Sunday, October 12, 2008

The mortgage mess: links worth exploring

AMac commented in response to "The mortgage mess: a few thoughts."

This is a complicated issue, so it is good to see a variety of opinions. I'll offer two links (one old, one new) that might be worth exploring.

Chart of the Day: Fixed vs Variable Subprime Default Rates dates from 7/18/07. Felix Salmon offers a fascinating chart and an explanation: the popularization of subprime variable-rate mortgages with an initial period without payment of principal promoted speculation, in a way that the lenders did not anticipate or account for.

Last Friday, Steve Sailer published "The Diversity Recession;" lead-in here.

Sailer’s thesis: increased lending to higher-risk minority groups did not, per se, cause the housing bubble.

However, the ever-more-lax standards that were designed to promote increased minority homeownership--and did--also promoted increasingly risky behavior on the part of non-minorities.

Since political correctness prevented critical examination of either the foundation of these policies or their developing effects, promotion of the bubble lasted all the way until... the collapse.

Sailer's summary: "Ideas have consequences."



If you give those two links a look, I hope you comment.

And thanks, AMac, for the links and their “main points.”