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elipson
29th January 09, 08:47 PM
How the hell do deal with these things?

They are talking now about creating a government run "bad bank" to get this shit out of the market and start banks spending money again. On the one hand I see this getting banks to loan money again, but on the other hand it will mean the US govt spending money on this shit, and whats worse is that this shit wont actually clear the market and therefore they will still be overpriced. If the govt buy toxic shit for the cost of its mortgage, then the banks basically break even for dumb decisions and the paper value of these mortgages is still what the govt paid for them, even though the market hasn't found a bottom yet and therefore no one knows what they are worth.

What if the govt bought them but for a reduced rate? 50% or 75% of whats left? The govt wouldn't be on the hook for such a useless bill and the banks wouldn't be able to turn a tidy profit on them.


What about the idea of an insurance fund against this particular kind of failure, paid out by the banks? It works for term deposits, why not mortgages? Obviously this is a long term thing, but it would put the protective measures in the hands of the market and the banks themselves, so that they don't have to turn to the govt to cover their massive losses.

Yiktin Voxbane
29th January 09, 09:06 PM
How about .....

Forcing the fucktards that made the loans to start with, to Poeple that never had a snowballs chance in hell of repaying them, to repay the money .

Hell if the Govt. is prepared to bail out companies that made bad decisions , then why not individuals too . Surely that shit is unconstitutional or something .

Robot Jesus
29th January 09, 09:44 PM
remember a good number of these people where conned by morgae salesmen pretending to be bankers.

the guys tring to make a fortune by flipping houses deserve to be reamed a new asshole mid lumbar.

HappyOldGuy
29th January 09, 10:11 PM
Having the government buy up toxic mortgages was a mucho good idea 6 months ago.

(a much better idea than just handing out cash)

It doesn't seem like the financial markets are in danger of siezing up anymore. I wouldn't necessarily oppose help for mortgage holders, but it seems like almost everyone who was in a helpable state will be covered by the existing programs. Most of the people I know who are losing their houses now aren't losing them because they can't pay. Just that their home values are so far down that it doesn't make any sense for them to keep making payments.

And thats beyond the ability of the government to do much about.

Equipoise
29th January 09, 11:11 PM
remember a good number of these people where conned by morgae salesmen pretending to be bankers.

the guys tring to make a fortune by flipping houses deserve to be reamed a new asshole mid lumbar.

You're suggesting Real Estate Fraud versus people not reading the clause of ARM on their mortgage contracts. The individual mortgage issues is due to faults upon the companies for lending to bad credit risks for the purpose of making money as well as the individuals attempting to own things they can't afford.

MEGA JESUS-SAMA
29th January 09, 11:20 PM
If people had just stolen all that shit instead of buying it on credit we wouldn't be in this situation.

Robot Jesus
29th January 09, 11:41 PM
You're suggesting Real Estate Fraud versus people not reading the clause of ARM on their mortgage contracts. The individual mortgage issues is due to faults upon the companies for lending to bad credit risks for the purpose of making money as well as the individuals attempting to own things they can't afford.


not fraud, but conned in the same way people who donate to peter popoff ministries are conned. finical institutions where able to alleviate much of the risk of subprime lending though securitization, turning the loan officer from someone charged with balancing risk and reward into a salesperson who could care less what the risks are. this is further compounded by the fact that those who would be utilizing the subprime mortgages are people with poor credit; people with poor credit are as a rule people who lack fiscal savvy.

What you say is correct, only suddenly there was an industry in making your scenario play out

WarPhalange
29th January 09, 11:42 PM
I think this is in large the fault of the school system here in America. Math requirements are really low and as such, people have no idea how interest works and go wild with credit cards.

Just a few weeks ago my mom and I were talking about credit cards and stuff and she says she has any sort of debt spread out between two cards and home a home equity loan (or whatever it's called). When she told me the percentages, they were something like 6%, 6%, and 4% for the home equity thing. I told her to dump ALL of that shit onto the home equity loan. She was scared to but I kept asking her to tell me what she was scared of. Was there some law or clause in the loan that I maybe just didn't know about? As far as I could tell, she just doesn't like putting all her eggs in one basket, even though this isn't a situation where that applies. 2% adds up. I'd rather have $20 than not have it.

Robot Jesus
29th January 09, 11:58 PM
in Alberta we have a partial credit course required for graduation called career and life management. it taught budgeting skills, resume composing, as well as a host of other things like credit management.

I found it insipid and boring as I already knew all of that. my cousin failed it four times ;it just shows that some people simply have difficulty with these things.

elipson
30th January 09, 01:53 AM
Your cousin probably didn't go. That's the only way people fail CAPP classes.

Equipoise
30th January 09, 06:28 AM
in Alberta we have a partial credit course required for graduation called career and life management. it taught budgeting skills, resume composing, as well as a host of other things like credit management.

I found it insipid and boring as I already knew all of that. my cousin failed it four times ;it just shows that some people simply have difficulty with these things.

Was he learning disabled or what?

KO'd N DOA
30th January 09, 11:08 AM
This "government buy out" should not be used to clear new train, boats and lastly highways right of ways for the infrastructure. Some one owns a property near a proposed alignment worth $500,000, gov buys a $1M dollar home in property, trades it. Saves the expropriation costs, and eveyone is happy. Very happy.

(on the flip side I heard a guy from New Orleans who said the gov wants to buy his family home for $7,000 because it is on a flood plane, pre-katrina it would have sold for $600,000. don't like that so much)

elipson
30th January 09, 12:56 PM
This "government buy out" should not be used to clear new train, boats and lastly highways right of ways for the infrastructure. Some one owns a property near a proposed alignment worth $500,000, gov buys a $1M dollar home in property, trades it. Saves the expropriation costs, and eveyone is happy. Very happy.
This made very little if any sense. You want the government to build roads over existing houses? Sounds like a good idea, except that toxic mortgages are likely spread all over a region and not nicely lined up next to a two lane highway that needs to be a four lane.

"Some one owns a property near a proposed alignment worth $500,000, gov buys a $1M dollar home in property, trades it."
Huh? Who would the government be "trading it" to? I have no fucking idea what this sentence is suggesting.

Cullion
30th January 09, 02:17 PM
Having the government buy up toxic mortgages was a mucho good idea 6 months ago.

Lol.



It doesn't seem like the financial markets are in danger of siezing up anymore.

Lol.



I wouldn't necessarily oppose help for mortgage holders, but it seems like almost everyone who was in a helpable state will be covered by the existing programs. Most of the people I know who are losing their houses now aren't losing them because they can't pay. Just that their home values are so far down that it doesn't make any sense for them to keep making payments.

And thats beyond the ability of the government to do much about.

Not at all. They could go on a wild, inflationary spending spree that pushed up home prices again. But of course that would lead to other problems.

KO'd N DOA
30th January 09, 02:49 PM
Okay - I will go clearer.

In order to undertake massive government financed 'make america work' projects you need the land. Think Pyramids, Great Wall, Panama Canal, WWII, Moon Landing, ... or more likely, build roads, bridges, tunnels, you need to get control of the land. (you're in BC. does Sea to Sky or 2010 mean to tree huggers there?)

When the government takes over the toxic mortgages this will provide them a whole pool of cheap places to offer to the displaced people. Win Win. China didn't do so well with the displaced millions at the 3 gorges dam. Lesson learned.

Cullion
30th January 09, 02:50 PM
You're an idiot.

Cullion
30th January 09, 02:52 PM
MJS actually had the most intelligent thing to say in this thread so far.

KO'd N DOA
30th January 09, 03:26 PM
You're an idiot.

Your a toxic poster.

elipson
30th January 09, 04:28 PM
Woa I agree with Cullion. You're post actually seemed less dumb when it was gramatically fucked up.

Any public works projects will probably NOT displace huge numbers of US citizens, especially not in the way China did with their mega-dam project.


does Sea to Sky or 2010 mean to tree huggers there? This reference also makes little sense, but I will assume you meant to say "what does..." and to which the answer is not really all that much. BC has some of the best foresting practices in the world, and the tree huggers seem to be contained on Van Island protecting the old growth rainforests. The Sea to sky and 2010 has a much greater impact on poverty rights idiots in Vancouver who know fuck all about anything.

Robot Jesus
30th January 09, 04:51 PM
Was he learning disabled or what?


I would describe her as average. when i took the course alot of people struggeled with it.

KO'd N DOA
30th January 09, 04:54 PM
Okay,

This is a mortgage thread, not on toxic mortgages, on brownfields or other abandoned sites.

However...In order to rekindle the economy you need to inject billions. But in order for the billions to not go to buying Plasma screens made oversees and video games, there needs to be a real stimulus package instead of doling out money- which is being debated now- the stimulus package will include bank bailouts and the taking over of toxic mortgages...

Now so we do not have an epidemic of tourching buildings for the insurance money, something needs to be done. Why not trade them around.

Look, I own a house that was valued at 350K, now it has lost the 2008 value, however now a house that was valued at 450k last year goes for 350k but was bought on toxic mortgage, why not offer me the chance to take over the 450k mortgage in a trade up. It is a lateral trade, I make the payments, and WHEN the market goes up, I benifit, if it tanks, my risk.

Incentive me, and I will transfer, my house can then be traded down ward.

Instead of just sitting on the properties that are in receivership, the government can get a bit creative.

Cullion
30th January 09, 05:29 PM
You're not going to 'inject' any money into the economy like that. You're going to take money from some participants and give it to others, via governmental bureacracy.

The rest of your post is still idiocy.

KO'd N DOA
30th January 09, 05:35 PM
You're not going to 'inject' any money into the economy like that. You're going to take money from some participants and give it to others, via governmental bureacracy.

The rest of your post is still idiocy.

Money moving around and not leaving the country, regardless of the mechanism, is greasing the wheels of the economy.

Cullion
30th January 09, 05:43 PM
No it isn't. It's having a bureacracy take it from some people, spend some of it on administration and then give it away to others because somebody's decided that what you need to get out of this mess is for people to save less. When you already know that the problem was caused by people not saving enough.

That's why this part of what you're proposing is stupid.

The rest of your proposal is simply a way of asking the banks to write off debts in proportion to the amount that the assets they are secured on has decreased in value.

They are already having to do this and that is why many are now trading whilst technically insolvent (but concealing it as much as possible) whilst screaming for bailout money.

What you are asking your government to do is disincentivise Americans from saving or being prudent, and disincentivse foreigners from lending you money, just as you most desperately need a good credit rating because the 'stimulus' plan involves the government spending more just as tax receipts are going down.

You are asking for a viscious spiral towards hyperinflation and/or federal bankruptcy.

KO'd N DOA
30th January 09, 05:50 PM
So you might be smarter than my paperweight afterall...

...I'll get back with plan B soon.

Feryk
30th January 09, 06:20 PM
You are asking for a viscious spiral towards hyperinflation and/or federal bankruptcy.


You are the guy who gives away the ending of The Usual Suspects, aren't you?

HappyOldGuy
30th January 09, 06:29 PM
The moral hazard of making vacuous moral hazard arguments is well known to the fans of the story known as, "The Boy Who Cried Wolf."

Cullion
30th January 09, 06:32 PM
HOG, you're the guy who expected the DJIA to settle around 10,000 aren't you?

Look, this isn't about 'confidence' (otherwise known as keeping quiet and hoping it will all be ok whilst digging yourself deeper into trouble, or 'whistling past the graveyard'). This is about math.

HappyOldGuy
30th January 09, 07:00 PM
HOG, you're the guy who expected the DJIA to settle around 10,000 aren't you?

Look, this isn't about 'confidence' (otherwise known as keeping quiet and hoping it will all be ok whilst digging yourself deeper into trouble, or 'whistling past the graveyard'). This is about math.

No. I don't remember ever making a prediction here. On another board I predicted back in the late fall that it would bottom out like a bouncy ball around 8400. Obviously it's bounced a bit lower than that, but given several months, that wasn't bad.

And no, this really isn't about math. Unless you are talking about KO'd idea, which is of course silly.

elipson
30th January 09, 07:03 PM
So waht do you think Cullion about the bad bank idea? It would free up these idiot banks so they start lending again.

Cullion
30th January 09, 07:36 PM
It's a stupid idea because the root of the problem is that the populace are already in too much debt. Buying bad debts off all the banks is just another way of transferring money from the general population to the bankers who made the stupid loans, so you'd simply be transferring the costs from the individual private institutions to the general public, who are already overly indebted.

This plan amounts to: The banking system is collapsing because people are too deep in debt, so lets give the people who made the loans some more of the general publics' money, so those overly indebted people can borrow more shortly before getting hit by a steep increase in taxes and/or a steep reduction in government benefits. Absurd.

HoG, I speciically recall you saying you thought that you thought the Dow was overvalued but that 10,000 was about it's correct level. That was a pipe dream on your part not based on any calculations. You just picked a number out of the air that seemed 'reasonable but not too severe'. This was around the same time you were asking for advice about what to do with your 401k.

You now feel more confident about it all because a moderate socialist is in power and you got a government job. I'm glad for you because we argue a lot but I want you to do ok and this is a good way to be safe, but you're still engaging in wishful thinking about the broader economy.

The Dow will bottom when it's dividend yield is about 7-8%. And that will happen when dividends have dropped quite a way as well as stock prices. You're a way off yet. Don't look for a time frame, look for it hitting 6% before you buy again, no matter how far it looks like it's already dropped.
I would be dishonest if I tried to give you a figure for the Dow, or a number of months/years to wait, but I will stand by that dividend yield as a marker for what you should look for.

HappyOldGuy
30th January 09, 07:52 PM
Your specific recollection is wrong.

http://www.sociocide.com/forums/showpost.php?p=1346692&postcount=2

The close of business the day before I made that post, the Dow was at 8450.

Edit: It may be confusing because the dow shot up about 1000 points the day I made that post, so if you read it later, you might have thought I meant the higher number.

Edit2: I also don't have a government job. I applied for one but it fell through. Your memory is going old man.

HappyOldGuy
30th January 09, 08:04 PM
Rather than do an edit3. Do you mean dividend yield literally? Or do you mean annual return? If you mean dividend yield literally, you need to get back in the tardis and come back to the present day.

elipson
30th January 09, 08:07 PM
You're assuming that getting banks to loan will only mean they are loaning to stupid people.

There is a big population of consumers and businesses who are smart with their money, but can't borrow the money they need for the regular and intelligent day to day business because the banks are all playing possum. Do you believe that once the banks start loaning again, they will immediately start making bad car loans and sub-prime mortgages again? Honest question.

Cullion
30th January 09, 08:16 PM
Rather than do an edit3. Do you mean dividend yield literally? Or do you mean annual return? If you mean dividend yield literally, you need to get back in the tardis and come back to the present day.

I mean dividend yield of the whole index averaged, not return. That's how far I believe it has to fall. And don't get at me about my memory. I get all the important stuff and I have long-term perspective that you youngsters just don't appreciate yet.

Wounded Ronin
30th January 09, 08:19 PM
How about .....

Forcing the fucktards that made the loans to start with, to Poeple that never had a snowballs chance in hell of repaying them, to repay the money .

Hell if the Govt. is prepared to bail out companies that made bad decisions , then why not individuals too . Surely that shit is unconstitutional or something .

I think all these white collar criminals should be sent to prison so that the "regular" inmates can play with them.

Cullion
30th January 09, 08:27 PM
You're assuming that getting banks to loan will only mean they are loaning to stupid people.

No, I'm not. I'm assuming that banks will still loan to people who their own actuarial statistics tell them are a good risk, and that they still do make such loans.

I'm saying that in an actuarial sense, the majority of most western populations now represent a bad credit risk (even the middle class people who've been paying on time) and that trying to force them to keep lending at the same volume will simply require them to either make bad loans or suck wealth from other parts of the economy in subsidy.

The uncomfortable part of this is that most of us think we are in the 'smart people' group, just because we followed the rules, to the letter, that the banks gave us. It doesn't work like that.



There is a big population of consumers and businesses who are smart with their money, but can't borrow the money they need for the regular and intelligent day to day business because the banks are all playing possum.

This is where I believe you're wrong. There is a big swathe of the population who've been stupid with their money but because they've kept up payments and followed all the written rules their bank gave them about how much they could borrow without lying to get a bigger loan, have deluded themselves that they've been prudent.

They haven't.

They've been bidding against each other with artificially cheap credit for over a decade, and in the process have required more credit because they've been bidding up the prices of the things they've needed credit to buy. The rules they were working to were given to them by the same banks whose management had a short-term incentive to encourage the asset bubble in progress for that year's bonus.

We are now in the process of these inflated assets unwinding back to a reasonable value because the debt created to bid them up to that price is unservicable. For 'reasonable value', look at rental yields and ratios of average house price vs. average household income. Whilst factoring in declining income.



Do you believe that once the banks start loaning again, they will immediately start making bad car loans and sub-prime mortgages again? Honest question.

No, I don't believe that. I believe they will hoard all bailout money passed their way in whatever form it is passed until they see a market bottom using the same metrics I've just given you, and then they will start buying assets. Using money extorted from you by politicians who they managed to bribe/scare into believing that the world would end if a few businesses employing a tiny percentage of the workforce mostly based in New York and London were allowed to suffer the market consequences of stupid risk management policies.

I'm going to say it again. This is a heist.

Feryk
2nd February 09, 12:04 PM
Cullion;

I owe you an apology. I completely disagreed with you on a number of points during this decline. But on this, I agree with you.

The big banks are being bailed out of their bad behavior and when the guy in charge of getting the money to them under the TARP program was being questioned by congress, he could not answer where the money has gone, or if they were holding executive compensation in check, or any specific details.

This guy is shelling out $700B and doesn't know what happened to it. WTF?!?

The banks ARE holding onto the money. For exactly the reasons Cullion is mentioning. The game changed, and there is not a compelling enough reason for the banks to start lending again. And when they do, it won't be the landscape of easy credit that it has been. And OF COURSE they will use the money on their balance sheets to acquire new assets at rock bottom prices. So would I. So would you.

There can and should be accountability measures in place for this stuff, but I believe it was all done so quickly, that no one had the time to add that stuff in. Go figure.

Cullion
2nd February 09, 07:33 PM
Congressmen were being told that if they didn't bail out the banks then the ensuing economic chaos would require martial law. That's how nasty the scare tactics were.

This is not 'stabilisation', this is an ongoing robbery.

Feryk
3rd February 09, 03:39 PM
I suppose I shouldn't be surprised. In a crisis, instead of people pulling together for the common good, they are all actively trying to chisel out what's in their own short term best interest. Fucking awesome.