Question about the Economy - Page 5

Question about the Economy

This is a discussion on Question about the Economy within the Off Topic & Humor Discussion forums, part of the The Back Porch category; Hopyard, I am self employed, I don't have any employer sponsored anything. It is all mine, I pick and choose where I put my money, ...

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  1. #61
    VIP Member Array farronwolf's Avatar
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    Hopyard,

    I am self employed, I don't have any employer sponsored anything. It is all mine, I pick and choose where I put my money, taking the risk myself, with noone else to blame and noone else to rely on.
    Just remember that shot placement is much more important with what you carry than how big a bang you get with each trigger pull.
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  2. #62
    Member Array alfack's Avatar
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    If you own any stock, CMO related or not, you are certainly affected. The entire market is down due to this one issue. I can't think of one stock that is trending upward right now. On the flipside, it would probably be a good time to buy, if you can spare the dough.

  3. #63
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    Fraud, criminal negligence

    Quote Originally Posted by SelfDefense View Post
    Just curious, but exactly what law do you think was broken and by whom?
    Fraud and criminal negligence. Theft by deception. Fraud by every home buyer who lied on an application. Fraud by every loan originator who encouraged unqualified buyers to get into a mortgage the loan originator knew they couldn't afford (there was a fiduciary responsibility here that was ignored), misrepresentation of the mortgage terms to buyers-particularly the resets as interest rates change. Reselling the bad mortgages while misrepresenting the value of the package.

    Negligence, (failure to meet the fiduciary requirements) by the brokers. Violations of SEC rules when CMOs were sold as investment grade bonds. Criminal negligence by Cox and Paulson for allowing this thing to get out of hand. Tell me, where were these clowns while this stuff bubbled up? AWOL.

    Oh, and by the way SD, though you often couch your ideas in moral terms, the comment the other day about offering 10 for 20 being good business, belies that moral standing. An honorable person doesn't do that. You don't fool and rip off your neighbor, or your business partner, or your customer, just because you have opportunity and think you can get away with it. And few except the extreme libertarians would want that, and even they claim they would enforce laws against theft, and uphold contracts.

    Farronwolf has already amply explained that your theory about banks being forced to originate loans to the unqualified is nonsense.

    But I want to add, this crisis did not start with the banks. The banks were indeed well regulated. This crisis came about when NON_BANKS were permitted to go into the mortgage lending business and originate mortgages.

    The non-banks, were largely unregulated, made their money from origination fees, and then somehow passed the paper on upward to the large brokerages, pension funds, real banks, insurance companies, and other investors as solid safe investments. This was enabled by the unrealistic AAA bond rating on these securities. There were absolutely no brakes or controls and no one realized the magnitude of the fraud perpetrated by the non-bank loan businesses.

    There is plenty of crime underlying this crisis. The only reason it isn't being dealt with is that it involves 100s of thousands if not millions of small fry-- and quite a few really big boys with lots of power. No one wants the small fish in the can (we don't have enough space for all who lied on their mortgage applications), and the big boys know how to keep out; even if they have to croak to do so like Ken Lay.

    So now, Paulson wants unfettered control of 700 billion dollars. No oversight, no court review of his actions. CRAZY. And Congress is getting steam rolled and stampeded into what might be necessary, but surely not acceptable with that provision disallowing court review of his actions.

    The whole country is being victimized by ... well, we aren't supposed to talk partisan politics here.

  4. #64
    Member Array Stranger's Avatar
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    It was and is wrong for the government to bail out any company/industry.
    The current mortgage problem has nothing to do with the companies or even the government and everything to do with people that are bad at math and bought well beyond their means. If a company was stupid enough to grant the "gourmet" style of loans then they should be left to lay in the bed they made.
    It is not the governments problem that people are ignorant and can't read a contract. Many are blaming the companies that were merely taking advantage of the situation. The problem still lies with the people that signed a contract that they did not take the time to understand. You can blame every one that you want but it will not cover up the fact that it is the person who signed the contract that is at fault. This is all happening because of a major lack of personal responsibility.

  5. #65
    Restricted Member Array SelfDefense's Avatar
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    Quote Originally Posted by Hopyard View Post
    Fraud and criminal negligence. Theft by deception. Fraud by every home buyer who lied on an application. Fraud by every loan originator who encouraged unqualified buyers to get into a mortgage the loan originator knew they couldn't afford (there was a fiduciary responsibility here that was ignored), misrepresentation of the mortgage terms to buyers-particularly the resets as interest rates change. Reselling the bad mortgages while misrepresenting the value of the package.
    I know you are angry, and rightly so, but in reality no laws have been broken. This is a complicated issue with many facets and except for the forceed lending to unqualified buyers his would simply be business as usual.
    Oh, and by the way SD, though you often couch your ideas in moral terms, the comment the other day about offering 10 for 20 being good business, belies that moral standing.
    I agree that it is immoral, unscrupulous and nothing I would encouage. My point is that it is not illegal and if someone were so dumb as to accept the offer then it is ultimately the fool's fault. That is why I have no sympathy for most of those who are losing their homes because they cannot pay.

    Farronwolf has already amply explained that your theory about banks being forced to originate loans to the unqualified is nonsense.
    I already refuted that by posteing excerpts from a blog that included the relevant banking regulations. It is so important that I keep referring to it as the root cause. Everything else was business as usual. Interestingly, the vast majority of mortgages are paid in full and on time every month, even the so called subprime loans. The number is something like 92%. The problem was not even the packaging of loans that include the tiny number of bad loans. It wasn't the idiotic credit ratings that mean nothing. All investment have risk and id you le someone else determine that risk for you then you get what you get. The failure was due to the derivatives market. When options and futures are the main prodyct then any fluctuation in the underlying issue will cause the entire thread to unroll. That is what happened here. It just started wth the government forcing lenders to make bad loans or not receive accreditation.

    So now, Paulson wants unfettered control of 700 billion dollars. No oversight, no court review of his actions. CRAZY. And Congress is getting steam rolled and stampeded into what might be necessary, but surely not acceptable with that provision disallowing court review of his actions.
    Congress was the cause of this mess by gerring involved with CRA loans. It is up to Congress to allocate the money necessary to fix the problem now. Every day of delay causes more problems. Court review?

    The whole country is being victimized by ... well, we aren't supposed to talk partisan politics here.
    Thomas Sowell for President 2008.

  6. #66
    VIP Member Array farronwolf's Avatar
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    Yea, but you forgot to post the link to the whole CRA regulation and the first part of it which states.

    FDIC: FDIC Law, Regulations, Related Acts - Consumer Protection

    SEC. 802. (a) The Congress finds that--
    (1) regulated financial institutions are required by law to demonstrate that their deposit facilities serve the convenience and needs of the communities in which they are chartered to do business;
    (2) the convenience and needs of communities include the need for credit services as well as deposit services; and
    (3) regulated financial institutions have continuing and affirmative obligation to help meet the credit needs of the local communities in which they are chartered.
    (b) It is the purpose of this title to require each appropriate Federal financial supervisory agency to use its authority when examining financial institutions, to encourage such institutions to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions.

    Hmm, safe and sound operations. Yep, they were forced into bad lending practices, says it right there. Stangely enough it also states it at the first of section 804 which you quoted, but failed to post that particular portion. Wonder why?
    Just remember that shot placement is much more important with what you carry than how big a bang you get with each trigger pull.
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  7. #67
    Restricted Member Array SelfDefense's Avatar
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    Quote Originally Posted by farronwolf View Post
    Yea, but you forgot to post the link to the whole CRA regulation and the first part of it which states.

    FDIC: FDIC Law, Regulations, Related Acts - Consumer Protection

    SEC. 802. (a) The Congress finds that--
    (1) regulated financial institutions are required by law to demonstrate that their deposit facilities serve the convenience and needs of the communities in which they are chartered to do business;
    (2) the convenience and needs of communities include the need for credit services as well as deposit services; and
    (3) regulated financial institutions have continuing and affirmative obligation to help meet the credit needs of the local communities in which they are chartered.
    (b) It is the purpose of this title to require each appropriate Federal financial supervisory agency to use its authority when examining financial institutions, to encourage such institutions to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions.

    Hmm, safe and sound operations. Yep, they were forced into bad lending practices, says it right there.
    It is the purpose of gun control laws to make our community safe, consistent with safe and sound practices.
    It may very well have been the purpose but that is not the wording of 802, which forced the lending to communities that could not possibly repay their loans.

  8. #68
    VIP Member Array farronwolf's Avatar
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    Where does it say they must loan to people that can't repay the loan? You must be reading something that I can not see for some reason.

    Or are you refering to the blog again and what someone else has determined that it says with an excerp from the section about minority owned institutions?
    Just remember that shot placement is much more important with what you carry than how big a bang you get with each trigger pull.
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  9. #69
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    Missing the point again

    Quote Originally Posted by SelfDefense View Post
    "I agree that it is immoral, unscrupulous and nothing I would encouage. My point is that it is not illegal and if someone were so dumb as to accept the offer then it is ultimately the fool's fault. That is why I have no sympathy for most of those who are losing their homes because they cannot pay."

    Theft is theft. Just because it wasn't done by thugs, and was done by pen, doesn't make it any less theft.

    The issue now has little to do with sympathy for fools who couldn't understand that a 1% change in interest rate on a 4% mortgage loan translated to a 25% INCREASE in monthly payments. Rather, the issue now is what the h are we to do given the magnitude of the mess. Apparently you support the bail out. And I too reluctantly think some sort of bail out is needed, but the bailout has nothing to do with the homeowners--- its purpose is to protect the finance system. And I actually think you and I agree that those here who say leave it alone and let it melt down, are at best naive about the consequences of inaction.

    I already refuted that by posteing excerpts from a blog that included the relevant banking regulations.

    Congress was the cause of this mess by gerring involved with CRA loans.
    Except that you are holding a misconception in your mind. The banks were not the cause of this crisis. It was the lending practices of the UNREGULATED mortgage market, the independent loan originators. Where banks are in trouble it is because they bought the paper from the unregulated market. Where was SEC's Cox and Treasury's Paulson while this crap was going on? Yesterday I saw excerpts of speaches Paulson gave last Sept. and last Febr. 08 insisting that ALL WAS WELL.

    Suddenly, unpredictably, there is a crisis of this magnitude? Come on. These guys were asleep at the wheel, or lying to us in the past, or both.

    Thomas Sowell for President 2008.[/QUOTE]

    Don't care for the guys viewpoints, but he probably couldn't do worse then the present gang.

    You could likely pick the average guy off the street by lot, and he couldn't do worse than this present gang on much of anything.

  10. #70
    Member Array ImaShepardRU's Avatar
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    Quote Originally Posted by Thanis View Post
    +1 ya, here in MI....looking real bad. Everyone knows it, even those with great jobs.
    Yup. Same for me.
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  11. #71
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    Not just no but "HELL NO!!!!", we're only rewarding stupidity and greed or a combination of both. There may be a less than 10% group of citizens that maybe, "maybe", should have some kind of mortgage relief due to unscrupulous lending practices, but for most I have no sympathy. I'm 3 years away from paying off my mortgage. I bought what I could afford, made my payments on time, improved my property, and when rates lowered I refinanced, but only for the remaining length of the loan. Why should I now have to pay for someone else's screw-up. Sorry, this ain't something we should be called up on to "take one for the team".

    The corporations should be held accountable. How about using the Executives "bonuses" to pay down their debt, before anything else.
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  12. #72
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    They will take us down with them

    Quote Originally Posted by airbornerangerboogie View Post
    Not just no but "HELL NO!!!!"

    The corporations should be held accountable. How about using the Executives "bonuses" to pay down their debt, before anything else.
    Here's the devil's dilemma. They will take us all down with them if we don't do something. As taxpayers, we are utterly between a rock and a hard place. The wealth is gone. The damage done. All that is left is figuring out which will do us all more harm; more inflation or depression.

    I do think there may be better approaches than this bail out, and there must be a better deal for us (taxpayers) than the one which has been proposed. But, much as I hate the idea, and it frightens me for our country, I think we are darned if we do, and even more darned if we don't.

    I think the "let them all go down" folks do not realize the extent to which each and every one of us is dependent on the dang boat staying afloat.

    Anyway, we get to choose our poison; lots of inflation and a devalued dollar, or a huge recession/depression. Either way, we lose. Cheers.

    And think about that when you get ready to pull the lever on election day.

    P.S. The Russians are laughing at us now. We forced them to spend into bankruptcy. We are doing it to ourselves out of stupidity.

  13. #73
    VIP Member Array farronwolf's Avatar
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    Well did anyone happen to watch or listen to the hearings today with Paulson, Cox, Bernanke, and Lockhart. None of them have a clue as to how this is going to work, or how the money is going to be spent. They don't have a clue as to what it will cost the taxpayer. It was utterly amazing the lack of any of them to answer any of the questions about how this will work. All they could say was, it is very complicated and we will have to get the best minds on it to find out what we need to do when something comes up. Just give us the money, don't ask any questions and we think it will be ok. And the congress is going to go along with it, at the presidents request.

    Whahoo, lets get in this ride and see where we end up.

    After we sell out another 700 billion in debt to China, what will we be able to say when they tell us that they are taking control of Tiawan, or some other scenario like that. We won't be able to do a darn thing about it. You haven't heard from Russia lately because after they went into Georgia their bond market dropped in ratings, and they realized that their economy would be devasted if no one would hold their debt. We are following right along. Let your foes carry the debt so you have nothing to bargain with. This is going to do wonders for our national security and the world as a whole.

    Yep this darn thing is broken, I feel sorry for my 5 yr old.
    Just remember that shot placement is much more important with what you carry than how big a bang you get with each trigger pull.
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  14. #74
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    Quote Originally Posted by Hopyard View Post
    Here's the devil's dilemma. They will take us all down with them if we don't do something. As taxpayers, we are utterly between a rock and a hard place. The wealth is gone. The damage done. All that is left is figuring out which will do us all more harm; more inflation or depression.

    I do think there may be better approaches than this bail out, and there must be a better deal for us (taxpayers) than the one which has been proposed. But, much as I hate the idea, and it frightens me for our country, I think we are darned if we do, and even more darned if we don't.

    I think the "let them all go down" folks do not realize the extent to which each and every one of us is dependent on the dang boat staying afloat.

    Anyway, we get to choose our poison; lots of inflation and a devalued dollar, or a huge recession/depression. Either way, we lose. Cheers.

    And think about that when you get ready to pull the lever on election day.

    P.S. The Russians are laughing at us now. We forced them to spend into bankruptcy. We are doing it to ourselves out of stupidity.
    How so? (either way we lose)? If we allow to crash what should have crashed long ago and start from scratch how have we lost? if we continue to allow Uncle ROB from us, then of course we are the one's losing. If we "lose" what we don't fully and/or rightfully own to begin with, what have we really lost? If I have to cash out and get a smaller home/ or rent an apartment in a cheaper side of town because I can't pay the bills that I know darn well that can't afford to pay, that's my own fault and I'll have to deal with the subsequent consequences.

    Funny how all my great-grandparents etc... managed to make it through the first "great depression" and all seemed to be better for it.
    "My God David, We're a Civilized society."

    "Sure, As long as the machines are workin' and you can call 911. But you take those things away, you throw people in the dark, and you scare the crap out of them; no more rules...You'll see how primitive they can get."
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  15. #75
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    Quote Originally Posted by packinnova View Post
    How so? (either way we lose)? If we allow to crash what should have crashed long ago and start from scratch how have we lost? if we continue to allow Uncle ROB from us, then of course we are the one's losing. If we "lose" what we don't fully and/or rightfully own to begin with, what have we really lost? If I have to cash out and get a smaller home/ or rent an apartment in a cheaper side of town because I can't pay the bills that I know darn well that can't afford to pay, that's my own fault and I'll have to deal with the subsequent consequences.

    Funny how all my great-grandparents etc... managed to make it through the first "great depression" and all seemed to be better for it.
    Agreed, giving these vipers their millions while their former employees are in the unemployment line and families who've lost their homes are forced into homeless shelters is more than anyone should have to swallow. Bailing out corporations that gambled away their profits on smoke and mirrors purchases is just too much. Sometimes I really miss the old west, where's a lynch mob when you need one.
    “Dream as if you'll live forever, live as if you'll die today.” James Dean
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