Funny - so many on this board claim to have predicted the housing crash - The Big Short (2015) Discussion

[–] denakfrench 8 years ago

Because most of us were not in a position to capitalize on it. My ex husband and I owned a real estate appraisal firm. We saw it coming. All we could do was watch it happen. We weren't even in a position to make as money as possible before the crash and hope to ride it out. We were a small company and we refused to overinflated appraisals for lenders and realtors. We lost our business before the crash as a result.

In November of 2007 my ex took a job as a truck driver working in a mine. We chose to use our knowledge of what was happening to take care of our family. Suddenly, food on the table, a rented roof over our head, and health insurance was a bigger priority than cashing in.

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[–] matt605 8 years ago

My favorite best predictor of trouble came in the appoint of Ben Bernanke to be Chairman of the Federal Reserve in February 2006. Bernanke, who was unknown at the time, specialized in the history of how the government fixed the economy during the Great Recession.

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[–] roreyking 8 years ago

Don't you actually mean "Great Depression"? And to assume his papers on the Depression were the only factor in his appointment to the Fed is a huge stretch. It overlooks everything else in his distinguished academic and government career.

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[–] matt605 8 years ago

Thanks! Yes, I did mean the Great Depression, not the Great Recession, as I wrote. However, at the time of Bernanke's appointment and confirmation, the media I saw noted that his expertise was in understanding and explaining the role of government during the Great Depression. I believe this fact is significant to understand a part of The Big Short too. At the end, Mark Baum noted that there was already a bail-out plan for the banks ready to go. That was about a year and a half after Bernanke's confirmation to the role.

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[–] roreyking 8 years ago

My, you do jump to conclusions, don't you! So you predicted the housing collapse/Great Recession on the basis of Bernanke's appt? B/c "the media noted his expertise" in the Depression? Again, you ignore the weight of his other accomplishments. And just b/c the media noted his expertise in the Depression doesn't mean it was central to the president's and his advisors' decision to nominate him. Do you really not get that?

You infer there was already "a bail-out plan" ready to go way before the crash. Again, how could you know this? You don't.

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[–] matt605 8 years ago

Bernanke's appointment to the Fed seemed unusual, as he didn't have any real experience. He was a Princeton professor with a specialty in the Great Depression, and had been on the Fed Board of Governors. He left Princeton in 2002 at age 49 to serve on the Fed Board of Governors. 2002 was the year that the Fed cut interest rates about a dozen times, apparently to boost the sagging equities markets, and starting the housing bubble.

The facts cited in the film imply that there was a bail out plan on the shelf ready to go. Baum noted that Bernanke met with the White House just as markets were collapsing. I believe our government spends a lot of time and money on planning for all types of horrible events that we don't think about.

For example, on the afternoon of the 9/11 attacks, I stopped by my local 7-Eleven and talked to the clerks. Business was dead. I went back by Thursday morning and noticed there were flag stickers available for sale next to the register. One in particular featured an F-16 embossed over an American flag. 48 hours after the WTC collapsed, flag stickers with militaristic images were available to buy. Our government has crisis planning down to the smallest detail. In fact, somewhere in its vast bureaucracy, even today there are employees working to assure that in a time of national emergency, Americans will have ready access to reasonably priced patriotic materials.

And you believe they had no idea that the financial system could collapse or what they would do next.

I didn't predict a collapse or it timing. Just observed to myself only that appointing as Fed Chairman a guy whose specialty was the Great Depression might be a bad omen.

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[–] roreyking 8 years ago

48 hours after the WTC collapsed, flag stickers with militaristic images were available to buy. Our government has crisis planning down to the smallest detail.

You think the government had these stickers, et al, all ready to go in preparation for an attack on the US or some comparable military crisis?

I rest my case.

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[–] matt605 8 years ago

Rest your case? Oh my God, I had no idea you were a lawyer.

Yes, I believe our government has emergency contingency plans that assure Americans will have access to plentiful and affordable patriotic materials in time of national emergency.

Likewise, I believe the bailout of the banking industry was thoroughly anticipated and planned by the Fed and possibly other federal agencies well before the subprime crisis began.

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[–] FirebirdCamaro 8 years ago

I saw it coming in the Phoenix area back in 2004 when suddenly, everyone had new houses and new cars, despite the median wage in the area being around $26k/year. I knew what cars and houses cost, how the monthly payments would work out with traditional loans, and was just flabbergasted. I was making around $20k/year back in 04 and there was no way I was going to be able to afford a $350/month car payment or a $1k/month+ mortgage payment, so I wondered how everyone else was doing it. Then come 2007, when people stopped buying. The median home price in Maricopa County topped out close to $350,000 before falling off a cliff.

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[–] theunopeneddoor-697-442391 8 years ago

Stevie Wonder wearing a blindfold in a darkroom could have seen in coming.

Nothing is recession proof. I know people like to label things as such.

There were people saying there were "irregularities" happening in the housing market on the news for years. Here is Donald Trump talking about it on CNN:

http://www.cnn.com/2016/05/19/politics/donald-trump-2006-hopes-real-estate-market-crashes/

Here is Paul Krugman talking about it in 2007: https://www.youtube.com/watch?v=qo4ExWEAl_k

Peter Schiff in 2006: https://www.youtube.com/watch?v=LfascZSTU4o

A C-Span discussion on it in 2007: https://www.youtube.com/watch?v=bQHJAm1ovR8

There were people getting foreclosed on two years before the bubble burst. The news talked about it day and night. I really don't know how anyone was surprised. This movie was dreadfully inaccurate that the people the film is about where the only people predicting it, there were literally dozens of experts (maybe even hundreds) on TV and in newspapers day and night talking about it.

The fact that this movie portrayed it as a surprise was a little bit of an insult to my intelligence. I liked the movie and appreciate what it had to say, but when it happened I didn't know anyone that was shocked.

What NONE of us saw was the EXTENT of the bubble bursting.

Plus do you think anyone on this board has the millions of dollars it takes to capitalize on the bubble bursting?

Never Drumpf! Never Hillary!

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[–] theunopeneddoor-697-442391 8 years ago

Stevie Wonder wearing a blindfold in a darkroom could have seen in coming.

Nothing is recession proof. I know people like to label things as such.

There were people saying there were "irregularities" happening in the housing market on the news for years. Here is Donald Drumpf talking about it on CNN:

http://www.cnn.com/2016/05/19/politics/donald-trump-2006-hopes-real-estate-market-crashes/

Here is Paul Krugman talking about it in 2007: https://www.youtube.com/watch?v=qo4ExWEAl_k

Peter Schiff in 2006: https://www.youtube.com/watch?v=LfascZSTU4o

A C-Span discussion on it in 2007: https://www.youtube.com/watch?v=bQHJAm1ovR8

There were people getting foreclosed on two years before the bubble burst. The news talked about it day and night. I really don't know how anyone was surprised. This movie was dreadfully inaccurate that the people the film is about where the only people predicting it, there were literally dozens of experts (maybe even hundreds) on TV and in newspapers day and night talking about it.

The fact that this movie portrayed it as a surprise was a little bit of an insult to my intelligence. I liked the movie and appreciate what it had to say, but when it happened I didn't know anyone that was shocked.

What NONE of us saw was the EXTENT of the bubble bursting.

Plus do you think anyone on this board has the millions of dollars it takes to capitalize on the bubble bursting?

Never Drumpf! Never Hillary!

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[–] roreyking 8 years ago

What NONE of us saw was the EXTENT of the bubble bursting.

Just my point! Hello?

I guess theunopeneddor thought his post was so riveting, it had to be posted twice.

No surprise Krugman saw it coming. Duh - he's a Nobel-prize-winning economist. Unlike those on this board who now claim equal prescience.

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[–] soylent_green_is_hamster 8 years ago

Actually, yeah. I think a lot of people saw this happening. But like others have mentioned weren't in a position to do anything about it.

I worked for HBOS in the UK during 2004-2005. Nothing finance related, I worked in IT. But even there, there was constant talk of a collapse.

Sure, we didn't know about CDOs and other financial wizardry, but those were just the mechanics. Internally, HBOS seemed to measure its success solely by how many mortgages it created per month. And getting a mortgage, for seemingly any amount, was EASY.

Gone were the days of borrowing 3 times your salary, you could get any amount you want. Here in the UK, you could even "self certify", meaning you didn't have to actually provide any details of income. This was a loophole, originally intended for the self-employed, exploited by the estate agents and banks to create more debt.

It was obvious HBOS was creating more and more unsustainable debt, so yeah, when it all fell down, it was no surprise at all to a LOT of people. But what could I personally have done?......its not like I had millions to negotiate shorts with the banks.

And thanks to the various bailouts and other government shenanigans, the collapse was actually softer than some of us predicted...

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[–] tigger83138 8 years ago

If I didn't know any better, I would say you would have to be an absolute idiot to not have seen it coming. I had a few hundred dollars to my name at the time. I did tell everyone I knew. Most of them were idiots.

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[–] roreyking 7 years ago

You only had a few hundred dollars to your name...and you think almost everyone else was an idiot? LOL!

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[–] tigger83138 7 years ago

It took you three months to come up with that? Three months, just to prove your lacking comprehension skills and that you have a twisted world view that has your life revolving around and owned by money. Have you ever been to a park? Go out and experience life. Watch the birds fly, the trees sway in the wind, children laugh and play; experience life man. There is so much out there that you are missing, and for what? There is so much for you to learn and to live for. Go live!

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[–] roreyking 7 years ago

Laughing even harder! All your baseless accusations and pontificating are just childish.

There are a lot of healthy options between a life of greed and your life of juvenile irresponsibility about one's finances and belief that "money doesn't matter." Earning an income, paying one’s bills and saving for the future are just a much part of life as “the birds…the trees…children.”

I loved my work in tech and made enough to retire early. After traveling for a wonderful 6 months in Europe, I came home and opened my own business. And don’t have to worry how much or little it makes, b/c my investments will cover my expenses through age 95. I’m loving every minute of this new chapter! But it would be hard to do on a few hundred dollars, mate.

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[–] schulwitz 7 years ago

Those in the Ron Paul movement and or who were listening to Ron Paul were very aware of these conditions early on. Ron Paul talked a lot about the housing bubble. For instance, here's what he said in a speech to congress in 2002:

"the government increases the likelihood of a painful crash in the housing market...the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss."

Full text here:
http://www.ronpaul.com/2008-09-26/ron-paul-on-the-housing-bubble-july-2002/

Also, for anyone who understands Greenspan, his past in the Objectivist movement and writings on sound money like "Gold and Economic Freedom" http://www.321gold.com/fed/greenspan/1966.html, it becomes pretty clear that he abandons those principles by his actions in the early 2000s, which Ron Paul repeatedly confronted him on.

To understand the reason why Greenspan took to manipulating interest rates in a way that deviated from how a free-market would have set interest rates, one must understand that Greenspan's favorite novel was Atlas Shrugged, and that in this novel, one of the primary heroes (Francisco d'Anconia) fools corporatists by getting him to join him in his money-making schemes, only to intentionally bankrupt them with poor investment strategy. In the same way, Greenspan correlated his interest rates with the price of gold throughout the 90s, to gain trust in corporatist institutions, and then departed from what would have been market-based rates (i.e. 2002 interest rates should have gone up, but Greenspan began artificially lowering them), in such a way to craft one of the biggest market manipuations the world has ever seen.

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[–] Spongeyone 7 years ago

That there was going to be a housing crash was very predictable. Timing it was much more difficult. If you noticed, the people in on it early came close to losing their shirts, and would have been screwed if they'd gotten in earlier or it had popped later.

Death to shakeycam directors!

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