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The Golden State, not so golden
After the Fall
Contrary to anti-social, right wing propaganda, "sub-prime" loans were not made to help poor people get their first homes.
They were created to help new home builders, especially in states like California, Nevada, and Florida, sell out their new home inventory at super-inflated prices.
Home buyers were told by the Fed chairman...by the President...by Fox News...by every idiot financial reporter on TV...that the loans they were taking out were a "good deal."
The loans were very simple:
Very little down, very low payments and then, a few years out - when theoretically the property would be worth much more - the monthly payments would rise dramatically.
The idea was that long before the higher rates kicked in, the home buyer would have sold out at a handsome profit and moved onto their next home.
Free enterprise at work.
It's easy to call these people foolish, but what they really are are the victims of a scam.
The home builders got paid lavish premiums for their inventory...real estate companies and loan brokers got rich from these sales...the Wall Street banks that packaged these scam loans and sold them throughout the world made hundreds of billions of dollars...and the psychopathic Bush administration got to fund its wars without raising taxes based on the illusion that the economy was good and could afford it.
Now the chickens are coming home to roost.
This is EXACTLY the same scam that Bush Sr. ran in the 1980s using the Savings and Loans real estate fraud bubble to pay for the Contra war and God only knows how many billions he and his fellow crooks siphoned off on the side.
Bush Sr. even had the same Fed Chairman Alan Greenspan running the central bank.
The only difference is this disaster is 100 (1000x) larger.
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