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CBS4 Reports on the Downtown Miami Condo Market Turnaround

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Downtown Miami Condos

For those who missed it earlier this evening, CBS4 aired a segment entitled “Is Downtown Miami’s Condo Market on the Rebound?“.  CBS4 reporter, David Sutta, highlighted the recent sellout of the Viceroy Tower at Icon Brickell and interviewed our very own Michael Light, of the Miami Condo Investments team, to get his perspective regarding the dwindling condo inventory in Downtown Miami. Light compares the condo inventory at the peak of the market to the inventory that now exists. Over the past year, prices have begun to rebound in Downtown Miami as inventory has been swallowed up predominantly by foreign buyers. There is no reason to believe that the market turnaround will reverse course anytime soon as new condo inventory in Downtown Miami is years away from hitting the market.



90 thoughts on “CBS4 Reports on the Downtown Miami Condo Market Turnaround

    • That’s not possible. The reason the bubble burst in the first place was due to the over abundance of new condo towers built in such a short period of time. There was just too much supply and nowhere near enough demand. Now with a majority of the existing inventory having sold-out and no new projects in the works, the market has stabilized and prices are up 14% in the 1st Qtr. 2011 vs. 1st Qtr. 2010.

      • “That’s not possible….. Now with a majority of the existing inventory having sold-out and no new projects in the works, the market has stabilized and prices are up 14% in the 1st Qtr.”

        seems to make my point that the next one is right around the corner.

        • The next bubble will probably be in rental housing. Developers will rush to get a piece of the action an undoubtedly to many of them will take the plunge.

  1. There will be another bubble – and bust – in Miami for sure. It’s just the way this town rolls, the order of things. The harder they fall, the harder they go up, and vice versa. Couple more years scraping the bottom, then another decade of 15% annual appreciation.

  2. Has anyone ever acknowledged that there was a bubble during the bubble era? So why would anyone acknowledge it now until it bits them in the butt.

  3. Preconstruction Sales Begin For New 22-Story Oceanfront Condo

    An entity controlled by Miami developer Jorge Perez of the Related Group has launched preconstruction sales this week for the proposed 22-story Apogee Beach condo tower fronting the Atlantic Ocean in the city of Hollywood in Southeast Broward County,according to a new report from CondoVultures.com.
    http://www.condovultures.com/News/ViewArticle/tabid/77/ArticleId/28553/Preconstruction-Sales-Begin-For-New-22-Story-Oceanfront-Condo.aspx

  4. So how dumb is this….so the condos are selling our …great…being bough by cash and foreign buyers….so ok what do they ever expect prices may start to climb up but then who is gonna be able to buy those units? Obviosuly Miami buyers dont have to means to affoard them now so who will buy them after if prices go up. There’s little financing so looks like all those towers will be another Miami fantasy as Miami people live in posh condos that they wil never own. Bottom line the majority of Miami’s workfoce simply cannot afford them condos now not they will be able to afford them later..so anyone foreign who thinks of their purchase as an investment and then flipping it in 5-7 years should think again.

  5. How could there be a bubble when 67% of all transactions this past year have been cash? It would require a vast majority of condo owners to sell at once in order for a bubble to pop. Keep in mind though that most of these owners are located in other countries. I can only think of two scenarios that would entice owners from all over the world to want to sell their Miami real estate holdings all at the same time. The first being World War III. The second being Obama turning the USA into a socialistic country. If either of those scenarios pan out, we’re all screwed and real estate will be the last thing on our minds. The truth of the matter is that inventory is running out fast. There won’t be new inventory for at least 3-4 years.

    I agree with Rob though. The average Miamian will never be able to afford a nice condo here. Miami is a paradise enclave that receives interest from people from all across the globe. It may seem unfortunate to locals but their tourism money is what drives this city. Without foreign currency flowing into the city, Miami would be akin to a city like Phoenix. Prices would still be dropping and no talk of a bubble would be mentioned. Real estate prices going up for local Miamians may not seem like a good thing but it creates new jobs and new infrastructure for the city. We need those jobs. I’m sure everyone here who is local to Miami knows at least 2-3 people who are unemployed.

  6. Lucas, i agree with you that there is no bubble. although not sure how 67% of all transactions being cash really has anything to do with it. leverage helps but is not required for a bubble-just see the bubble in stocks a decade ago. cash buyers there as well.

    but questions will arise on future expected prices of these condos. who will buy them in the future at elevated prices? will new foreign buyers come in to replace the old foreign buyers? domestically, we are headed towards a couple of bad longer term scenarios for homebuying. fannie and freddie will be phased out, with a strong push from the right to remove government support for mortgages. this will push mortgage rates up-and result in less ability to increase prices. interest rates in general will probably be up in 5 years as well-putting pressure on rising principal prices. and who knows what will happen to the mortgage deduction currently in the tax code-plenty of talk about eliminating it as well. these are many issues, at least domestically, which are helping to diffuse enthusiasm of homebuyers.

  7. Bubble is good for us the brokers for a short while. But then – Feast or famine! Miami RE along with NY has been kept up artificially by not allowing foreclosures. Latest report from Realty Trac shows NY foreclosures take average 900 days and the backlogged for 7 years. Imagine all these home / condos will continue to get in to market for next 10 years. Miami market has another 30% to go down. Look at these sales below – there is lot of double count. And getting 125% mortgage in these days? Lot of cash buyers purchased properties in 2008-2009 and are underwater / defaulting now. People go to casino all the time and lose their shirt everyday but that does not stop others from doing so. But you don’t have the scantily clad women serving free booze in the casinos (most) anymore as they used to do.

    A buyer purchased unit 1204 from the bank in 10/10 for $144 psf. He then later sold the same unit for $194 psf in 02/11.
    ===========================================================

    Apt was sold 10/2006 for $414,365, resold 4/2007 for $480,000, resold after 2 months 6/2007 for $810,000 after that the sales were disqualified in 10/2008, 5/2010 and 10/2010 at $165,000 is described as deed to and from financial institution. 11/2010 there was a quit claim deed. and 1/2011 it was purchased by Solaris 1204 Group LLC. with a $90,000 mortgage from BoA.

    Unit 2304 was purchased as a short sale for $134 psf in 3/11. This definitely took the average down. Then he turned around and sold the same unit for $210 psf in 4/11 which took the average up.
    ========================================
    This property was sold for $556,551 in 11/2006 and resold for $800,000 in 8/2007 then sold for 3/2011 for $160,000 to S F PROP REHAB LLC with a mortgage of $187,200. Which was deeded to an individual in April 2011.

    Go figure what this means!
    Hint: These are not real sales…………..

  8. P&U, a cash buyer from 2008-09 cannot default, so being underwater does not create a distressed situation like with a mortgage. while prices can still fall due to defaults from the binge buyers of the mid decade, i agree with gixxer and others the cash buyers will limit how much more downside can occur. but they have little control on the upside.

  9. gables, did you ever ask yourself how the rest of the world is having housing bubbles that would put Miami to shame… without funnie and freddie in the picture? Because you should. Just phasing these two monstrosities out won’t knock home prices down. What it will do is make 30yr fixed rate mortgage a thing of the past, and new mortgages will be provided at floating rates tied to LIBOR. Thats how most of the civilized world buys its digs, and thats where the land of milk and honey is headed too.

  10. F-35 — The rest of the world? More like a few really overpopulated and/or rapidly growing locales.

    If you think the absence of Fannie and Freddie won’t have a huge and adverse effect on U.S. r.e. prices, you should do all of us a favor and step away from the keyboard for a while.

    Lucas — The idea that absentee foreign owners “create jobs” is utter nonsense. Miami has been a money-laundering destination and a tourist town for 30 years now, and where are all these great jobs? Adjusted for inflation, the average Miami resident is something like 2% better off than he/she was in 1980 or 1985, when Time magazine ran its infamous cover story on Miami.

  11. Joe, the only reason I wont tell who you are is because I cant do it without resorting to name calling, a practice that though in our case may actually be quite useful, is nevertheless generally being frowned upon.
    Well, anyways, you are probably unaware – which appears to be your normal state of consciousness – that only TWO countries in the world have 30-yr mortgages, USA and Denmark. And the rest of the world somehow survives, and it has bubbles, and…hold your breath…many countries often have lower interest rates, since short end of the curve starts at zero these days. In Spain 3% causes panic.
    But, hey, genius, dont let me upset your enthusiasm for silly contributions. I sincerely hope you make enough dough in that hellhole that you call home today, so that few years from now you can finally grow up and pay all cash for a place in Kendall.

  12. F35, in case you didn’t realize, we did not have the bubble and burst due to conventional 30 yr fixed rate mortgages. we got here due to variable interest rate loans-the types you propose is the future. the future is here, and it is not pretty. the reason govt stepped in with the 30 year product after the depression was to provide a stable cost for home ownership. before that you had 5 year rolling mortgages-and people routinely lost their homes during the reset. consumers have relearned the risk of these variable interest type products.

  13. gables, no you don’t tell…the only reason all those fancy products came out at the tail end of a RE boom is because “30-yr fixed-rate mortgage” scam run out of qualified suckers, and the only way to keep that pyramid going for few years longer was to introduce exotic mortgages with teaser rates, no interest, ninja, liar, whatever…Thats not what I “advocate”, but nice try. You are slightly smarter than Joe, but dont kid yourself. “Slightly” is a key word here.

  14. gables, one more very crucial point. Fixed-rate 30-yr mortgage ensures “stable cost of home ownership” only in a rising interest rate environment. You may have missed it, but interest rates are in a secular decline for already…oh, 30 years almost…must be some kind of a coincidence here. And in that case borrowing for 30 years at fixed rate means slow-and-steady financial asphyxiation. Thats why Americans were forced into multiple refis during their mortgages’ lifetimes, every time shedding their equity, accruing bloodsucking points, and delivering steady profits to Wall Street, Fannie, Freddie and overseas buyers, while people in the rest of the world calmly paid lower and lower interest rates, year after year, blissfully ignorant that they werent supposed to be able to afford home ownership without freddie and fannie of their own. And thats why foreign bubbles, though far bigger than ours, didnt burst with such ferocity. Americans were simply tapped out by their own government, which as you said, ONLY WANTED TO HELP, as always.

  15. I’m sorry, but I stopped the video after hearing the words “Latin American buyers”. Isn’t that how we got into this mess in the first place?

  16. F35, you seem to have an odd view of the world. a 30 year fixed mortgage means i know what my costs are over 30 years-they do not vary. if i have a variable rate mortgage, in five years my salary may not pay the mortgage if rates rise. for most people, your salary rises with time so the mortgage becomes even more affordable under a fixed rate. if you obtained a mortgage beyond what you could pay, that has nothing to do with fannie or freddie-that is just poor financial planning.

    if you had a 30 year mortgage and rates drop, you just refi into the lower rate. even with some fees, over the long term you pay less on the mortgage that way-with no risk of a rising monthly bill. your view is interest rates are low and will only go lower is equivalent to real estate never drops in value. you appear smart until the cycle ends-then you look like a fool.

  17. P&U, a cash buyer from 2008-09 cannot default, so being underwater does not create a distressed situation like with a mortgage.
    —————

    Gables – I am sure you can do your own homework and see that many of these cash sales have mortgages. Shockingly 125% mortgages. I can show you number of properties purchased with 20% down in 2008 and 2009, which have defaulted. FYI I do not even look at any transaction under $100K.

      • George,

        On this board, all the buyers in Miami are presumed to be foreign cash buyers – which included the two examples mentioned previously.

  18. don’t know how paying cash for a condo means prices can’t drop by 40%. I also don’t see how obama turning USA into a socialist county will cause people not to want to live here when most of the world is considered socialist or communist by US standards, besides I thought Obama has already turned us into a socialist country?

  19. Joe, much of Europe and other countries are having massive housing crisis right now and there is no fannie or freddie to blame. I know this doesn’t fit with your ideology that fannie and freddie is responsible for the housing bubble but how do you explain the massive housing crashes that is going on around the globe without freddie and fannie?

  20. Makes Me Think — Again, more dishonesty, and more straw-man arguments. When did I say Fannie and Freddie were responsible for the housing bubble? Fannie and Freddie contributed to the bubble, as did a lot of other actors and factors. That doesn’t change the fact that if Fannie and Freddie disappear, there will be an adverse effect on U.S. housing rates moving forward.

    • “Do you really believe the banks would have been extending these putrid loans if Fannie and Freddie weren’t buying all the garbage paper the banks were writing? Again, I’m not some big pro-Bush, pro-Republican apologist, but the facts are the facts. Just like Bush tried to reform Social Security and got obliterated in the media, he tried to reform Fannie and Freddie and got rebuffed by Congress. You can search high and low, and you won’t find right-wingers who supported giving LIAR loans to anyone with a pulse, FICO be damned.”

      Joe says:
      October 20, 2010 at 11:12 pm
      “As I’ve said repeatedly today and as just about every analyst now agrees, Fannie and Freddie could have preempted 90% of the r.e. mess by simply refusing to buy the first waves of crap paper issued by the banks. The MBS craze didn’t take off like wildfire among private investors until **AFTER** Fannie and Freddie had fanned the flames by encouraging and buying bad paper. Had Fannie and Freddie not bought the first waves of the crap — which gave it the appearance of a performing asset — then the secondary MBS wave never would have happened (or would have been far, far smaller). ”

      sounds like you are blaming fannie and freddie for the RE bubble to me. Who is being dishonest again?

  21. Oh please, give it a rest joe. We(myself and gables) had and indeph discussion with you a few months ago where you insisted that the housing bubble was a result of fannie and freddie. We told you that Wall st. securitization was the main culprit and that fannie and freddie didn’t get involve until the end of the bubble when they saw how much money wall street was making. You always claim straw man but do a search on the archives and you will see. You are the one being dishonest.

  22. Makes Me Think — I don’t have time to go thru the archives, but I never said Fannie and Freddie were 100% responsible for the housing bubble. For one thing, I’ve always assessed about 50% of the blame to Congress, particularly the nonsensical “Community Reinvestment Act” that spawned all the loose underwriting over the past two decades. Please stop with the dishonesty and the straw-man garbage.

    Anyway, no matter what I said or didn’t say in the past, that doesn’t change the fact that if Fannie and Freddie disappear, housing prices will suffer. I don’t know why you insist on wasting time going in circles.

    • yeah, you are right “Community Reinvestment Act” which has been in place for decades is why there is in a global housing bust. You are priceless. By the way it doesn’t take much time to search the archives. I pulled up your quote from oct. 21 2010 in about a minute.

      Have a good day

  23. Makes Me Think — Claiming the Community Reinvestment Act didn’t substantially loosen underwriting standards is even dumber than arguing that the disappearance of Fannie and Freddie would have no impact on U.S. housing prices.

    Get some rest, man. You’re really struggling lately.

  24. Joe, you do fail to state the CRA was focused on housing in poor and minority communities. All of the middle and upperclass housing that went bust-the majority of busted RE- was not subject to the CRA. And aside from the political pundits who have their own agenda, most credible economics folks have already said the CRA was not an impact player in the financial crisis which unfolded. you may want to use it as a scapegoat, but it is still not guilty as charged.

  25. gables — The CRA led to the relaxed lending standards that crept into almost all other areas of home lending and eventually spawned a lot of the subprime lenders that drove America’s credit bus over the cliff. I don’t know of any credible economist who DOESN’T hold this position. Obviously, the CRA was passed many years before the housing bust, but the housing bubble wasn’t built overnight, either. The bubble was inflated by a lot of bad policy, bad laws, lax oversight, and unscrupulous actors over a number of years, if not a number of decades. I neither blamed Fannie and Freddie nor the CRA exclusively for the bubble, but both were major contributors.

    As for the insidiousness of the CRA, just look at what’s going on again now: Per recent news reports, the Obama administration is starting to push banks to relax underwriting standards for high-risk, bad-credit applicants in inner cities. I guess the bailouts just 2-3 years ago weren’t a sufficient wake-up call.

  26. joe, if i wanted to hear a repeat of the fox news ideologues, i would tune into their channel. the fed has already said the CRA had little, if any, bearing on the housing crisis. this is based on the feds own research. you have this ideology of always blaming the government for bad actions of the banks-the government made me do it!

    it is a fallacy to say the CRA led to relaxed lending standards-that is just a scapegoat argument. the CRA had nothing to do with the middle and upper class housing bust. that bust had to do with greedy buyers and banks-and not the urban centers upon which the CRA focused. relaxed lending standards would have occurred with or without the CRA-denying that is denying the reality of the boom and bust.

  27. Joe is in denial about histor. He has completely ignored the fact that Wall st. packaged a bunch of shitty loans sliced them up and marketed them as AAA rated investment and sold that shit all over the world. I don’t know how someone could be so obvlious to the facts in this day of 24/7 media. I guess if I spent the past 3 years in a Bolivian jungle maybe I would be just as ignorant of the facts. I would however, hope that I would be wise enough to keep my ignorance to myself instead of posting it for the world to see.

    • As far as I can remember, I used to own few CMO’s way back in 80′s. They used to cost $25K and multiples. Wall Street has been packaging CMO’s and CDO’s for a very long time. If Fannie and Freddie had not committed incest and purchased all those mortgages, we wouldn’t be in this trouble. Wall Street works on demand and supply. F & F created the demand and the street met the demand. If the government had not interfered the market would have bottomed out by now. All these deadbeats would be living in the rented properties and paying rent instead of freeloading.

  28. You two can bury your heads in the Miami sand if you want, but the “greedy banks” and “sleazy bankers” couldn’t have done even 1/10th as much damage if the politicians in D.C. hadn’t been greasing the wheels via legislation, lax oversight, cheap money, unlimited money for Fannie and Freddie, etc., etc. This is just a simple reality.

  29. joe, the government did not create the “greedy banks” and “sleazy bankers”. they already existed. and they took action. they knew what they were doing was wrong-just look at the comments that were released during the fabulous fab investigation. no different than the enron energy traders in california. you have an antigovernment ideology-i get it. but someday use your brain instead of fox news to understand what happened during the financial meltdown.

  30. Joe & PU, you watch fox news and read blogs. That is how you get your information. I spent a career working for the largest investment banks and I also have a Real Estate Investment business from 2000 – Present. I was up close and personal with many of what went wrong during the housing bubble especially from 2004 – 2007. Not to name drop but I can tell you that several of my close business associates (did RE deals with and met with frequently) has been featured on different episodes of American Greed. I can tell you for a fact that most of the RE transactions we came across had nothing to do with Fannie or Freddie. When people were buying homes in extremely bad neighborhoods and paying crazy prices for them they weren’t getting those loans from the bank down the street and they weren’t Fannie qualified loans. For years we questioned how that craziness was allowed to happen for so long. It wasn’t until after I saw “House of Cards” on CNBC and saw how this stuff was marketed and sold all around the world I finally understood why it went on for so long.

    Trust me when I tell you, that for the most part it wasn’t the poor getting houses the couldn’t afford. There was a lot of that but there were also a lot of “Investors” buying 3 shitty houses at the same time in REALLY bad areas and pulling out lots of money without doing much repairs and defaulting in 3 months. They would turn around and buy 3 more houses in their poor father’s name and do the same then they would have heir girlfriend do the same. Trust me, where the really bad cases were, normal people wouldn’t live there much less over leverage themselves on a CRA loan for those places.

    I saw many cases where we would sell houses to investors they would do light cosmetic work to the house and turn around and sell the same house for 2.5 times what they bought the house from us for a few months before. They would pay the out of state straw buyer 10K for f*ing up his credit and rest they split between the person find the deal and the person finding the straw buyer and the contractor who did the shitty work. They would then rent out the house and collect a few more dollars each month until the bank foreclose.

    Trust me, it was very tempting to get involved when you see how easy those guys would make 100K+. If I was in dire straights and didn’t have a healthy fear of the law I might have gotten involved with bank fraud. It appears that my fear of jail was overblown because not many of those actors have ever been prosecuted. I guess crime does pay.

    You can go ahead and blame Fannie and Freddie all you want, I guess that fit your agenda but the truth is that they got involved at the end of the cycle and even then they still were too restrictive for those investors I described above. Anyone who was a intimately involved in RE Investing during that time will tell you the same.

    • MMT: May be you are not aware of many things that went on during those days – such as new condo construction contract flipping. Those $itty houses you are talking about – they were foreclosed, poor owners kicked out. They are living on street It is the scamsters and deadbeats on the Brickell, Beach, Midtown, Downtown, NMB, Fort Lauderdale, West palm, Aventura who gambled with F & F given money and are still living in those houses and condos without paying mortgages or HOA.

      There were programs on the TV “How to Flip that House”. Front page stories in Miami Herald about how Miami was running out of land.

      Most of the mortgages securitized by the banks were the Jumbo mortgages and some of the non-conforming mortgages.

      AND that is the reason why F & F had to be taken over by the Government. What was the role of brokers back then. How many of you told the client that “You” wouldn’t buy at that price? How many brokers are refusing to take listings TODAY which are ridiculously overpriced? I am part of re investor group going way back.

      FYI – We have purchased, rented and sold RE over past three decades. During last decade, we sold all our holdings, got out in time and will buy again at right price. None in my group is on the TV and you have never heard of them or seen them.

      • Pay attention son!
        I’m trying to learn you something.

        All those loans were not F&F loans. Many of them were HELOC from primary residences which had greatly appreciated I used an Interests only HELOC to purchase several investment homes in 2004 and 2005, when I sold my then primary home in 2005 the HELOC was paid off and the rest of my equity was given to me in cash. I still own those investment properties and they cash flowing today. Many people who bought Properties did the same as well, Many of them never sold their primary residences and now it is worth Bump. Others bought 3 or 4 condos with loans from private lenders, those loans were then sold to Wall st and then sold to the rest of the world. F& F did there share of damage but they weren’t the main culprit. I read somewhere where they said F&F subprime loans performed much better than those of Wall Street(by order of magnitude ).

        • So all these private lenders wanted to lose money? So they gave it away? That is a news worth reading.

          FYI – I have 4 beautiful grandchildren.

  31. gables — You used to argue in an honest way, but things have gone south. I never said the government “created” the greedy banks and sleazy bankers. I simply said that the greedy banks and sleazy bankers couldn’t have done even 10% as much damage if the government hadn’t greased the wheels via legislation, lax oversight, cheap money, unlimited money for Fannie and Freddie, etc., etc.

    I don’t care how much you dislike the banks, it’s simply illogical to assess 100% of the blame to the banks and bankers and 0% of the blame to the government, greedy borrowers, greedy r.e. agents, corrupt appraisers, etc., etc.

  32. joe, i’m telling you those greedy and sleazy entitites already existed. this event would have happened with or without the governments actions. hey, i blame the banks, borrowers, RE establishment, appraisers, etc. i just call a spade a spade when you try to throw government into the arena-that is an argument based on ideology-it is way overplayed.

  33. gables — I *KNOW* the greedy banks and sleazy bankers “already existed.” I never said otherwise.

    My point, for the umpteenth time, is that the greedy banks and sleazy bankers couldn’t have done even 10% as much damage if the government hadn’t greased the wheels via legislation, lax oversight, cheap money, unlimited money for Fannie and Freddie, etc., etc.

    How could the greedy banks and sleazy bankers have sold billions if not trillions in garbage paper if the government didn’t keep money so cheap and allow anyone with a pulse to qualify for the $600,000 liar loans, etc., that the banks packaged and sold as “investments”? If a guy goes on a shooting spree, you expect the cops to stop him after a few minutes, not after five years of shooting. But it took the government YEARS to even begin to slow down, let alone stop, the abuses by the greedy banks and sleazy bankers — and then it infused billions of dollars to keep most of the same sleazebag bankers in their jobs.

  34. joe, just to be clear so i know you don’t want political ideology to influence the discussion, the rise in RE during the 2000-2005 years was a result of the lax oversight, lobbying and deregulation occurring during the ownership society of the controlling Bush and conservative Republican governments. i guess if we are to blame the government, let’s make clear who the actors in power were when the shenanigans were occurring during this bubble of real estate.

    the government did not infuse billions of dollars to keep the sleazebag bankers in their jobs. they infused billions so that the bond funds in your pensions, your money market account, your savings account, etc maintained stability and did not collapse. did people profit? yes. but if you think taking no action was appropriate, you have no understanding of what was happening during the financial crisis.

  35. gables — I never mentioned GOP or Dem or Bush or Obama. I blame the Bush admin for not being forceful enough in making changes and shutting down the sleaze. It must be noted, however, that when Bush proposed actual changes, additional oversight, etc., it was treated as dead-on-arrival by the Dems in Congress, such as Teddy “Give Loans to Anyone with a Pulse” Kennedy. (The Social Security situation makes the housing implosion seem like child’s play, and Bush tried to deal with that, too. But dishonest Dems killed that, too.)

  36. joe, when you control the WH and Congress, you have no excuse for not executing what should be done-unless the ruling party has no problem with what is happening. i laugh at how, even when Bush and Reps controlled the government, somehow it is still the Dems fault for all the bad things which happened. i can play the revisionist blame game as well. the current deficit and debt is Bush’s fault. the tax cuts he enacted during the surplus years would have been a nice balance to the stimulus needed during the recession. instead, it became part of the loose money which ran up the real estate bubble. so conservative fiscal policy lead to the RE bubble.

    this is why, while convenient to blame the govt, it is not really a valid argument. government will ALWAYS exist, and thus always serve as a scapegoat for one side or the other. but people know right and wrong, no matter what the government does.

  37. gables — More dishonesty, plus some lousy political analysis. In case you didn’t learn from Obamacare, etc., unless a party has 60 votes in the Senate, it’s borderline impossible to effect any big changes. And, as I mentioned above, Dems like Teddy Kennedy considered things like Fannie and Freddie reform to be “dead on arrival” in the years leading up to the housing implosion.

    “this is why, while convenient to blame the govt, it is not really a valid argument. government will ALWAYS exist, and thus always serve as a scapegoat for one side or the other. but people know right and wrong, no matter what the government does.”

    – Seriously, man, what color’s the sky in your world? The only reason government exists is to enforce “right and wrong.” If government can’t do that effectively, then there’s no reason for it to exist.

  38. joe, the only dishonesty provided is from you. you don’t like the truth so you take the typical approach and disparage.

    government does not exist purely to enforce right and wrong-it fails at the morality play. governments provide the infrastructure and framework through which a society survives. you really think this country would be as great as it is if government did not provide highways, airports, sewers, defense, education, etc? it has sponsored research which led to medical advances, computers, internet, etc. show me a successful country where the government’s only role is to enforce “right and wrong”. now “Seriously, man, what color’s the sky in your world?”

  39. gables — The people in Idaho don’t need bureaucrats in Washington, D.C., to tell them how and when to build roads, schools, etc.

    The primary and overriding purpose of government is to define and then enforce the concept of justice — right and wrong. For you to sit here and absolve the government of any responsibility for the housing implosion because “people should know right and wrong” is just idiotic. It makes you sound like a clown. I try not to get into name-calling here, but I really can’t think of a more polite way to say it.

  40. joe, they do if they want to use the interstate highway system and airports. you want interstate commerce and the benefits which come from that, you need to learn to share and participate as a group. you can try and secede from the union if you want-but that didn’t turn out so well for the last group that tried either.

    i do giggle, however, when i imply that people should take on responsibility for their actions and you disagree, claiming it is the governments job to do that. you sound like some liberal socialist!

  41. gables — You’re being really silly here, almost Gixxer-esque, in your refusal to admit a simple truth and move on.

    The idea that the U.S. government was conceived and currently exists primarily to design highways and regulate interstate commerce rather than to uphold laws and pursue justice is utterly absurd.

  42. no joe, its your absurdity of blaming the CRA and F&F on the housing bubble and bust. you let your ideology get in the way of the facts.

    i never said the government primarily exists to design highways and regulate interstate commerce-those are your words in an attempt to try and discredit those with whom you disagree. my words are these are just some of the responsibilities of a government. you lose credibility when you argue with falsehoods.

  43. gables — blah blah blah

    For the 100th time, I’ve never assessed full blame for the housing implosion to the CRA. Meanwhile, you insist on fully exempting the government from ANY blame. And you say *I’m* the unreasonable one? Please.

  44. joe, blah blah blah

    as you say “My point, for the umpteenth time, is that the greedy banks and sleazy bankers couldn’t have done even 10% as much damage if the government hadn’t greased the wheels via legislation, lax oversight, cheap money, unlimited money for Fannie and Freddie, etc., etc.”

    you are an ideologue who wants nothing more than to blame the government for the crap of the private sector. 10% as much damage?! you live in the fox news and conservative radio fantasy land!

  45. gables – I can’t believe how dishonest you’ve become. I’ve assessed blame for the housing implosion to about 10 different actors, from the government to bankers to greedy buyers, but you keep falsely insisting that I only blame the government. Meanwhile, you insist on EXEMPTING the government from ANY BLAME WHATSOEVER. I’m done going in circles with you. You used to be a voice of reason around here. Your demise is sad.

  46. joe, you insist on categorizing the government with actors who BROKE THE LAW! some of these charactgers are even going to jail! it is absurd to categorize the government (with whom you simply disagree with their policy-but they are doing nothing illegal) with people who committed mortgage and security fraud among others. it is dishonest on your part to lump felons in with the government simply due to an ideology of antigovernment. the sooner you realize this, the fewer circles you will run! you cannot be that dense!

  47. gables — If they BROKE THE LAW, then who is responsible for putting them in jail? The government, right? And how many people have gone to jail so far? Not many, and certainly no one of any Wall Street prominence.

    Why is it so damn hard for you to see this? You’re so busy blindly defending the government that you refuse to see the government was both lax in the run up to the housing implosion and lax in post-implosion prosecutions.

    You keep screaming hysterically that the “greedy bankers” BROKE THE LAW. Okay, then, why hasn’t the government put them in jail? Please explain.

  48. joe, the lack of prosecution today had no bearing on the activities leading up to and including the bubble and resulting burst. today’s slow action in prosecution had absolutely no bearing on the bubble and bust which occured in the past. again, you are reaching for straws to defend your ideology that it is the governments fault. your anger should be focused on the people who actually committed the fraud! perhaps an environment which supported government regulation instead of deregulation would have helped. but then people would have moaned for the government to leave business alone-which as i recall was a common theme during those gogo years.

  49. gables — The lack of prosecution has no bearing on crimes? Really?

    If only one out of a thousand murderers was prosecuted, don’t you think there’d be more murders?

    Likewise, don’t you think the lax enforcement of banking laws, both pre- and post-implosion, had an effect on people’s willingness to commit crimes?

    Seriously, what the hell is the point of having a government if it neither enforces laws in the run up to a crime nor prosecutes offenders AFTER crimes have been committed?

  50. joe, the bankers had no idea back then whether we would be effective in prosecuting the lawbreakers. your argument is not valid. unless they believed a policy of deregulation would keep them safe. of course, to make sure the same thing does not happen again in the future, stronger enforcement and regulation is needed today. i suppose you are in favor of greater enforcement and regulation in the banking and RE industry today, correct?

  51. gables — Talk about arguments that aren’t valid. Good grief.

    Why are you already focused on the NEXT banking-related scandal? As you’ve been screaming here for months, the “greedy bankers” “BROKE THE LAW.” Why do you not care that essentially NONE of the greedy, law-breaking bankers have been prosecuted? How many freaking global economic implosions are necessary before your beloved government bothers to prosecute someone?

    Debating with you is like debating with a lunatic. You keep screaming that greedy bankers “BROKE THE LAW,” but you don’t seem to care at all that none of those greedy bankers have been prosecuted. What gives? How is that logical?

  52. joe, you brighten my day with giggles. you think they are not trying to prosecute? they most definitely are. lack of resources and deregulation make prosecutions very difficult. i would throw them all in jail if i could. be we are not stalinist russia-we can only work within the existing judicial system.

    i understand your frustration joe. you have arrived at the typical point of contradiction which many ideologues encounter. you want to be able to blame the government for everything bad: the bankers only broke the law because the government let them. but you can’t truly bring yourself to embrace a solution, which involves increasing the bite of regulations-it’s against your ideology. which is why you avoided my question about stiffer regulation today.

    if bankers and other players had not broken the laws, there would not have been the bubble and following bust which occurred. quit blaming others for the illegal actions of these initial players.

  53. gables — I’ve never seen someone use such a circular argument.

    It’s been three years since the implosion. How much time does the government need before it can start prosecuting?

    The government has spent something like $10 million investigating and prosecuting Barry Bonds. Something tells me “lack of resources” isn’t the problem here.

    As for “deregulation,” that’s an idiotic argument. You keep screaming that the “greedy bankers” “BROKE THE LAW,” so which is it? Did they break the law or not? You can’t say they broke the law but then say deregulation exempts them from prosecution.

    As for supporting “stiffer regulation,” I see no point in adding more regulations to the books if the government won’t enforce the EXISTING regulations. If what you say is true, a relatively small number of “greedy bankers” essentially tanked the world’s economy three years ago, and yet the government still hasn’t prosecuted more than about three of them.

    Your position is odd and laughable. You blame the bankers 100% for the implosion, but then you seem to have no problem with the fact that few of them have faced criminal penalties. And now you want MORE laws written. You’re like those dopey liberals who think that one more gun law would have stopped the Columbine massacre, as if the existing 20 laws the shooters broke weren’t enough.

  54. joe, again you make me chuckle. you want to blame the government twice, both before the bubble and after the collapse! it’s an ideology run amuck! your constant responses over the past week have had very little to do with how inappropriate the actions of the bankers and RE complex have been in the bubble, but how it was simply the governments fault. you really need to get away from this victim mentality-it simply results in a bitter angry point of view. the government is not going away. whether it is a big government or a small government, it will still never be able to stop the illegal actions like we saw resulting in the RE bubble. providing cover for these people who broke the law by trying to blame the government for their actions is laughable. focus on the lawbreakers rather than your ideology!

  55. gables – You’re in serious need of some honesty — and some reading comprehension classes. You keep accusing me of being blinded by “ideology” and refusing to “focus on the lawbreakers,” but *I’m* the one calling for bankers to be prosecuted. Meanwhile, all you do is make noise about needing MORE laws and MORE regulation, even though the government is making no effort to enforce the laws and regulations we have.

    For a year, you’ve been screaming here that the “greedy bankers” “BROKE THE LAW!” yet you don’t seem to care that none of them are being prosecuted. I can’t tell if you’re a strange guy or a troll.

  56. joe, again you just make me chuckle. i do get a kick out of how you try to put words in my mouth in order to make your stance look more reasonable. you keep losing focus on how the bubble problems developed. they developed because people chose not to follow rules in an effort to make easy money-they committed fraud in the RE transaction and securitization process. the bankers led the way on this. prosecuting bankers today (or lack thereof), while noble and in agreement, was not the cause of the bubble and bust from three years ago. it is simply a derivative product of the actions of the bankers several years ago. but i do like your tenacity in searching for ways to blame the government for the crisis, misguided though it may be.

  57. gables – If people who “committed fraud in the RE transaction and securitization process” are to blame for the housing and economic implosion, then shouldn’t they have been prosecuted? The fact they haven’t been seems like a clear failure of government to me, but I guess you see things differently.

  58. joe, this discussion began over who was to blame for the bubble and bust. you continue to want to focus on issues after the fact, so that you can impose your ideology on the argument. again, lack of prosecution today had no bearing on the behavior of the guilty parties five years ago. you are simply convoluting the issues. the boom and bust was caused by fraudulent activities five years ago via private market participants, and not a lack of government prosecution today.

  59. gables — Yet again, you’re missing the point. OF COURSE, prosecutions today can’t retroactively change what happened five years ago. My point, all along, has been that the government should have been prosecuting people FIVE TO SEVEN YEARS AGO. By 2004, anyone with an IQ over 50 knew that there was massive fraud in the r.e. and banking sectors, yet the government just sat by and did nothing.

  60. joe, don’t be so dishonest. your point to begin with was we need to blame the CRA, FHA, freddie and fannie, etc for the housing bubble and bust. you just keep deviating from the real argument so that you can embrace your ideology that it is the governments fault. i just simply call you on that.

    the market system spun out of control-simple as that. the completely unregulated CDS market was used to hedge against knowingly fraudulent mortgage securities-and the result was the near collapse of the financial system around the time of lehman and AIG. you can blame your whipping boy all you want, but this problem was simply a private sector frankenstein. you simply need to learn to tolerate these boom-busts which will occur in a free market capitalist system-and not blame others when they occur to support an ideology.

  61. gables — The only one dishonest here is you. From Day 1, I’ve assigned blame for the economic implosion to about 10 different parties, from greedy bankers to lazy prosecutors to lousy Fannie and Freddie policies and execs. You’re the one who keeps taking us in circles trying to explain how the government was ZERO PERCENT responsible for the problems, which, frankly, is an idiotic position.

    “the completely unregulated CDS market was used to hedge against knowingly fraudulent mortgage securities”

    – If they were “knowingly fraudulent,” then why weren’t people prosecuted at the time? And why do you refuse to blame the government AT ALL for having done little or nothing to slow down, let alone stop, the implosion from happening?

  62. gables said: “you simply need to learn to tolerate these boom-busts which will occur in a free market capitalist system-and not blame others when they occur to support an ideology.”

    – If this is true, then why have you been screaming about “greedy bankers” here? Either laws were broken or they weren’t. If they were, then people should have been prosecuted. End of story.

  63. joe, again i fail to see your argument on how the prosecution, or lack thereof, of greedy bankers has any significance on the actions of the bankers leading up to the bubble. the bankers created the situation, not the prosecutors. you are going to complain about the government if it regulates, and you are going to complain about the government if it does not regulate. there will never be a government which you are happy with-it is simply the ideology you follow.

  64. gables — I didn’t think this needed to be explained to you, but the bubble didn’t happen overnight, it built up over time. It’s not like everything was fine and dandy and then the “greedy bankers” closed 5 million fraudulent deals on some random day in 2003 before anyone knew what was happening. We all saw the trouble unfolding — the constant “no money down” infomercials, the liar loans, the flipping, the easy credit, etc., etc. — and yet no one lifted a finger to slow things down.

    Are you seriously suggesting that even if the government had shut down a Countrywide and/or prosecuted a few corrupt appraisers and a few straw buyers back in 2003, that things wouldn’t have been any different? I really hope that’s not your position, because only a fool could espouse it.

    You keep saying “ideology,” “ideology” like a broken windup doll, but you’re the one locked into an ideology here, by blindly refusing to assess any blame whatsoever to the government. Expecting a government to GOVERN isn’t “ideology” — it’s common sense.

  65. joe, just ask bank of america and goldman sachs if the government is not pursuing them. their activities are reported almost daily in the news. and they have already paid fines and legal costs out the wazzzoo, with more to come.

    as joe said: “the constant “no money down” infomercials, the liar loans, the flipping, the easy credit, etc., etc.” in case you did not notice, these are great examples of private actors and not the government!

    and joe, sorry to tell you in 2003 there was very little evidence of what was to come-distorted hingsight. but if you want to go there, you should remember that during that runup from 2000-2005, we ran the government according to the policy makers in charge. if you want to blame the government, then you really should blame the policies that ran the government at the time. laissez-faire capitalist system with deregulation to enforce the notion that free markets operate best when government does not interfere with their operation. government agencies simply executed the policies of the Bush homeownership society and Greenspan fed. but you want to shoot the messenger, and not the policy maker!

    as you said “Expecting a government to GOVERN isn’t “ideology” — it’s common sense” the government did govern-their approach was to leave the markets alone to innovate and propagate. the administration basically told you they would not regulate-so why are you so surprised when they did not regulate?

  66. gables — More people were probably arrested in South Beach last weekend than have been arrested as a result of the economic and housing meltdowns. For someone who screams about “greedy bankers” all the time, it seems like you should be outraged that more of them aren’t in prison.

  67. joe, tell you what. i am outraged. why didn’t Bush and company prosecute all those bankers back when they were breaking the law? seems to me Bush gave them a pass and left it up to somebody else to deal with a failed laissez-faire policy. our government failed after all. still want to blame the government now? sooner or later you will come to realize which players were active in the bubble and collapse-just open your eyes a little bit. nobody put a gun to the banker’s head. outrage, or lack thereof, for bankers in jail today has little bearing on who created the problem to begin with!

  68. gables — Now who’s blindly married to “ideology”? I’ve never tried to turn this into a Dem v. GOP issue. I’m outraged that the government didn’t prosecute people who broke the law. Whether it’s Bush or Obama is irrelevant to me. (And, just or the record, most of these frauds could just as easily have been prosecuted at the local and state level as the federal level, so trying to change the subject by invoking political affiliation is more than lame.)

  69. joe, don’t be a liar. you tried to make it a political argument by blaming the government. you want to blame liberal dems for the bubble and bust-that is why you try to portray fha, fannie, freddie, etc as causes of the bubble. then you can blame liberal policy for getting us into the mess. but if you actually follow the crisis back to its beginnings, you find it is a result of deregulation (CDO’s and the resulting CDS bets) and greed in the private sector. so if you want to blame the government, that is fine, but you better blame the correct group of policymakers.

    as joe said “I’m outraged that the government didn’t prosecute people who broke the law. Whether it’s Bush or Obama is irrelevant to me.” why would you expect any prosecutions to occur in a deregulated environment? don’t share the blame, place the blame where it belongs! then i won’t consider you an ideologue!

  70. gables — Do you understand what “deregulation” actually means? Deregulation is a trend toward less regulation on business, not a period of anarchy or a period in which existing/remaining laws aren’t (or shouldn’t be) enforced.

    You need to pick a position and then argue it. For a year now, you’ve been screaming that “greedy bankers” “BROKE THE LAW!” Now you seem to be claiming that people didn’t actually break the law but instead took advantage of “deregulation.”

  71. joe, are you dense or just playing? people can still break laws in a deregulated environment-and it can end up really messy. just like we saw in the financial crisis.

    CDS products actually were more than deregulated. they were considered neither futures nor securities via specific legislation, so they were under no government regulation whatsoever. a wild west, if you will. and they exceeded by an order of magnitude the dollar value of the products for which they were considered a derivative-many asset backed securities (private mortgages). now the banks built up these CDO’s, many via fraudulent activities (liar loans, ninja loans, etc). the fraudulent CDO was sold to an investor, while the bank also issued a CDS (insurance policy) which bet that the CDO would fail! joe, this is an example of how a deregulated environment mixed with lawbreaking can result in excessive financial crisis!

    as if on cue, CNN just released an article describing how we continue to avoid regulation and withhold funding to our existing agencies. and you wonder why prosecutions are not occurring?
    http://money.cnn.com/2011/06/06/news/economy/tim_geithner_banks/index.htm?iid=HP_LN

  72. gables — I’ve lost track of what you’re even arguing. You go from claiming thousands of greedy bankers broke laws and escaped punishment to blaming the whole thing on deregulation. Deregulation does not, and has never, implied a suspension of existing laws or prosecutorial efforts.

  73. joe, you lose track because you are either incapable or unwilling to acknowledge how the bubble came about. you try to blame the government via fha, fannie, freddie, etc. but they were not the culprit. it was the private sector pushing the envelope, and then finally breaking the envelope, in search of greater yield. deregulation played a role, but it was the bankers who broke the law. it was just easier to break the law in a deregulated environment. please come back when you are better educated on the financial crisis, because it is clear you really do not understand what happened during those events.

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