My Personal Credit Crisis by Edmund L. Andrews (economic reporter for NY Times)

[Swede]

in 2004, I joined millions of otherwise-sane Americans in what we now know was a catastrophic binge on overpriced real estate and reckless mortgages. Nobody duped or hypnotized me. Like so many others — borrowers, lenders and the Wall Street dealmakers behind them — I just thought I could beat the odds. We all had our reasons. The brokers and dealmakers were scoring huge commissions. Ordinary homebuyers were stretching to get into first houses, or bigger houses, or better neighborhoods. Some were greedy, some were desperate and some were deceived.

As for me, I had two utterly compelling reasons for taking the plunge: the money was there, and I was in love. It was August 2004, just as the mortgage party was getting really good. I was 48 years old and eager to start a new chapter in my life with Patricia Barreiro, who was then my fiancée.

http://www.nytimes.com/2009/05/17/magazine/17foreclosure-t.html

[ramapo]

1. I was rather appalled at this story.

It was hard to believe that an economic reporter could've been so clueless.

[DJ13]

2. Not so hard to believe

He's the same type of economics reporter than thought the stock markets would hit 20,000 in the late 90's, the same kind that never sees manipulations in either the stock market nor the commodity exchanges, the same kind that (obviously) thought housing prices could continue ever higher while wages declined.

Not too bright, but few of them are anything more than mouthpieces for the upper class.

[ixion]

3. yeah, no doubt...

all you had to do is read the fine print in any of those documents to know that you were about to be screwed.

I made an offer on a house in 2005, and wound up pulling out of the deal once I'd read the stack of documents. It is crazy to purchase anything of considerable value with an Option-ARM loan, in my opinion.

[shireen]

4. it can happen to anyone who gets caught up in a dream-world

i'm glad he wrote about it. What he did was clearly unwise, but i think i understand how the power of dreams can sweep people away from reality.

[wryter2000]

6. Astonishing, isn't it?

Kudos to him for writing about it. I wish everyone would read the column.

[Doctor_J]

5. We already hashed this out a week ago

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=103&topic_id=448554

[The Velveteen Ocelot]

7. It sort of proves the point that all kinds of people got suckered into too much house.

You'd think a guy with his expertise wouldn't have made this mistake, but the reality is that people make a lot of major financial decisions based on emotion rather than rational analysis. This guy had a new wife he wanted to please and they found a beautiful house that was just what they wanted -- and the salesman played on those emotions. In 2004 it was easy to believe the appreciation in real estate values would continue, and if you want a thing badly enough you can let yourself believe almost anything.

Of course he should have known better, which he admits. But even smart people can do dumb things, and a lot of smart people got snookered by their own emotional reaction to a seemingly limitless real estate market. It could have happened to just about anyone -- I remember feeling a bit tempted myself; fortunately I'm almost pathologically conservative when it comes to spending money (and I hate moving), so I decided to stay put and keep living in my dumpy little old house and keep paying the conventional fixed-rate mortgage. But I'm not going to get up on my high horse and claim to be smarter than this guy, because I'm not; I just wasn't in a situation at that time that allowed me to be easily seduced.