Jim Cramer gets it right. We’re spending billions to build houses in Iraq and we have a mortgage crisis on our hands. When middle class Americans are falling behind on the repayment of their home equity loans, we’re in trouble. Combine the mortgage crisis with increased pressure to improve profitability and productivity in the global marketplace, and it becomes clear that America is facing a crisis.
Who is to blame? I don’t want to be so negative. I’d prefer to ask — whom do we thank for this lovely situation?
I’d like to thank Ditech, Lending Tree, and all the other wonderful teaser rates! Thank you, home equity loans and excessive consumption. Oh, and thank you Harley Davidson for selling us motorcycles when we really need fiscal responsibility in our lives.
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It should be noted that there is a differentiated value for subprime or stated income loans in the commercial lending market. This loan type is not entirely bad despite the abuse of some in the residential lending arena. Oftentimes, individuals that want to start or acquire a small business, purchase a gas station, acquire a motel, open an auto repair shop or any of a myriad of sole proprietor establishements, and do not have the portfolio that would make them attractive to the big box leaders. Lending companies like Ocean Capital in Rhode Island offer subprime and stated income loans by using up close and personal evaluations of the borrower and the opportunity. We need companies like this to support new business opportunities.
Unfortunately, Jim Cramer was bemoaning the impact of the mortgage crisis on the lending companies and hedge funds that invested in these types of loans – he wasn’t complaining about the impact on the consumer borrower. It’s one thing to stand up for the borrower who may have been misled or deceived during the lending process – it’s another thing to defend the companies and investors who tried to benefit from those loans and now are facing difficulties to high default rates, as Cramer is doing here…
Scooter – I agree with you in principle, but Cramer has gone on the record endorsing corporate accountability to shareholders/investors in more than just words. He gets hot under the collar about stupid, short-sighted business practices. He also bemoans the degredation of the middle class in America, which is the investing class & the class of people who have some of these variable-rate mortgages.
I must have inferred a concern for the middle class, I suppose.