Scott Pelley interviewed Treasury Secretary Henry Paulson on 60 Minutes Sunday night and I thought I was going to blow a gasket.
Pelley reminded Mr. Paulson of a quote he said way back in April 2007:
“I don’t see sub-prime mortgage market troubles imposing a serious problem. I think it’s going to be largely contained.”
And when Pelly asked why he didn’t know this coming, Paulson replied “Hindsight is 20/20… I didn’t expect quite this.”
Are you kidding me? Now, I may be just a pretty little girl and may not know a lot about this “economic stuff”, but how is it that I saw this coming 5 years ago? I was a manager of a real estate agency from 02-04 when houses were getting 10 offers and people with bad credit making $60K a year were buying $500K houses. We saw this catastrophe happening right before our very eyes and knew that very very bad things were going to happen once these loans started to adjust.
You’d Have to be Blind to Miss the Signs
We were having meetings to discuss it for goodness sakes! We were telling our agents that they need to learn how to become REO agents because that is where we were going to be in a couple of years! I even considered becoming an agent just so I could be an REO Agent when this puppy was going to hit the fan! That was way back in 2004! (Thank god I didn’t go that route. After all, it’s so much more fun to be a stressed out real estate investor rather than a stressed out REO Agent.)
Fast forward to the last 2-3 years and see all us investors educating ourselves to buy houses in this market crash. Did we investors know it was coming?
So how is it that we “regular” people knew that our market was going to crash and 10’s of thousands of people where going to loose their homes and banks were going to fail – but very important smart people like Paulson “didn’t expect quite this”?
Pelley also quoted several emails by analyst for credit rating agencies on Wall Street and one of the emails from two years ago said:
“Let’s hope we are wealthy and retired by the time this house of cards falters.”
Well it’s almost what we investors have been saying for the past couple of years – except that we are saying “Boy – We are sure going to be wealthy and retired by the time this crash is over.”