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What Caused the Financial Meltdown?
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<blockquote data-quote="mountaingoat" data-source="post: 402563" data-attributes="member: 1250"><p>Another cause is people's general human nature to spend beyond their means. What happened within the past 6-7 years is that because of the loosening of lending strings, the market had artificial demand. More people could now "afford" to buy the same amount of houses. Demand went up, supply stayed the same, and that drove house prices up.</p><p></p><p>People on the buying side didn't say, "Hey - I can now purchase a home well within my mean and get a 15-year-mortgage" but rather, "Wow, now I can qualify for a larger home with a 40-year-mortgage".</p><p></p><p>We are a nation that defines ourselves by image. The larger the home, the flashier the car ("You are what you drive"), the more stuff that we have. Twenty years ago, how many self-storage areas did we have in this country? Now we pay monthly fees to store stuff that we don't use. We park our Lexus SUV and BMW in our driveway so that we can store our $10 Wal-Mart bikes in the garage. We live in McMansions with 3000' sqft of living space, and still don't have enough room to store our stuff.</p><p></p><p>We tend as a nation to buy things that we don't need with money that we don't have to impress people we don't know.</p></blockquote><p></p>
[QUOTE="mountaingoat, post: 402563, member: 1250"] Another cause is people's general human nature to spend beyond their means. What happened within the past 6-7 years is that because of the loosening of lending strings, the market had artificial demand. More people could now "afford" to buy the same amount of houses. Demand went up, supply stayed the same, and that drove house prices up. People on the buying side didn't say, "Hey - I can now purchase a home well within my mean and get a 15-year-mortgage" but rather, "Wow, now I can qualify for a larger home with a 40-year-mortgage". We are a nation that defines ourselves by image. The larger the home, the flashier the car ("You are what you drive"), the more stuff that we have. Twenty years ago, how many self-storage areas did we have in this country? Now we pay monthly fees to store stuff that we don't use. We park our Lexus SUV and BMW in our driveway so that we can store our $10 Wal-Mart bikes in the garage. We live in McMansions with 3000' sqft of living space, and still don't have enough room to store our stuff. We tend as a nation to buy things that we don't need with money that we don't have to impress people we don't know. [/QUOTE]
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