Like 2001 when terrorists were in the final stages of the Planes Operation, as when Katrina was bearing down on New Orleans, Americans are being left to the wolves as Dubya commences his annual vacation at the Ranch.
Laissez faire is fine, but the bully pulpit of the White House is not without influence and should be used to calm the panic in the stock market.
I know that these things have their cycles, but for our leaders to be mute, blind, and deaf to the crisis is incredible.
What would you like him to do? Words really don't calm markets, unless they come from Bernanke.
What the hell is he going to say that's going to have any impact? Sorry that you bunch of numb-skulls, living beyond your means bought houses that you knew you couldn't afford with the help of unscrupulous lenders...
You "hate bush" yahoos need to get a grip on yourselves and start living in the real world.
We left OURSELVES to the wolves dear Timmy and sometimes daddy can't bail you out. Sometimes it's not his obligation.
lol, just start one thread that reads "I hate Bush, he causes everything." Then I don't have to waste my time responding.
If Bush stepped in and did something, you would accuse him of bailing out all his "rich friends."
And what, in the hell, was Bush supposed to do to stop the planes from hitting the WTC? You know, I bet if he would have stood up and shouted "NOOOOOOOOooooooooooo!" and then ran to the airport things would have come out differently. Lives would have been saved for sure, because GW Bush would have saved us all. good thinking.
And Katrina? Are you serious. The federal government did what they have always done. Issued warnings a week ahead of time, issued evacuation orders 2 days ahead of time, and then sent in FEMA on their normal 3 day schedule. Damn you George W. Bush for not overhauling our disaster relief agencies and not over riding the state and local governments and not forcing poor unarmed black people from their homes. Damn you!
Bush is not a good president. He has done little that gains favor with me, nor anyone else. But not everything is his fault. Trying to blame him for ridiculous things belittles the actual problems of his presidency (massive over spending, a war that continues to go poorly even after realizing our mistakes, ignoring real problems like social security's pending demise, continued erosion of civil liberties, increased secrecy of government, ongoing corruption allegations, hesitant and faltering foreign relations, decrease world influence... there is plenty of problems. You don't need to try to pin other tails on the elephant).
Wasn't their an earthquake in Peru today, what did Bush do to cause that?
quote:
Originally posted by tim huntzinger
Like 2001 when terrorists were in the final stages of the Planes Operation, as when Katrina was bearing down on New Orleans, Americans are being left to the wolves as Dubya commences his annual vacation at the Ranch.
Laissez faire is fine, but the bully pulpit of the White House is not without influence and should be used to calm the panic in the stock market.
I know that these things have their cycles, but for our leaders to be mute, blind, and deaf to the crisis is incredible.
Wow!
The state of the current market is a result of similar anxiety attacks on the part of hedge fund operators, inexperienced broker/agents who expect every transaction to be a winner and financial media willing to go along.
There's no real crisis, other than perception by some who can influence the motion.
Good accumulaton opportunity.
You're crying "Wolf".
And then using the opportunity to bash Bush, as usual.
quote:
Originally posted by Wrinkle
quote:
Originally posted by tim huntzinger
Like 2001 when terrorists were in the final stages of the Planes Operation, as when Katrina was bearing down on New Orleans, Americans are being left to the wolves as Dubya commences his annual vacation at the Ranch.
Laissez faire is fine, but the bully pulpit of the White House is not without influence and should be used to calm the panic in the stock market.
I know that these things have their cycles, but for our leaders to be mute, blind, and deaf to the crisis is incredible.
Wow!
The state of the current market is a result of similar anxiety attacks on the part of hedge fund operators, inexperienced broker/agents who expect every transaction to be a winner and financial media willing to go along.
There's no real crisis, other than perception by some who can influence the motion.
Good accumulaton opportunity.
You're crying "Wolf".
And then using the opportunity to bash Bush, as usual.
I offer that there is no need for an opportunity.
I agree there's not much that can be done.
You have the toxic combination of credit-challenged people buying way more house than they can afford, plus overly permissive lenders signing off on them when they instead should have steered clients to more financially manageable properties. This sort of shakeout was inevitable.
Plus you have this stupid "bigger is better" mantra. Does a couple with one kid really need a 2,000-square-foot house, when a well-maintained 1,000-square-footer will do just fine?
Financial regulations likely will be tightened after this, as they probably should. But it's closing the barn door after the cows have already left.
This thread is funny.
quote:
Originally posted by rwarn17588
I agree there's not much that can be done.
You have the toxic combination of credit-challenged people buying way more house than they can afford, plus overly permissive lenders signing off on them when they instead should have steered clients to more financially manageable properties. This sort of shakeout was inevitable.
Plus you have this stupid "bigger is better" mantra. Does a couple with one kid really need a 2,000-square-foot house, when a well-maintained 1,000-square-footer will do just fine?
Financial regulations likely will be tightened after this, as they probably should. But it's closing the barn door after the cows have already left.
Agreed.
quote:
Originally posted by rwarn17588
Plus you have this stupid "bigger is better" mantra. Does a couple with one kid really need a 2,000-square-foot house, when a well-maintained 1,000-square-footer will do just fine?
1000 Sq feet would not be large enough for my families purposes. I'm crammed into 1400 as it is. Small laundry area/entry way (10 feet long, 4 feet wide), small kitchen (5 feet wide, 12 feet long maybe), dining room (big enogh to just fit a 6 person nice table), living room (couch, easy chair, 2 sitting chairs, entertainment center - full), one bath (sink, toilet, shower - full), 2 bedrooms (master bedroom is big enough for a full bedroom set and we could fit a chest at the foot of our bed), and a small computer room (desk + computer and room for a blow up mattress on the floor for company). I guess we could get rid of the computer room and put the computer stuff on the dining room table and eat at the coffee table...
Clearly I COULD get by with less. I could live with one bedroom and my son could sleep in our bed. But I sure don't want to. I really don't want his room one wall away from mine and would like somewhere to throw some cards without being accosted by my wife after dark (no part of my house is further than 15 feet from any other part).
Bleh, I digress...
I'll certainly want 2000 sq feet when my son is a teenager.
"As you know President Bush is currently on vacation in Texas. He said he's going to try and do absolutely nothing for the next ten days. His advisors think this is the best way to bring his approval rating up. Just don't do anything." --Jay Leno
"President Bush is going on his annual vacation. The White House says he goes to his Texas Ranch to unwind. I'm thinking, when does he wind?" --David Letterman
"It turns out President Bush can run again in the next election. Now I know you're only supposed to be allowed two terms, but the Supreme Court said if you count his vacation time, he's barely served one." --Jay Leno
"President Bush earned $400,000 for his job as president last year. That's not really that much for being president when you think about it. But President Bush, he doesn't do it for the money, he does it for the eight months of vacation every year." —Jay Leno
quote:
Originally posted by recyclemichael
"As you know President Bush is currently on vacation in Texas. He said he's going to try and do absolutely nothing for the next ten days. His advisors think this is the best way to bring his approval rating up. Just don't do anything." --Jay Leno
You know. His approval numbers are funny...that is until you see Congress'. You should see how your democratic congress is doing in the polls if you want a really good laugh.
That is a bogus argument.
Congress has had a 30% or below approval rating for over ten years. Most of these were in years of a republican controlled Congress. Approval ratings for Congress have not been over 40% since Watergate.
Bush once had approval ratings in the high 70s even topping off at 84% in 2002.
quote:
Originally posted by recyclemichael
That is a bogus argument.
Congress has had a 30% or below approval rating for over ten years. Most of these were in years of a republican controlled Congress. Approval ratings for Congress have not been over 40% since Watergate.
Bush once had approval ratings in the high 70s even topping off at 84% in 2002.
And that's a bogus argument. Bush's approval ratings were artificially high, as any president's would have been during that period of unprecedented solidarity after 9/11.
Congress is polling as low as 17% recently which is roughly half of 30%. Pretty similar to the 36-34% that Bush is polling which is about 50% of his average high.
Congress has been just as dissapointing to the American people and the polls are showing it.
quote:
Originally posted by rwarn17588
I agree there's not much that can be done.
You have the toxic combination of credit-challenged people buying way more house than they can afford, plus overly permissive lenders signing off on them when they instead should have steered clients to more financially manageable properties. This sort of shakeout was inevitable.
Plus you have this stupid "bigger is better" mantra. Does a couple with one kid really need a 2,000-square-foot house, when a well-maintained 1,000-square-footer will do just fine?
Financial regulations likely will be tightened after this, as they probably should. But it's closing the barn door after the cows have already left.
This is somewhat similar to the promiscuity shown by the savings & loans back in the late 1970's and early 1980's.
Instead of it happening to smaller lenders who were controlled by businessmen and smaller investment groups with pretty loose regs, it's happened to larger institutional lenders with more investors.
This is cyclical. Lenders get into a high-profit, high-return area, and kind of sort of neglect to really recognize the high risk which accompanies high returns.
There will be some sort of bailout forthcoming. I'm still pissed that Congress ran through the bankruptcy reform act to mainly protect preditory credit card lenders. Not that it's had any effect on me personally. I just don't see how that was an interest well-served for the good of all people.
First, it would help if Dubya acted like he gave a rats butt. Then he could raise the spending caps at Fannie and Freddie, maybe call an emergency meeting of his economic council. He could dispatch Administrative talking heads to the media to explain the Administration's approach to the crisis (sticking to the reforms at Fannie and Freddie).
I think of Jack Nicholson in Mars Attacks, explaining to his Cabinet after Congress has been obliterated by the aliens . . . [SOUND CLIP HERE] (//%22http://www.moviewavs.com/php/sounds/?id=bst&media=WAVS&type=Movies&movie=Mars_Attacks"e=two_gov.txt&file=two_gov.wav%22) . . .
quote:
First, it would help if Dubya acted like he gave a rats butt.
What do you suggest he say?
quote:
Then he could raise the spending caps at Fannie and Freddie
It is not the government's obligation to bail out the private sector every time it's in trouble. We are reaping the whirlwind of our own gluttony. Why should the government be obligated to purchase defunct mortgages from tanking lenders? Are we to expect that Fannie and Freddie should take the shaft instead of the sub-prime mortgage holder who sold the bogus loan? The bottom line is, no matter who holds the loan, they AREN'T going to get paid. The mortgagee's simply can't pay their PITI payments anymore. Might I suggest you read Atlas Shrugged for some perspective...
quote:
maybe call an emergency meeting of his economic council.
Oh boy! Let's have a meeting.
(http://jeffpfaller.com/images/average/meetings.jpg)
quote:
I think of Jack Nicholson in Mars Attacks, explaining to his Cabinet after Congress has been obliterated by the aliens . . . [SOUND CLIP HERE] (//%22http://www.moviewavs.com/php/sounds/?id=bst&media=WAVS&type=Movies&movie=Mars_Attacks%22e=two_gov.txt&file=two_gov.wav%22) . . .
Too bad this is real life, or you'd have an answer on your hands.
quote:
Originally posted by tim huntzinger
First, it would help if Dubya acted like he gave a rats butt. Then he could raise the spending caps at Fannie and Freddie, maybe call an emergency meeting of his economic council. He could dispatch Administrative talking heads to the media to explain the Administration's approach to the crisis (sticking to the reforms at Fannie and Freddie).
\]
1. Fannie is for student loans. Start a different thread if that is an issue for you, but I just got done with school a couple years back and loans were not an issue. If anything, they are TOO easy to get. Plenty of my classmates took out loans for school so they could buy a new car with their other $$$. Again, start a different thread if you want to discuss further.
2. You complained a while back about lending companies that gave retarded loans for ridiculous houses to unqualified people; we all know how that ends. Why should the government (read your tax money) be used to save these companies from their own high risk decisions?
For that matter, the stock market is a RISK. You are rewarded for your risk with returns, but you can lose your money as well. Hence, risk. It is not the governments job to manage citizens risk in the stock market.
3) The government over regulates as it is. Anyone who thinks we need MORE regulation of the economy clearly doesn't deal with it very often. Lending, equity, or bonds are all retarded over regulated and require a high amount of cost to navigate the bureaucracy.
The answer is to let these companies fail, take the pain, learn from the mistake, and move on.
If the government steps in we learn that we can make poor financial decisions and uncle Sam will save the day. Thus, teaching us to do it again.
More government is seldom the answer. Hands off.
quote:
1. Fannie is for student loans. Start a different thread if that is an issue for you, but I just got done with school a couple years back and loans were not an issue. If anything, they are TOO easy to get. Plenty of my classmates took out loans for school so they could buy a new car with their other $$$. Again, start a different thread if you want to discuss further.
Wasn't Fannie Mae setup to issue emergency loans in desparate times? Either way, it shouldn't be done, but am I remembering this incorrectly? I remember reading something from Jim Cramer the other day about this very issue and he mentioned Fannie Mae.
Fannie Mae stands for 'Federal National Mortgage Association.' [:O]
I am not an economist (but I slept at a Holiday Inn Express last night!) but for a President who has borrowed more than all predecessors combined to suddenly blush at the idea of keeping liquidity in the real estate game is bizarre.
First of all, none of us here have lost any money, unless you have cashed in your stocks this past week. Everything lost is an 'unrealized loss', just as the profits you weren't really making were 'unrealized gains.'
And if you are in a panic right now and selling, you are a fool. The idea is to buy low and sell high. Not buy high, panic, then sell low.
Everyone should be buying!
And if you buy on a regular basis, which is what most of us do in our 401k, 457, ...., you should be thankful those stocks you have been buying within the last 10 days or so and cheaper then what you were buying before, meaning you are buying more shares at a cheaper price.
This correction is health, even if it is all George Bush's fault (just like everything else, like... global warming, the score at the PGA, gas prices, how much my computer cost, my kids grades at school, .....).
Fannie Mae is the largest 'private" lender for student loans in the world. It was my understanding that they have more assets in non-dischargeable student loans than in mortgages. I understand that they started as a federally owned mortgage broker/guarantee, but they have migrated.
MMM stands for Minnesota Manufacturing and Mining, they no longer mine...
Though I stand to be corrected on the Fannie Mae thing, just read an article in conjunction with its pending sale... which is hindered by both regulation and changes to student loan financing. But like I said, I'm happy to be corrected if someone can find the Fannie Mae asset/loan distribution, I guess I really dont know. Just my impression.
- - -
and Wilbur, I'd be happy if everyone panicked a little more. I have my eye on a few solid stocks and I'd like to see the P/E come off a bit. Actually, most stocks are trading close to the historic 16.5 P/E anyway. So if things keep falling nearly anything will be a good buy.
ps. Dow rebounded (dangit). I worked all day to free up cash to buy in tomorrow and the damn thing recovers. /off to find some losers.
quote:
Originally posted by tim huntzinger
Fannie Mae stands for 'Federal National Mortgage Association.' [:O]
I am not an economist (but I slept at a Holiday Inn Express last night!) but for a President who has borrowed more than all predecessors combined to suddenly blush at the idea of keeping liquidity in the real estate game is bizarre.
It's not his job to bail out the private sector. These are decisions that we as a society have to collectively deal with. Many people will lose jobs and many companies will go out of business, but it's cause and effect dear Timmy.
When people buy mortgages they can't afford from loan companies who shouldn't be offering them loans, where these loans are in turn labeled as "A" grade paper (when they really are B- grade paper) and used by unscrupulous hedge-fund pimps to purchase stocks that are subsequently not worth the paper they're written on...it is NOT the obligation of the federal government to buy out those loans to back the mis-graded fake paper behind these hedge funds.
We need to take our lumps and move on, but asking the Fed to mitigate the damage does nothing to teach either the BORROWER, MORTGAGOR, or HEDGE FUND PIMP not to create dangerously overvalued paper.
Unless you'd like to repeat this cycle again in 10 years....
Hopefully the Reserve will not raise rates 17 consecutive times, either. I surmise that seven million mortgage defaults will be as detrimental to the economy as a little inflation.
Why not just abolish Fannie and Freddie outright, then? It seemed to be working pretty good until recently.
quote:
Hopefully the Reserve will not raise rates 17 consecutive times, either. I surmise that seven million mortgage defaults will be as detrimental to the economy as a little inflation.
Still not gettin it? The damage is coming from hedge funds that are backed by sh**ty mortgages. The answer is not to bail out the mortgage companies. We have a swell of hedge funds purchased with mis-graded paper. IOW, a good majority of these stocks have overinflated values. The cat is out of the bag so to speak, and nothing we do can "revalue" these stocks other than to let the market correct ITSELF.
Everyone knows these stocks are overvalued and the hedge fund pimps can't get anyone to buy them anymore. Are you suggesting we buy out the liquidity problem that exists with these hedge funds as well, because that's the only real answer.
No, but there has to be more daylight at the end of the tunnel to keep things going in the short-term. The correction is what it is, we cannot subsidize stupid practices, but if adding liquidity were not a partial solution then what have all the banks been doing when adding cash to the system?
Having Bush tap-dance and whistle Dixie with his advisers may not solve everything, but it would send a message that the wheels are not going to come off the economy. You may know that and I may know that but the average consumer may not understand that.
CF, normally you are spot on with your facts but Fannie Mae doe snot do student loans... Sallie Mae is the largest student lender. FNMA's charter only allows it to do residential mortgage loans and they along with Freddie Mac are the largest gurarantors of residential mortgages in the country.
Beyond that, the assessment of the part they could play in the sub-prime sissue is correct. They may very well be able to expand their loan portfolios buy buying more mortgages but they would NOT be the sub-prime types that are blowing up at present. Keep in mind as well that congress, only 2 years ago, limited FNM and FRE in the growth of their loan portfolio because there was a fear that they might be getting big enough to cause systemic risk to the financial markets and as such could potentially force a tax-payer bail-out. How ironic that congress, and others like Tim, are calling on FNM and FRE to get bigger to AVOID a tax payer bail-out. If the market for traditional 20% down, high FICO score mortgages would begin to dry up then FNM and FRE could grease the skids so to speak, but, in todays market those are not the kind of mortgages that are causing the problems.
In total, I have trouble seeing how this issue can really be politicized..... let's see, are we going to bring in a bunch of people that are losing their house becaus they got money they shouldn't have? And their credit was screwed up before so this foreclosure is not going to make their plight any worse right? And the lenders and investors are LOSING a ton of money right? Not really a predatory lending issue as far as I can see..... more like a lot of people got to live in houses they shouldn't have for a period of time and now reality is sinking in... again.
Poor credit practices are poor credit practices... it is not un-American to tell people no when they ask for money if they cannot pay it back. And in the end, no one forced these people to take the money and if they didn't understand all of the intricacies of the loan then borrower beware.
One other issue and then I'll end this little diatribe, cry no tears for investors losing money in hedge funds. By definition, investors in these funds are required to be "accredited investors". In addition to significant financial hurdles that it takes to be deemed an "accreditied investor" there is an assumption that you are a "sophisticated" investor as well.... laymen's terms- there should never be an investor in these funds that cannot afford to lose some or all of the money they put at risk.
quote:
Originally posted by rwarn17588
I agree there's not much that can be done.
You have the toxic combination of credit-challenged people buying way more house than they can afford, plus overly permissive lenders signing off on them when they instead should have steered clients to more financially manageable properties. This sort of shakeout was inevitable.
Plus you have this stupid "bigger is better" mantra. Does a couple with one kid really need a 2,000-square-foot house, when a well-maintained 1,000-square-footer will do just fine?
Financial regulations likely will be tightened after this, as they probably should. But it's closing the barn door after the cows have already left.
Well said Rwarn. I've seen it go on too long. People think they have to have MUCH more house than they really need. I guess it's just to one-up the Jones'. It really makes no sense. The heating, cooling, and maintenance of all that extra house is ridiculous. Well, they are reaping what they sowed, in my opinion.
Nice try Timmmmaaaaaaayyy....Now get back in your hole.....
The Busheviks will go down in history as the great waste.
http://www.chicagotribune.com/business/chi-070815stocks-story,1,6911312.story?coll=chi_tab01_layout&ctrack=1&cset=true
"Feels like we're on the edge of a panic to me," said Jeffrey Saut, who oversees $33.7 billion as chief investment strategist at Raymond James & Associates in St. Petersburg, Florida. "In our business, psychology is everything and psychology has changed real quick on Wall Street."
"What that indicates is that people are worried not about this move or the past couple of weeks but the possibility of a real market sell-off or crash scenario," said Ben Londergan, co- CEO of Group One Trading LP in Chicago. "We've seen not that large a move to the downside in percentage terms but we've really had a big move up in the VIX."
Choppy times....lack of clear direction.
It might be time to be adding slowly to equities. This market will be lame duck for a couple of years. My advice, don't fear.
Well Jeffery Saut of Raymond James, looking at futures this morning I guess phsycology has changed for the better....
Markets trade on emotion and we should not expect, or want, the Fed to react to emotion. The Fed this morning did cut the "discount rate" which is the rate that banks can borrow directly from the Fed. This is a totally different market than the fed funds market which is what banks lend money to each other... and these funds are completely unsecured. This move gives those banks that need money another avenue to fund themselves vs. paying higher than market rates to those banks that have money to lend on an overnight basis. All in all this move is more symbolic than anything.
One other comment on the move in the markets this morning. This has all of the signs of a short covering move than a sign of real investors getting long the market. The difference between the 2 is important. Keep in mind that if you buy a stock it can be either for a short term trade or a long term investment. Generally if you buy a stock on a trade then you have a quicker trigger finger than if you are buying a stock for a long term play. However, a short is ALWAYS a trade. you stay with it as long as it is working but the minute it stops working you cover. In theory, a buy of a stock has unlimited gains because a stock can alway go up.... or put another way you loss is limited to the price you pay for a stock. If you short a stock your potential losses are unlimited while your gain is limited to the difference between the price you siold and zero.
Confused yet? And guess what, Bush has absolutely nothing to do with the above....
You are correct.
Bush is not relevant.
quote:
Originally posted by bokworker
CF, normally you are spot on with your facts but Fannie Mae doe snot do student loans... Sallie Mae is the largest student lender.
D'oh! You are correct and I am totally wrong. Sorry, I was thinking Sallie Mae the entire time and I guess Fannie Mae is too close for my little mind. My favorite part was when I was told I was wrong and still insisted I was right... damn you brain.
Thanks for correcting me.
- - - - - -
Tim,
The Federal Reserve is not going to act to try and stabilize ONE sector of the economy. The are, theoretically, not suppose to act to stave off economic downturns anyway... they are suppose to react to in- and deflation. If they cut rates to help one sector, they would be screwing another (I realize they cut short term rates).
Business that make bad decisions should be allowed to fail. Citizens that make poor decisions should be allowed to fail. Everyone in the nation new variable rate mortgages WOULD GET more expensive, as rates were at a historic low. Companies new people really couldn't afford what they were borrowing. No sympathy to either of them.
A piece on NPR yesterday fretted for about 30 minutes about the pending bankruptcy of Country Wide and how the nation could handle such a thing. They ignored the underlying strength and asset base (mortgages are secured) of the company and pretending any Bankruptcy would be a liquidation. Way to spread panic...
- MARKETS UP, we lost our opportunity.
I am just amazed that a White House that borrowed a trillion bucks to keep its deficit spending going is suddenly a spendthrift. The taxpayers have been keeping the phoney real estate - and education - industries afloat for sixty years, so why blanch at keeping the wheels going and boosting investor confidence?
Why seek control of the Treasury Department and White House if you do not believe in their power to influence things like the Market during a crisis?
This is worse than Katrina, in that up to seven million at-risk borrowers may lose their homes. I know that many will be single folk with only themselves to care for, but I suspect that millions of families with children are getting ready for some heartbreak.
Government bails out undeserving people all the time, if it is a firefighter or an ambulance, doing the right thing does not always require needs testing.
Quite simply this is a greed issue. The investors in the hedge funds, and everyone in the home building/sale, and lending chain all sought to profit by more promiscuous lending. The homeowner had greed in wanting more house than he/she could logically afford.
Here's the pathos story I'm anticipating on one of the news networks:
"Joe was a mid-level manager working for XYZ corporation and enjoying the American dream. One day that came crashing down as he lost his job, his cars, and finally- his dream home, as the economy was dissolving...."
What that story will neglect to point out is that Joe was an alcoholic, was a chronic absentee from work, had a sexual harrassment claim brought against him to the HR dept., had a Hummer and BMW he could barely afford, and bought a house he couldn't afford on an ARM.
Somehow the news media has a way of making people's stupidity look like a tragedy.
quote:
Originally posted by tim huntzinger
I am just amazed that a White House that borrowed a trillion bucks to keep its deficit spending going is suddenly a spendthrift. The taxpayers have been keeping the phoney real estate - and education - industries afloat for sixty years, so why blanch at keeping the wheels going and boosting investor confidence?
Because it's not their job to do so...why is this so difficult for you to grasp? The problem will not go away by throwing a little money at it.
quote:
Why seek control of the Treasury Department and White House if you do not believe in their power to influence things like the Market during a crisis?
No one but you is asking for that.
quote:
This is worse than Katrina, in that up to seven million at-risk borrowers may lose their homes. I know that many will be single folk with only themselves to care for, but I suspect that millions of families with children are getting ready for some heartbreak.
Why can't we just eliminate all risk from the stock market and guarantee that all stock trades. Just guarantee that if investors lose money the fed will just reimburse them for their poor stock choices...seems reasonable to me?
quote:
Government bails out undeserving people all the time, if it is a firefighter or an ambulance, doing the right thing does not always require needs testing.
Unfortunately Timmy, the government is not there to protect you from yourself and keep you from making piss poor decisions...You should be thankful for that or you'd be locked in a padded white room right now.
The government protects us from ourselves all the time, from seatbelts to drug usage. The government bails out people all the time, from firefighting to lost hikers. You anti-government freaks live in some anarchistic lala land.
Since we are living in a cradle-to-grave Nanny State that restricts our freedoms it is my opinion that we begin asking more from our government. I am unsure exactly what emergency steps the Executive Branch can take outside of raising the lending caps at Fannie et al, but this is a national emergency and passing the buck to a do-nothing Congress is weak.
Seven million at-risk borrowers losing their homes smells a lot like hyperbole to me.
Tim, are you implying that just because these lenders are going under that means the houses get sucked under with them?
Not the case. So long as the borrower keeps making the payments, they aren't going to lose their house. If they quit paying because they think they don't have to pay for it because the lender went belly-up, then they are just stupid.
What will happen with the mortgages is they will be sold at discounts to other lenders to service. It can create an even higher yield for subsequent holders of the notes.
Since re-dedicating my life to Jim Cramer, I find he says 7 million borrowers have their property on the line. He does cry over the hedge fund managers and I do find it hard to share his grief.
quote:
Originally posted by tim huntzinger
The government protects us from ourselves all the time, from seatbelts to drug usage. The government bails out people all the time, from firefighting to lost hikers. You anti-government freaks live in some anarchistic lala land.
Since we are living in a cradle-to-grave Nanny State that restricts our freedoms it is my opinion that we begin asking more from our government. I am unsure exactly what emergency steps the Executive Branch can take outside of raising the lending caps at Fannie et al, but this is a national emergency and passing the buck to a do-nothing Congress is weak.
So are you proposing what I'm asking for then, a risk free stock market? If not, why?
Tim, seriously... I getting lost in the rhetoric. What do you want?
1) If you want the government to bail out the stock market, then where does it end? Eventually, will they cover my gambling losses too? Stupid me for making sound investments that aren't likely to double, so long as the government will cover me when my risk fails I'll take it all day long. Companies are in business to make money, inherently with competition there is risk involved. Slowly but surely as the risk goes down, the profits go down too (look at farmers).
2) If you want the government to bail out home buyers, then where does it end? Can I run out and buy a home I can not afford and then expect the government to save it for me? Stupid me for buying this I can afford. Surely the tax payers should make sure I can live above my means - everyone can! Its easy.
3) You repeatedly point out all the problems the government has gotten us into, but you think somehow getting the government MORE involved is now the answer. Dont you see the flaw in that?
4) You complain about the nanny state, so your solution is to increase the nanny state? Do you think more government intervention, taxation (to pay for 7milion homes), and freedom infringing is somehow going to lessen the nanny state? I just dont get that.
- - - -
Failed businesses should be allowed to fail. Risky investors should be allowed to both reap the benefits and suffer the pitfalls of investing. Consumers should be allowed to both borrow credit to live as they please and be allowed to suffer the consequences of living beyond their means.
FREEDOM includes the obligation to suffer the consequences of your actions.
All this talk about financial panic is B.S.
I got an e-mail from my highly respected money manager late yesterday, and he said right now is a prime opportunity to BUY stocks. He's gone from bullish to strongly bullish because the market has become undervalued, and that the housing shakeout will have a meager effect on the economy.
quote:
Originally posted by rwarn17588
All this talk about financial panic is B.S.
I got an e-mail from my highly respected money manager late yesterday, and he said right now is a prime opportunity to BUY stocks. He's gone from bullish to strongly bullish because the market has become undervalued, and that the housing shakeout will have a meager effect on the economy.
Well...the panic is real, but the reasons are probably not as "real" as they are making them out to be. And you're manager is correct. Great time to get into the market...unless the damned thing keeps going up![:P]
quote:
Originally posted by rwarn17588
All this talk about financial panic is B.S.
I got an e-mail from my highly respected money manager late yesterday, and he said right now is a prime opportunity to BUY stocks. He's gone from bullish to strongly bullish because the market has become undervalued, and that the housing shakeout will have a meager effect on the economy.
Best way to create panic is to...well... panic.
Thanks for bringing some reality into the discussion.
All I know is that the market tanked in a big way and all the analysts were saying it had to do with a credit crunch - not enough cash to keep the wheels going. This could be a ploy by 'Them' I suppose to drive down prices to make for better buys, but I do not think crazy like that. I am not a Defeatocrat who longs for bad news to show The Man that he sucks.
1. Not wanting a 'bail-out' on the market, just life support is all.
2. Something needs to be done for homeowners who were unwary consumers. Maybe the lending institions should eat their losses, maybe the loans need to be structured fairly. If Big Government needs to lean on Money Bags, so be it. If the banks gave out bad loans and unwary customers took them, the buyer has more to lose than the bank.
3. When do I put down big gubmint? I just want the trains to run on time. Gubmint is not getting smaller nor will it, I submit we are not getting our dollars' worth.
4. Ditto. At least I am not whining about universal health care when we already have universal education, universal roadcare, universal retirement security. At least I am not making the argument that tax-payer funded immunizations are an affront to the Constitution and human liberty or whatever
And if I were selling ice I would sell ice to an eskimo, so for a stockbroker to point out that stock prices are low and therefore a good time to buy, how can you argue with that?
quote:
Originally posted by tim huntzinger
All I know is that the market tanked in a big way and all the analysts were saying it had to do with a credit crunch - not enough cash to keep the wheels going. This could be a ploy by 'Them' I suppose to drive down prices to make for better buys, but I do not think crazy like that. I am not a Defeatocrat who longs for bad news to show The Man that he sucks.
1. Not wanting a 'bail-out' on the market, just life support is all.
2. Something needs to be done for homeowners who were unwary consumers. Maybe the lending institions should eat their losses, maybe the loans need to be structured fairly. If Big Government needs to lean on Money Bags, so be it. If the banks gave out bad loans and unwary customers took them, the buyer has more to lose than the bank.
3. When do I put down big gubmint? I just want the trains to run on time. Gubmint is not getting smaller nor will it, I submit we are not getting our dollars' worth.
4. Ditto. At least I am not whining about universal health care when we already have universal education, universal roadcare, universal retirement security. At least I am not making the argument that tax-payer funded immunizations are an affront to the Constitution and human liberty or whatever
And if I were selling ice I would sell ice to an eskimo, so for a stockbroker to point out that stock prices are low and therefore a good time to buy, how can you argue with that?
Sigh...sadly you just don't get it but that's okay...
You're the only one around here that's stuck on this issue. Just go on hating Bush for your soup being cold and grass stains on your jeans and you'll be just fine.
Oh yeah, that is me, just creating panic. I caused the stock market to correct itself and am just happy as a clam about it. I just want to stick it to The Man. Right. Got it. Worldwide economic panic but it is because of everyday dudes like me, not because the banks themselves were freaking out.
All I ask for is to add some liquidity via Fannie Mae, for Bush to come out and make a statement, to accelerate whatever reforms need to be made to the mortgage game, and suddenly I am asking for Absolute Immunity From Any And All Personal Responsibility.
Okie dokie!
I wouldn't endorse that kind of stuff. Not a straight funds injection. Maybe this stuff should have been curbed sooner, but it was driving much of the assumed "economic gains" of the last few years. Having that bubble was just about the only thing working for this administration.
We'd be in a better place now if we weren't borrowing money. We aren't even funding the gov't ourselves, much less the war.
LAS VEGAS ECONOMY BOOMING
Las Vegas, NV (AP) -- In the last 24 hours, the Las Vegas economy has shown signs of increasing economic activity. Apparently, the seeds of the boom were planted starting on Thursday around 1pm when net receipts at the local strip clubs skyrocketed due to a mysterious unidentified man who appeared to be in his 80s started handing out C Notes to all the ladies. This individual was seen at all of the major strip clubs and, later, at the casino tables.
Sources tell us that the unidentified man was heard ranting about how you can't "Eat IV", leading some to believe that he may be an IV drug user on some kind of high.
The tricle down effects on the real economy in the Las Vegas area have been astounding over the past 24 hours. Economists believe that this could signal a turning point in the stagnant Las Vegas Housing market.
Intrinsic Value
Timmy, FNM cannot do anything about this situation. Continuing to ask for this as a response leads me to believe you have not read some earlier responses explaining this. As well, reforms to the mortgage "game" would NOT alleviate the problem. In fact, some of the reforms, like responsible lending that includes paying the loan back, are exactly what is going on. Hey, drink too much of the "kool-aid" and there is hell to pay with a nasty hangover.
The Fed's recent additions of short term liquidity could be deemed "life support"... a cut in rates is a bail-out. As well, with Bush's credibility do you really think ANYTHING he could say would soothe market angst????
My investment in baseball cards and beanie babies should get me through retirement.
Don't ya just love how all these proponents of getting the government out of the free market, start crying for a government bailout the second their portfolios take a plunge? This is poetic justice. Karma is a b*#tch. BTW, to everyone who ridiculed me for pointing out the serious problems we have in our economy by painting me as an alarmist or a naysayer, I hate to say I told you so, but.... lets just say vindication is a very rewarding feeling. Somebody call the wahhmbulance, the fascists need some corporate welfare, stat.
"The Fed's recent additions of short term liquidity could be deemed "life support"... a cut in rates is a bail-out. As well, with Bush's credibility do you really think ANYTHING he could say would soothe market angst????"
^
Yes......!
"Today, my fellow Americans I am resigning the office of President of the United States....
Joining me in my resignation will be Dick Cheney and Codoleeza Rice..."
[}:)]
Look, I am just siding with Jim Cramer on the FNM thing. If we can reign in predatory lending we can certainly do more to protect unsavvy consumers. Clearly I am not the smartest guy in the room but if one leg of the market is tanking that brings down the whole shooting match. Sending the mortgage industry some walking around change is not irresponsible if it prevents disaster.
Bush has to fight the negativism with some sort of assurances. Lie to us, just say something to make us feel better beyond 'we respect the Federal Reserve's independence.' In my heart of hearts I have to believe Uncle Ben was called. Just ignoring the issue is a disservice to the nation, IMHO.
Tim,
Our fundamental difference appears to be in personal responsibility. I feel that people should be free to make bad decisions, and are obligated to suffer the consequences. You are arguing that they should be free to make bad decisions, and someone else should suffer the consequences.
Remember, these companies are owned by other people - mostly Americans. So you would be forcing the Americans that were smart enough to save money and invest to subsidize those that were dumb enough to spend more than they could afford. To me, that should not be the behavior the government is encouraging.
The mortgage system is already set up to be very forgiving. You do not get your house taken away for being late a month, or even missing a couple months payments. It takes MONTHS to actually lose your house. Which generally means you are in a spiral you will not recover from and NEED to get out of the house for financial survival anyway.
The institutions that made these high risk loans wanting high risk returns will lose billions of dollars. I have no sympathy for them either. Like the purchasers who could not afford it, the companies made the loans to get more than they really could (in interest). Both parties took a high risk and both will now lose. Too bad.
It may shake the economy more, but government intervention is not needed to keep the ship from sinking. The deck is scuffed and a few poor bastards may fall overboard, but the vessel is sound (/pats self on back for analogy).
Thanks for the discussion.
Rico... you had me right up to the Condi part....lol.
Tim, in my book predatory lending occurs when a lender makes a loan with convenants that are to the lenders advantage with the express intent to be able to foreclose and seize collateral that is worht MORE than the loan. The fact that lenders are losing their collective a**es and now hold property that is worht considerable LESS than what was loaned is therefore NOT predatory lending.
We have all seen contracts across various business dealings that include fine print and statement s that are hard to understand but we already ahve truth in lending laws that state that mortgage loan documents must show in BOLD print the effective rate of the loan for the entire term. If your beginning rate is 2% and the loan has an effective rate of 8% and you don't understand the meaning of that then I question whether you should be taking the loan out in the first place. the reality is we went through a period where not only was this understanding not important but that you only had to qualify at the low intial rate (sometimes call a teaser rate) and not at the effective loan rate.
The value of housing as an asset class was and is driven by the availability of credit to purchase it. The recent period shows that making credit available on terms that are too lax does not spur more people to make rational responsible borrowing decisions.... the payback of these irrational, irresponsible decisions is not the end of our economy as we know it. And while not painless it will end up repricing the housing market to more reasonable levels.
One last comment Tim. have you ever listened to the disclaimer at the end of each segment of Jim Cramer's show? You should and heed the statement.
quote:
Oh yeah, that is me, just creating panic. I caused the stock market to correct itself and am just happy as a clam about it. I just want to stick it to The Man. Right. Got it. Worldwide economic panic but it is because of everyday dudes like me, not because the banks themselves were freaking out.
President Bush? Is that you?
[VIDEO: HERE is Bush keepin' it real . . . ] (//%22http://www.liveleak.com/view?i=5e1_1182684500%22)
My Lord and Savior Jim Cramer has singlehandedly saved a 1000 point crash. All praise and glory to Him!
There needs to be a Congressional investigation of the matter. Consumers are protected from themselves all the time and corporations whether they be banks or toy manufacturers are not immune from regulations. I hope stockholders and vanquished homeowners find someone to sue, because someone made money on the deal and that is not right.
Folk with families who were repairing their credit and cannot refinance need assistance. If that means banks get hosed, so be it. And for all of you 'personal risk at all costs' types, what is the FDIC but Big Bad Gubmint protecting your assets?
There doesn't need to be a congressional investigation. The risks of taking out a loan or investing in stocks are apparent, and are in writing.
There won't be any lawsuits worth a fig; see above.
The FDIC protects basic savings; this is commonsense fairness. It's never protected you from defaulting on a risky loan, or should it.
And if you're dumb enough to put your money in a non-FDIC institution, that's on you.
Bush admin has been restrained when it comes to interfearing with financial markets. I suspect unless there's a dire emergency, you're not going to see involvement here either.
The Fed is taking action by cutting rates and for now, that's probably good enough.
This is interesting, NYTIMES (//%22http://www.nytimes.com/2007/08/19/business/19credit.html?pagewanted=2&_r=1&hp%22) reports '. . .in March, the head of the Federal Deposit Insurance Corporation, a banking regulator, had urged Congress to create standards to protect borrowers with poor credit.'
Huh. Imagine that. The FDIC - which protects banks from cash shortfalls - suggested that Congress protect stoopid consoomers. I count myself in good company.
quote:
Originally posted by tim huntzinger
This is interesting, NYTIMES (//%22http://www.nytimes.com/2007/08/19/business/19credit.html?pagewanted=2&_r=1&hp%22) reports '. . .in March, the head of the Federal Deposit Insurance Corporation, a banking regulator, had urged Congress to create standards to protect borrowers with poor credit.'
Huh. Imagine that. The FDIC - which protects banks from cash shortfalls - suggested that Congress protect stoopid consoomers. I count myself in good company.
You should try reading the stories you link to Timmy. What the source from the FDIC stated, and what you said that he stated are two different things. By "protecting borrowers" he means NOT LENDING TO THEM, not bailing them out Einstein. Try reading the story next time.
Let me be clear, it was my suggestion - not the FDIC - to begin looking at individual cases for relief. The interesting thing was that many comments in the thread seemed to deride the consumer, but in the end the FDIC sided with the consumer.
It is one thing to troll out on a bulletin board and project one's economic theories, and quite another to be an Administration which promotes home ownership is one of its chief economic goals, point to increased home ownership as vindication of its policies, and then go AWOL when the scheme goes South. (Or in this case go North to Canada to talk about what the US can do to improve their economies).
My new theory is that many of the defaults are not the product of ARMS, anyway, but of illegal residents who are walking away from their homes.
The vast majority of people in America will NOT default on their mortgages.
I'm no fan of the Bush administration, but just because a small percentage of people default on admittedly high-risk mortgages, it does not symbolize a wholesale repudiation of home-ownership policies.
After this bump, home ownership will continue to rise, if it still isn't. That's because of creativity and competition in the home-lending industry. There's still money to be made, and the number of options for prospective homeowners continues to increase.
So chill, Tim.
(I'd be tempted to call you Chicken Little, except that username is taken, and giving it to you would be an insult to that person, who's decidedly less alarmist than you are.)
quote:
Originally posted by tim huntzinger
Consumers are protected from themselves all the time and corporations whether they be banks or toy manufacturers are not immune from regulations. I hope stockholders and vanquished homeowners find someone to sue, because someone made money on the deal and that is not right.
In the case of personal bankruptcy reform, the Congress sided with credit card companies, not the consumers.
There's no one to sue in this case. Homeowner's bought more house than they could afford in inflated markets and used perfectly legal lending instruments to do this. People with ARMs and interest-only, or baloon arrangements counted on one of two things to happen: their personal income would be increasing with the rise in house payment as the rate went up, or the value of the house would appreciate to the point it could be cashed out for more than the principle balance, or it could be refinanced down the line when they could afford a full P & I payment.
For some of those people, their income eventually did go up, but they also wound up buying new cars to go in those new garages with their new-found borrowing power. In some cases, I'm sure job situations did change and people wound up making less money. That's still not the fault of the lender.
People buying a principle place of residence for the most part are creating a long-term savings account. Viewing it as an aggressive short-term (less than five years) investment is stupid, especially in a hot market, unless that person has good experience in doing quick property flips. The baloon eventually bursts. If someone buys, planning on being there for 20 years or more, it's a safe savings haven and will generally weather the ups and downs of housing markets.
Since credit reforms 30 or so years back, the terms of lending agreements are carefully spelled out for the borrower. If the borrower has not fully read and familiarized themself with the fact that their adjustible rate mortgage payment can go up, then that is not the lender's fault so long as it's noted in the loan documents. If that person did not maintain a good enough repayment record on the mortgage or other indebtedness which prevented them from re-financing, that is their own fault not that of the lender(s).
I'm guilty as anyone of not reading every last 8-point type word in a multi-page contract when I've signed mortgage docs. But if I sign and didn't realize there was a certain clause in an agreement which worked against me and it's there in print- that is my fault not that of the lender.
At every loan closing I've ever been a party to, the re-payment terms have been clearly spelled out by the closing representative.
In this case it's not a crappy national economy which has caused this problem. It was a credit binge which has left a lot of people with a nasty hang-over.
Hey Timmy, check out this weeks Barron's... seems your "lord and saviour" Jim Cramer's stock picks are not outperforming the market. Maybe you should reconsider his place in your life....
Over long periods of time housing, like the stock market, has proven to be a viable investment. However, over short periods of time housing, like the stock market can be a bit risky. the good part about housing is that, absent an overextension, you get a good bit of utility out of the investment as well. As Conan says, if you are buying a home because of the utility you are fine.... "flipping" houses like "flippping" stocks is not a riskless proposition.
Timing the market is not important.... Time in the market is... Longer time frames do not remove risk but certainly mitigate risk.
To add what bokworker says ...
Index funds are the way to go. Low cost, no hassle, and why try to beat the market when there's a financial instrument that matches it?
I agree with the idea that homes are long-term investments, which is why I also advocate landlord/rental reform, which is another subject.
There is a deafening silence from the supposed victims of ARMS and others who got upside down on their equity, so the likelihood of some tidal wave of aggreived defaulters rushing the bank with pitchforks is unlikely. My mythical victim is more the exception, not the rule.
Barney Frank will be leading the Congressional hearings this fall, so stay tuned. He has owned every opponent I have ever seen him come up against, so I look forward to the political fallout.
Give Cramer's stocks more time, BOK, these things take time.
quote:
There is a deafening silence from the supposed victims of ARMS and others who got upside down on their equity
Could you please define the term "victim" as used in this sentence?
quote:
Barney Frank will be leading the Congressional hearings this fall, so stay tuned. He has owned every opponent I have ever seen him come up against
Too...many......jokes....can't.....hold...back....for...much...longer........
Tim, also look into this:
One of the main reasons so many risky loans were made to low income people was that a few years back (1990's) Congress threatened to interfere if more credit was not made available to low income people.
Congress wanted more credit to low income people, the banks said it was a bad idea, Congress threatened action, the banks caved to big brother. That worked out well.
I keep telling you, most of the problems you want government to solve... government created.
CF.. to whit.... the Community Reinvestment Act is exactly what you speak of. Banks are given a CRA rating that is VERY important to them.
Bottom line, make a certain amount of loans that you kow won't be paid back.
The real turning point for banks and other financial intermediaries came when home mortgage loans became "marketable" and the originating entity did not have to keep the loan on their books. If a loan is going to stay with you then the underwriting process becomes a little more important. If you sell the loan to generate new money to make more loans then all of a sudden it is a volume game. Underwriters that make money on volume aren't necessarily the most careful when it comes to doing what needs to be done to get the deal...
quote:
Originally posted by tim huntzinger
Barney Frank will be leading the Congressional hearings this fall, so stay tuned. He has owned every opponent I have ever seen him come up against, so I look forward to the political fallout.
Yeah, he also
owned a condo in DC that a gay prostitution ring was being run out of.
quote:
Originally posted by bokworker
CF.. to whit.... the Community Reinvestment Act is exactly what you speak of. Banks are given a CRA rating that is VERY important to them.
Bottom line, make a certain amount of loans that you kow won't be paid back.
The real turning point for banks and other financial intermediaries came when home mortgage loans became "marketable" and the originating entity did not have to keep the loan on their books. If a loan is going to stay with you then the underwriting process becomes a little more important. If you sell the loan to generate new money to make more loans then all of a sudden it is a volume game. Underwriters that make money on volume aren't necessarily the most careful when it comes to doing what needs to be done to get the deal...
Thanks for the term BOk. I couldnt think of the name of the program.
Also, per the loan purchasing, I really have no problem with that. A mortgage is really just a secured note, so why shouldn't it be bought and sold? The problem arose when purchasing companies were not insisting upon decently categorized groups. A bank just said "here are our notes" and they were purchased.
From now on, originators will probably have to sort their loans before they will be purchased. No hedge fund is going to acquire a block of loans if 25% could be high risk (sub prime) ventures. As it currently stands, the groups are so large and disorganized that they can not separate the good blocks from the bad. And THATS why no one is sure how much hedge funds are worth or who has real exposure to this issue.
Cf, there is no reason that good quality loans should not be marketable. In reality, a lot of a banks' balance sheet is now marketable as there is a secondary market from everything from credit card receivables to car loans. This additional liquidity for a banks' balance sheet allows them, if used properly, to more efficiently match their assets and liabilities as well as to profitably deploy capital.
As with any credit product, it is incumbant on the buyer, which is now the lender, to make sure that the credit process is kosher and that loans are properly documented. In a period though when the real estate market bailed out a lot of bad credit decisions the credit process was not viewed to be as important as it should have been. Now that the market won't bail the lenders out the credit process will become a bit more stringent. Not to get too deep but in the mid-eighties when the Ok. and Texas banking markets were in the toilet the OCC quit even giving banks credit for collateral value and focused almost primarily on income. This shift caused a lot of borrowers to suddenly be classified as "impaired" and banks had to set aside huge amounts of loan loss reserve.... in fact, this change put many a bank in receivorship.
In the end, I am afraid that market participants that are expecting a quick resolution to the housing issue are going to be disappointed as I think there is more pain to be felt. It is not the end of the world but it might not be pretty.
RWARN, in general you are correct. A properly diversified portfolio of low cost index funds should do fine and is certainly more appropriate for your serious money that watching Mad Money every day. I will offer however that there are a few active managers that offer a risk return profile that overcomes their higher fee structures.
Keep going, BOK, this is good info. Why is a CRA important? Did the Act mandate a percentage of loans made that were high-risk and were the banks going to be penalized somehow for not meeting some goal? Did the importance change from the amount of a downpayment to income in response to the Act?
What changes can be made so that the goal of increasing home ownership can be met, or is that impossible to do without artificially inflating home prices?
Yeah, ol' Frank is gonna tear 'em up. If anyone can get to the bottom of things it is him!
Tim, CRA is important because the OCC (Office of the Comptroller of the Currency, the primary regulatory agency for national banks) looks at this score as one measuring stick of how well a bank is servicing its' market... and whether or not to allow the bank to expand their prescence...i.e. buy another bank. No one will ever say that there is a specific "target" for an amount of loans that have to be made but if a low income area is in your footprint, and EVERY bank has a low income area in its' footprint, then you better be doing some loans in that area. Loaning money is not the only way to get a high CRA score but without doing this there is no way to get a high CRA score. As well, there is no stated "penalty" for a low CRA score but it is understood that you don't want one. All banks are subject to this Act as well. In the beginning, borrowers still had to have a significant down payment to borrow against a home but the income requirements could be relaxed somewhat.
The CRA however was not the source of the problems we had now. In the beginning, the CRA did force banks to make some loans they probably would not have and ended the so called "red-lining" of areas where credit was not offered. Don't get me wrong, I am not saying banks were the bad guys before this.... banks are in business to make money. Loans that don't pay back cause banks to lose money so banks have always tried to manage their risk position. This "risk mamgement" however tended to preclude certain types of borrowers, i.e. low income, and certain areas of towns to not have access to credit. The CRA was an attempt by the banking regulators to get them to step outisde their comfort zones a bit. think Capital One type ads.... Big banks only care about big customer type thing.
The beginning of todays problems started with the financial engineering of Wall Street. That and an extended period of very low rates in which fixed income investors were looking at very low rates.... remember 2% CD's and sub 1% savings rates.... Higher risk investments pay a higher rate of return and all it took was some smart math whizzes.... a ratings agency to bless the process and viola, we had "high quality" fixed income investments that paid a higher rate of return.
Things went along beautifully as the housing market boomed with new demand from new borrowers that could now afford to buy new homes... and hey, to top it off the whole process did not include a silly little requirement of having to actually prove what you made... you could just tell someone what you made. If the house you wanted was a little more expensive than what you could afford well then just tell them you made a little bit more so you could qualify... I mean what the heck, if things got bad then you could just sell the house for more than you paid because everyone knew that houses were going up in value and the guys that made the most were the ones buying the biggest houses. Volume underwriters were happy to play along because their commission was based on the loan amount and realtors were happy to play along because their commission was based on the sale amount. It was absiolutely the easiest slam dunk deal ever...
That was until the supply of homes began to increase as builders extrapolated this increase in demand far into the future and started building a ton of new homes.... early on, way cool. Remember info-mercials on "pre-construction" purchasing of condos and houses? Good god man, if you weren't doing this you were leaving money on the street. Real estate was the path to easy street and only the stupid were not playing the game. Now the suppply of homes and condo's on the market are at multi-decade highs and lending requirements are becoming more stringent. this change in the supply vs. demand picture does not lead one to think that housing values are going up anytime soon. Take heart in Tulsa though as we did not see the incredible run up that some markets did and as such will not feel the same pain.
In the end Tim, the goal of home ownership has to be a personal goal not a government goal. Is high home ownership reflective of a populace that is doing well and striving to make their collective lives better? You bet. But you and I both know that there is a segment of our population that is not responsible enough to ahndle home ownership.... or handle debt properly. And handing them free money to own a home is not the answer becuase we know there is no such thing as free money. that money comes from responsible tax paying individuals like you and me that have chosen not to make dumb a** decisions and then cry to the government when it goes bad.
Shall I go on?????
BOK- great reply. Thanks.
I (heart) BOk.
Well said.
Thanks CF and Conan... don't tell Friendly Bear that management told me what to say...[}:)]
Money is a commodity which we rent or lease for a given time the same as we can do with a car. Supply and demand controls the amount charged for its use. The Fed has turned on the presses to float over a 120 billion dollars into the supply market in order to stabilize it.
After W.W.ll in order to control the growing need for the supply, 20% down payment was established to defray inflation. As the plastic cards were introduced this was abolished because there was no way to enforce a down payment on credit card purchases. The home loan industry follow suite.
We have now distributed so many of the dollars that are being devalued each day that our world creditors are spending billions to shore up the dollar in order to protect their interest. The new cliché is "don't sell but hold on for the long haul." Our problem is whether we can sell it to our world debtors.
The world is going into recession like it did in 1928-29. We must patch the hole in the balloon before we hear the big bang of it bursting.
The question is "Do you think that people will control their credit until we get some stabilization in the available supply and demand".
quote:
Originally posted by shadows
Money is a commodity which we rent or lease for a given time the same as we can do with a car. Supply and demand controls the amount charged for its use. The Fed has turned on the presses to float over a 120 billion dollars into the supply market in order to stabilize it.
After W.W.ll in order to control the growing need for the supply, 20% down payment was established to defray inflation. As the plastic cards were introduced this was abolished because there was no way to enforce a down payment on credit card purchases. The home loan industry follow suite.
We have now distributed so many of the dollars that are being devalued each day that our world creditors are spending billions to shore up the dollar in order to protect their interest. The new cliché is "don't sell but hold on for the long haul." Our problem is whether we can sell it to our world debtors.
The world is going into recession like it did in 1928-29. We must patch the hole in the balloon before we hear the big bang of it bursting.
The question is "Do you think that people will control their credit until we get some stabilization in the available supply and demand".
As for the money between us of time of the specification which has us it leases the same it is possible, to do with the car or or it is the commodity which is leased. Demand and supply control the quantity which is filled up for using. Because it makes that stabilize the federal system attached the publication to the suspended matter with respect to 120,000,000,000 dollars in the market of supply.
In order to pay inflation, after being established in order to control the necessity which W.W.ll supplies, for 20% down payment increases. That the plastic card was introduced, simultaneously this was abolished being not to have the method of executing the down payment of the purchase by the credit card. Housing loan industry follows to the continuation.
As for us now as for the obligee of our worlds the expense which in order to protect interest it should support with respect to dollar 1000000000 so large number of the dollar which thing everyday is reduced was distributed. New clich3e it is, but grasp "you do not sell and/or because of the long distance transport. "Our problems are us can sell that to the obligator of our worlds how. The world has entered as in retreat 1928-29 made year.
We us before inquiring about the hard blow which that destruction intensity it does is large must repair the hole of the balloon. As for question stability of demand and the supply which we can utilize "is obtained until, when the people control their confidences," you think, it is.
Is that clear??????
quote:
Originally posted by iplaw
quote:
Originally posted by shadows
Money is a commodity which we rent or lease for a given time the same as we can do with a car. Supply and demand controls the amount charged for its use. The Fed has turned on the presses to float over a 120 billion dollars into the supply market in order to stabilize it.
After W.W.ll in order to control the growing need for the supply, 20% down payment was established to defray inflation. As the plastic cards were introduced this was abolished because there was no way to enforce a down payment on credit card purchases. The home loan industry follow suite.
We have now distributed so many of the dollars that are being devalued each day that our world creditors are spending billions to shore up the dollar in order to protect their interest. The new cliché is "don't sell but hold on for the long haul." Our problem is whether we can sell it to our world debtors.
The world is going into recession like it did in 1928-29. We must patch the hole in the balloon before we hear the big bang of it bursting.
The question is "Do you think that people will control their credit until we get some stabilization in the available supply and demand".
As for the money between us of time of the specification which has us it leases the same it is possible, to do with the car or or it is the commodity which is leased. Demand and supply control the quantity which is filled up for using. Because it makes that stabilize the federal system attached the publication to the suspended matter with respect to 120,000,000,000 dollars in the market of supply.
In order to pay inflation, after being established in order to control the necessity which W.W.ll supplies, for 20% down payment increases. That the plastic card was introduced, simultaneously this was abolished being not to have the method of executing the down payment of the purchase by the credit card. Housing loan industry follows to the continuation.
As for us now as for the obligee of our worlds the expense which in order to protect interest it should support with respect to dollar 1000000000 so large number of the dollar which thing everyday is reduced was distributed. New clich3e it is, but grasp "you do not sell and/or because of the long distance transport. "Our problems are us can sell that to the obligator of our worlds how. The world has entered as in retreat 1928-29 made year.
We us before inquiring about the hard blow which that destruction intensity it does is large must repair the hole of the balloon. As for question stability of demand and the supply which we can utilize "is obtained until, when the people control their confidences," you think, it is.
Is that clear??????
How do you do that? Classic. [:D]
I have an "Engrish" translator. His posts are better read in their native tongue.
I just thought you finally lost that last thread of sanity. Can't say I was surprised. [;)]
quote:
Originally posted by cannon_fodder
I just thought you finally lost that last thread of sanity. Can't say I was surprised. [;)]
I lost that long ago...in a far away galaxy.
quote:
Originally posted by tim huntzinger
I agree with the idea that homes are long-term investments, which is why I also advocate landlord/rental reform, which is another subject.
Tim, just got back around to this. What are you advocating in the way of landlord/renter reform? Do tell.
I think home ownership should be a national priority, it is good for neighborhoods and good for families. Rental properties degrade the quality of life and reduce the sense of community in the neighborhood. If I am a big fan of Mae, FDIC, CRA and what not one can imagine the Maoist dreams that stir in this fervid mind.
Tim, if you want to be taken seriously you are going to have to do better than that.
"Rental properties degrade the quality of life and reduce the sense of community in a neighborhood"? That's a pretty broad statement. For what it is worth, I rent and don't feel I am degrading the quality of my life, or anyone elses, and I am a damn good neighbor.
FNM and FRE are directly involved in the mortgage market, CRA only indirectly, and the FDIC has nothing to do with the housing market. Do you not agree with my statement that housing is a personal goal that is reflective of a vibrant country but that it should not be priority "forced" upon the populace?
I did not connect CRA and the housing mess, someone else did. If Big Gubmint has no place in our economy, than I say buh-bye FDIC and the rest. What is the FDIC but another leftist plot to use other people's money to bail out someone else?
Drive through most neighborhoods and if you cannot spot the rentals you are not trying. This will be another negative effect of the housing crisis. Renters who have a 30-day commitment versus those who have nominal 30-year commitments to the neighborhood have little in common.
Hey Timmy. I found you a new avatar. Feel free to use it at any time...
(http://www.our-picks.com/wp-content/uploads/2006/12/200px-hammer_and_sickle.png)
look closely at my existing one, ips! but i thought i said maoist, see what you can do . . .
quote:
Originally posted by tim huntzinger
I think home ownership should be a national priority, it is good for neighborhoods and good for families. Rental properties degrade the quality of life and reduce the sense of community in the neighborhood. If I am a big fan of Mae, FDIC, CRA and what not one can imagine the Maoist dreams that stir in this fervid mind.
All one has to do to see that it's not as much of a priority is look at the tax code these days. With the standard deduction going up, the tax break on mortgage interest deduction is becoming irrelevant to many families who make less than $100K per year, based on how much house lenders will allow them to buy at what the "average" NDI range is. I believe standard deduction for married/file joint this last year was, what, $10,200?.
With the earned income credit, along with standard deduction, it makes home ownership even less relevant to families at the lower end of the income spectrum.
When I bought my first house in 1989 for $55K, on a 8.75% bond money loan, I had enough interest to make it worthwhile to itemize. If I would have bought that same house today, there would be no tax incentive. Using rough math, a couple needs to finance somewhere around $180,000 at prevailing 30 year rates to outrun the standard deduction.
It's kept it as a priveledge for those who have more of a tendency for homeownership anyhow in upper income brackets.
All that aside, there are still programs like FHA and municipal and county bond programs which are incentives for first time buyers and low-income families to buy with low down payment requirements. However, many low-income people either come to the table with no credit or poor credit, or no down payment money.
I'll agree to an extent that some incentives have disappeared for the average work-a-day family. However, there are a lot of people who through poor decisions of their own have made it harder for themselves to be able to buy a home. You can't protect people entirely from their own poor decisions. I really don't think that should be a function of government.
quote:
Originally posted by iplaw
Hey Timmy. I found you a new avatar. Feel free to use it at any time...
(http://www.our-picks.com/wp-content/uploads/2006/12/200px-hammer_and_sickle.png)
Seems one would find it irresponsible for a supposedly grown intelligent person to start to flame as is indicated in the above posts.
I don't believe there are indications that because of tim's beliefs, that he should be degraded to the extent as indicating that they deserve to be connected with the Russian flag.
quote:
Originally posted by shadows
Seems one would find it irresponsible for a supposedly grown intelligent person to start to flame as is indicated in the above posts.
I don't believe there are indications that because of tim's beliefs, that he should be degraded to the extent as indicating that they deserve to be connected with the Russian flag.
Russian Flag:
(http://www.politicsonline.com/blog/images/2006/russian_flag.gif)
quote:
Seems one would find it irresponsible for a supposedly grown intelligent person to start to flame as is indicated in the above posts.
See that's where your assumption went wrong. Of course what would I know, I can't speak Sphynxian like you either...
"You must lash out with every limb, like the octopus who plays the drums." (http://www.internationalhero.co.uk/s/sphinx.jpg)
At least no one has caused another a Nazi yet, although . . .
Ultimately, predatory borrowers are a risk to the health of our economy, but predatory lenders must exist, as well. Fact is we have moved to an economy that is based on spending and not on saving. If the gubmint raises its down payment requirements for first time home buyers or for that matter any loan, will it be at the cost of retail spending in general?
quote:
Originally posted by tim huntzinger
At least no one has caused another a Nazi yet, although . . .
Ultimately, predatory borrowers are a risk to the health of our economy, but predatory lenders must exist, as well. Fact is we have moved to an economy that is based on spending and not on saving. If the gubmint raises its down payment requirements for first time home buyers or for that matter any loan, will it be at the cost of retail spending in general?
I believe the requirement of a down payment would curb excessive spending and slow the spiraling inflation that has devaluated the dollar where the savings of money is no longer feasible. When a 50 cent gallon of milk was delivered to one's door that now cost $4 and you pick it up, the time for change of the monetary system is ready for adjustment.
The large corporations just love the present status quo because they will be able to pay off their retirement debts with devaluated money of spending values at less than a third of when it was installed in their retirement. The same it true with money invested at present that will pay for only one third of what it will purchase today.
The value of the product does not change it is the value of the barter of exchange that changes.
1) If they instituted a down payment requirement you would be complaining that the evil government has taken away the "right" of homeownership from the poor.
2) How much would milk cost in Gold? Lay off the tired currency debate... milk used to cost 50 cents and computers used to cost hundreds of millions. What does that have to do with the housing market?
3) Inflation helps manufacturing and debtors and hurts financiers and return investors. Just as many corporations are hurt by inflation as helped. The "poor" who have no money to lose value are rewarded with easier debt repayment.
4) Presumably money invested today will pay for MORE than what it will purchase today because it is INVESTED. If it was buried, it would likely pay for 3-5% less each year as a historical average. Investment returns have averaged 8-13% per year... so you should come out ahead.
quote:
Originally posted by cannon_fodder
quote:
Originally posted by shadows
Seems one would find it irresponsible for a supposedly grown intelligent person to start to flame as is indicated in the above posts.
I don't believe there are indications that because of tim's beliefs, that he should be degraded to the extent as indicating that they deserve to be connected with the Russian flag.
Russian Flag:
(http://www.politicsonline.com/blog/images/2006/russian_flag.gif)
The houses that sold new for $3,700 dollars now are selling for $100,000 dollars. The house have sustain deterioration over the past 70 years but unlike good wine there can be only one explanation of why such an increase to the present value.
Could it have anything to with the value we place on our barter of exchange?
Being that Russia has endured the ages of time and has survived under many standards (6&7) thus the red flag used under the USSR of the Sickle and Hammer denoted expansion in agriculture and in industrial areas under a communist system. It is still used by other communist countries having been incorporated in their flags.
The star of Russia communist flag is available as a Russian flag from e-bay.
Responding to the wild-eyed, leftist musings of Bush haters around the globe, Bush outlines steps to aid besieged mortgage holders. (//%22http://apnews.myway.com/article/20070831/D8RC2AA00.html%22)
Hope this helps build confidence in the markets.
Don't worry. It won't.
It will have next to no effect, it is exactly what was expected.
quote:
He rejected any direct government aid to homeowners losing their houses to foreclosures, saying he only supported federal government help that would encourage refinancing and educate prospective home buyers about risky mortgage terms
I agree with this position. There are consequences to borrowing more than you can afford, and I'm afraid those include the loss of your home. I hope the number of people that suffer this fate is as low as possible, but teaching them poor decisions have no consequences will just lead to a repeated cycle of over borrowing.
Tim , you are right that the measures outlined today are more fuluff (confidence) than real...
1) allow individuals that are more than 90 days delinquent to refinance into and FHA loan. The loan is not forgiven and subject to borrowing limitations for FHA loans. Rates may be lower but not neccasarily. Taxpayers are on the hook for those borrowers that do refinance to an FHA loan and then subsequently default. Administrative estimates are that 80,000 homeowners can refi this way with a potential total of 240,000 by the end of 2008
2) Tax relief for foreclosured properties. Currently if you owe $200,000 and your house is worth only $180,00 you get a tax bill on $20,000 of taxable income upon foreclosure. This may in fact require an act of Congress but if so it appears that support is broad based.
And saving the best for last 3) Bush ordered a STUDY by the Treasury and HUD into the reasons behind rising delinquencies so additional policies can be drafted.
The bottom line is these proposals will have limited impact and will not materially change the cycle of higher delinquencies, tighter credit conditions, and lower home prices. Dealing with these issues in a manner that does not involve a fair amount of pain would require a willingness to lend even more money at easier terms that would only make the eventual problem even bigger. The party is over and there are some serious hangovers....