[quote=CA renter][quote=davelj]I don’t have a problem with financial innovation, per se. None of the following were “bad” products for the first several years of their existences: securitized mortgages, credit default swaps, option ARMs, etc.
The problem is that the nature of Wall Street is to push every innovation (which may be perfectly useful on a limited scale) to the point that it starts to fail. And recently we had a whole bunch of these pushed to the edge and failing all at the same time.
A simple “30-year fixed-rate mortgage” was once considered a major financial innovation. Would it be better if we eliminated mortgages (or credit cards?) altogether? I think not.
I don’t think the problem is innovation. The problem is the degree to which these innovations are foisted upon folks who should have no exposure to them.[/quote]
If we didn’t have 30-year mortgages or credit cards, prices would be much, much lower (as would wages). Personally, I’d like to see a lot less “innovation” and a return to **saving** for purchases instead of pulling the purchases forward and pushing debt into the future.
I understand that for high-priced items like cars and houses, people will need some kind of credit or they’d only be able to buy when they’re 60. Still, we be better off with 15-year fixed-rate mortgages instead of 30-year. The increased duration simply props up prices of land and housing-related industries.[/quote]
i don’t think Canada has 30 year mortgages, instead they do
5 year with 30 year amortizations.
we can have 10 year mortgages with 30 year amortization schedules,
it’s just a form of ARM or balloon payment
