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Thread: Hey skipster, I thought the market knew what's best

  1. #19

    Default Re: Hey skipster, I thought the market knew what's best

    I agree with your first statement but it doesn't appear that the powers that be are listening or if they are then perhaps they are powerless to do so. As painful as this correction will be for many mortgage holders and investors it appears that very little has changed in the mentality of the markets. With all the money being poured in by the worlds central banks and the Fed cutting rates it looks like the bulls are looking for any excuse for another run. If they do will the next fall be more severe? Like the sub-primes, ARMs are on shaky ground with a soft real estate market along with equity based loans. Can hedge funds and private equity funds hold their own as they cover mounting losses from high risk investments?

    Individuals and communities need to educate themselves quickly as to the exact risk that they are exposed to. Examine your entire portfolio including 401k's and IRA's. Ratings firms and brokers alike have put many in risky positions, that if these investors really understood the full extent of said risk would be shocked.

  2. #20

    Default Re: Hey skipster, I thought the market knew what's best

    Quote Originally Posted by oc View Post
    We need a return to fiscal sanity. The sub-prime meltdown is an example of the powers to be ignoring market constraints. Since when did high risk people get low cost loans? This is absurd. Fancy financing for martages is absurd also, people have been lending money for 6000 years, we know how to do it. The whole sub-prime fiasco was doomed from the beginning, hold the bastards accountable.
    It is absurd that high-risk customers get low-cost loans, but is there a law against it? I'm not sure about that. Also, can't an entity do what it wants with its own stuff? I think I mentioned a situation earlier that if I ask to borrow $5000 from you and agree to pay it back at a price of $100/mo, then don't pay at all and later, I ask to borrow another $5000, who's the dummy if you decide to loan the money?

    These companies are takign on a big risk, but do we need to protect them from themselves? They should be able to look out for themselves. The same goes for those who take out these loans. They are big people and should be able to take care of themselves. WE certainly wouldn't want the government to look out for these people -- the government does a horrible job of looking out for itself!

  3. #21

    Default Re: Hey skipster, I thought the market knew what's best

    Here's Jim Cramer talking about this on the Colbert Report:

    http://www.comedycentral.com/motherl...ml_video=91179
    Curtis Chenoweth
    wannabe national champ headed to a new home:walkman:

  4. #22
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    Default Re: Hey skipster, I thought the market knew what's best

    Skipster, Perhaps a trillion dollars of wealth will disappear because of this fiasco, that matters and can't be shrugged off with Cato Institute cliches. Our elected represenatives who advocated, campaigned for and passed the laws that made sub-prime lending possible have ruined many people's lives (not me, I don't have a mortage), your logic of, "These companies are takng on a big risk, but do we need to protect them from themselves? They should be able to look out for themselves. The same goes for those who take out these loans. They are big people and should be able to take care of themselves. WE certainly wouldn't want the government to look out for these people -- the government does a horrible job of looking out for itself!" taken to it's logical conclusion does away with all laws regarding markets, Ponzi schemes, come on, you should know better, it also ignores the fact that the laws are to protect people and secure the financial system.

    Ripping people off use to be against the law, Ponzi schemes are illegal because they can not work, sub-prime lending is no different, you can not lend money at below cost, everyone know this. I can't sell hambergers below cost and hope to make up each individual loss on volume sales. The people who orchestrated this should be put in jail.

  5. #23

    Default Re: Hey skipster, I thought the market knew what's best

    Many of these people put no money down on their house. They lived in the house for one to three years, and then when the interest rate adjusted, they found that they couldn't afford their house. Now they will have to sell their house, possibly at a loss, but not in all cases. Isn't that the same as paying rent to live in someone elses's house?

    "Ripping people off use to be against the law"

    People taking personal responsiblity for their own finances used to be the way people lived their lives. Not any more. Now it's much easier to plead ignorance and blame the other party.

  6. #24

    Default Re: Hey skipster, I thought the market knew what's best

    Usury also used to be against the law (way back when).

    FTN, you are holding the entire spectrum of parties that arranged, reviewed, sought profit from (wall street), or had theorectical oversite, of subprime loans, blameless. At no point are you offering any type of condemnation at all.

    An interesting attitude that probably has it's seed in your business, whatever it is:

    "People like me who sat on the sidelines watching the idiocy are now in a position to benefit from the situation"

    You did say this. You sound like a shark smelling blood in the water.
    I wonder how many others share that attitude.

    -------------------------------------------------------------------------
    "They made a gamble that the housing market would keep going straight up, and that interest rates would never rise."

    Or they didn't know that their morgage payments would change.
    -------------------------------------------------------------------------

    "However, over the past few years, money was easy to get, whether you were high-income or low-income. That's obviously good - equal access for all."

    Real equality? Those who really need the BEST interest rates, get the worst. Those who can afford higher interest rates get the lowest.
    -------------------------------------------------------------------------

    "Now that some recent homeowners have made some extremely poor choices, betting that interest rates would remain stable and that their home would continue to appreciate steeply."

    And some of these were refinaced loans, where long-term homeowners were sold a bill of goods based on low interest rates. And some refinanced out of desparation. The economy hasn't been good in Ohio and the SP loans have been a recipe for disaster.
    --------------------------------------------------------------------------

  7. #25

    Default Re: Hey skipster, I thought the market knew what's best

    From this morning's Cleveland Plain Dealer (reworded from a story by Teresa Murray):

    Nancy Levine was a recent loan officer for American Home Mortgage. I say recent because American Home Mortgage just went out of business. At the time she had over 25 customers in the mortgage process.

    On her own initiative and without any reward (except good will) she rapidly found alternative financing for every customer. Not an easy task since rates had also gone up. She spent many hours, earned no commissions from the effort, and walks away with American Home Mortgage owing her 30,000 dollars.

    Having taken care of all the "hanging" customers, many of whom were also extremely stressed, she begins work at a new place tomorrow.
    --------------------------------------------------------------------------

    Another story details the plight of a new homeowner who bought at a 8.99percent variable rate (from a company called "Option One"), at a time when 5.99 percent was available. She was ignorant of the lay of the land and got snookered. BTW, she HAD a 25,000 dollar down payment for her 123,000 dollar home. Now she finds that ther mortgage payment is due to increase from 800 to over 1200, which will be beyond her means. Whatever her equity, including the 25000, has been in essence wiped out.

    -------------------------------------------------------------------------

    Not all of these cases fit Flop-the-nuts' descriptions. Many, many don't.

  8. #26

    Default Re: Hey skipster, I thought the market knew what's best

    Full disclosure - I do not work for a company that benefits in any way from the subprime meltdown (or Armageddon, as my wife wisely predicted three years ago). I do consulting for very large construction and transportation projects, usually in the $100 million to $1 billion range. So, neither I nor the company I work for is positioned to benefit or lose from this.

    "People like me who sat on the sidelines watching the idiocy are now in a position to benefit from the situation" I did say this previously, and I'm looking forward to buying a big honking abode from someone who made a silly mistake and got themselves overextended. I'm already seeing high-ed homes in Northern California remain on the market for much, much longer than I've seen in the past 10 years. It's only going to get worse, so I'm keeping my powder dry. Keep your fingers crossed for me.

    "Or they didn't know that their morgage payments would change"
    They should have looked into the definition of "ARM". Should we start giving IQ tests when people take out mortgages? There was a front page article in the WSJ recently, where a state (I think Michigan) wanted to make it mandatory for low-income people to attend something like a four-hour session to educate them whenever they were set to sign a mortgage. A large number of community activists stepped up and called the program blatantly racist, so the state was forced to abandon the program. It wasn't based upon race, it was based upon income, but that didn't matter to the race mongers. So, the low-income people were left to fend for themselves. I'll bet that the same community activists have their bullhorns out now, pointing fingers anywhere but at themselves.

    "Those who really need the BEST interest rates, get the worst. Those who can afford higher interest rates get the lowest"

    As it should be. Look at how many loans are gong to go sour for the lenders. Most of them are going to be because they loaned money to low-income people at low rates. It's pretty clear that many of those people should not have gotten loans, at any rate.

    I don't buy the proposition that all of these people who signed loan agreements were babes in the woods. I think that the majority knew that they were placing a very large bet that the housing market would continue to rise, and that interest rates would always be low. Now that they made the wrong bet, they want the Feds to bail them out, with my tax dollars (and yours). The Feds should not act as a safety net here. If the Feds are always going to jump in to bail out people who have engaged in high-risk activities, then why would anyone ever stop investing in high-risk ventures?

  9. #27
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    Default Re: Hey skipster, I thought the market knew what's best

    Flop, Assuming everything you say is true, the purpose of lending laws is not just to protect the lendee, it's to protect the integrity of the system. The people running the sub-prime schemes knew it could not be maintained, they willingly compromised the system. They were so willing to do this they advocated for changes in lending laws, got what they wanted, then proceeded to rip off fixed rate mortage holders (who must be paying higher rates to compensate for the sub-prime and the shortage of fixed rate mortage money. People need to do some time.

    Vick is going to lose 100 to 140 million dollars and do some time in Federal Prision, for dog fighting. Who is going to jail for 1 trillion dollars in lost wealth?

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