Not all banks were doing dirty things, and not all people were doing things, but many banks were and so were many individuals, and so the rest of us pay the price.
This crisis is truly an American style crises - people in most other countries are hugely risk averse when it comes to this kind of stuff. Even buying cars on payments is a newer thing in some advanced countries ie Spain.
Not just attitudes though ... 'bankruptcy' is a survivable event for companies and individuals in America. Less so elsewhere.
The idea that the financial crisis was brought on by some greedy underclass with ideas above their station is a myth that the banks have been pushing ... and it seems a few HNers have just bought it hook, line and sinker.
From what I heard many people in US were (maybe still are) taking all kinds of non-necessary loans. Well that's really not the healthy mentality, nor is it standard anywhere else across the globe. People that can't do simple 2nd grade math on paper take those here in Europe, and often they suffer, together with their families.
Seriously, there is something called financial literacy, and 101 of that is - don't buy shit you can't afford with a HUGE comfortable margin. 102 would be don't take loan on anything but your housing, unless you're starting a company. Any other loan, you're entering needless risk for not good enough reason. My personal opinion this is one of the failures of modern schooling - these things should be taught to every child, over and over. How to do taxes, how government works, how to become a better member of society and contribute to it, and how to effin' be financially smart whatever your circumstances are.
Nobody here is vouching for the banks here, they share their huge part in what happened, but your views are simplistic and a bit paranoid to be honest - 'banks pushing their myths on HN crowd' - the situation has been analysed ad nauseum and its pretty clear what led to the crysis. Nobody needs to push anything, not that banks would be magically able to do it anyway
Duped? You don't need to pour over financial models to know that spending 3/4 of your pay on a mortgage is going to cause problems. One thing I will say is that in the US, personal finance education is woefully inadequate. Just look at the number of people and the amount of balances that get carried on CCs. That alone is a sign how poorly people think about money.
The sad part is that a budget is not hard. It does require some self discipline, which is also sorely lacking.
No. Like I said there's a lot of people who could afford their homes, maybe even many.
I'm saying there's many people who were buying multiple homes, who shouldn't have been and that was part of the problem.
The banks, for the most part, were being rewarded for originating loans that they weren't going to hold, so they had perverse incentives to loan as much money as they could. There was massive fraud throughout the system from the the borrowers to the mortgage agents to the banks to the re-packagers (other bigger financial institutions, usually) to the credit agencies. It was a total shit show all around.
My thought was always I have a good job in software making way above the median income, and I can't comfortably afford a house. There is no way this can continue. It lasted much much longer than I would have guessed though.
Yes, it's absolutely partly the people's fault. There were tons of people taking massive loans they should not have. People cannot abnegate personal responsibility there.
A lot of things had to go wrong in the banking system for the crash to happen, but that was one of them.