And Now We're Headed For The GREATEST Depression

[Acanthus]

Meh, I'm not even going to go there.

That is the gist of the scam they were running, the derivatives and other exotics were to cover all bets.

Some banks made bad bets with derivatives.

ALL of the banks made bad bets on eternally appreciating housing.

 

[Jhhnn]

I could debate this, but to what end? You've already baked in your assumptions

Didn't figure you would, the truth being what it is. They picked whatever models and methods that would allow them to lend more money to shakier and shakier buyers, hedged as justification after the fact, made bonuses in the tens and hundreds of millions. The smartest and most ruthless, like GS, rode it to the top and then shorted it into the dirt with proprietary stock trading and derivative deals. What were fundamentally naked shorts abounded. Funny how being both a broker and a trader allows financial service companies to get away with that... Securities were created and sold out the front door for the express purpose of shorting them out the back door in the form of synthetic derivatives worth many times the value of the original securities.

It was all perfectly legal, of course, and anything that wasn't was merely subject to negotiation and fines... Lemme see... Flimflam a few billion out of homebuyers and investors, pay yourself incredible bonuses, get bailed out knowing the Greenspan put was in place, pay yourself some congratulatory bonuses, pay a few hundred million in corporate fines, maybe, somewhere down the road... I'm not really seeing any downside here... Yeh, a few guys got caught with their shorts around their knees, and a few went under the bus for lying to stockholders and investors, but they were just the most greedy and careless...

This wasn't an accident, at all- more like a feat of financial engineering...

 

[hal2kilo]

Didn't figure you would, the truth being what it is. They picked whatever models and methods that would allow them to lend more money to shakier and shakier buyers, hedged as justification after the fact, made bonuses in the tens and hundreds of millions. The smartest and most ruthless, like GS, rode it to the top and then shorted it into the dirt with proprietary stock trading and derivative deals. What were fundamentally naked shorts abounded. Funny how being both a broker and a trader allows financial service companies to get away with that... Securities were created and sold out the front door for the express purpose of shorting them out the back door in the form of synthetic derivatives worth many times the value of the original securities.

It was all perfectly legal, of course, and anything that wasn't was merely subject to negotiation and fines... Lemme see... Flimflam a few billion out of homebuyers and investors, pay yourself incredible bonuses, get bailed out knowing the Greenspan put was in place, pay yourself some congratulatory bonuses, pay a few hundred million in corporate fines, maybe, somewhere down the road... I'm not really seeing any downside here... Yeh, a few guys got caught with their shorts around their knees, and a few went under the bus for lying to stockholders and investors, but they were just the most greedy and careless...

This wasn't an accident, at all- more like a feat of financial engineering...

I find myself agreeing with Killer alot of the times, but this is where I find that he has a blind eye. Don't want to call him an apologist.

 

[dmcowen674]

Quote:
Originally Posted by Acanthus
Housing purchases crash and burned this month.

Numbers were just released today.

Maybe the fucking banks will renegotiate their unfair loans rather than take on depreciating assets by foreclosing.

"unfair" loans? How were the vast majority of them "unfair"?

1. Terms were disclosed in documentation. If you've ever closed on a mortgage you'd know how thorough they are.

2. People who took out the mortgages were largely "betting" housing would keep going up. They weren't educated and that wasn't a bank's fault. It is theirs for being stupid.

"betting" housing would keep going up.

They weren't educated and that wasn't a bank's fault. It is theirs for being stupid.

and a big fuck you to you too.

Such elitism is disgusting and should not be tolerated. :twisted: :twisted: :twisted:

 

[dmcowen674]

I find myself agreeing with Killer alot of the times, but this is where I find that he has a blind eye. Don't want to call him an apologist.

He is a disgusting excuse for an American.

He should have his ass kicked out of here so fast and far it would be unrecognizable.

Every one of the millions of Americans that have lost their homes should get their turn with his ass.

 

[Fingolfin269]

Quote:
Originally Posted by Acanthus
Housing purchases crash and burned this month.

Numbers were just released today.

Maybe the fucking banks will renegotiate their unfair loans rather than take on depreciating assets by foreclosing.




"betting" housing would keep going up.

They weren't educated and that wasn't a bank's fault. It is theirs for being stupid.

and a big fuck you to you too.

Such elitism is disgusting and should not be tolerated. :twisted: :twisted: :twisted:

Dave I think this is the first post of yours that made me realize you are not what you appear to be. I must not be awake yet.

You know, I feel for people who took out loans without understanding what they were doing. But all I can really remember about what was going through my mind when buying my condo a few years ago was this... FIXED RATE. How anyone could get conned into anything else just doesn't make sense to me.

 

[PeshakJang]

How anyone could get conned into anything else just doesn't make sense to me.

Dave has been conned in just about every way imaginable during his life, and takes his rage out on others. He can't deal with the fact that he's fundamentally a failure at living, so obviously everyone else in the world who is more successful than him must be cheating somehow.

 

[Jhhnn]

Dave I think this is the first post of yours that made me realize you are not what you appear to be. I must not be awake yet.

You know, I feel for people who took out loans without understanding what they were doing. But all I can really remember about what was going through my mind when buying my condo a few years ago was this... FIXED RATE. How anyone could get conned into anything else just doesn't make sense to me.

When potential first time buyers see their work and saving for the up front money to buy a house going for naught because of rising prices, they get scared, then exploited by agents and brokers. It's tied up with how middle America sees home ownership as long term security and how middle incomes have stagnated over the last 30 years, too.

They can't save fast enough to get there is what it amounts to. They also know that rent rises with inflation while fixed rate mortgage payments don't. And they've seen others successfully exploit a rising market with creative financing, too. Very early in the boom, people who got in on shoestring financing were able to convert to fixed rate mortgages because of rising valuations, break through to stable and affordable payments. Everybody knows somebody who did just that. The idea that real estate prices could fall precipitously and stay depressed was (and still is) entirely foreign to the American mindset.

As the whole thing progressed, it became a lot more predatory. Buyers who qualified for more modest homes and fixed rate financing were steered to bigger homes at variable rates because of the fee structures of both agents and brokers. Builders responded with bigger houses. Securitization and hedging strategies allowed underwriters to relax standards to ridiculously low levels, because they could, for awhile, and because the short term rewards for doing so were enormous for a very few people.

Economic pressures and desires also strongly influenced existing owners to refinance, extract equity, often to pay off other debts accumulated because of extended unemployment by one marriage partner in the wake of the tech bust. Some did so wisely, some didn't.

And we had the dreamers and flippers, too, outright speculators doing so on the basis of OPM... all they risked was their seed money and their credit rating in non-recourse states...

The middlemen made money off of all of them, lots of it, because personal gain entailed only corporate rather than personal risk. Set the company and the whole system up for collapse? What's in it for me?

When the answer is dozens or hundreds of millions, nothing else really matters, does it?

 

[dmcowen674]

Dave I think this is the first post of yours that made me realize you are not what you appear to be. I must not be awake yet.

You know, I feel for people who took out loans without understanding what they were doing. But all I can really remember about what was going through my mind when buying my condo a few years ago was this... FIXED RATE. How anyone could get conned into anything else just doesn't make sense to me.

You honestly bought your house expecting it to drop 40% in value?

 

[dmcowen674]

Dave has been conned in just about every way imaginable during his life, and takes his rage out on others. He can't deal with the fact that he's fundamentally a failure at living, so obviously everyone else in the world who is more successful than him must be cheating somehow.

Obviously you know first hand about conning. Your ass should be in prison.

 

[heyheybooboo]

Dave I think this is the first post of yours that made me realize you are not what you appear to be. I must not be awake yet.

You know, I feel for people who took out loans without understanding what they were doing. But all I can really remember about what was going through my mind when buying my condo a few years ago was this... FIXED RATE. How anyone could get conned into anything else just doesn't make sense to me.

I financed my house with a series of interest-only loans .... and paid it off in 2003 (after 12 years).

I'm one of the few where it worked to my advantage - and the advantage of the bank (I had to pay a more 'commercial' rate but my required payments were quarterly, and quite a few times I could only cover my interest). I still only paid about a third of what I would have paid in interest over a conventional mortgage with typical terms.

I'm not paid weekly --- my cash comes in big lump sums. You just have to have the discipline to pay down a big chunk of the principle each quarter (instead of letting it 'ride'). If I was weak on principle one quarter, I more than doubled-up the next quarter.

That's the advantage of dealing with a 'local' bank and maintaining a relationship with them.




--

 

[werepossum]

Dave I think this is the first post of yours that made me realize you are not what you appear to be. I must not be awake yet.

You know, I feel for people who took out loans without understanding what they were doing. But all I can really remember about what was going through my mind when buying my condo a few years ago was this... FIXED RATE. How anyone could get conned into anything else just doesn't make sense to me.

So true. When I bought my house the bank tried very hard to push a variable rate loan, yet they were very reticent to actually tell me how the rate setting worked. I persisted (stubbornness being an asset) until they finally told me enough to piece it together. Turns out that the initial rate is artificially low, so that if interest rates didn't change my mortgage rate would still increase until actual savings would be a quarter or a half percent, while the rate could potentially go up four or five percent of the fixed rate. Basically it was moving the economic risk completely to me for a small discount (which cost me I think $1,500 to buy in prepaid points.) This was a major bank, too, not a mortgage company. Lenders are definitely shady in the mortgage business, but in the end it's the buyer's responsibility to determine the actual terms and their consequences. Only if the lender actually lies or legally misrepresents is the responsibility not on the buyer. Kudos for your smart move.

 

[Acanthus]

So true. When I bought my house the bank tried very hard to push a variable rate loan, yet they were very reticent to actually tell me how the rate setting worked. I persisted (stubbornness being an asset) until they finally told me enough to piece it together. Turns out that the initial rate is artificially low, so that if interest rates didn't change my mortgage rate would still increase until actual savings would be a quarter or a half percent, while the rate could potentially go up four or five percent of the fixed rate. Basically it was moving the economic risk completely to me for a small discount (which cost me I think $1,500 to buy in prepaid points.) This was a major bank, too, not a mortgage company. Lenders are definitely shady in the mortgage business, but in the end it's the buyer's responsibility to determine the actual terms and their consequences. Only if the lender actually lies or legally misrepresents is the responsibility not on the buyer. Kudos for your smart move.

So you don't thinks the banks should disclose best and worst case scenarios for ARMs?

 

[TheDoc9]

Dave has been conned in just about every way imaginable during his life, and takes his rage out on others. He can't deal with the fact that he's fundamentally a failure at living, so obviously everyone else in the world who is more successful than him must be cheating somehow.

This is total BS, I've been conned as well before. The truth is conn artist and their games will always change so you'll never be 100% prepared for them. The only chance is to hold on to your money as tight as possible.

 

[LunarRay]

Folks, thinking the US can go into a 'Deep Depression' is akin to thinking you can sink an Ocean Liner in a 10' deep lake. You can hardly get the boat to the lake let alone sink it.
The US today is totally different that the US of the '30s.

The only thing that happens if we print tons and tons of dollars is you loose what we've been trying to avoid (World Currency Reserve status) and that actually is a good thing if you don't mind a bit of isolationism. It is the other countries that will get hurt... We have food and raw materials and we are brilliant and a money makin machine.
Your government won't let you down. They'll extend benefits until the printing presses break down...

 

[Trianon]

Folks, thinking the US can go into a 'Deep Depression' is akin to thinking you can sink an Ocean Liner in a 10' deep lake. You can hardly get the boat to the lake let alone sink it.
The US today is totally different that the US of the '30s.

The only thing that happens if we print tons and tons of dollars is you loose what we've been trying to avoid (World Currency Reserve status) and that actually is a good thing if you don't mind a bit of isolationism. It is the other countries that will get hurt... We have food and raw materials and we are brilliant and a money makin machine.
Your government won't let you down. They'll extend benefits until the printing presses break down...

Why should I even bother working then?

 

[LunarRay]

Why should I even bother working then?

Because that is part of the 'money makin machine'... and maybe part of the brilliance... we will survive because we can... and you work cuz that is what you do and do so for many reasons. IF you happen to lose that opportunity then there are benefits available until you regain your status. The fuss about printing dollars or expanding the debt is hocus pokus... IF we owe it to ourself... cuz the lender nations drop the dollar's worth via their actions so what... It will equalize... eventually. And look at the dynamics that must occur.

 

[bamacre]

Because that is part of the 'money makin machine'... and maybe part of the brilliance... we will survive because we can... and you work cuz that is what you do and do so for many reasons. IF you happen to lose that opportunity then there are benefits available until you regain your status. The fuss about printing dollars or expanding the debt is hocus pokus... IF we owe it to ourself... cuz the lender nations drop the dollar's worth via their actions so what... It will equalize... eventually. And look at the dynamics that must occur.

Are you kidding? My sarcasm detector hasn't had enough coffee yet.

 

[Fingolfin269]

You honestly bought your house expecting it to drop 40% in value?

To be honest I haven't even looked at the value of the condo since I bought it. I have no desire to move. I do know that my payment is still exactly what the bank told me it would be and what I agreed to pay when I signed those papers.

 

[Darwin333]

"unfair" loans? How were the vast majority of them "unfair"?

1. Terms were disclosed in documentation. If you've ever closed on a mortgage you'd know how thorough they are.

2. People who took out the mortgages were largely "betting" housing would keep going up. y Theweren't educated and that wasn't a bank's fault. It is theirs for being stupid.

3. Its not the American Taxpayers fault that banks made those loans to people who couldn't afford them because the banks were largely "betting" housing would keep going up. They weren't educated and that wasn't the taxpayers fault. It is theirs for being stupid.

 

[dmcowen674]

To be honest I haven't even looked at the value of the condo since I bought it. I have no desire to move. I do know that my payment is still exactly what the bank told me it would be and what I agreed to pay when I signed those papers.

Well check and see if it has gone down.

Then put yourself in the shoes of millions of Americans.

 

[zephyrprime]

You know, I feel for people who took out loans without understanding what they were doing. But all I can really remember about what was going through my mind when buying my condo a few years ago was this... FIXED RATE. How anyone could get conned into anything else just doesn't make sense to me.

Don't overestimate people. 1/3rd of people have no idea what variable and fixed rates are.

 

[zephyrprime]

Folks, thinking the US can go into a 'Deep Depression' is akin to thinking you can sink an Ocean Liner in a 10' deep lake. You can hardly get the boat to the lake let alone sink it.
The US today is totally different that the US of the '30s.

The only thing that happens if we print tons and tons of dollars is you loose what we've been trying to avoid (World Currency Reserve status) and that actually is a good thing if you don't mind a bit of isolationism. It is the other countries that will get hurt... We have food and raw materials and we are brilliant and a money makin machine.
Your government won't let you down. They'll extend benefits until the printing presses break down...

What makes you think that we have been trying to avoid World Currency Reserve Status? I know a few conservatives (and liberals too) do not like the concept of that but you have to realize that the number of such people is very small. By far the largest body of people have no clue what world currency reserve status even is. The next largest group of people are people who are agnostic but since they like to spend lots of money (politicians) and they like to make lots of money (bankers) they exploit having world currency reserve status. Then there are the people who support world hegemony by the US. Last are the people who are against the US dollar's World Currency Reserve Status. This group is by far the smallest.

Also, what exactly is the alternative to World Currency Reserve Status for the dollar? The Euro having that status? The UN making a new currency and assuming all the powers that go along with that? Most people who are against World Currency Reserve Status for the US dollar also HATE those two alternatives. Yet, they provide no other viable alternative themselves.

 

[LunarRay]

Are you kidding? My sarcasm detector hasn't had enough coffee yet.

:sneaky:

Economics is a science. It is, as you know, a Social Science. What people think is happening is how they will react to whatever confronts them. Not the people who sit atop the cherry cream soda but the ones to whom an economy means not much at all beyond their own capacity to evaluate their reality.

We've successfully 'stimulated' probably 2 million jobs with the 'package' started by Bush. That information is nice to some and to others it is meaningless.
What is real is that we've done this by printing dollars and dumping that into the accumulated debt, obviously. This then has the effect of making the foreign lenders who use our debt and their asset for their reserve currency holding a bit antsy about the economic health of the US in contrast to some other 'powerhouse'. IF we keep up debt financing our current operating shortfall beyond some ratio to other financial/economic factors coupled with the mandated by recovery reduced yield to those foreign lenders we will eventually weaken the dollar vis a vis other wanna be reserve currencies to the point where the money supply outflow via dis intermediation in our banks and deposits in theirs provides the stimulus and opportunity for their growth and requires us to make up that lending short fall. Who do we lend it to? To us again creating high inflation thus eliminating deflationary factors but also stimulating a buy now mentality...
But, buy what? Foreign goods will be significantly more expensive thus creating the incentive at home to provide for this demand which requires an increase in the money supply... More printing! We will have created the notion of Economic Health and prosperity.
To accomplish this we must keep the folks out of work now able to exist at least and for that talent (brilliance) to not loose its desire to execute. We are the most creative Nation with the most capable workforce IF we don't have to battle with competition geared to undercut our labor force's earning power... That entails a bit of isolationism... iow, Change the Psyche of the American a bit. Move us away from 'Walmart' shopping to the extent it is not in our interest nationally...

So in summary:
We can and will survive because we can. And to enable that the Government must provide stimulus to the people in forms that consider the total picture. Every dollar spent by Government IS a stimulus in some form!
Additionally, we can't really fall into a 'deep depression' because long before that happens other dynamics mentioned above will occur... they have to... and over time the US will emerge stronger than before...

 

[LunarRay]

What makes you think that we have been trying to avoid World Currency Reserve Status? I know a few conservatives (and liberals too) do not like the concept of that but you have to realize that the number of such people is very small. By far the largest body of people have no clue what world currency reserve status even is. The next largest group of people are people who are agnostic but since they like to spend lots of money (politicians) and they like to make lots of money (bankers) they exploit having world currency reserve status. Then there are the people who support world hegemony by the US. Last are the people who are against the US dollar's World Currency Reserve Status. This group is by far the smallest.

Also, what exactly is the alternative to World Currency Reserve Status for the dollar? The Euro having that status? The UN making a new currency and assuming all the powers that go along with that? Most people who are against World Currency Reserve Status for the US dollar also HATE those two alternatives. Yet, they provide no other viable alternative themselves.

I hope I said: The loss of World Reserve Currency Status...
We've been trying to remain the world's top dog for a reason... IF we control the world's economy (so to speak) we maintain control over all that we interface with in all arena of endeavor.

An example: Iraq wanted to move to the Euro as the denominator for their oil... and they wanted bringing all the OPEC folks with them... This was a major threat to us and we saw Saddam as the wanna be leader of it all... he was and would have been but for our military efforts.

Economics has some interesting aspects... We see what we see by making certain assumptions and carrying them forward making other assumptions and all or some of the assumptions may be dead wrong... but at the end of the day there is one assumption that is always right... That is: Money is Power and everyone wants it but Money is a limited commodity. IF Alliance 'A' can find a way to garner more than Alliance 'B' they will do that. Today there are probably 8 or maybe 9 potentially big Money Power Nations all seeking alliances to further their objectives... Russia, Europe, China, US, etc.. etc... There can only be maybe 2 or 3... of these Alliances and not create more havoc than uniformity. All things move toward equilibrium over time...