points to Orange County as the birthplace of the subprime loans that infected the world financial system.Is this fair?
I think there are two answers to that. The first answer is that to the extent that Orange County is the subprime capital of the world in 2005 (even WaMu's Long Beach Mortgage was operating in Anaheim by the Pond), and that the subprime industry was the first financial sector to collapse, then OC was indeed the starting point for the world financial crisis. The chain of events is pretty unambiguous on this one.
My second answer starts with this question: suppose you accept the premise that OC is indeed responsible for the current financial crisis, do you believe that in a world where neither Orange County nor subprime mortgages existed at all, would the current international financial crisis be thusly averted?
My answer to that is no. In a world without subprime loans there are still plenty of toxic financial instruments that would have also brought down the international financial market- NegAm option ARMS, alt-A loans, HELOC, etc etc. Keep in mind that all these things were securitized as CDOs so they would have infected the global financial industry in precisely the same way.
5 comments:
In a world with toxic sub prime loans and explosive financial markets.
One man.
Will risk everything he has.
To prove to his co-worker.
That in a far-off land.
Where nothing is as it seems.
In a time when nothing seemed to matter.
In a place where fantasy knew no bounds.
That the simple fact remains.
When pushed to the limit.
Murder!
Suspicion!!
Accusation!!!
The making of the worst universal financial crisis in 30 years.
Can only be blame ourselves.
This SUMMER, prepare to be blow away.
Yang Hu, the man, the myth, the legend.
With time running out;
He. Will. Help. Avert......
"FINANCIAL MELTDOWN, Trillion dollar babies part deux"
The late Don LaFontaine would surely approve!
http://en.wikipedia.org/wiki/Don_LaFontaine
if that was the case.. how come not all the homes are foreclosing out here?! subprime is one thing, responsibility is another. apparently these OC homebuyers were more responsible (from what i can see) than other homebuyers throughout the country. if they weren't, maybe i'd own property by now!!!
it's a win-lose situation. :(
And in related news, pawn shop owner report record business.
Pride is what keeps most of the people in "their" homes a bit longer than most. Some people just can't grasp the notion, the stigma of a foreclosure. That is until the sheriff comes to evict you.
As for getting dirt cheap property... late 2011 after a 30% drop in pricing.
The question of "would there still have been a financial crisis if OC and subprime didn't exist" reminds me of something I read in history class back in high school. I forgot the author or the proper term for it, but the basic question was would society would have progressed to this point if certain key figures didn't exist? Such as if Albert Einstein never existed, would we still have reached the nuclear age given the efforts of others? Or would there still have been WW2 if Hitler never existed?
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