News-Record.com

http://www.mortgage-helper.com/zerodown.html

"The reason can be summed up in two words: income polarization."

How about these two words; greed and ignorance?

Greed by lenders and others (Neo's link) who wanted to crank out as many mortgages as possible; consequences be damned. Greed by house flippers. Greed by consumers biting off WAY more than they could chew.

Ignorance by consumers biting off WAY more than they could chew.

BTW, no one is forced to open a credit card account. I have one card, use it primarily for business travel expenses, and pay it off in full every month.

Ever notice people, particularly young, go into a convenience store, buy a bag of chips and a drink for $2.00 and put it on a credit card? Plastic is the new currency, but with it comes responsibilities.

I totally agree, Dan

Same here....I get credit card approval from many companies weekly...sure, I have good credit, but they send these invites to one and all. Too many people buy with no thought to paying off mortgages or credit cards. I guess my generation is the last who thought paying off your home was a goal.

The solution to income polarization is obviously income redistribution.

My understanding is that a credit card bailout is on its way next, along with college student loan bailout. Kid you not.

Hey Steven, have you ever heard of Fannie Mae, Freddie Mac, Barney Frank, Franklin Raines, Chris Dodd, Maxine Waters, Barack Obama, the Community Reinvestment Act, ACORN, lenders being forced by congress to give loans to people who had no job, no income, no way to pay the loan back?

Check out You Tube, some great instructive moments from congressional hearings with a Fannie regulator trying to spell out the corruption at fannie Mae, being attacked and villified by congressional Demo-Rats who told us there were no problems what-so-ever at these corrupt institutions, and that the regulator was the problem. Idiot!

The underlying question is: Why did all these people have bad credit in the first place? For some of them it is a question of personal responsibility. For others it's the fact that too many expenses have risen way faster than income. During the Bush administration, for the first time in American history, GDP and the poverty rate rose at the same time. That indicates an income distribution problem.

The issue with income distribution isn't strictly a question of ethics, fairness, guilt, however you want to put it. It's also a question of what's best for the economy as a whole. Healthy economies have big middle classes, Third World economies have extreme polarization. There's a reason for that: Businesses need customers with disposable income in order to sell anything. Kill the customer base, kill the economy. Mortgages, excess plastic, etc. are symptoms more than causes. The problem is that regular people have less money in constant dollars than they used to; loose credit just postpones the effect of that loss of income on the economy.

This simply isn't all middle class profligate spending. The middle class faces much bigger medical, educational, and housing expenses than it ever has before without commesurate increases in income. What you're witnessing with these credit problems is essentially an attempt to run faster in place.

I realize that income distribution of some sort smacks of excessive gov't intervention (which is really already there, just giving advantages in a different direction), but without it, we'll be a nation of gated communities and huge slums, not competitive with anyone. Our major competitors are moving in the opposite direction we are - growing middle classes. If these trends don't scare you, climb back into your libertarian hole and dream that unregulated businesses are going to save you. They did a great job on this crisis. Good luck.

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