Economics business.The Sub-prime Crisis. How bad is it?

[Moontanman]

The trillion $ ++? bailout

What if. . .

 

Instead of giving the money to the criminals and clowns who devised this system and hoisted it on the world. . . shaking the foundations of our economic system. .

 

we. . .gave the money to all the stressed mortgage holders to pay off their mortgages completely.

Home ownership in USA soars and the money Then goes/gets back to bail out the corporate crooks?

 

Only a minor diversion of the money flow surely . . .but what a difference that would make.

 

Yes i would like to know the answer to that as well, why not bail out the people who are loosing their homes? Not everyone is a lay about who took out a huge loan with no income. Why not bail out these people so they can have a house and put money back into the economy instead of bailing out the banks so they can give their greedy pig managers golden parachutes?

[questor]

It is easy to criticise. The real question is...What are we (and the world ) going to do? Some seem to think we can just print money to give out whenever we need it. Think of how this would roil all the countries holding dollars as benchmark currency. Everyone is going to be hurt in this crisis. Wall Street will be reconfigured, punished, and regulated. It would be nice to punish only those responsible, but many bear the blame. I would be for finding a way to recover money from the perpetrators, but the Ponzi scheme

is too complex.

[pgrmdave]

Yes i would like to know the answer to that as well, why not bail out the people who are loosing their homes? Not everyone is a lay about who took out a huge loan with no income. Why not bail out these people so they can have a house and put money back into the economy instead of bailing out the banks so they can give their greedy pig managers golden parachutes?

 

Most of the stock of these companies is likely held by retirement funds, not 'greedy pig managers', so bailing them out helps more average Americans than anybody else. In addition to which, the collapse of a large financial institution has implications everywhere - it lowers the liquidity of the market so that there's less money to be given to people who need it, including small business owners, which employ the majority of Americans. While I think that there is a need to help people who legitimately lost their home through no fault of their own (i.e. - they didn't take a loan which they were clearly not qualified for), I don't think that bailing them out would do much but put more money into the banks that are failing.

[Michaelangelica]

Spot on? How so?

 

I don't think you understand the exact nature of what's going on with the US companies (or other countries for that matter) that are failing.

 

There's no single place where you can point a finger with this. Everyone is to blame....from the lendee that decided to get a mortgage for a $300,000 house with $30,000/yr income, to the lender that approved it, to the whole system that allowed it. It's not an easy fix, and it's far from over.

 

Perhaps it's about time to let banks be banks and market companies be market companies. :shrug:

Really? Please itemise my ignorance so I can better reply to your insulting offhand remark.

[Michaelangelica]

Yes i would like to know the answer to that as well, why not bail out the people who are loosing their homes? Not everyone is a lay about who took out a huge loan with no income. Why not bail out these people so they can have a house and put money back into the economy instead of bailing out the banks so they can give their greedy pig managers golden parachutes?

 

I think this would be a much 'juster' solution that giving the rich carpetbaggers a free ride with sub-prime- after all the pain and anxienty and angst they have caused. I am surprised there is no class action for "mental cruelty" started among sub prime mortgagees yet.

 

However the is another class of mortgages- the leveraged ones- which would have Wall St Sh**ing itself if you suggested they get their money back via the mortgagee. Many mortgages might be leveraged 30 or more times (who knows?)

 

Are there many to blame??

Firstly the federal reserve for flooding the economy with money chasing itself.

2. The promoters and salespeople of the sub prime financial community

3 lack of Government regulation for financial crooks.

Who else?

But the innocent are definably the sub-prime mortgage holders. Stupid and credulous maybe, but not guilty of anything else.

It would tickle my sense of justice if they got a free house out of it all.

[freeztar]

Really? Please itemise my ignorance so I can better reply to your insulting offhand remark.

 

I didn't mean to insult you and I'm sorry that I did.

 

Allow me to rephrase...

 

The "mortgage crisis" is not as simple as saying that the fat cats pulled the wool over the eyes of the public and now they are making away scot-free with no detriment because the gov't is bailing them out.

 

First of all, the market needed (still needs) serious help. If no action was taken by the US gov't, the situation would be a lot worse in the future. The "fat cats" did not make out with a whole bunch of money. In fact, several reputable companies have collapsed (eg. Merril Lynch, Lehman Bros. :shrug: ). A lot of American's savings are tied into the market as well.

 

Also, I'm tired of hearing that the people who took the mortgages are the victims in this economic upheavel. They were not forced into their mortgage and are just as much responsible as those people that gave the mortgages. If you gamble, you better be prepared to lose. People might say, "well, they didn't know any better". My answer to that is "Sucks for them". Don't sign a peice of paper unless you know what you are getting into. Harsh? Perhaps, but reality often is.

 

Imho, lack of Gov't regulation is probably the biggest culprit. I'm not a big fan of gov't regulation in general, but situations like this empasize why some gov't oversight is prudent.

[pgrmdave]

I like hating on the rich as much as the next person, but there are some companies, and the big investment banks are in this category, that are so important to our economy, and indeed the world's economy, that if they were to suddenly go bankrupt it would cause major problems, even for those of us who aren't rich. As much as I don't like it, these companies need to be helped, if only for long enough to have an orderly, slow sale of all of their assets.

 

What I'd like to see are regulations that prevent any company from being in this position again, so that there's no company so integral that its failure would bring down the economy.

[Donk]

... I'm tired of hearing that the people who took the mortgages are the victims in this economic upheavel. They were not forced into their mortgage and are just as much responsible as those people that gave the mortgages. If you gamble, you better be prepared to lose. People might say, "well, they didn't know any better". My answer to that is "Sucks for them". Don't sign a piece of paper unless you know what you are getting into. Harsh? Perhaps, but reality often is.

Ain't that the truth! Let's hope Congress checks Paulson's piece of paper very carefully! Spotted elsewhere:

"No time to to read all that paperwork - just trust me. It's a great deal, and the best you're going to get." I don't know if Paulson ever sold subprime mortgages, but he sure knows the script!

[freeztar]

Let's hope Congress checks Paulson's piece of paper very carefully!

 

If they have enough time to...

[Donk]

If they have enough time to...

There's always time.

 

If somebody tells me that a deal has to be signed NOW,that's when I back off. Read it through carefully. Sleep on it. I've saved myself a lot of money by doing that.

 

Who says it's urgent? Paulson and the administration do. This administration has a long history of - to put it politely - hype. Pushing people into decisions without giving them all the facts. And didn't Paulson see it coming? If not, he got it badly wrong - who can say he's got it right now?

 

Or maybe he did see it coming. If so, all his statements over the past year have been propaganda to calm the markets. That doesn't mean he's lying now, but it would show that truth is a secondary consideration for him.

 

Either way, I hope the people who have to make the decision take all the time they need to get it right.

[Cedars]

The "mortgage crisis" is not as simple as saying that the fat cats pulled the wool over the eyes of the public and now they are making away scot-free with no detriment because the gov't is bailing them out.

 

First of all, the market needed (still needs) serious help. If no action was taken by the US gov't, the situation would be a lot worse in the future. The "fat cats" did not make out with a whole bunch of money. In fact, several reputable companies have collapsed (eg. Merril Lynch, Lehman Bros. :shrug: ). A lot of American's savings are tied into the market as well.

 

Also, I'm tired of hearing that the people who took the mortgages are the victims in this economic upheavel. They were not forced into their mortgage and are just as much responsible as those people that gave the mortgages. If you gamble, you better be prepared to lose. People might say, "well, they didn't know any better". My answer to that is "Sucks for them". Don't sign a peice of paper unless you know what you are getting into. Harsh? Perhaps, but reality often is.

Baloney...

 

Look up these failing companies past profit reports. This fiasco stinks of Enron and Worldcom. Bail them out? I dont think so. Let the market do what a free market is supposed to do. If it collapses then we rebuild from the lessons learned. Is there a responsiblity to be passed around? Sure theres some that falls on the consumer, but mostly its the pyramid scheme passed off as a good investment by suits at desks pushing paper.

 

"New York -

 

In the headlines this midday, Lehman Brothers says annual profits were up 38% from last year's, driven by robust investment-banking activity.

 

For the year, Lehman (nyse: LEH - news - people ) earned $3.3 billion, compared with $2.4 billion in 2004. Revenue surged by more than 26% to $14.63 billion. The results topped analysts' expectations. Lehman says a flurry in M&A deals during the fourth quarter helped drive investment banking revenues higher. "

 

Lehman Bros. Annual Profit Up 38% - Forbes.com

 

And How much does Lehman need to bail itself out?

[freeztar]

I'm not sure you realize it or not, but Lehman Bros. has filed for bankruptcy and is now liquidating its assets.

 

On September 15, 2008, the firm filed for Chapter 11 bankruptcy protection; the filing marks the largest bankruptcy in U.S. history.[2] The following day, Barclays plc announced its agreement to purchase, subject to regulatory approval, Lehman's North American investment-banking and trading divisions along with its New York headquarters building.[3][4] On September 20, 2008, a revised version of that agreement was approved by Judge James Peck.[5]

Lehman Brothers - Wikipedia, the free encyclopedia

[Cedars]

 

Also, I'm tired of hearing that the people who took the mortgages are the victims in this economic upheavel. They were not forced into their mortgage and are just as much responsible as those people that gave the mortgages. If you gamble, you better be prepared to lose. People might say, "well, they didn't know any better". My answer to that is "Sucks for them". Don't sign a peice of paper unless you know what you are getting into. Harsh? Perhaps, but reality often is.

 

hmmm... the american dream of owning your own home. Smooth sales pitch of buy now pay later. Lookie at how Home Values are going Up Up UP!

 

Sucks for wall street too. Sucks for all those investors who put money into the dream of early retirement from borrowing their money to the markets.

 

Let the market chips fall where they may. I sure cant afford higher taxes to bail out market mistakes. Good thing privatizing s.s.i. didnt get far. Oh wait, it just might end up going to wall street after all.

[Cedars]

I'm not sure you realize it or not, but Lehman Bros. has filed for bankruptcy and is now liquidating its assets.

 

 

Lehman Brothers - Wikipedia, the free encyclopedia

So did enron:

Enron - Wikipedia, the free encyclopedia

[Michaelangelica]

hmmm... the american dream of owning your own home. Smooth sales pitch of buy now pay later. Lookie at how Home Values are going Up Up UP!

 

Sucks for wall street too. Sucks for all those investors who put money into the dream of early retirement from borrowing their money to the markets.

 

Let the market chips fall where they may. I sure cant afford higher taxes to bail out market mistakes. Good thing privatizing s.s.i. didnt get far. Oh wait, it just might end up going to wall street after all.

From some of Buffy's links

 

“Mr. Howard made it clear to the mortgage broker that he could not read or write, but his loan application erroneously claimed he had had 16 years of education.” —Center for Responsible Lending report, “IndyMac: What Went Wrong?” June 30, 2008

 

“That was your homework—to watch Boiler Room.”—Lisa Taylor, Ameriquest loan agent, quoted in the Los Angeles Times, February 4, 2005

 

“It was unbelievable. We almost couldn’t produce enough to keep the appetite of the investors happy. More people wanted bonds than we could actually produce.” —Mike Francis, executive director, residential mortgage trading desk, Morgan Stanley, quoted in “The Giant Pool of Money,” This American Life, May 9, 2008

CJR: Boiler Room

 

Not crooks? read this.

What a crock. Kudlow blames it all on the liberals. What a joke this man is. This is another case that proves conservatism is dead. Of course not everybody can afford a home. Sorry, the irresponsible lending practices went on because it kept Bush’s economy chugging along for years before it crashed and burned. The ownership society Bush and conservatives called it. Morning Joe actually takes him apart for even suggesting that low income families are the root cause of our economic problems in the housing market. It’s up to the lenders to qualify people for loans. PERIOD.

 

I watched this crisis unfold and saw people walking into fairly expensive homes in Venice, CA with no down payments and either low or no interest loans. Yes, I’m a renter now. I couldn’t believe my eyes when the property values skyrocketed (went up to 1 million) because of these lending practices. People can apply for a loan all they want, but that does not automatically mean they should be approved. That’s up to the lenders. Liberal guilt is never an issue and a lie, Mr Kudlow. They aren’t supposed to hand over thousands of dollars without knowing that they will be paid back. The predatory lenders made boat loads of cash at will with a conservative philosophy in hand. Just ask your best friend for a hundred bucks and see what happens…Naomi Klein writes: Disowned by the Ownership Society

Crooks and Liars Larry Kudlow blames Congress and low income families for housing crisis: ‘Guilty Liberal Consciences’ Forced Banks To Make Bad Loans

 

One of Buffy's links pointed out that the Feds could actually continue making money out of the whole process by perpetuating the scam

Sorry Can't find it now; but is cynicism my middle name?

 

PS

pss

NAB in line for $US1bn of rescue package

By Dennis Shanahan and David Uren

The Australian

September 25, 2008 12:00am

NAB

'Take advantage of any opportunities' ... NAB may seek to recoup losses from its exposure to US property markets / AFP

NATIONAL Australia Bank may seek to offload its $1 billion exposure in US property markets to the massive banking rescue being mounted by the US Government.

 

The increasingly global nature of the crisis was underlined yesterday with the Reserve Bank entering a $US10 billion ($12 billion) deal with the US Federal Reserve to supply US currency to banks operating in Australia, The Australian reported.

http://www.news.com.au/business/story/0,27753,24399832-14334,00.html?referrer=email

[Cedars]

One of Buffy's links pointed out that the Feds could actually continue making money out of the whole process by perpetuating the scam

Sorry Can't find it now; but is cynicism my middle name?

cynical or correct?

 

http://www.nytimes.com/2008/09/25/business/25value.html?_r=1&oref=slogin

[freeztar]

Here's a question. Since the $700B plan is receiving a lot of criticism here, what do you suggest instead?