Paulson Plan: Lazs style socialism at its worst

[SkyRock]

Again, there's your annual inflation rate which includes gas and food. 

I spoke about the cost of fuel and food, you keep giving me stats that include, but do not specify how much those two rose.  Nice dodge, fuel and food is up 100% and 13% respectively since 2002.  Those two played an integral part in the housing collapse.  Tool...errrr Toad<------ownt!

[Donzo]

I spoke about the cost of fuel and food, you keep giving me stats that include, but do not specify how much those two rose.  Nice dodge, fuel and food is up 100% and 13% respectively since 2002.  Those two played an integral part in the housing collapse.  Tool...errrr Toad<------ownt!

The only reason that those two played and integral part was the fact that these people were way beyond their means.  Like Toad pointed out...something breaks or goes up in price and they are screwed.

[Hangtime]

I know it was COMMON for 125% of the cost of the house to be loaned out... First the real estate was priced at about double its' actual VALUE.  That means people who were risks anyway were given loans for 250% of true value for the property.  Not that many years ago, when real estate and homes were priced closer in line with actual value, it usually required the person who wanted to borrow money to buy a home to have 10% to 20% and decent credit to even hope to get a mortgage.

The impulsive buying on the real estate market (buying simply because 'i am willing to pay anything to get in that home' not based on real value) caused the market to have an artificial bubble... It is time to let that bubble pop... if your poor judgment led you to sign a mortgage that you cannot afford or you used your mortgage like an ATM card - IT SUCKS TO BE YOU!.... if your poor judgment led you to write an excessive loan on over-priced property to a person that was high risk - IT SUCKS TO BE YOU!

I am livid enough over this bailout stupidity to tar and feather those responsible!

There are other, more appropriate ways of dissuading them from repeating the mistakes.

[SkyRock]

The only reason that those two played and integral part was the fact that these people were way beyond their means.  Like Toad pointed out...something breaks or goes up in price and they are screwed.

I agree, I never said they were good loans, quite the contrary, but also, many would still be in there houses without the fuel and food spikes.  I believe in home ownership, but not all can afford homes, and some just barely hang in there.   

[bustr]

Remember how 1929 happened and why all of the restrictions were put in place to not allow speculation with bad paper in the stock market by separating banking from insurance from securities? Making them 3 separate industries with separate regulation?

Gramm-Leach-Bliley was a bi-partisan effort because the Senate Banking committee is bi-partizan and you cannot get any kind of finance related bill through the senate without the committees say so. By allowing banks to own insurance and securities companies, you can issue bad loans, insure them and float the investment structure through your securities holdings. Yep one stop shopping fedraly insured.......

OH, don't forget Alan Greenspan dropping the Fed rate to help get minorities and ilegals into homes with the subsiquent abuse of the rate drops, easy money and housing speculation bubble. I think Greenspan is a Democrat\Liberal and his crystal ball got clouded by his personal image of utopia.<---Law of Unintended Consiquences.

The full 1999 committee helped the House draft their version to address what both parties wanted. NOT the republicans rammed it down the poor defencless democrat\liberals throats. Every gun toating republican, loony elite Liberal, and dissacociated angry libertarian on this board got screwed equaly by the members of the 1999 Senate Banking committee and Bill Clinton. Pure American non-partizan GREED and subsiquent bi-partizan Banking committees did the rest........Look at all those cable TV turn your house for profit shows from 2001-2005 that sprang up.

We were all asleep at the wheel and I thought all the Liberal\Progessives on this board were political elite geniuses who know everything there is to know about all U.S. politics.........


FULL BANKING COMMITTEE TO SERVE ON CONFERENCE
FOR S. 900, FINANCIAL SERVICES MODERNIZATION

The U.S. Senate has approved the appointment of all 20 members of the Senate Committee on Banking, Housing and Urban Affairs to the conference on S. 900, the Financial Services Modernization Act.

Sen. Phil Gramm, chairman of the Banking Committee, made the recommendation to the Senate Majority Leader that the full committee be appointed to the conference.

"Congress has been working for 20 years to remove the Depression-era barriers that separate banking, insurance and securities," Gramm said. "And for the first time in 20 years, both houses of Congress have passed bills to do that.

"Members of the Banking Committee had a key role in shaping this legislation, and their expertise will be needed as we convert it into law," Gramm said. "It is a historic bill that has potential for benefiting all of our constituents, from Texas to South Dakota and from New York to Idaho."

In addition to Gramm, the Republican members of the Banking Committee are Richard Shelby of Alabama, Connie Mack of Florida, Robert Bennett of Utah, Rod Grams of Minnesota, Wayne Allard of Colorado, Michael Enzi of Wyoming, Chuck Hagel of Nebraska, Rick Santorum of Pennsylvania, Jim Bunning of Kentucky, and Mike Crapo of Idaho.

The ranking member of the Banking Committee is Sen. Paul Sarbanes of Maryland. The other Democrat members are Christopher Dodd of Connecticut, John Kerry of Massachusetts, Richard Bryan of Nevada, Tim Johnson of South Dakota, Jack Reed of Rhode Island, Chuck Schumer of New York, Evan Bayh of Indiana, and John Edwards of North Carolina.

The members of the Senate Banking Committee will work with House members to combine the two versions of S. 900. The Senate Banking Committee approved its version March 4, and it was passed by the full Senate May 6. The House approved H.R. 10 on July 1, and set the stage for conference on July 20 by substituting its language in S. 900 and sending the bill to the Senate.

[Toad]

I spoke about the cost of fuel and food, you keep giving me stats that include, but do not specify how much those two rose.  Nice dodge, fuel and food is up 100% and 13% respectively since 2002.  Those two played an integral part in the housing collapse.  Tool...errrr Toad<------ownt!

<Sigh>

I weep for your students.

How about Consumer Price Index?

"A Consumer Price Index of 158 indicates 58% inflation since 1982, the commonly quoted inflation rate of say 3% is actually the change in the Consumer Price Index from a year earlier. By looking at the change in the index we can see that what cost an average of 9.9 cents in 1913 would cost us about $1.82 in 2003. "

So ALL GOODS that people commonly rose by roughly 3% a year for the years you single out. Actually it probably averaged a little less than 3%. ALL GOODS... everything they needed to buy.... ALL GOODS.

You continue to ignore the basic problem. People with no reserves, no capital were put into mortgages with nothing down, paying interest only on adjustable loans. The assumption was made by all parties involved that either nothing would change in the economy (an incredible flight of fancy easily disproved by a quick look at historical record) or that any changes in the economy would better enable these people to pay(another incredible flight of fancy easily disproved by a quick look at historical record).

The whole program was a pipe dream. An uptick in interest rates and these people were on the streets. An uptick in consumer prices of < 3% and these people were on the street. A major paycut at work (common in this time period) and these people were on the street. A blown engine or transmission in their auto and these people were on the street.

This is the really, really simple explanation for you. These people could not afford these houses. Period. They could not qualify under ANY normal mortgage program. A special program was created for them and it was a flawed creation.

Do you really think it was a realistic expectation to count on the CPI continuing to decline for 30 years until the mortgage was paid off....ooops... these mortgages would NEVER be paid off; they were interest only.

Ya get it yet? The people would NEVER have owned those houses. NEVER. They were not paying any principal.

As soon as the slightest downturn in the economy occurred they were SOL and on the street and they HAD NO EQUITY because..... they WERE NOT PAYING ANY PRINCIPAL.

The poor slobs were bent over the barrel and hosed and all the while they smiled because hey..they owned a house.

They were renting houses by paying interest only. It was only a matter of time and the clock started ticking the moment the first deal was done.

I can't help you any more than this. Ponder on it; you'll eventually figure out the scam.

[SkyRock]

So ALL GOODS that people commonly rose by roughly 3% a year  ALL GOODS...

except for food and fuel, which has risen much higher.

you'll eventually figure out the scam.

I know the scam:  http://www.youtube.com/swf/l.swf?swf=http%3A//s.ytimg.com/yt/swf/cps-vfl56220.swf&video_id=Gl27UziYXjE&rel=1&eurl=&iurl=http%3A//i4.ytimg.com/vi/Gl27UziYXjE/default.jpg&t=OEgsToPDskKXAuMnX2v4VSmgz28k8CN0&use_get_video_info=1&load_modules=1&fs=1&hl=en
 

[bustr]

Toad,

When the controls put in place after 1929 were repeald in 1999, it took us less than 8 years to pull a 1929 style fiasco again. The 1929 fiasco was enabled by the same players, congress and big business and robber barons. It took roughly the same amount of time in the 1920's brought along by the roaring 20's financial bubble to blow up in 1929.

Human nature caused both fiascos. People at all levels of income took part in the con because it was a get rich scheme of immense proportions. Just like Netscape going IPO in the 90's made everyone think they could get rich quick with tech, turning homes, mandated federal loans and easy money made everyone think they could get rich in the 2000's. The rest of the world thought so and either invested in the U.S. or mirrored the same housing scams in europe.

The federal controls on banking, insurance and securities protected us from the 1930's untill 1999. Then one bank robberbaron in the 90's wanted to build the largest and most diversified bank in america\world via the 1998 Citicorp/Travelers merger. By the old law protecting us for 60 years the merger was ilegal. So guess what. We got deregulation and a 1929 style fiasco. And the fiasco even screwed Citicorp/Travelers in the end who the deregulation was implimented for to create one of the largest banks in the world.......   

Human beings are the Perfict Law of Unintended Consiquences!

[Toad]

except for food and fuel, which has risen much higher.

And other goods went down in price thus making an average inflation of ~ 3%. One item goes up, another goes down; I'm sure you follow this.

[lazs2]

skycrock.. the reason toad ripped into you was because your statement was that of a fool..  gas and food did not cause anyone who could afford a house to begin with to lose said home..  period.. it is stupid to even think it.

buster..  The one thing wrong with the deregulation causing meltdown theory is that..  many of the institutions that are doing well are the least regulated and many that are failing are heavily regulated like fannie and freddie...

The other wild card is that if you force companies to make bad loans to low income and minorities.. if you add socialism to the mix..  it opens floodgates for the shysters to pour in.   Everyone wants to get in on the boom created by socialism.

In the end.. people who should not have gotten loans got em.. the credit companies should have known better but.. backed and forced by big government.. they thought they could get away with it.... Long enough to get rich anyway.. or..a few more years.

I don't think anyone in the finanacial market didn't realize there was an artificial bubble...  these bailouts will just encourage them to do it again 20 years down the road.

lazs

[Toad]

James J. Cramer wrote this (Mad Money guy). Pretty decent view of how the whole mess happened. Good read, a bit long. It may help Skyrock.. but maybe not. 

The Great Shakeout

http://nymag.com/news/businessfinance/50520/

...But then the chickens began coming home. The Fed started what proved to be an inexorable rise in interest rates, and the housing market cooled. The borrowers, legions of whom had used adjustable-rate mortgages, began defaulting at record rates. Even though only a small percentage of homeowners actually defaulted when all was said and done, those defaults set off alarm bells that led the major bond-rating agencies to downgrade the mortgage-based bonds. That caused a kind of mortgage-bond reflux. In essence, the billions in mortgage-backed loans were called all the way back up the borrowing chain, and no one had the cash to cover them because they were too heavily leveraged. It was that chain reaction that effectively caused Bear, then Lehman and Merrill, to succumb or merge. AIG, the insurer of much of this kind of paper, could no longer guarantee its worth, either.....

.......If you want to be in the incredibly lucrative mortgage game going forward, you are going to have to mimic the Hudson Cities of the world—banks that know their customers and demand down payments and don’t risk giving loans to those who could turn out to be deadbeats. That’s right, what we’re seeing is a return to the era of good, clean, old-fashioned banking, an era in which the winners will be those banks that look just like the Bailey Bros. Building & Loan, or at least have an old-school deposit component at their core. Their owners and operators may not make as much money as the Potters once did, but at the end of the day they get to keep their jobs. And they’re still the richest men in town.

[SkyRock]

And other goods went down in price thus making an average inflation of ~ 3%. One item goes up, another goes down; I'm sure you follow this.

When you are on the edge, you buy what keeps the family going, food to eat, fuel to go to work. In other words, not all items on the cpi are needed items, they are items factored in that most americans use monthly, yet if one is having a go of it, items dwindle to basic neccesities. When food and fuel spiked, so did housing forclosures.  Check it out, I have provided you with the numbers, they match.

Toad, check your PM's.

[Donzo]

When you are on the edge, you buy what keeps the family going, food to eat, fuel to go to work. In other words, not all items on the cpi are needed items, they are items factored in that most americans use monthly, yet if one is having a go of it, items dwindle to basic neccesities. When food and fuel spiked, so did housing forclosures.  Check it out, I have provided you with the numbers, they match.

Toad, check your PM's.

They were on the edge because of stupidity.

The argument that food and fuel prices went up and THAT casued the foreclosures to happen is missing the point.

[SkyRock]

skycrock.. the reason toad ripped into you was because your statement was that of a fool..  gas and food did not cause anyone who could afford a house to begin with to lose said home..  period.. it is stupid to even think it.



lazs

Stupid for you to say that.  You act like their aren't home owners who are just making ends meet.   

[Captain Virgil Hilts]

IF you bought a home, had no reserve capital, and further, could barely make the payments when you bought it, then you bought more home than you could afford. It's that simple. The problem is, they don't teach economics anymore, not in school, and not at home. People are taught from childhood that borrowing is good, and smart,  therefore borrowing more is better and smarter, and borrowing more than you can afford is great, and brilliant.

The people losing their homes, for the most part, have ARM payments, or even regular mortgage payments, that exceed HALF what they make in a month! And mortgage brokers were not just encouraged, but damned near required, to offer them that mortgage.

ANYTHING causes people like that to lose their home to foreclosure. What would be a minor problem to a family with a house payment of 20%-25% of their monthly income, is an unsurvivable disaster to a family with a house payment of 50%-70% of their monthly income. Even people with a house payment of 30%-40% of their monthly income are flirting with disaster. They're already barely keeping an older vehicle running, they are barely keeping their utilities paid, and if they got their hours at work cut, something would have to give. If their car was wrecked, and it was their fault, they're screwed, because they probably couldn't get coverage on their older car, and even if they could, they couldn't afford it. Even if it only had a major mechanical failure, they'd be screwed. They'd have to try to borrow the money to repair or replace it, and they have no down payment for the loan, nothing to secure it, and even if they did, they can't make the payments.