I somewhat follow the news to see what’s going on in the world — it’s usually manageable in small doses. I also read/listen to a lot of history, to keep things in perspective and to understand what we humans are like. My main reaction is to laugh that we use the term sapiens (wise, intelligent) to describe ourselves. Homo imbecilus seems more appropriate.
It certainly is true that the present U.S. is a lot different from the one I grew up in. For instance, then if you wanted to buy a house you made sure you had a good down payment and could make the commitment of regular mortgage payments. You never bought a house bigger than you could afford. Nowadays that’s hard to do.
According to the Wall Street Journal, used homes are difficult to buy right now — investors have bought most of the bargains and the people owning the rest of them are trying to wait until prices rise before they sell. But builders are having a boom time selling more expensive new homes, even to people with little savings or with spotty credit histories. How do they do it? They make it easy to borrow the money. In many cases they have their own mortgage departments and arrange for loans with little or no down payment. But isn’t that risky for the builders? Not always. 50% of the loans are guaranteed by the federal government, so the builders will get repaid in any case.
But doesn’t that mean the government is encouraging the very behavior that started our economic crisis in the first place? Well, yes. But if the new owners default the government can always print more money and presumably deal with the consequences later. Homo imbecilus is the only explanation I can think of. What do you think?