Apparently, the lure of money makes people forget lessons of the past.
So when recently the housing prices started to rise again in the Western regions of US, People are starting to dump houses, hoping to cash in on the higher prices. (either that, or just trying to get themselves out of the market with little loss as possible).
That has led to a small glut of supplies in some places. Which invariably lead to 2 possibilities: (1) Prices will come down again, quickly, because there aren’t that many buyers, (2) People will start to speculate (flip) housing prices, with banks giving easy credits.
Now, some may say the possibility (2) is not likely, because banks have learned their lesson, and the current government policies heavily regulate loan approvals to prevent subprime loans.
However, “subprime” is coming back. http://www.marketplace.org/topics/economy/after-lehman/5-years-after-lehman-subprime-mortgages-return
But they call it different thing now, “non-prime mortgages”, for people with bad credit. Supposedly with more strict rules, like verified income.
That’s like saying, “subprime with less risk, according to some criteria”.
Of course, it is nice that people should qualified for a home. It’s the American dream (and pretty much dream of all people to own homes).
But the problem with “subprime” wasn’t necessarily the “income”, it was the “speculation”, the risky behaviors of some folks, that drove up the prices into the “bubble”. I.e. PRECISELY the kind of risks associated with “bad credit rating”, which the non-prime mortgages still allow. So, people who speculated in the last bubble, ended up with bad credit, are now again qualified.
The problem is, with “non-prime mortgage”, people will likely use the easy credit with the high interest to speculate, given the temptation to do so.
(A real solution is perhaps attach risk to the specific real estate. If the area is already overpriced, loans should be selectively denied. But unfortunately, when there is a demand for speculation, there will be bank loan sharks willing to feed the beast.)
*While all this was already going on, the story received very little coverage in the Western media, which was actually quite busy harping on the Chinese “housing bubble”, which they have little understanding of.
Propaganda and cover up much?
Which gets down the fundamental problem of some people who are too busy looking FOR other nations’ problems: It’s really just their escape, to ignore their own serious problems. It doesn’t have to be a government trying to divert attention. It is often just collective self-deception in the mentality and assumption that one’s own affairs are perfectly OK.