I am sitting at work and just had this thought.
The credit crisis stemmed from the fact that banks were basically handing out mortgage loans to anyone who wanted them. They were not using discretion from a risk standpoint the way they should. What happened was, when the ARM's (adjustable rate mortgages) started to rise, the mortgage could not be payed by the borrower.
Eventually what this lead to was the banks not receiving mortgages payments like they expected. They had to foreclose on homes in an attempted to recover their loss on the loan.
Then what you have is a truck load of homes for sale with no one to buy them, driving the price of homes way down. On the balance sheet of these banks, their assets in foreclosed homes must be written down and now these banks are all in really bad shape. On top of this banks are realizing they are pretty bad off and really tightening up their standards in regards to lending.
So now we have this big mess where no one can buy a home, there are too many homes to be bought and now the banks have much tighter lending standards so even if you wanted to buy a home, you either can't or it is much more difficult.
To help alleviate this problem the government started essentially handing out money. They gave out the stimulus money, tax credits on homes, cash for clunkers, etc.
This whole series of events, which is still not resolved is basically the main reason why our economy was/is in the crapper. I tend to think it is getting better, but still in a very poor state. So you get an idea, and I don't know if this is true for sure or not, but I was told by an investment guru that Atlanta and its surrounding area has so many empty residences that if starting today, no new homes were built and the home purchasing grew at its normal annual rate in Atlanta (around 8 or 9 percent) it would take 8+ years to fill every current residence. Sorry for the run on sentance, but that is absurd.
To finally tie this together with healthcare. We have now passed a bill where everyone is going to receive healthcare. Because there is no longer a preexisting conditions clause, insurance companies cannot deny coverage. This means the government has eliminated their ability to mitigate risk in that sense.
Hopefully by now, you are seeing the connection. In the housing market, banks did not regard risk the way they should and when that risk bit them in the butt, the large load of poo hit the fan. In my mind, it seems as if insurance companies, who make a living off of valuing risk, are now all the sudden handing insurance out like candy. What happens when this risk comes to bite them in the butt? The healthcare industry is the largest job provider in America. I see this as a huge problem. I fear this load may be much larger, and hit the fan much harder then the load we saw in the credit crisis.
Does anyone else see this as a problem?
The credit crisis stemmed from the fact that banks were basically handing out mortgage loans to anyone who wanted them. They were not using discretion from a risk standpoint the way they should. What happened was, when the ARM's (adjustable rate mortgages) started to rise, the mortgage could not be payed by the borrower.
Eventually what this lead to was the banks not receiving mortgages payments like they expected. They had to foreclose on homes in an attempted to recover their loss on the loan.
Then what you have is a truck load of homes for sale with no one to buy them, driving the price of homes way down. On the balance sheet of these banks, their assets in foreclosed homes must be written down and now these banks are all in really bad shape. On top of this banks are realizing they are pretty bad off and really tightening up their standards in regards to lending.
So now we have this big mess where no one can buy a home, there are too many homes to be bought and now the banks have much tighter lending standards so even if you wanted to buy a home, you either can't or it is much more difficult.
To help alleviate this problem the government started essentially handing out money. They gave out the stimulus money, tax credits on homes, cash for clunkers, etc.
This whole series of events, which is still not resolved is basically the main reason why our economy was/is in the crapper. I tend to think it is getting better, but still in a very poor state. So you get an idea, and I don't know if this is true for sure or not, but I was told by an investment guru that Atlanta and its surrounding area has so many empty residences that if starting today, no new homes were built and the home purchasing grew at its normal annual rate in Atlanta (around 8 or 9 percent) it would take 8+ years to fill every current residence. Sorry for the run on sentance, but that is absurd.
To finally tie this together with healthcare. We have now passed a bill where everyone is going to receive healthcare. Because there is no longer a preexisting conditions clause, insurance companies cannot deny coverage. This means the government has eliminated their ability to mitigate risk in that sense.
Hopefully by now, you are seeing the connection. In the housing market, banks did not regard risk the way they should and when that risk bit them in the butt, the large load of poo hit the fan. In my mind, it seems as if insurance companies, who make a living off of valuing risk, are now all the sudden handing insurance out like candy. What happens when this risk comes to bite them in the butt? The healthcare industry is the largest job provider in America. I see this as a huge problem. I fear this load may be much larger, and hit the fan much harder then the load we saw in the credit crisis.
Does anyone else see this as a problem?