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Author Topic: Bailout?  (Read 23070 times)

John Roberts {JR}

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Re: Bailout?
« Reply #10 on: September 24, 2008, 12:08:13 PM »

Not that I saw any real points in there to respond to..  Phil's response is thoughtful, and I doubt this is any kind of power grab or self aggrandizement for Bernake and Paulson. I'll bet he wishes he was any where else right now.

I don't find blame games very productive, but the root cause goes way back many years. After the dot com bubble burst, we (Greenspan) left the spigot open too long to pump up the economy. Housing became the engine for this post dot com economic growth, so congress kept throwing fuel on that fire, while getting some social engineering on the side, putting low income people into homes. Unfortunately they didn't stop when they ran out of low income people who could actually afford to buy homes.

There is plenty of blame to go around, and we will make some completely different mistake next time.

JR  
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John Halliburton

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Re: Bailout?
« Reply #11 on: September 24, 2008, 12:14:11 PM »

John Roberts  {JR} wrote on Wed, 24 September 2008 11:08

Not that I saw any real points in there to respond to..  Phil's response is thoughtful, and I doubt this is any kind of power grab or self aggrandizement for Bernake and Paulson. I'll bet he wishes he was any where else right now.

I don't find blame games very productive, but the root cause goes way back many years. After the dot com bubble burst, we (Greenspan) left the spigot open too long to pump up the economy. Housing became the engine for this post dot com economic growth, so congress kept throwing fuel on that fire, while getting some social engineering on the side, putting low income people into homes. Unfortunately they didn't stop when they ran out of low income people who could actually afford to buy homes.

There is plenty of blame to go around, and we will make some completely different mistake next time.

JR  


Perhaps I'm upset that there is a long track record of screw ups from all branches.  The bottom line is we won't know who is right for a while-I can only hope that Paulson isn't pulling any fast ones for the administration, Congress will somehow manage to not muddle things up, and that the business side will manage some self regulating and wiser business courses to get back on track.

John
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John Roberts {JR}

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Re: Bailout?
« Reply #12 on: September 24, 2008, 12:53:45 PM »

John Halliburton wrote on Wed, 24 September 2008 11:14



Perhaps I'm upset that there is a long track record of screw ups from all branches.  The bottom line is we won't know who is right for a while-I can only hope that Paulson isn't pulling any fast ones for the administration, Congress will somehow manage to not muddle things up, and that the business side will manage some self regulating and wiser business courses to get back on track.

John



There is much to be upset about, but IMO now is a time to focus on unfreezing our financial system. When banks won't loan to other banks, we have trouble right here in River city.

There is merit to Ron Paul's concerns about price fixing and manipulation on these questionable assets. My understanding is they are talking about managed auctions to discover fair (or reasonable) market values, but this can't be accomplished in a crisis environment.

It is easy to see how we got here with excesses from trying to engineer the economy to avoid the regular recessions we routinely experience. There are unintended consequences from pumping liquidity into the market. Bubbles happen even without excess liquidity, but excess liquidity almost guarantees them.

I trust we will be smarter next time. It is difficult for politicians to convince voters that recessions serve a useful function.. As the world economies get more coupled  to each other, these ebbs and flows may occur geographically, which may be a win for some and lose for others. I would love to see an always growing economy be haven't yet figured out how to do that.

Life is an IQ test, that can't be graded on a curve. There will always be winners and losers.

JR

PS: I don't see what Paulson has to gain... I suspect he is long past the point where he has more money than he can comfortably spend. And he doesn't strike me as needing more accomplishments for his bio.  For that matter most at the highest levels in government service are not doing it for personal gain, while most congressmen manage to magically turn into very wealthy people despite modest paychecks. You do the math on that. In mid level government service there is no doubt some benefits from influence and power. Congress controls spending so I guess some money just sticks to them.  Rolling Eyes
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Mike Butler (media)

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Re: Bailout?
« Reply #13 on: September 24, 2008, 01:25:01 PM »

John Halliburton wrote on Wed, 24 September 2008 12:14


...I can only hope that Paulson isn't pulling any fast ones for the administration, Congress will somehow manage to not muddle things up...

Start praying now. They are already tripping over each other demagoguing this one, with the head pontificator being my home state's very own Chris Dodd, who as Senate Banking Committee Chair, conveniently overlooked the ongoing implosion of Fannie/Freddie, while sitting on his sweetheart jumbo mortgage he got from Countrywide.

It's easy to demagogue this one because it is "for the rich," which is the evergreen "populist" battle cry. But while it may give some sadistic pleasure to extract revenge against the suits whose paychecks we'll never see the likes of, it will be cold comfort to the employees of that company manufacturing all those new coffee machines McDonald's was going to buy on credit, and to the rest of the workforces around the world that will be furloughed when credit dries up and business loans get denied. That's to say nothing of what happens to jobs when consumer credit disappears and car loans can't be had.

What's ironic is that it's "the poor" who are at the heart of the housing/mortgage meltdown and now whose political surrogates are crying out their request for a bailout. I guarantee that none of the "community organizers," who pressured the lending industry to throw out their underwriting manuals and become financiers for the indigent, are going to kick in out of their own pockets to help with a situation that they helped to create. That is, not any more than the rest of us are paying for it.

And please don't anyone get me started on how when I was in the industry, Fannie and Freddie represented the "golden standard" of residential lending, synonymous with fastidious underwriting designed to assure that (at least 99% of) loans went only to those who had the ways and means to pay their debts along with a history of doing so. Oh wait, I just got started, didn't I?  Shocked

JR and Phil have shared some insightful thoughts in much greater detail than I am inclined to write. I only hope that if the powers that be go ahead and do the deal, it works--or if they don't do it, the bloodletting is brief.

Prayer books, anyone? (Ooops, no religion, sorry!)
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Dave Dermont

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Re: Bailout?
« Reply #14 on: September 24, 2008, 01:47:27 PM »

I won't pretend that my public high school edumacated mind completely understands the complexity of the problem, but here's my understanding of it.

Let's see, a mortgage broker, after telling the appraiser what the appraisal "needs to be", does not even check to see if the buyer is employed, much less how much he makes, signs some poor schmuck to an ARM when rates are at record lows.

You know, I am not an economist, but I can figure out what direction interest rates will most likely go when they are at record lows.

It was as if "Mortgage Broker" was becoming the "Vacuum Cleaner Salesman" of the new millennium.

Who cares if the guy can pay the loan back, the thing will be sold before the ink is dry. Make the sale. Get your piece of the action.

A few guys go into foreclosure, but it's just a "softening of the market". A few more get foreclosed, and it's a "Market Adjustment".

Then the bottom falls out, taking banks and insurance companies with it, and it's a "Crisis". Evidently, the seriousness of a crisis is in direct proportion to the salaries of the people it effects.

I get this whole Risk/Reward Free Market Economy deal, but it'd be nice if you would practice what you preach. You should not be able to have it both ways.

If it's a screwing you deserve, it's a screwing you should get.

Please excuse my Congressman for taking up everyone's valuable time to let you know that the constituency is kinda pissed.

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Dick Rees

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Re: Bailout?
« Reply #15 on: September 24, 2008, 01:51:47 PM »

DEAR AMERICAN:
> I NEED TO ASK YOU TO SUPPORT AN URGENT SECRET BUSINESS RELATIONSHIP  
> WITH A TRANSFER OF FUNDS OF GREAT MAGNITUDE.
> I AM MINISTRY OF THE TREASURY OF THE REPUBLIC OF AMERICA. MY  
> COUNTRY HAS HAD CRISIS THAT HAS CAUSED THE NEED FOR LARGE TRANSFER  
> OF FUNDS OF 800 BILLION DOLLARS US. IF YOU WOULD ASSIST ME IN THIS  
> TRANSFER, IT WOULD BE MOST PROFITABLE TO YOU.
> I AM WORKING WITH MR. PHIL GRAM, LOBBYIST FOR UBS, WHO WILL BE MY  
> REPLACEMENT AS MINISTRY OF THE TREASURY IN JANUARY. AS A SENATOR,  
> YOU MAY KNOW HIM AS THE LEADER OF THE AMERICAN BANKING DEREGULATION  
> MOVEMENT IN THE 1990S.
> THIS TRANSACTION IS 100% SAFE.
> THIS IS A MATTER OF GREAT URGENCY. WE NEED A BLANK CHECK. WE NEED  
> THE FUNDS AS QUICKLY AS POSSIBLE. WE CANNOT DIRECTLY TRANSFER THESE  
> FUNDS IN THE NAMES OF OUR CLOSE FRIENDS BECAUSE WE ARE CONSTANTLY  
> UNDER SURVEILLANCE. MY FAMILY LAWYER ADVISED ME THAT I SHOULD LOOK  
> FOR A RELIABLE AND TRUSTWORTHY PERSON WHO WILL ACT AS A NEXT OF KIN  
> SO THE FUNDS CAN BE TRANSFERRED.
> PLEASE REPLY WITH ALL OF YOUR BANK ACCOUNT, IRA AND COLLEGE FUND  
> ACCOUNT NUMBERS AND THOSE OF YOUR CHILDREN AND GRANDCHILDREN  
> TOWALLSTREETBAILOUT@TREASURY.GOV SO THAT WE MAY TRANSFER YOUR  
> COMMISSION FOR THIS TRANSACTION. AFTER I RECEIVE THAT INFORMATION,  
> I WILL RESPOND WITH DETAILED INFORMATION ABOUT SAFEGUARDS THAT WILL  
> BE USED TO PROTECT THE FUNDS.
> YOURS FAITHFULLY,
> MINISTER OF TREASURY PAULSON
>

Sad  Sad  Sad  Embarassed  Shocked  Shocked  Shocked  Confused  Confused  Confused  Rolling Eyes  Rolling Eyes
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dave stojan

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Re: Bailout?
« Reply #16 on: September 24, 2008, 02:22:38 PM »

I got a close up look at one of those mortgage bums (no, it ain't me - the missus & I raised 4 kids in a miniature hovel that was within our means and is scheduled to be paid off the same day the Aztec calendar says the world will end). He's a decent, hard working fella that got him a nice place out in the sticks and was making his payments regularly & on time. Suddenly the notice came he needed to pay over half again as much because the interest rate changed - hard times hit home. So what's the solution?

Obviously he was able to make the payments when the interest rate was reasonable, but when a Wall Street Whim takes a greedy turn for NO reason (I didn't see the FED or prime rates take wild jumps) I can only conclude it was a manipulation by the monied to create a huge impoverished & beholding class. Old man Potter from "It's a Wonderful Life" comes to mind. Anyway, a possible solution would be to refinance his mortgage at a rate he can afford - and if the government has to hold the note so be it. So why should he get a break & leave us poor chumps who always paid our own way basically holding his bag? Well, maybe we can get even by disallowing some or all of the home interest deduction he can claim - thus he actually helps pay for his own bail out. Liens and stipulations could be added to the refinance to where John Q. Public shares in any eventual gains and/or collects penalties from participants in case of loss.

As for Wall Street there are some old tiny tariffs that were eliminated that could be brought back to finance its own and other recoveries & help pay for the societal infrastructure upon which its existence depends.

Bottom line: avoid the Kool-Aid. It's been served up & consumed way too much for way too long. I think we all want a prosperous and virtuous America, one that the history books someday shall say led the way to global Utopia. We are not alone, so why despair as if we are?



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John Roberts {JR}

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Re: Bailout?
« Reply #17 on: September 24, 2008, 02:34:40 PM »

Dave Dermont wrote on Wed, 24 September 2008 12:47

I won't pretend that my public high school edumacated mind completely understands the complexity of the problem, but here's my understanding of it.

Let's see, a mortgage broker, after telling the appraiser what the appraisal "needs to be", does not even check to see if the buyer is employed, much less how much he makes, signs some poor schmuck to an ARM when rates are at record lows.



That is pretty close to how bad it got in the latter days, but the only reason they were able to sell those "liar loans" (sure I have a good job and can pay), because there was a huge vacuum from above willing to buy those funny loans. Not to sound like a broken record but for any who don't get it or don't believe me.. Fannie + Freddie+ congress fighting off regulators who tried to reign it in caused that situation. There were also oversight bills defeated in congress. Some people in congress got it but didn't have the power to stop it. The people who took the loans surely have some culpability. I wouldn't sign my name to anything like that casually.

Quote:

 I am not an economist, but I can figure out what direction interest rates will most likely go when they are at record lows.

Not so obvious, while they can't go below 0. They lingered near 0 in Japan for years fueling the "Yen Carry" trade (borrow cheap, loan for more).  I was pleasantly surprised that Bernake didn't lower and left it unchanged last week. In general they raise or lower in response to inflationary threat. Unfortunately they are politically motivated to lower to stimulate economic activity. I wish they would raise it to strengthen the dollar and avoid monetizing all this debt.
Quote:


It was as if "Mortgage Broker" was becoming the "Vacuum Cleaner Salesman" of the new millennium.

Who cares if the guy can pay the loan back, the thing will be sold before the ink is dry. Make the sale. Get your piece of the action.

A few guys go into foreclosure, but it's just a "softening of the market". A few more get foreclosed, and it's a "Market Adjustment".

Then the bottom falls out, taking banks and insurance companies with it, and it's a "Crisis". Evidently, the seriousness of a crisis is in direct proportion to the salaries of the people it effects.

I get this whole Risk/Reward Free Market Economy deal, but it'd be nice if you would practice what you preach. You should not be able to have it both ways.

If it's a screwing you deserve, it's a screwing you should get.

Please excuse my Congressman for taking up everyone's valuable time to let you know that the constituency is kinda pissed.




The congress are like monkeys dancing on a stick and pointing everywhere but at themselves, to keep the voters from figuring out the true cause of the problem IMO...IMO... IMO.

I believe the deal is already done and they're just posturing to save face and maybe win the next election by placating voters (sounds like it's working). Putting TV cameras in congress was the beginning of the end of thoughtful debate..The real negotiation occurred behind closed doors.

They repeated the $700 BILLION top line gross figure sound bite about 50 times today for the camera... " I'm totally shocked to learn the magnitude of this problem (we caused). " Once again that whole $700B is not going away.  Smart bond guys want a piece of the action in realizing the actual value in there. Buffet said he would buy it but can't raise $700B like the US Govt..

JR


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John Roberts {JR}

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Re: Bailout?
« Reply #18 on: September 24, 2008, 02:43:08 PM »

dave stojan wrote on Wed, 24 September 2008 13:22

I got a close up look at one of those mortgage bums (no, it ain't me - the missus & I raised 4 kids in a miniature hovel that was within our means and is scheduled to be paid off the same day the Aztec calendar says the world will end). He's a decent, hard working fella that got him a nice place out in the sticks and was making his payments regularly & on time. Suddenly the notice came he needed to pay over half again as much because the interest rate changed - hard times hit home. So what's the solution?

Obviously he was able to make the payments when the interest rate was reasonable, but when a Wall Street Whim takes a greedy turn for NO reason (I didn't see the FED or prime rates take wild jumps) I can only conclude it was a manipulation by the monied to create a huge impoverished & beholding class. Old man Potter from "It's a Wonderful Life" comes to mind. Anyway, a possible solution would be to refinance his mortgage at a rate he can afford - and if the government has to hold the note so be it. So why should he get a break & leave us poor chumps who always paid our own way basically holding his bag? Well, maybe we can get even by disallowing some or all of the home interest deduction he can claim - thus he actually helps pay for his own bail out. Liens and stipulations could be added to the refinance to where John Q. Public shares in any eventual gains and/or collects penalties from participants in case of loss.

As for Wall Street there are some old tiny tariffs that were eliminated that could be brought back to finance its own and other recoveries & help pay for the societal infrastructure upon which its existence depends.

Bottom line: avoid the Kool-Aid. It's been served up & consumed way too much for way too long. I think we all want a prosperous and virtuous America, one that the history books someday shall say led the way to global Utopia. We are not alone, so why despair as if we are?






The interest rate wasn't changed on a whim. It was in the contract he signed. His interest rate for the introduction period was artificially low and probably didn't even cover interest on the debt. I learned fractions and interest in grade school.

Get smart or suffer. Rule #1 when doing business understand who cares about your best interest... only you!

LIFE IS A FRIGGIN IQ TEST... THE GRADES WILL NOT BE CURVED.

JR


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dave stojan

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Re: Bailout?
« Reply #19 on: September 24, 2008, 02:56:35 PM »

John Roberts  {JR} wrote on Wed, 24 September 2008 19:43

His interest rate for the introduction period was artificially low and probably didn't even cover interest on the debt.


Yeah, a hair under 6% is artificially low and the mortgage company was fully justified in bumping it up to 10% 'cuz that's the going rate.  Rolling Eyes
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