"If you paid your mortgage off, it means you probably did not manage your funds efficiently over the years," said David Lereah, chief economist of the National Association of Realtors and author of "Are You Missing the Real Estate Boom?" "It's as if you had 500,000 dollar bills stuffed in your mattress."Nothing like spending your market value capital gains on fancy weddings. When people say that we should return to common sense, the problem is, how do we know what that is? (presumably this is code-speak for everyone should now agree with my hindsight diagnosis and cure).
He called it "very unsophisticated."
Anthony Hsieh, chief executive of LendingTree Loans, an Internet-based mortgage company, used a more disparaging term. "If you own your own home free and clear, people will often refer to you as a fool. All that money sitting there, doing nothing."
The financial services industry is doing all it can to avoid letting consumers be foolish. Ditech.com touts home loans as a way to pay off credit cards, and Morgan Stanley says they're a good way to fund education expenses. Wells Fargo suggests taking a chunk out of your house to finance "a dream wedding."
Tuesday, November 29, 2011
Unsophisticated Investors Circa 2005
From the LA Times back in 2005:
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I'm confused, what does this have to do with political correctness and liberal guilt about race?
If you want that, you there are lots of websites for you (eg, Huffpost)!
I can say I predicted it, but I didn't do anything about it, so that puts me in a boat with a lot of other naysayers at the time.
But the most damning statement was in 2004, Alan Greenspan told people to take out adjustable rate mortgages when interest rates were at a historic low. When I heard that, I knew something was wrong with the world.
Even if you know what common sense should be, who makes money by fighting the market? As they say, the market can remain insolvent a lot longer than you can stay liquid.
David Lereah made many, many foolish statements during the housing bubble. Your only job as the NAR chief economist is to come up with new ways to say, "It's never been a better time to buy a house."
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