I have nothing to do with this

[cema]

As I am not an expert in finances or economics, I defer any judgment on the bailout and its failure.

But we are all experts in politics, aren't we. Do I understand it correctly that the basic driving force behind the current financial troubles is a failure of a socialist experiment in the housing market? Or is it only part of the problem?

And the politicians, as usual, will blame someone else. (And everybody else will blame politicians.)

It is interesting to note, too, that more Americans are reported to trust Obama's team on economics than McCains' team. Whereas one would think that it would be the other way.

Update. A bit heated in the comments. Chill out, the world is not going to end right now.

Comments

[gera.livejournal.com]

To give you a little perspective on this whole "utility bills instead of credit history" issue let me share some personal experience.
When I moved to this country I subscribed to a cellphone service literally next day. I hadn't had not only a credit history, but any local ID at that point yet. But I had a cosigner, who had everything in place. I was their customer for a year, by that time I had all kinds of identification and had paid them with my personal checks for a year. So, I dropped the cosigner and when my yearly contract was up, I opted for another year. They asked me for an upfront deposit of $1000. Why? Because I didn't have a credit history.
Just think about that. It's not like I came out of nowhere sticking some old disparate crumpled bills into their faces to prove that I had paid someone else in the past, trying to convince them to entrust me with hundreds thousands of dollars. I had actually been their customer, I had a history with them. Yet, neither my letter to the management, nor showing up in person and bringing copies of my personal checks paid to them changed their mind. I had to put down $1000, because I didn't have a credit history. Also, consider their downside: all they were risking was $65, one monthly payment, because if I didn't pay that, they would disconnect the service. Yet, they wouldn't budge. You may imagine that for a bank that is to hand over a six-digit amount to a person without credit history some old utility bills are not really an adequate substitution.
In other words, this omitted sentence not only doesn't change the meaning to the opposite, it actually strengthens the aforementioned point, the theme of the entire document: looser standards, looser standards. Once again, didn't you notice the sentence about extenuating circumstances in the same paragraph? Don't you see that all that pushes in the same direction?

But, once again, it gets better. Credit history and credit score are checked not only when extending new credit, but in many other contracts and transactions. It is very hard to get by without credit history in America. So, if a potentional home-buyer, who, as such, is most likely at least in his late twenties and married, has never had a credit card, apprently, there is a good reason for that: nobody trusted him with one, not even with a tiny credit line (especially compared to a house loan). The argument, that the document makes for not having a credit card is completely bogus: being used to pay as you go does not contradict having and using a credit card.

Now, you should now how credit cards work in the US, because it's very different from Israel. A credit card is both a convenient way to pay and a borrowing vehicle. It is NOT tied to a bank account, so repaying it is based on trust and therefore not everyone gets them. You can charge a credit card up to your credit limit and then pay it off for years (with huge interest, of course), choosing yourself your monthly payment that has to meet some tiny minimum. But you can as well choose to pay off the entire balance every month, which many people, myself included, always do. On the other hand, even upper middle class people like to keep around a couple of unused credit cards because it gives them an easy access to cash in case of emergency.
This is like an insurance policy, which is actually far, far more important to poor people, who are both constantly out of money and have far fewer opportunities to borrow it. Would you really believe that a poor person, no matter how disciplined, frugal and prudent, would willingly forgo this kind of insurance? Chances are, the reason he doesn't have any credit card is not his "pay-as-you-go" philosophy, but a mere fact that nobody would give him one.