yconic - Greed
Hide Menu

My Feed Money for School Student Help Brands Winners Support Center



Explore yconic
Explore Student Life Topics
Scotiabank
STUDENT CHAMPION
yconic proudly recognizes Student Champion Partners who are providing our community with superior support for their student journeys. Learn More
Student Help Brands

Greed

A photo of Quant Quant
I heard about the proposed $26 billion “mortgage settlement” in the US last week, which would bail out homeowners by reducing the principal for borrowers who were adversely affected by the subprime crisis. A couple of days ago I heard that apparently the majority of people are not satisfied with this principal reduction plan, and that in addition to the $26 billion to bail them out, they are demanding not only more money, but that criminal charges be pressed against the executives of the "culprit banks."

These are the same people who thought it would be a great idea to enter into adjustable rate mortgage contracts (which they could not afford) with the hopes of refinancing their loans after a couple of years of appreciation in the price of their homes, the same people who accumulate obscene amounts of credit card debt, and who just generally live beyond their means and desire to acquire material goods they cannot afford.

All of this just lends credibility to my claim that, on average, lower middle class individuals possess the highest level of greed of any other segment of the population.

These people should be placed in internment camps or something.
Was this helpful? Yes 0
33 replies
 
A photo of SUMmer123456 SUMmer123456

@Quant wrote
I heard about the proposed $26 billion “mortgage settlement” in the US last week, which would bail out homeowners by reducing the principal for borrowers who were adversely affected by the subprime crisis. A couple of days ago I heard that apparently the majority of people are not satisfied with this principal reduction plan, and that in addition to the $26 billion to bail them out, they are demanding not only more money, but that criminal charges be pressed against the executives of the "culprit banks."

These are the same people who thought it would be a great idea to enter into adjustable rate mortgage contracts (which they could not afford) with the hopes of refinancing their loans after a couple of years of appreciation in the price of their homes, the same people who accumulate obscene amounts of credit card debt, and who just generally live beyond their means and desire to acquire material goods they cannot afford.

All of this just lends credibility to my claim that, on average, lower middle class individuals possess the highest level of greed of any other segment of the population.

These people should be placed in internment camps or something.




I don't think this says anything more or less than the fact that the vast majority of human beings are greedy; this isn't really something that requires rigorous scientific validation. The banks let people gamble on someone else's money, and people were all too happy to do their part. Did the banks not owe a duty to their stakeholders to not approve high-risk debt in which there was very little chance of repayment unless a relatively low-probability optimal set of circumstances were achieved?

I'm not defending the people who "lived beyond their means" and defaulted. If you make poor choices, you should live with the consequences (I agree pressing charges against the executives is bs; ignorance should be no defence here). However, everyone involved deserves blame for what happened. If anything, I would commend the government for bailing out debtholders as they did the "super banks" to ensure some degree of equity from that standpoint. But to call them any more or less guilty than the banks isn't a very fair statement in my opinion. Everybody played the game and tried to get rich on credit, but failed. It's more a lesson on unbridled human avarice than one on the middle class.
Was this helpful? Yes 0

 
A photo of mynameismattgotmlgo mynameismattgotmlgo
Ultimately it's the bank's responsibility to decide whom to give mortgages to. Sure, the borrowers are also responsible, but they are not the ones who are expected to have a lot of financial/mathematical knowledge, nor should they be seriously concerned about macroeconomic issues that affect them on a mirco level. In a lot of ways, the banks deliberately entered into knowingly risky contracts just to sell as many mortgages as possible to keep the money flowing to mortgage-backed security holders. Furthemore, the banks used teaser rates to really dupe borrowers into believing they could afford what they actually could not.
Was this helpful? Yes 0

 
A photo of Quant Quant
The banks were pressured into lending to subprime borrwers by the government (remember the Community Reinvestment Act)? There is no circumstance under which these same banks would engage in this kind of behavior absent government intervention.

If you're a residential borrower, you don't have to be some kind of financial wizard to realize that something is too good to be true. You should intuitively recognize that if you're making $40K/year, you probably can't afford a $half mill house. You should also recognize that if you're entering into complicated contracts - like adjustable rate mortgages - there is great potential for adverse effects if you don't know what the screw you're doing. These contracts, by their very nature, start out with a low introductory rate, and then increase to the market rate (which is usually tied to the LIBOR or some other index) + a margin. Given that the yield curve is usually upward sloping, long term rates will be higher than short term rates (due to risk premium). This isn't a "teaser rate" necessarily, it's just the nature of this type of mortgage contract. So yes, borrowers should be expected to understand the underlying factors which affect their mortgage. If you're poor & stupid, you should not own a fucking house. Instead, you should remain in the ghetto in your dilapidated appartment with the other savages where you belong, and leave homeownership to those who know what the screw they're doing.

The reason they did not bother to be prudent is due to greed and their desire to obtain something they could not afford and did not deserve. The fact remains, poor people are the greediest motherfuckers on the planet.
Was this helpful? Yes 0

 
A photo of mynameismattgotmlgo mynameismattgotmlgo
It's like giving money to a retarded child and expecting him to get groceries with it. He comes back with candy; who is to blame, him or you? He's the retarded one; you're the smart one - you should know not to give him such a relatively complicated task.

The CRA has been in effect since the 70s, and it has been shown that most subprime mortgages were underwritten by private banks independent of CRA regulation and that CRA-sponsored subprime mortgages outperformed those not sponsored by the CRA.

I don't know how you define greed, but I wouldn't call poor people previously living in a ghetto but now living in the suburbs struggling to make mortgage payments greedy. They're not trying to live in excess with luxuries all around them; they're just trying to live in a safe, comfortable place to raise their children. Are they stupid for believing that they can afford this when they actually cannot? Yeah, probably. Greedy? I don't think so. The people who were greedy were the Wall Street bankers selling MBSs, CDOs, and CDSs, making tons of money but not realizing they were treading on the thin ice that was the assumption that underlay part of the appeal of those securities: that housing prices would continue to rise indefinitely and significant numbers of defaults would not occur at one time. But what did they care? Money made is money made. Might as well continue to sell packages of risky mortgages to unknowing investors and swaps for the default risk associated with those mortgages and make tons of money while the going is still good. Sometimes making a 6 million dollars a year is not enough; you gotta at least break that eight-figure mark. That's what I call greedy.
Was this helpful? Yes 0

 
A photo of Quant Quant
The amendment to the CRA that was made sometime in the mid 90s (I don’t recall exactly when) is what I’m referring to. This is what placed the biggest restriction on “discrimination” in the credit practices of banks. It basically told the banks they could not refuse to give extend credit to low-income neighborhoods.

I had an internship in quantitative credit derivatives analysis a couple summers ago, and I know from experience that the entire process of deciding who is and is not creditworthy, who is at probability of default, and who has the largest potential for loss from default, is a process of discrimination. In fact, people who live in certain neighborhoods are statistically more likely to default than others – and this is based on tests of significant size (and power). CRA created the market for subprime mortgages, and this amendment only fuelled it. That CRA loans accounted for only a small percentage of the bad mortgages is irrelevant. Once the CRA regulated loans proved to be profitable (at the time) other banks started to infiltrate the market as a means of survival. And the credit derivatives weren’t borne out of greed – they had two functions: to minimize the risk on the balance sheet associated with the subprime loans, and to bypass regulatory capital adequacy requirements (which is expensive.)

I define greed as the dictionary does: the desire for accumulating material possessions which one does not deserve or has any right to. A Wall Street executive’s 7 figure salary (as much as it may keep you up at night) is earned and therefore not undeserved. So your example of greed fails to meet the criteria.
Was this helpful? Yes 0

 
A photo of Quant Quant
Also, whenever I hear a story about some greedy schmuck whose house was foreclosed and was kicked out onto the street, I can't help but feel all warm & fuzzy inside knowing that no matter the level of government intervention, you just can't screw with the market.

I also imagine that when these people signed their mortgages contracts, the first thing that popped into their minds was an image of them living in some $500K house with 4 bedrooms and the song "Moving on Up" from the Jeffersons playing in the background.
Was this helpful? Yes 0

 
A photo of SUMmer123456 SUMmer123456

@Quant wrote
Also, whenever I hear a story about some greedy schmuck whose house was foreclosed and was kicked out onto the street, I can't help but feel all warm & fuzzy inside knowing that no matter the level of government intervention, you just can't screw with the market.

I also imagine that when these people signed their mortgages contracts, the first thing that popped into their minds was an image of them living in some $500K house with 4 bedrooms and the song "Moving on Up" from the Jeffersons playing in the background.



How is that different from the bankers who wanted the exact same thing; only it was just a bit more magnified in scale in their case?
Was this helpful? Yes 0

 
A photo of mynameismattgotmlgo mynameismattgotmlgo

@Quant wrote
Once the CRA regulated loans proved to be profitable (at the time) other banks started to infiltrate the market as a means of survival.



While I'm sure a lot of the banks realized the risks of the subprime mortgage market but just hopped on the money-making bandwagon that it was, they still knowingly participated in risky business. It was an "if you can't beat them, join them" situation; I get that. However, many of those banks didn't take appropriate measures to defend against what they knew to be risky, potentially massively damaging loan contracts. Loan loss provisions, for example, were at an all-time low relative to revenue just before the financial crisis.


And the credit derivatives weren’t borne out of greed – they had two functions: to minimize the risk on the balance sheet associated with the subprime loans, and to bypass regulatory capital adequacy requirements (which is expensive.)



I understand that. I was just saying that (most of) the people who sold these were greedy, not the people who created them.


I define greed as the dictionary does: the desire for accumulating material possessions which one does not deserve or has any right to. A Wall Street executive’s 7 figure salary (as much as it may keep you up at night) is earned and therefore not undeserved. So your example of greed fails to meet the criteria.




Does not deserve or have any right to is a bit harsh. How would you define "does not deserve"? You mean, beyond one's means? I'd more just consider that financial ineptitude. "A strong desire to live beyond one's needs" is how I would define greed, and I don't necessarily think there's anything wrong with it. Greed, I think, makes the world a better place, even though it can definitely come across as selfishness. Any reasonable greedy person who makes $5M a year but wishes he could make $10M a year probably realizes that his lifestyle won't change considerably; he just has a natural drive to do better and better for himself. He'll now be able to afford a Ferrari Enzo, rather than just a Ferrari F430. Does a person need to live in a safe, comfortable suburb? No... I suppose that makes him or her greedy in a way. But I do think it is less greedy to want to live in a safe, comfortable suburb instead of the inner city than it is to want a Ferrari Enzo instead of a Ferrari F430.

Also, just so you know, I don't lose any sleep over a Wall Street executive's 7-figure salary. I think that is completely fair. All I was saying is that it's greedy to desire more than that.
Was this helpful? Yes 0

 
A photo of Quant Quant
^To both of you: I reject your simple definition of greed whereby simply "wanting things" is the sole criteria. There has to be more to it than that. Also, "need" tends to be very subjective. A lower middle class individual doesn't need to live in the suburbs any more than a wealthy individual needs another luxury car. Marginal utility only diminishes up to a point, and beyond that (usually beyond the point where one meets the necessary & sufficient conditions to live) the utility function is based on personal preference and risk aversion. So the only criteria that needs to be considered is whether the individual deserves the material possessions he desires, or whether it is an inappropriate desire.

However, let's say I buy your loose definition. Even then, the desire to double your salary from $1 mil to $2 mil and to generate more profit for your firm than the previous year, is a healthy dose of greed. Certainly there are varying degrees of greed, and everyone possesses some of it. My claim is that poor people are comparatively more greedy. This is supported by their spending habits, the legislation they support, and their sense of entitlement to social programs that benefit only them, yet are largely funded by other people (IE the "top 1%"). The fact that the government facilitates this greed through legislation and through massive credit expansion via the central banks is not lost on me. The government has to shoulder some of the burden too.
Was this helpful? Yes 0

 
A photo of Quant Quant
Additionally, this nonsense about the banks knowingly entering risky contracts due to greed needs to stop. I know from experience what kind of rigorous analysis goes into determining creditworthiness. Although I didn't work in the loan area, typically the same analysis for determining probability of default or loss from default when pricing a credit derivative is the same analysis as is done when determining creditworthiness. This is pretty much universal for all banks all over the world. For any kind of loan, other than a mortgage, the criteria is fairly strict. Banks will not take uncalculated risks when loaning money to an individual (even in the US). The reason they did so when it came to mortgages is due to the market distortion as a result of things like the CRA. There are always unintended consequences from government intervention. This is empirically factual.
Was this helpful? Yes 0

 
A photo of SUMmer123456 SUMmer123456

@Quant wrote
Additionally, this nonsense about the banks knowingly entering risky contracts due to greed needs to stop. I know from experience what kind of rigorous analysis goes into determining creditworthiness. Although I didn't work in the loan area, typically the same analysis for determining probability of default or loss from default when pricing a credit derivative is the same analysis as is done when determining creditworthiness. This is pretty much universal for all banks all over the world. For any kind of loan, other than a mortgage, the criteria is fairly strict. Banks will not take uncalculated risks when loaning money to an individual (even in the US). The reason they did so when it came to mortgages is due to the market distortion as a result of things like the CRA. There are always unintended consequences from government intervention. This is empirically factual.



That is the problem with your argument to begin with. This has been a documented fact; the banks DID take, at least to many on the surface, poorly calculated risks. Haven't you explored the discourse exploring the reasons for the credit crunch to begin with? I agree with the rigorous analysis portion, but this is precisely what was foregone in many cases in this crisis. The large number of defaults lends credence to this. Additionally, governmental regulation was insignificant to begin with; this is what caused many of these poor lending practices going unchecked for so long. Probabilistically, if your argument is correct, this was either a freak accident through no fault of the banks; or the more likely scenario that the banks simply gambled by lending money to poor credit risks on the off-chance that they would be good for the money down the line. Ironically, probability says that the more likely scenario is the latter one.

This point appears moot, however, as your contention seems to revolve around the lower classes being MORE greedy, so I feel it is pointless to argue on the validity of the aforementioned point. Greed is wanting more than your fair share; at least that's what my definition is (feel free to correct me if your definition of greed is different). Yes, needs tend to be subjective, but greed ALSO tends to be subjective. What may be greedy in your view might not necessarily be greed in mine or someone else's for that matter. What is an appropriate or inappropriate desire is a subjective determination. So all you have proven in my view is that, in your opinion (which may or may not hold for other people), less affluent members of society are greedier than more affluent members of society. Since this is what you were saying to begin with, you appear to have proven that you believe that poor people are greedier than rich people based on your subjective criteria. Congratulations!
Was this helpful? Yes 0

 
A photo of Quant Quant
Jesus fucking Christ, it’s like you haven’t read a single thing I said.

In the post you quoted, I clearly stated that with the exception of mortgages the criteria for loan approval is very strict and banks do not take uncalculated risks. I also clearly outlined why mortgages are an exception to this. Your claim that government regulation was insignificant is not to be taken seriously, as anyone who has worked in the industry will tell you. It’s one of the most heavily regulated industries - so much so that banks have entire departments devoted to compliance and regulation. This, in and of itself, produces so much waste & inefficiency since these resources could be utilized for other more productive tasks.

Greed is only subjective when you define it by using words like "need" or "fair share." When you define it in terms of more concrete terms like "deserves," as the word is suppose to be defined, it is no longer subjective. Working in a profession which happens to yield a high level of income, or undertaking the risk of proprietorship/entrepreneurship, and rewarding yourself with material possessions does not fall under the umbrella of greed. Moreover, choosing to work in a field that will yield you a high level of income is not a sign of greed. Ambition =/= greed. Contrast this with the sense of entitlement to the possessions of others, the desire to obtain goods (such as a home) even if it means foregoing prudence, and the expectation of being bailed out (wealth redistribution) when your poor choices bite you in the ass.

I will gladly stop ragging on poor subhumans (I do not consider poor people to be of the same species as me) so long as you and all the other hippies pool your money together to assist them financially, allowing me to opt out from subsidizing their social programs. Can we make this happen?
Was this helpful? Yes 0

 
A photo of mynameismattgotmlgo mynameismattgotmlgo

@Quant wrote
A lower middle class individual doesn't need to live in the suburbs any more than a wealthy individual needs another luxury car.



Here's a question: would you rather live in some dank inner city apartment but with a Ferrari Enzo, or would you rather live in a typical middle-class suburban home with a Ferrari F430 in the driveway? You can't sell the cars. If you're a reasonable person, which I doubt you are, I'm sure you'd take the latter. The difference between living in a nice house in a good neighbourhood and living in the slums is greater than the difference between owning a Ferrari Enzo and owning a Ferrari F430. Hence, most people, even the richest people in the world, would go for the latter option.


However, let's say I buy your loose definition. Even then, the desire to double your salary from $1 mil to $2 mil and to generate more profit for your firm than the previous year, is a healthy dose of greed. Certainly there are varying degrees of greed, and everyone possesses some of it.



Well, if we're going to argue semantics, here's the OED definition of "greed": intense and selfish desire for something, especially wealth, power, and food. There's nothing about what a person deserves or living beyond's one means there, as you proposed. You can be greedy but still live within your means simply by generating more wealth.


My claim is that poor people are comparatively more greedy. This is supported by their spending habits, the legislation they support, and their sense of entitlement to social programs that benefit only them, yet are largely funded by other people (IE the "top 1%"). The fact that the government facilitates this greed through legislation and through massive credit expansion via the central banks is not lost on me. The government has to shoulder some of the burden too.



What I can't get over is how you think poor people have the greatest drive for seeking wealth - not just money but wealth (as in, an ABUNDANCE of valuable possessions or money, thank you again, OED) - and power and food. That's a paradox. If poor people have a strong drive to make lots and lots of money, then why are they poor? Obviously their drive to make lots and lots of money is not that strong, as they are poor, not rich. Wanting to have their hospital bill paid for "by the government" is not an intense and selfish desire for wealth, power, and food, and it certainly isn't purely selfish, as such legislations apply to everyone.

I just don't think that "greed" is the word you are looking for. I think financial ineptitude is more fitting. Poor people, on average, have little to no understanding of personal finance, corporate finance, or public finance. They almost seem to think that money grows on trees. That I can agree with.


For any kind of loan, other than a mortgage, the criteria is fairly strict.



OK. We're talking about how the banks made poor decisions when signing mortgage contracts with people who can't afford them, you claim that banks didn't knowingly enter risky contracts due to greed, that rigorous analysis goes into determining creditworthiness, and then say that this analysis doesn't apply to mortgages. Talk about not even knowing your own argument, or at least filling it with moot side points. So what then, banks entered into risky MORTGAGE contracts for fun? Oh right, it was the CRA that caused them to do so. Well, that's just conjecture, and it's not widely held. At the very least, banks who felt forced into subprime mortgages simply because of CRA regulation, whether that actually happened or not, should have taken appropriate loss provisions.


There are always unintended consequences from government intervention. This is empirically factual.



I can agree with that, but what are you implying? That the world would be a better place without a lot of government intervention? Because that is entirely conjecture. Do I think it's false? I don't know. No solid evidence, just speculation.
Was this helpful? Yes 0

 
A photo of Quant Quant
In the first paragraph, you are confusing “want” and “need.” Clearly I would not want to live in some dilapidated apartment, and neither would most people. For it to be something you need, it would have to be something essential for basic survival. Shelter is certainly necessary for survival, whereas luxurious shelter is not.

You should post the definition in its entirety: “intense or inordinate longing, especially for wealth or food; avarice; covetous desire.” Most other definitions use the phrase “does not deserve,” this one uses “covetous” – IE to desire something that is not yours and hence do not deserve. SAME THING. Furthermore, rapacious and covetous are synonyms of the word. The “something” that is desired is not limited to wealth.

Why are poor people poor? I have no idea. It could be that the desire to possess material goods does not always translate into “drive.” Or it could be that their spending habits and propensity for accumulating obscene amounts of debt prevents them from achieving any kind of financial success. Or maybe they are just lazy & incompetent? Who the screw cares? What a stupid fucking question.

No Matt, banks didn’t enter into risky loan contracts for fun. The ones who were directly regulated by the CRA entered into them for obvious reasons. The ones who weren’t directly regulated by CRA entered into them because corporations have a fiduciary responsibility to their shareholders to maximize profits, and their competitors were dominating the market share of a previously untapped market that ….wait, why am I explaining this to you again? Read my fucking posts!
Was this helpful? Yes 0

 
A photo of SUMmer123456 SUMmer123456

@Quant wrote
Jesus fucking Christ, it’s like you haven’t read a single thing I said.

In the post you quoted, I clearly stated that with the exception of mortgages the criteria for loan approval is very strict and banks do not take uncalculated risks. I also clearly outlined why mortgages are an exception to this. Your claim that government regulation was insignificant is not to be taken seriously, as anyone who has worked in the industry will tell you. It’s one of the most heavily regulated industries - so much so that banks have entire departments devoted to compliance and regulation. This, in and of itself, produces so much waste & inefficiency since these resources could be utilized for other more productive tasks.

Greed is only subjective when you define it by using words like "need" or "fair share." When you define it in terms of more concrete terms like "deserves," as the word is suppose to be defined, it is no longer subjective. Working in a profession which happens to yield a high level of income, or undertaking the risk of proprietorship/entrepreneurship, and rewarding yourself with material possessions does not fall under the umbrella of greed. Moreover, choosing to work in a field that will yield you a high level of income is not a sign of greed. Ambition =/= greed. Contrast this with the sense of entitlement to the possessions of others, the desire to obtain goods (such as a home) even if it means foregoing prudence, and the expectation of being bailed out (wealth redistribution) when your poor choices bite you in the ass.

I will gladly stop ragging on poor subhumans (I do not consider poor people to be of the same species as me) so long as you and all the other hippies pool your money together to assist them financially, allowing me to opt out from subsidizing their social programs. Can we make this happen?



Your original post argues entirely on the problems associated with mortgage bailouts. So, the process of deciding on the mortgages wasn't sufficiently rigorous, which you concede yourself from what you're saying (or at least not as rigorous as that associated with other forms of lending). Still, I fail to see how this means the lower classes are at fault for what happened. If anything, it shows that the bankers were, at best, naive in lending out to poor credit risks, and didn't do their homework.

What does it mean to "deserve"? How do you deserve something? How is that no longer subjective? Do you decide who deserves what? So something doesn't fall under the umbrella of greed because you said so? Yes, so the banks should suffer for the poor choices they made in the way of their ambition/greed? I still fail to see how this supports your point beyond: "This meets my definition of greed, and this doesn't, so based on that premise, this is my argument". See my previous post for my view on this point.

Personal attacks now, really? Sadly, your argument with regards to hippies is as "subhuman" as those your attacks seem to be levelled against. You should, ultimately, focus your attacks against the government. I have no qualms about you "ragging" on the government because you have a right to hold them accountable for their actions; attacking poor people seems to be nothing more than elitist posturing.
Was this helpful? Yes 0

 
A photo of mynameismattgotmlgo mynameismattgotmlgo

@Quant wrote
Why are poor people poor? I have no idea. It could be that the desire to possess material goods does not always translate into “drive.” Or it could be that their spending habits and propensity for accumulating obscene amounts of debt prevents them from achieving any kind of financial success. Or maybe they are just lazy & incompetent? Who the screw cares? What a stupid fucking question.



It's called critically assessing your own theory. Seeing as you have no real definitive evidence, then you should at least have a solid reason for why, if they have such a strong drive to be wealthy, poor people are poor. Your theory doesn't even stand to reason, and your only evidence that poor people are the greediest people is that they entered into mortgage contracts which they could not afford (how does that necessarily make them greedy? Maybe they're just idiots who don't understand personal finance - that would explain it too), they love social programs, and they love buying on credit. These are all just circumstantial, and, to me, are suggestive that poor people are bad with money (possibly why they're poor to begin with) and lazy (also possibly why they're poor to begin with). I used the same evidence as you to conjure up a different theory, one that somewhat stands to reason (as it can explain why poor people are poor); that's how crappy your evidence is.

That you can't play devil's advocate with yourself is probably the reason why this theory of yours sounds so ridiculous, and it's certainly the reason why you are so close minded.
Was this helpful? Yes 0

 
A photo of Quant Quant

@SUMmer123456 wrote

@Quant wrote
Jesus fucking Christ, it’s like you haven’t read a single thing I said.

In the post you quoted, I clearly stated that with the exception of mortgages the criteria for loan approval is very strict and banks do not take uncalculated risks. I also clearly outlined why mortgages are an exception to this. Your claim that government regulation was insignificant is not to be taken seriously, as anyone who has worked in the industry will tell you. It’s one of the most heavily regulated industries - so much so that banks have entire departments devoted to compliance and regulation. This, in and of itself, produces so much waste & inefficiency since these resources could be utilized for other more productive tasks.

Greed is only subjective when you define it by using words like "need" or "fair share." When you define it in terms of more concrete terms like "deserves," as the word is suppose to be defined, it is no longer subjective. Working in a profession which happens to yield a high level of income, or undertaking the risk of proprietorship/entrepreneurship, and rewarding yourself with material possessions does not fall under the umbrella of greed. Moreover, choosing to work in a field that will yield you a high level of income is not a sign of greed. Ambition =/= greed. Contrast this with the sense of entitlement to the possessions of others, the desire to obtain goods (such as a home) even if it means foregoing prudence, and the expectation of being bailed out (wealth redistribution) when your poor choices bite you in the ass.

I will gladly stop ragging on poor subhumans (I do not consider poor people to be of the same species as me) so long as you and all the other hippies pool your money together to assist them financially, allowing me to opt out from subsidizing their social programs. Can we make this happen?



Your original post argues entirely on the problems associated with mortgage bailouts. So, the process of deciding on the mortgages wasn't sufficiently rigorous, which you concede yourself from what you're saying (or at least not as rigorous as that associated with other forms of lending). Still, I fail to see how this means the lower classes are at fault for what happened. If anything, it shows that the bankers were, at best, naive in lending out to poor credit risks, and didn't do their homework.

What does it mean to "deserve"? How do you deserve something? How is that no longer subjective? Do you decide who deserves what? So something doesn't fall under the umbrella of greed because you said so? Yes, so the banks should suffer for the poor choices they made in the way of their ambition/greed? I still fail to see how this supports your point beyond: "This meets my definition of greed, and this doesn't, so based on that premise, this is my argument". See my previous post for my view on this point.

Personal attacks now, really? Sadly, your argument with regards to hippies is as "subhuman" as those your attacks seem to be levelled against. You should, ultimately, focus your attacks against the government. I have no qualms about you "ragging" on the government because you have a right to hold them accountable for their actions; attacking poor people seems to be nothing more than elitist posturing.



They were not naive at all. Many of them lobbied against legislation like the CRA because they knew what the outcome would be.

"Didn't do their homework" is an inaccurate statement. They have teams of people who price mortgages and derivatives on those mortgages and who assess the risks associated with them. Most of the models used were erroneous because of assumptions that broke down (ie asset prices follow a lognormal distribution) in the presence of a rare event. This has nothing to do with greed and everything to do with the inherent unpredictability of markets. This is finance, crap happens. Deal with it.
Was this helpful? Yes 0

 
A photo of Quant Quant

@mynameismattgotmlgo wrote

@Quant wrote
Why are poor people poor? I have no idea. It could be that the desire to possess material goods does not always translate into “drive.” Or it could be that their spending habits and propensity for accumulating obscene amounts of debt prevents them from achieving any kind of financial success. Or maybe they are just lazy & incompetent? Who the screw cares? What a stupid fucking question.



It's called critically assessing your own theory. Seeing as you have no real definitive evidence, then you should at least have a solid reason for why, if they have such a strong drive to be wealthy, poor people are poor. Your theory doesn't even stand to reason, and your only evidence that poor people are the greediest people is that they entered into mortgage contracts which they could not afford (how does that necessarily make them greedy? Maybe they're just idiots who don't understand personal finance - that would explain it too), they love social programs, and they love buying on credit. These are all just circumstantial, and, to me, are suggestive that poor people are bad with money (possibly why they're poor to begin with) and lazy (also possibly why they're poor to begin with). I used the same evidence as you to conjure up a different theory, one that somewhat stands to reason (as it can explain why poor people are poor); that's how crappy your evidence is.

That you can't play devil's advocate with yourself is probably the reason why this theory of yours sounds so ridiculous, and it's certainly the reason why you are so close minded.



It's not critically assessing anything. It's a stupid fucking question. An irrelevant one at that. It implies that possessing the quality of greed does or should, translate into the accumulation of wealth, when in fact, greed has more to do with intent than anything else.

I don't doubt for a second that they are incompetent money managers. My evidence for their greediness is their behavior. Their spending habits describe lifelong patterns of behavior. Their voting record is a point estimator of their sense of entitlement. The mortgage contracts are just the most recent manifestation of their behavior.
Was this helpful? Yes 0

 
A photo of mynameismattgotmlgo mynameismattgotmlgo
Yes, I know, but you should at least be able to explain the disconnect (why poor people with a strong intent to increase their wealth and material possessions are unable to do so), given that your evidence is far from solid.

I could claim that the rise of technology was brought on by a decrease in the proportion of the global population that are pirates, and I could show correlations that seem to show that. A combination of only correlational evidence and no theory to explain it makes that idea ridiculous.
Was this helpful? Yes 0

 
A photo of SUMmer123456 SUMmer123456

@Quant wrote

@SUMmer123456 wrote

@Quant wrote
Jesus fucking Christ, it’s like you haven’t read a single thing I said.

In the post you quoted, I clearly stated that with the exception of mortgages the criteria for loan approval is very strict and banks do not take uncalculated risks. I also clearly outlined why mortgages are an exception to this. Your claim that government regulation was insignificant is not to be taken seriously, as anyone who has worked in the industry will tell you. It’s one of the most heavily regulated industries - so much so that banks have entire departments devoted to compliance and regulation. This, in and of itself, produces so much waste & inefficiency since these resources could be utilized for other more productive tasks.

Greed is only subjective when you define it by using words like "need" or "fair share." When you define it in terms of more concrete terms like "deserves," as the word is suppose to be defined, it is no longer subjective. Working in a profession which happens to yield a high level of income, or undertaking the risk of proprietorship/entrepreneurship, and rewarding yourself with material possessions does not fall under the umbrella of greed. Moreover, choosing to work in a field that will yield you a high level of income is not a sign of greed. Ambition =/= greed. Contrast this with the sense of entitlement to the possessions of others, the desire to obtain goods (such as a home) even if it means foregoing prudence, and the expectation of being bailed out (wealth redistribution) when your poor choices bite you in the ass.

I will gladly stop ragging on poor subhumans (I do not consider poor people to be of the same species as me) so long as you and all the other hippies pool your money together to assist them financially, allowing me to opt out from subsidizing their social programs. Can we make this happen?



Your original post argues entirely on the problems associated with mortgage bailouts. So, the process of deciding on the mortgages wasn't sufficiently rigorous, which you concede yourself from what you're saying (or at least not as rigorous as that associated with other forms of lending). Still, I fail to see how this means the lower classes are at fault for what happened. If anything, it shows that the bankers were, at best, naive in lending out to poor credit risks, and didn't do their homework.

What does it mean to "deserve"? How do you deserve something? How is that no longer subjective? Do you decide who deserves what? So something doesn't fall under the umbrella of greed because you said so? Yes, so the banks should suffer for the poor choices they made in the way of their ambition/greed? I still fail to see how this supports your point beyond: "This meets my definition of greed, and this doesn't, so based on that premise, this is my argument". See my previous post for my view on this point.

Personal attacks now, really? Sadly, your argument with regards to hippies is as "subhuman" as those your attacks seem to be levelled against. You should, ultimately, focus your attacks against the government. I have no qualms about you "ragging" on the government because you have a right to hold them accountable for their actions; attacking poor people seems to be nothing more than elitist posturing.



They were not naive at all. Many of them lobbied against legislation like the CRA because they knew what the outcome would be.

"Didn't do their homework" is an inaccurate statement. They have teams of people who price mortgages and derivatives on those mortgages and who assess the risks associated with them. Most of the models used were erroneous because of assumptions that broke down (ie asset prices follow a lognormal distribution) in the presence of a rare event. This has nothing to do with greed and everything to do with the inherent unpredictability of markets. This is finance, crap happens. Deal with it.



The CRA had been in effect years before this crisis manifested with amendments being made throughout its life. The fact that banks were able to meet its regulatory requirements before this crisis implies that it was, at worst, something they had learned to live with, and shouldn't have contributed significantly to the meltdown. However, my point here is speculation...as is yours. There is no point in arguing what did or did not happen, since your central argument seems to revolve around the greed of the poor; and opinions don't lend themselves to argument.

What you believe is irrelevant with regards to the rigour of their analysis. It's not central to the base argument. Bottom line: They miscalculated; can we live with that at least? The market was unpredictable. "Stuff" happened, as you so eloquently put it. This implies that both the borrowers and lenders should suffer. They did. Government bails out banks. Why should it not bail out borrowers? The market played them as much as it played the banks. The borrowers did not do anything illegal. The banks and borrowers both made decisions that led to financial ruin. It doesn't matter how "in faith" YOU feel both of them acted. Your argument is based entirely on double standards, and you refuse to deal with that.
Was this helpful? Yes 0

 
A photo of Quant Quant
I’ll respond to both of you since you’re both making similar points.

If greed is about intent, then the only way to infer intent is from action. If you want to make this a more rigorous argument, then you can think of it in terms of how intent is defined in criminal law. Greed would be an “offense” requiring only ‘basic intent’ for which the mens rea requirement would be that the individual intentionally commits a certain act while being conscientious of their actions. People who purchased homes with no money down who could not afford those homes unless the price of their home continued to appreciate and could then refinance were certainly not financially savvy individuals, but to say that they were just unintelligent and not greedy is absurd. It’s not a stretch to infer from their actions that they had a specific goal: to purchase a home (which they could not afford) that would be an upgrade from their current home. This is more than financial ineptitude – it is an active pursuit of material wealth. Not just an active pursuit of material wealth, but a lack of satisfaction with current possessions and the need to obtain more, and even covetousness. All of which meet the criteria for greed. Keep in mind that a lot of these homes were purchased for speculation purposes. Working class individuals were buying multiple homes with no money down because everyone was convinced home prices would continue to appreciate, and hoping to sell them when the low interest rate term of their mortgage expired.

How is this different from what the bankers were doing? As was previously mentioned, corporations have a fiduciary responsibility to maximize shareholder profit. Their employees produce a good or a service, make a profit for their owners, and are compensated for their work. This legal duty remains constant despite how silly the regulatory regime may be or how profoundly it distorts the market. If this means increasing your leverage ratios because debt is cheaper than equity as a result of the preferential tax treatment it receives from government, or lending to subprime borrowers because your government regulated competitors are doing so and dominating the market share in that particular market, then so be it. There are examples of greed from those in upper classes as well (neither of you correctly identified them.) The numerous cases of mortgage fraud for example (among others unrelated to the financial crisis). But unless you consider business owners or executives or employees to be inherently greedy (I doubt you’ll find many people who agree with this outside of extreme leftist nut jobs) then the greed displayed by corporations isn’t as widespread as it is in the lower middle class.
Was this helpful? Yes 0

 
A photo of mynameismattgotmlgo mynameismattgotmlgo
I just hate arguing semantics. Was it greed? I wouldn't say so. These people had a fairly strong drive to live a better life (i.e. one with better material possessions), though they didn't necessarily have the means. Two semantic reasons why I would not call this greed: 1) there is no excessive yearning to acquire more money and material possessions. People who normally would not be able to get a mortgage were now able to get one. The banks were more than willing lenders, so it's not like these borrowers were going to great lengths to get a mortgage, and I think (no proof, just as you'll have no counter-proof) they entered risky contracts not to conscientiously speculate but out of ignorance and financial ineptitude. To reiterate, these people did not go to great lengths to get these mortgages and thus have a bigger house; there was no excessive desire.

2) they were not looking for wealth; they were looking for a better lifestyle. I know, I know, even the person who buys a Ferrari Enzo to replace his Ferrari F430 is looking for a better lifestyle. But a reasonable person will realize that living in a safer neighbourhood is more likely to lead to a better lifestyle than buying a better Ferrari. The point is, greed generally requires a yearning for an abundance of money, not just more money (both are true as far as dictionary definitions go, but essentially everyone has a yearning for more money; "greed" is saved for a greater extreme, unless you want to use the word with no discrimination). You'll never become wealthy simply by taking out a mortgage or another credit card, so I wouldn't call either a greedy pursuit.

Another common feature that is added on to the public definition of greed is an obsession for money and material possessions above all other things. Giving up your family life to make more money when you're already wealthy is being greedy. I would hardly say that taking out a larger mortgage than you can probably afford is valuing money and material possessions above all other things.
Was this helpful? Yes 0

 
A photo of Quant Quant

@mynameismattgotmlgo wrote
I just hate arguing semantics. Was it greed? I wouldn't say so. These people had a fairly strong drive to live a better life (i.e. one with better material possessions), though they didn't necessarily have the means. Two semantic reasons why I would not call this greed: 1) there is no excessive yearning to acquire more money and material possessions. People who normally would not be able to get a mortgage were now able to get one. The banks were more than willing lenders, so it's not like these borrowers were going to great lengths to get a mortgage, and I think (no proof, just as you'll have no counter-proof) they entered risky contracts not to conscientiously speculate but out of ignorance and financial ineptitude. To reiterate, these people did not go to great lengths to get these mortgages and thus have a bigger house; there was no excessive desire.

2) they were not looking for wealth; they were looking for a better lifestyle. I know, I know, even the person who buys a Ferrari Enzo to replace his Ferrari F430 is looking for a better lifestyle. But a reasonable person will realize that living in a safer neighbourhood is more likely to lead to a better lifestyle than buying a better Ferrari. The point is, greed generally requires a yearning for an abundance of money, not just more money (both are true as far as dictionary definitions go, but essentially everyone has a yearning for more money; "greed" is saved for a greater extreme, unless you want to use the word with no discrimination). You'll never become wealthy simply by taking out a mortgage or another credit card, so I wouldn't call either a greedy pursuit.

Another common feature that is added on to the public definition of greed is an obsession for money and material possessions above all other things. Giving up your family life to make more money when you're already wealthy is being greedy. I would hardly say that taking out a larger mortgage than you can probably afford is valuing money and material possessions above all other things.



They didn't go to great lengths? This was mostly due to the fact that it was so easy for them to obtain loans. When they couldn't, they would just lie about their income and financial history, knowing lending the standards had become so lax. Mortgage fraud was widespread (both the borrowers and mortgage loan officers were responsible for this.) And yes, a lot of them certainly purchased homes (some even multiple homes) for the sole purpose of speculation. That you are not aware of this well known fact is surprising, but also irrelevant. It happened. Some of them would refinance to a fixed rate mortgage once the fixed rate term of their adjustable rate mortgage would expire, and then go to the mall to purchase a plasma TV they couldn't otherwise afford, or to the local car dealership to purchase a vehicle they could not afford.

Financial ineptitude manifests itself in the form of paying too much for an item you need even though you had cheaper options elsewhere but you failed to perform the necessary analysis, or not taking advantage of an employer sponsored retirement savings plan that receives preferrential tax treatment. When you constantly seek out opportunities (or "get rich quick" type schemes) in an attempt to obtain material goods, it becomes more than financial ineptitude (although these people clearly did possess financial ineptitude). It's greed.
Was this helpful? Yes 0

 
A photo of mynameismattgotmlgo mynameismattgotmlgo
What matters is that they didn't have to go to great lengths to get these mortgages; why exactly that was doesn't matter. Remember, greed implies an obsession with building wealth and acquiring material possessions, not just the regular yearning to live a marginally better life. If you can easily go and get a mortgage that you cannot afford, then you're not exactly obsessed with building wealth and acquiring material possessions. You're an idiot, yes, but not greedy. A greedy person would potentially risk heavy fines, massive credit score damage, and possible jail time to gain even slightly more money and/or material possessions than they already have, say by ordering the cooking of books, knowingly entering a fraudulent mortgage, etc...

And, yes, I am aware that a lot of speculation occurred. However, it's my understanding that the speculation - and I'm talking about pure speculation (i.e. not just buying a house because you think you need one and also think it's a good investment) - was done by the upper middle class and upper class, not by the lower middle class that you're referring to. Yes, I am sure some lower middle class people bought for purely speculative purposes, but they're the minority.
Was this helpful? Yes 0

 
A photo of Quant Quant

@mynameismattgotmlgo wrote
What matters is that they didn't have to go to great lengths to get these mortgages; why exactly that was doesn't matter. Remember, greed implies an obsession with building wealth and acquiring material possessions, not just the regular yearning to live a marginally better life. If you can easily go and get a mortgage that you cannot afford, then you're not exactly obsessed with building wealth and acquiring material possessions. You're an idiot, yes, but not greedy. A greedy person would potentially risk heavy fines, massive credit score damage, and possible jail time to gain even slightly more money and/or material possessions than they already have, say by ordering the cooking of books, knowingly entering a fraudulent mortgage, etc...

And, yes, I am aware that a lot of speculation occurred. However, it's my understanding that the speculation - and I'm talking about pure speculation (i.e. not just buying a house because you think you need one and also think it's a good investment) - was done by the upper middle class and upper class, not by the lower middle class that you're referring to. Yes, I am sure some lower middle class people bought for purely speculative purposes, but they're the minority.



What an incredibly strange argument to make.

Let's put this in the context of criminal law. An individual brutally murders a person. During the trial, it is discovered that the murder was premeditated and very meticulously planned out. The murderer however, did not have to "go to great lengths" to commit the crime because he was a neighbor of the deceased and had easy access to his home. A second individual murders another person. During the trial, it is discovered that this murder was also premeditated. However, the murderer in this case had to go to greater lengths because the deceased had a very sophisticated security system installed in his home. Is one individual more culpable than the other simple because he had to go to greater lengths? No, absolutely not. It can be inferred from both of their actions that they had an intent (or a strong desire) to murder.

And do you even know what speculation is?! That they purchased the home for the sole purpose of financial gain (by hoping housing prices would continue to appreciate) without intending for it to be their primary residence, is a sign of speculative behavior. That is speculation. This kind of behavior was widespread in the middle class, and mostly among new homeowners (who were mainly working class).
Was this helpful? Yes 0