if you know the GSEs have to buy up the MBSes or equivalent does it matter that you're doing the origination rather than them?
2004 through 2006 were the peak years, and the GSEs were in the thick of it.
And what percentages of the subprime market did they occupy in the following years as the subprime market exploded in size, you know... the years that really led to the crisis? That doesn't even mention the fact that they are MBSs, not the origination of the subprime loans.
Between 20042006 the share of subprime mortgages relative to total originations ranged from 18%21%, versus less than 10% in 20012003 and during 2007.
if you know the GSEs have to buy up the MBSes or equivalent does it matter that you're doing the origination rather than them?
2004 through 2006 were the peak years, and the GSEs were in the thick of it.
People don't have the time to manage and enforce personal loans. That's what the banks are for. The problem wasn't that they loaned other people's money - that has been happening for thousands of years. The problem was that they used other people's money to invest in badly rated securities. They gambled on credit, which is one of the dumbest things you can do.It doesn't even matter. The fact that banks lend other people's money means they cannot be trusted.
True lending can and should only take place from your own savings, not from a depositor's savings at a bank, or money created out of nothing.
True lending can and should only take place from your own savings, not from a depositor's savings at a bank, or money created out of nothing
and the dems created lots of the bad securities by encouraging subprime loans to generate affordable housing.
Well said. And yes, there is plenty of blame to go around; neither party has clean hands, and we voters, in our desire for low taxes (at least on ourselves) and free goodies, are the ones that made it possible.Not a bad idea. Big problem though - Wallstreet is the biggest beneficiary of deficit spending there is. You want your 401k to grow faster than the GDP? Then only debt can induce that. I'm often shocked that people don't get that.
The biggest problem with the 'free market' today is that monetary leverage (I think the term is formally called 'velocity') is now 'snuffing out' actual wealth creation.This velocity creates bubbles, people invest in those bubbles, and when the monetary bubbles pop the wealth created vanishes while a small percent accumulate more wealth. In a nutshell, pushing money around and being a hedge fund manager gives you more power than some poor chump trying to start a business, and that's what's killing the system.
Only bright idea I've seen to help solve this is start taxing large financial transactions while simultaneously the Fed starts charging negative interest rates to banks. Basically, large banks get charged interest to horde cash.
It's frankly absurd that large banks can borrow money at near zero interest, then turn around with some crafty book keeping and buy bonds with that same dough. In some respects it's worse than a ponzi scheme.
Bush Jr loved the idea of a strong housing market as well, so the blame should be spread equally.
Exactly right. We were doing okay for awhile, until we dropped our technology transfer barriers, but that genie can't ever be put back into the bottle. And those companies who do move production offshore are free to create foreign-owned corporations to sell their own products to them, keeping the lion's share of the profits off shore. That makes it more practical to make future investments offshore as well, only repatriating profits when there's another tax holiday or when a lack of profits domestically means they will pay little or no tax. Plus, we often use tax money to subsidize the costs of moving production offshore!This is how a free maket works:
You stand on a corner selling stuff and some guy walks accross the border and sells stuff cheaper because in his country he has slaves working for him and no one cares if they make a lot of polution, and he gets help from his central goverment, so he can make goods cheaper.
So since you have free trade, you have to let them undercut your prices, because your government will not listen to your complaints. So you move your company overseas so you can sell stuff at the same price or lower.
The stock prices of your company sky-rocket because you are not making cheaper goods. This makes it look like the economy is doing great, even though you put all your old friends who use to work for you out of business. You also do not pay hardly any federal tax because you only invest in foreign manufacturing. You only pay sales tax in the USA because you are an importer. Because of free trade we can not tax you or penalize you for exporting all the jobs in another country.
This is exactly how free trade works. It is great, isnt it?
Just look at the market valuations of those subprimes. 2004 was tiny compared to later years.
It doesn't even matter. The fact that banks lend other people's money means they cannot be trusted.
True lending can and should only take place from your own savings, not from a depositor's savings at a bank, or money created out of nothing.
People don't have the time to manage and enforce personal loans. That's what the banks are for. The problem wasn't that they loaned other people's money - that has been happening for thousands of years. The problem was that they used other people's money to invest in badly rated securities. They gambled on credit, which is one of the dumbest things you can do.
And the government made it possible. The repubs made buying the securities possible by killing Glass-Steagall, and the dems created lots of the bad securities by encouraging subprime loans to generate affordable housing.
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/09/AR2008060902626.html
This is long, but it's worth quoting because of the persistent lies from the left to try to recast the government as the savior rather than as part of the problem. This requires the Big Lie, even ignoring that there were fucking Congressional hearings on this matter in 2003/2004. Lord knows the Republicans aren't perfect - their abolishing the remains of Glass-Steagall allowed a housing crisis to crash the entire banking industry - but this impending crisis was unmissable by 2004 and the Pubbies did try to fix the problem. Barney Frank and Chris Dodd, along with a willing and compliant media, took the initiative to ensure that never happened.
If we do not point out the Big Lie every time it is put forth, those willing to lie for political benefit will win, and they will transform this country into something unrecognizable. The GSEs have struggled to meet their low income loan targets every year since HUD took over their regulations in '92, and there have been numerous if boring and poorly reported Congressional hearings about this subject in almost every Congress. Now the people who want societal engineering want to blame the inevitable consequences of that societal engineering as justification for even more societal engineering.
When all these banks are leveraged against each other and they are sitting on a pile of dollars created through fractional reserve banking, when the bad loans and bad bets are made, and they will be, nobody can always be right, the house comes tumbling down and if it were to fall entirely, we'd be left with the true money supply not what was created through credit.
All I am advocating is that we stop creating money through lending with fractional reserve banking, because it invariably causes a chain collapse when it could be contained to one bad lender who simply has to put a "For-Sale" sign on his building, not all of Wall Street because they are all sitting on a credit bubble and their fat asses when it pops comes crashing down on our heads!
FRB isn't the issue, it's leverage and the capital ratio, that makes a difference between losses and no losses.
There's not one single thing wrong with FRB and, logically, is the only way to operate. If you were a depositor and your money was just sitting in the bank, the bank would have to charge you maintenance and other fees, rather than you getting money from them. The only reason why you get money from deposits is that they CAN use them. Furthermore, once this happened, nobody would deposit money to begin with, otherwise you're just pissing money away.
As the poster above said, everybody knows the deposits are lent out, thus, it isn't theft or fraud, it's just simply the way things work.
This is how a free maket works:
You stand on a corner selling stuff and some guy walks accross the border and sells stuff cheaper because in his country he has slaves working for him and no one cares if they make a lot of polution, and he gets help from his central goverment, so he can make goods cheaper.
So since you have free trade, you have to let them undercut your prices, because your government will not listen to your complaints. So you move your company overseas so you can sell stuff at the same price or lower.
The stock prices of your company sky-rocket because you are not making cheaper goods. This makes it look like the economy is doing great, even though you put all your old friends who use to work for you out of business. You also do not pay hardly any federal tax because you only invest in foreign manufacturing. You only pay sales tax in the USA because you are an importer. Because of free trade we can not tax you or penalize you for exporting all the jobs in another country.
This is exactly how free trade works. It is great, isnt it?
Free market is like warlord country in Afghanistan. You wouldn't want it. Warlord buys the "judges" has his "enforcers" called cops to do his bidding and pretty much controls every transaction in his territory.
When all these banks are leveraged against each other and they are sitting on a pile of dollars created through fractional reserve banking, when the bad loans and bad bets are made, and they will be, nobody can always be right, the house comes tumbling down and if it were to fall entirely, we'd be left with the true money supply not what was created through credit.
All I am advocating is that we stop creating money through lending with fractional reserve banking, because it invariably causes a chain collapse when it could be contained to one bad lender who simply has to put a "For-Sale" sign on his building, not all of Wall Street because they are all sitting on a credit bubble and their fat asses when it pops comes crashing down on our heads!