Originally Posted by
Maelochs
Dotcom and housing were both 'get-rich-quick" schemes. Dotcom was based on magical thinking---"I am sure whatever some 24-year-old nerd is telling me will be the next Apple will be!" and of course it was all vaporware and salesmanship, with few actual products and usually no actual profits.
Housing had nothing to do with real estate, sort of. it was more about cynical investors realizing the could create fictional investment instruments and sell them to suckers The Dotcom whiz kids really believed (I think, and sometimes at least) that they had some phenomenal new virtual product. The housing bubble crooks flat knew they were cheating everybody and gaming the system. Even the regulators and ratings firms got in on it---shows why we needed the regulations we got rid of because .... oh, yeah All regulations are evil and hurt business.
The "housing bubble" was really the "collateralized debt obligations" bubble .... and as with all bubbles, CDOs were great investments until people saw the emperor was naked.
And have we forgotten the Junk-Bond/Savings-and-Loan debacle? or are you all too young/?
Some folks might point out that none of this has anything to do with buying toys and games on credit. Some folks might point out that when some folks feel the need to win an internet debate, they will voluntarily make all kinds of totally wrong statements ( having been there myself too often, and seem some other posters there .... we All know it, but usually too late in any given thread.)
Anyway ... I take my comedy wherever I find it.
Superficially, we are disagreeing, but it's a matter of perspective. My job as a bankruptcy lawyer was working with the victims of the housing bubble--people conned into buying too much house with terrible mortgages. From those people's perspective, the reason they bought into it was mainly because they believed conventional wisdom that the value of real estate always goes up, so they'd be able to sell the property before any balloon payment or whatever booby trap clicked in, or better yet, refinance it at that point. Very rapidly, these became mortgage payments they couldn't afford with a property that couldn't be sold or refinanced because it was over-mortgaged.
People who were buying stupid dotcom stocks were doing so because they thought people had discovered technology and ideas that made basic economic principles irrelevant.
Since the thread is supposedly about how we decide to buy bikes, I've looked at these bubbles from the "consumer's" perspective, not that of the perpetrators or bankers.