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The Blame Game Continued

Who’s to blame? Both lenders and buyers abused the mortgage industry - there was greed on both sides. Lenders allowed individuals without jobs to put down money on mortgages. There were no controls on the system and this only created a bigger bubble and a bigger pop.

It has all started to unravel and still is unraveling as the stock market and financial systems crash – Merrill, Lehman, and Bear Stearns. It’s sad but ironic when you see all of these supposed genius financial gurus, who before were recommending stocks and securities, are now going bankrupt.

There was a joke going around just after Lehman Brothers went under that they placed such and such stock as a strong buy. There will be more bank failures, more company buyouts and takeovers, and more opportunities for those who have cash in reserve, such as Warren Buffet who are buying companies as consolidation. Right now, cash is king, no matter what you’re doing, whether you’re buying stocks, real estate, or a company.

Bill Clinton also talked about how there was no inflation back in 2000, as he was questioned whether or not he and Greenspan were partly to blame for the real estate bubble. After the dotcom crash, everyone was looking for a place to put his or her money, somewhere where there was growth. And with interest rates so low, it helped fuel the real estate surge.

Interest rates were low so as to fuel the economy but there was again very little regulation in the market. And, oil was nowhere near the $150 price range as it was in the summer of 2008. As new homebuyers disappeared and lenders tightened their standards (as the sub-prime mortgage mess show), and as oil sped higher, things were only exacerbated.

Sure, some cities and states have been spared, but on the whole, home prices dropped dramatically on both coasts of the United States. California, Nevada, Arizona, and Florida were hit the hardest.

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