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"This Christmas could be a make or break for Toys R Us"


Sauromosis

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  • 3 weeks later...

 

1- Banks were "greedy" by making subprime loans that they "knew" borrowers could not pay

2- Borrowers were just as greedy for getting a loan they knew full well they could not pay

3- Government was stupid (no surprise there) by highly encouraging ("forcing") banks to lend to unqualified borrowers in the hopes of making "homes affordable for everyone!"

 

 

There were no innocent parties in the crisis, it's just easier to blame the ones at the top.

Just as bad as O...

 

Couldn't have said it better. Banks made risky subprime mortgage loans because they were very profitable and they were feeling risky. On top of this, they wanted to be even more risky so started selling off synthetic CDOs into tranches and credit default swaps to other banks. In short, banks placed bets on their last bets winning. This amplified their risk and ballooned the housing bubble even further.

 

Also, credit agencies mis-categorized many subprime loans, adding to the problem.

 

Like you said, the feds led by Barney Frank wanted to make sure "every american can afford a house" - which is impossible - therefore under fannie mae and freddie mac made sure this would be true. They were the largest buyers of the subprime loans.

 

 

Conclusion:

 

1. If the government stayed out of it, it would likely not have happened, or would have been only a slight fraction as bad in reality.

2. If some of the large banks were more risk-adverse instead of riding on the high margins on the loans thinking there was no end in sight thanks to the federal government, then the problem would have been much smaller.

3. If some people who couldn't afford a house didn't try to get a loan for a house, the problem would have been smaller.

4. If the credit agencies had been more accurate on the risk level of loans, then the problem would have been smaller.

 

Unfortunately, all 4 of these happened at once, and the flood gates opened.

 

 

(also, I did not vote for either Obama or Romney....both suck on the majority of issues)

 

 

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As far as toys r us stores that may be closing down in the future, I know there was one store near me that closed down around 2001 or 2002. I got lego soccer sets for 75% of 75% off, which is like 94% off. Might have been a couple small star wars sets there too.....nowadays I imagine they are able to get rid of their legos to other companies or liquidation businesses for a much higher price than that.

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