FBI is now investigating Fannie Mae, Freddie Mac, Lehman Brothers, AIG
09-26-2008, 02:19 PM
#136
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The problem is that applying one aspect of Laissez Faire just the "not intervening" part while ignoring the need for bounds- and at the same time providing massive subsidies for selected industries and wholesale redistribution of wealth through regressive tax structures and ill-conceived international military adventurism, isn't really Laissez Faire at all.
But apparently the lesson of this week should be as simple as that;
Laissez Faire doesn't work.
So what are we going to try next?
09-26-2008, 02:35 PM
#137
I don't need more cowbell dammit!
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Well, yes and no: the recent lending ethics have come to a point where they are as such: "Do you make $1,200 a month? Then you can afford a $690,000 home with Option ARM!"
I do not wholly blame the buyer in those cases - most were almost bullied into buying a home (and lets be honest, if someone is giving you the option of buying a home with almost no down payment and less than $1000 a month - would you turn it down?)
But at the same time, people should have been smart enough to look at it through the glass and say "That's a bad deal."
You have to remember though this is the American general population we are talking about; consumer driven and obsessed with material goods.
I do not wholly blame the buyer in those cases - most were almost bullied into buying a home (and lets be honest, if someone is giving you the option of buying a home with almost no down payment and less than $1000 a month - would you turn it down?)
But at the same time, people should have been smart enough to look at it through the glass and say "That's a bad deal."
You have to remember though this is the American general population we are talking about; consumer driven and obsessed with material goods.
09-26-2008, 02:37 PM
#138
I don't need more cowbell dammit!
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I would disagree only because sufficient regulation should provide a fair and free market which should be self-correcting in many of these regards.
The problem is that applying one aspect of Laissez Faire just the "not intervening" part while ignoring the need for bounds- and at the same time providing massive subsidies for selected industries and wholesale redistribution of wealth through regressive tax structures and ill-conceived international military adventurism, isn't really Laissez Faire at all.
But apparently the lesson of this week should be as simple as that;
Laissez Faire doesn't work.
So what are we going to try next?
The problem is that applying one aspect of Laissez Faire just the "not intervening" part while ignoring the need for bounds- and at the same time providing massive subsidies for selected industries and wholesale redistribution of wealth through regressive tax structures and ill-conceived international military adventurism, isn't really Laissez Faire at all.
But apparently the lesson of this week should be as simple as that;
Laissez Faire doesn't work.
So what are we going to try next?
09-26-2008, 04:02 PM
#139
banned
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Would I turn it down? I would read the loan docs and based on the conditions of a loan on a home costing 690K with nothing down I would say to myself, hmm...in 2 years when my payment goes from 1200 a month to 5K+ can I afford it? The answer is no, so I will not take this loan, but Im not your average consumer.
Having purchased a home in the last few years, I myself saw the option of the ARM Vs. Fixed, & of course the common consumer finds the ARM option alluring. But thinking long term; 5-10 years of ownership, not just 2 years in-out-sell & avoid capital gains tax, meant that a 6% fixed was the smarter choice. Luckily I had a good local lender that wasn't pushy about going ARM, and we've never been late or missed a payment. Later on the loan was sold to Countrywide, which at first seemed shady but I get it. Especially for first time buyers, I'd split the blame more on the side of the lender for not investing the time to check applicants income/employment & just going with whatever was on paper.
As we're also seeing with the tens of billions that U.S. automakers are asking for, the 'close a deal at any cost' model went beyond homebuying. Hell the car I owned previous to my Subie was bankrolled through E-loan, who later sold the loan to CitiBank. Another example of greed greed greed is WaMu (woohoo!). Even though I already had 2 of their cards, I kept receiving credit applications from them. I was like "Really, how much debt were they planning on hatching on our economy?!". I guess the one card of theirs I have left will be replaced with a shiny one from (JP Morgan) Chase, no doubt with a higher interest rate in order to get back some bailout $$.
The Free Market based economy as a good model died once a million bucks no longer seemed like a lot of money. The funeral for it is costing us $700 Billion.
09-26-2008, 04:17 PM
#140
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Chase shouldn't need to jack anyones card rates.
They just bought 180 billion dollars in loans for 1.9 billion, they should be sitting pretty for a while.
At least until they find a way to spend all of that, If we don't start to prosecute the real bad guys, I'd give them about 12-18 months- that should be about enough time for them to turn 200 billion worth of loans into worthless paper...
They just bought 180 billion dollars in loans for 1.9 billion, they should be sitting pretty for a while.
At least until they find a way to spend all of that, If we don't start to prosecute the real bad guys, I'd give them about 12-18 months- that should be about enough time for them to turn 200 billion worth of loans into worthless paper...
Last edited by psoper; 09-26-2008 at 04:20 PM.
09-26-2008, 04:41 PM
#141
I don't need more cowbell dammit!
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True that; but it would also be great if the lenders had long term prosperity of the business & thus marketplace as the model... rather than 'offer wolf in sheeps clothing type of loan, close loan, sell loan ASAP to another lender, take $$ and run' as the business model.
Having purchased a home in the last few years, I myself saw the option of the ARM Vs. Fixed, & of course the common consumer finds the ARM option alluring. But thinking long term; 5-10 years of ownership, not just 2 years in-out-sell & avoid capital gains tax, meant that a 6% fixed was the smarter choice. Luckily I had a good local lender that wasn't pushy about going ARM, and we've never been late or missed a payment. Later on the loan was sold to Countrywide, which at first seemed shady but I get it. Especially for first time buyers, I'd split the blame more on the side of the lender for not investing the time to check applicants income/employment & just going with whatever was on paper.
As we're also seeing with the tens of billions that U.S. automakers are asking for, the 'close a deal at any cost' model went beyond homebuying. Hell the car I owned previous to my Subie was bankrolled through E-loan, who later sold the loan to CitiBank. Another example of greed greed greed is WaMu (woohoo!). Even though I already had 2 of their cards, I kept receiving credit applications from them. I was like "Really, how much debt were they planning on hatching on our economy?!". I guess the one card of theirs I have left will be replaced with a shiny one from (JP Morgan) Chase, no doubt with a higher interest rate in order to get back some bailout $$.
The Free Market based economy as a good model died once a million bucks no longer seemed like a lot of money. The funeral for it is costing us $700 Billion.
Having purchased a home in the last few years, I myself saw the option of the ARM Vs. Fixed, & of course the common consumer finds the ARM option alluring. But thinking long term; 5-10 years of ownership, not just 2 years in-out-sell & avoid capital gains tax, meant that a 6% fixed was the smarter choice. Luckily I had a good local lender that wasn't pushy about going ARM, and we've never been late or missed a payment. Later on the loan was sold to Countrywide, which at first seemed shady but I get it. Especially for first time buyers, I'd split the blame more on the side of the lender for not investing the time to check applicants income/employment & just going with whatever was on paper.
As we're also seeing with the tens of billions that U.S. automakers are asking for, the 'close a deal at any cost' model went beyond homebuying. Hell the car I owned previous to my Subie was bankrolled through E-loan, who later sold the loan to CitiBank. Another example of greed greed greed is WaMu (woohoo!). Even though I already had 2 of their cards, I kept receiving credit applications from them. I was like "Really, how much debt were they planning on hatching on our economy?!". I guess the one card of theirs I have left will be replaced with a shiny one from (JP Morgan) Chase, no doubt with a higher interest rate in order to get back some bailout $$.
The Free Market based economy as a good model died once a million bucks no longer seemed like a lot of money. The funeral for it is costing us $700 Billion.
And as far as your loans being sold goes, that happens all the time. Its a way to get bad loans off your books and free up some liquidity by packaging non-performing loans with good loans.
09-26-2008, 04:58 PM
#142
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Yes loans get sold all the time, but usually for something close to their face value, what Chase did last night was essentially buying up hundreds of thousands of loans for pennies on the dollar. That kind of things is going to need to come out in the wash someplace, because a whole ton of value just traded hands for a pittance of money.
I still contend that something very unsavory reeks about the whole deal...
I still contend that something very unsavory reeks about the whole deal...
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