Posted: Wed Jul 23, 2008 11:27 am Post subject: Re: Bush drops opposition; endorses housing bailout
aflurry wrote:
, it looks to me like the era between the wars was below the mean - how do you identify this as the mean point?).
I wasn't really referring to the mean price, but rather the mean method of originating mortgages, outlined in the ways I explained above. Although, if you look at the the mean price prior to WW2 and GD1 (from 1890 on), it is lower than the mean in the postwar boom, with a few exceptions.
Most of what I'm pontificating could be bunk, though, and we could see the advent of a 50 or 100-year mortgage product, thus "justifying" absurdly high real estate values with an E-Z™ monthly payment..
In that case, hello Japan! _________________ "It's called the American Dream because you'd have to be asleep to believe it."
Posted: Wed Jul 23, 2008 11:58 am Post subject: Re: Bush drops opposition; endorses housing bailout
Cashmere wrote:
All I can say to all of the fake conservatives and liberals out there who have, their entire lives, voted for bigger government . . .
You're about to get your bigger government - I just don't think you're going to be happy about the method of delivery.
I honestly don't know what this kind of comment means.... it seems like rhetoric specifically designed to provoke identity defensiveness without providing any content whatsoever.
On the one hand you have your anonymous internet cranks who seem primarily interested in declaring over and over how liberals have little bleeding hearts where their balls should be.
And on PO.com it comes bundled with a healthy dose of apocalyptic insinuation and "you will all burn for you liberal sins" posturing....
On the other hand you have opportunist "conservative" politicians in the service of business interests who have co-opted the idea of small government as a coding scheme for their project of not paying any taxes, not providing a living wage, creating unfettered monopolies, and owning everything around you.
Lucky for all parties, the myth of small government and the free market is like a mirage continually receding on the horizon, so the interneters will go on feeling superior, and the oligarchs will stay fed by convincing us all to stare longingly at that refreshing and continually untested illusion.
Posted: Wed Jul 23, 2008 12:07 pm Post subject: Re: Bush drops opposition; endorses housing bailout
A few questions spring to mind.
1) Am I right in thinking that $300bn will go a long way towards recapitalising the GSEs? Assuming they hold $5 trillion of mortgage debt and their cookie jars are empty, this will reduce their leverage to 17:1 or 6%, which depending on what they hold may be adequate for years to come.
2a) Is the whole provision being added to national debt immediately or will it be added as it is drawn down?
2b) Is this being added to national debt at all, or treated separately, similar to the UK government's continuing pretence over Northern Rock?
3) Could the effect on borrowing costs turn out to be non-catastrophic in the short to medium term? There were fears of a dollar and debt crisis if the US government were to back all that debt, but handing over a $300bn line of credit from the taxpayer and leaving the GSEs' status unresolved, while distasteful and the proverbial "thin end of the wedge", seems too small to be disastrous in isolation. The Northern Rock bailout was 2/3 that size (in terms of funding facility) in a far smaller economy.
In the long term, this screws the US even more deeply, but we knew that already. My current impression is that for now this will only be a few notches above unhelpful and will not trigger the crisis some feared.
Posted: Wed Jul 23, 2008 12:13 pm Post subject: Re: Bush drops opposition; endorses housing bailout
Twilight wrote:
A few questions spring to mind.
1) Am I right in thinking that $300bn will go a long way towards recapitalising the GSEs? Assuming they hold $5 trillion of mortgage debt and their cookie jars are empty, this will reduce their leverage to 17:1 or 6%, which depending on what they hold may be adequate for years to come.
Thoughts?
Maybe, but...
(emphasis mine)
Quote:
Fannie, Freddie Rescue Plan May Cost $1 Trillion, Bunning Says
By Michael McKee and Bryan Keogh
July 23 (Bloomberg) -- A government rescue of Fannie Mae and Freddie Mac would require taxpayers to pay ``way'' more than the $25 billion estimated by the Congressional Budget Office, potentially as much as $1 trillion, Senator Jim Bunning said.
Treasury Secretary Henry Paulson ``hasn't told us the truth about this bill,'' Bunning, a Republican from Kentucky, said in an interview with Bloomberg Television today. ``Why would you put in a backstop of unlimited amounts of money if you weren't going to need it.''
Paulson on July 13 asked Congress for authority to increase credit lines to Washington-based Fannie Mae and McLean, Virginia- based Freddie Mac, buy shares in the firms and give the Federal Reserve a ``consultative role'' in overseeing their capital requirements. The proposals are meant to restore confidence in the government-sponsored enterprises, which own or guarantee almost half of the $12 trillion of U.S. home loans outstanding.
...
Bloomberg _________________ "It's called the American Dream because you'd have to be asleep to believe it."
Posted: Wed Jul 23, 2008 12:16 pm Post subject: Re: Bush drops opposition; endorses housing bailout
Twilight wrote:
In the long term, this screws the US even more deeply, but we knew that already. My current impression is that for now this will only be a few notches above unhelpful and will not trigger the crisis some feared.
Thoughts?
I'm just watching US treasuries and the dollar very closely after this. I cannot see how those who hold dollars around the world will view this in a positive light. However, since it is basically a lose-lose situation now matter what path they chose, maybe all the stakeholders view it as the lesser of all evils, as you pointed out. I believe economic and financial fundamentals will still catch up to them eventually, however.
I personally think the dollar will continue its slide downwards and commodities will continue their march upwards until the Fed raises rates significantly, which it may do once it believes the credit hemorrhaging has stopped. I simply don't see how this is possible however with the quadrillion dollar derivatives market variable hanging out there and financial companies behaving like absolute maniacs.
Posted: Wed Jul 23, 2008 12:27 pm Post subject: Re: Bush drops opposition; endorses housing bailout
This is kind of funny (In a sort of receiving your execution order from a rigged trial kind of way).
We now have the US government on two fronts working to spike up inflation. One way with yet again artificially low interest rates, another with suppressed oil prices.
Two horribly thought out "solutions" to the worlds problem implemented back to back. Each capable of giving the global economic system a heart attack on their own. Together the results can't be anything short of cataclysmic
Posted: Wed Jul 23, 2008 12:38 pm Post subject: Re: Bush drops opposition; endorses housing bailout
Hence my "thin end of the wedge" remark if 6% were to prove insufficient due to the real credit risk in their books, or if they were to add to them, taking the majority of the mortgage debt market with government approval and becoming a taxpayer-backed toxic waste dump just as defaults peak. Then they would probably come asking for another few hundred billion dollars. However, after this kind of feast that would be years down the line and investors in dollars and short-dated US debt might not care enough to sell off? I would want immediate clarity on the GSEs' future business plan if I was holding anything longer-term though. If there is any hint of a plan to use them for garbage disposal... People do not like uncertain future obligations.
Posted: Wed Jul 23, 2008 12:43 pm Post subject: Re: Bush drops opposition; endorses housing bailout
The problem is, the stuff they're subsidizing with the $325 billion isn't worth Jack. Why would anyone spend $1 million for a rat infested shack in Oakland when they could just buy 222,000 gallons of gas and ignite it? _________________ People first, then things, then dollars.
There will be enslavement, cannibalism, & zombie invasions.
Posted: Wed Jul 23, 2008 12:55 pm Post subject: Re: Bush drops opposition; endorses housing bailout
aflurry wrote:
(On an unrelated note - the version of the chart i liked to above has the building cost index plotted as well. Can anyone shed some light on why that creeps up consistently over the century? I would have thought the opposite would be true, what with all the Caterpillars, etc. Is it labor costs? Building codes? House size?)
I can't speak for other areas of the country, but here in the Northeast, new construction stick built homes have scaled substantially in size, have larger garages, larger lots/acreage, more bathrooms and more luxury features like (tile/granite/hardwood/marble/fireplaces/vaulted ceilings/finished basements/air conditioning/hydronic heat/decks) which have added to the price.
Modern building/safety/fire/mechanical/energy/local codes, enforcement, inspections, licensing, zoning restrictions, deed restrictions, plus the rising costs of land, materials, hardware, labor and fuel have also added to the cost.
Even manufactured homes are quite large and have more luxury features these days. Features that were once considered luxury features like additional bathrooms, half baths and central air conditioning have become standard even in the low end market.
Posted: Wed Jul 23, 2008 12:59 pm Post subject: Re: Bush drops opposition; endorses housing bailout
It isn't right. As I said before, many of these defaults are from people who've just decided that they don't want to pay for their loans, especially since they've been hearing that mortgage bailouts are coming. I mean, why would John continue to pay $300,000 for a loan on a home that's now worth only $200,000 when Stacy across the street hasn't made a payment in over 3 months because she thinks the fed is going to substantially lower her payments on a home she happily agreed to pay full price for just a few years before? I'd call these people, the Looters. They're simple opportunists.
Their cut from the same cloth as those during the LA riots who didn't care a whit about any question of racism. They just wanted to get theirs. How many times did we see hundreds of people pouring out of stores with tv's and whathaveyou. The streets were filled with them. They saw an opportunity and they took it. Many, perhaps a majority of these home loan defaulters are doing just the same. On the back of the taxpayer. Opportunists.
Posted: Wed Jul 23, 2008 1:40 pm Post subject: Re: Bush drops opposition; endorses housing bailout
aflurry wrote:
Cashmere wrote:
All I can say to all of the fake conservatives and liberals out there who have, their entire lives, voted for bigger government . . .
You're about to get your bigger government - I just don't think you're going to be happy about the method of delivery.
I honestly don't know what this kind of comment means.... it seems like rhetoric specifically designed to provoke identity defensiveness without providing any content whatsoever.
Come on aflurry, you know me well enough to know that I wouldn't BS you like that. I never try to provoke a "response". I post my observations about the world around me. Those who choose, can read them. Those who don't, can ignore me.
My statement, above, is my observation of the world.
Liberals in particular, and 95% of "conservatives", have voted for bigger government virtually every chance they have gotten.
The main source of the current ills is government.
The Fed.
The Treasury.
The Massive Agencies.
So I repeat - for all of you tax and spend liberals and borrow and spend "conservatives" out there, you're going to get exactly what you deserve.
You may not, on the one hand, belly ache constantly for big government, and then, on the other hand, complain when big government runs it roughshod right up your ass. _________________ Massive Human Dieoff must occur as a result of Peak Oil. Many more than half will die. It will occur everywhere, including where you live. If you fail to recognize this, then your odds of living move toward the "going to die" group.
Posted: Wed Jul 23, 2008 1:45 pm Post subject: Re: Bush drops opposition; endorses housing bailout
Concerned1 wrote:
It isn't right. As I said before, many of these defaults are from people who've just decided that they don't want to pay for their loans, especially since they've been hearing that mortgage bailouts are coming. I mean, why would John continue to pay $300,000 for a loan on a home that's now worth only $200,000 when Stacy across the street hasn't made a payment in over 3 months because she thinks the fed is going to substantially lower her payments on a home she happily agreed to pay full price for just a few years before? I'd call these people, the Looters. They're simple opportunists.
So long as they are not breaking any laws, so what?
This is moral hazard democratised.
People signed a contract and expected a capital gain. Instead they took a capital loss. In many cases it is so severe and still accumulating that even over the next 20 years it will be permanent. Maybe they were greedy, maybe they were misled, maybe they were mis-sold, but in such circumstances companies will seek legal advice on how to get out. Companies do not continue to pour money into a black hole for 20 years if they recognise one. They do not agonise over inflicting collateral damage to others' balance sheets. Why should private citizens? Are they bound by a morality abdicated upon incorporation? Should this be the case?
The US government made the mistake of signalling bailouts. Defaults by speculators is just one of the consequences that follow such an act, and a wholly predictable one. These distortions are not the fault of the individual attempting to protect his own financial interests. They are responses to a policy framework, and may in fact be rational and legitimate, if not the correct responses to the guidance being given to the market today, this year and last.
Provided they never misrepresented their financial situation, there is no reason why property buyers with reason to expect loss of income or unrecoverable capital loss should not seek legal advice about the consequences of bankruptcy. The option exists because a long time ago, people decided that a financial error should not stay with a man for life, and that one-off financial ruin and several years of impaired credit should be adequate punishment and discouragement from recklessness.
If the law permits a second chance and there is time, people should think about taking it. Make no mistake, it does not come free. People lose stuff. Their credit history is ruined for years. Finding a place to rent is as difficult as owners' willingness to run credit checks. Career doors get closed. But once upon a time, people decided it was better than financial slavery or debtors' prisons and made it so. Do not envy or resent those who make that choice. It isn't right, it is the business of living and responsibility to one's family. Play the game by the rules as they are, not as you wish them to be. And one play is to wait and see if the government is the greater fool while you prepare to file. _________________ "The American people are watching the numbers climb higher and higher at the pump and they're waiting to see what the Congress will do." - George W Bush
Last edited by Twilight on Wed Jul 23, 2008 1:49 pm; edited 1 time in total
Posted: Wed Jul 23, 2008 1:47 pm Post subject: Re: Bush drops opposition; endorses housing bailout
Cashmere wrote:
You may not, on the one hand, belly ache constantly for big government, and then, on the other hand, complain when big government runs it roughshod right up your ass.
i see the point you're trying to make; however, i think the counter argument, from both sides, mind you, would be: we voted for a certain kind of big govt. and this ain't it.
Posted: Wed Jul 23, 2008 1:50 pm Post subject: Re: Bush drops opposition; endorses housing bailout
Concerned1 wrote:
It isn't right. As I said before, many of these defaults are from people who've just decided that they don't want to pay for their loans, especially since they've been hearing that mortgage bailouts are coming. I mean, why would John continue to pay $300,000 for a loan on a home that's now worth only $200,000 when Stacy across the street hasn't made a payment in over 3 months because she thinks the fed is going to substantially lower her payments on a home she happily agreed to pay full price for just a few years before? I'd call these people, the Looters. They're simple opportunists.
Their cut from the same cloth as those during the LA riots who didn't care a whit about any question of racism. They just wanted to get theirs. How many times did we see hundreds of people pouring out of stores with tv's and whathaveyou. The streets were filled with them. They saw an opportunity and they took it. Many, perhaps a majority of these home loan defaulters are doing just the same. On the back of the taxpayer. Opportunists.
and what would you call the financial institutions that are doing the exact same thing?
All times are GMT - 6 Hours Goto page Previous1, 2, 3Next
Page 2 of 3
You cannot post new topics in this forum You cannot reply to topics in this forum You cannot edit your posts in this forum You cannot delete your posts in this forum You cannot vote in polls in this forum
News
Discussions
Resources
Members
Forum FAQ
Search
Usergroups
Profile
Log in to check your private messages
Log in
