“Pathological Rationalism” – Housing Bubble!

burbuja-650x400The housing bubble has busted and many people are feeling the effects, not only locally, but worldwide. California was, at one time, the 5th largest economy in the world and now it’s the 8th. California has a larger GDP than most countries on planet earth!!! Why is it that we cannot balance our budgets and keep employment rates from declining? This is due mainly to greed, ignorance and political agenda.

It all started with the housing boom in late 2002. Loans were easy to get because underwriting was relaxed and inviting. Regulation wasn’t there to keep things in check. All of the sudden, buying a house became routine. It was a simple matter of making people look good on paper with loan products like, “Stated Income Stated Asset”, and the most extravagant of any loan product in the history of mankind, “No Income No Asset”. With the “No Income No Asset”, all you had to do is say how much you make on paper, and you didn’t even have to prove it! What were they thinking? People started staring into the void, pathologically rationalizing how they could conclude the resultant of the unknown dozens of housing market variables. This opened the door to greed and ignorance. It was like a “Dionysian Impulse”. The nobles started watering at the mouth when they pathologically rationalized the ease in which their fortunes could skyrocket while ignoring the consequences. People started to pathologically rationalize how they can refinance their negatively amortized homes in 5 years  or so expecting to avoid disaster by getting a better fixed interest rate.

Well, it’s a fact, that no one can predict the future and everyone was betting on the market and many lost. Where was the priest to Sheppard the sheep to salvation? Where does this leave us as a nation? Entire countries, all over the world, are feeling the effects of our greed and ignorance. Yeh, being the 5th largest economy does have its responsibilities, and it also has its consequences too when we don’t respect it.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s