The U.S. Mortgage Clusterfuck

[bananaclubcock]

Really? So if you know that someone can't pay you back and you lend them money anyway, you would honestly say that the person who borrowed the money is more foolish?

If that's the case then we have a totally different way of looking at things.

Yup. If you are a moron who lends a schizophrenic $1million for tin foil, you can't say that schizophrenic is responsible for not paying you back. Lenders have legal obligations, too. They have better information than borrowers, better lawyers, and all sorts of responsibilities that come with the privileges of corporate status. Corporations fail to repay debts all the time, loans are called risk assets for just that reason.

Why don't we hear outcries about corporations not paying back debts? Because Uncle Rupert's propaganda machine doesn't see that as an issue of concern.

 

[Drifterwood]

People keep lending the US money, and as far as I know, she has no plan to repay it.

 

[vince]

People keep lending the US money, and as far as I know, she has no plan to repay it.

Is America too big to fail? I don't think it's possible for her lenders to call in their notes without catastrophic consequences is it?

 

[bananaclubcock]

Is America too big to fail? I don't think it's possible for her lenders to call in their notes without catastrophic consequences is it?

The U.S. can print it own currency, it can pay the money back... the catch is that money might be worth a whole lot less in the future. A lot of what is at stake then, is who prospers and who pays. Understand that and you will know what is really happening.

 

[unabear09]

That's easy, a person who borrows money he knows he can't pay back.

and of the millions of people who have defaulted on their mortgages, credit cars, etc, how many of them do you think actually went in to borrow the money knowing they couldn't pay it back? I guess would be very few. People are stupid, but not that stupid.

 

[D_Sir Fitzwilly Wankheimer III]

and of the millions of people who have defaulted on their mortgages, credit cars, etc, how many of them do you think actually went in to borrow the money knowing they couldn't pay it back? I guess would be very few. People are stupid, but not that stupid.

i disagree, ie buying a car. most buy the very most the can get credit for. they may be able to pay it but that doen't mean they can afford it.

and for housing unless the mortgage had fixed rarte, thet we're jjust dreaming. there was time wher a house payment was less than rent and no money down. why not you really don't loose anything. worst case scenario you back to renting.

i think most of the screw ups were just o get thing out of the way. i don't think the screw up will have any bearing on those who coould have afforded their. if that were the case they wouldn't have been in forclousure in the first place.

just like the california welfare recipients spending hteir money on vacations and at the casios. people don't appreciate what they don't have to earn.

 

[B_New End]

I don't think it serves anyone's interest for these banks to now go bust; but I do think it's about time that some high ranking bankers went down.

Does anybody remember the days before the mega banks bought up all the local banks?

There was no martial law, and you could still go to the local bank and a get enough money loaned to you to buy a house.


TOO BIG TO FAIL IS A LIE SO BIG PEOPLE ACTUALLY BELIEVE IT!

 

[Drifterwood]

TOO BIG TO FAIL IS A LIE SO BIG PEOPLE ACTUALLY BELIEVE IT!

What I don't really understand about all this is the line between prosperity and falling off the cliff.

Let's say you have a business and it grows steadily, but then you have a bad year and contract by 10%. The company wouldn't normally crash.

We used to think of Banks as the bastion of "safe", but the reality seems to be that their very model, fractional reserve lending and a model that is dependent upon growth, makes them amongst the most precarious systems that we have.

Banking and capitalism only work when you grow. We don't seem to have a sensible fall back position, i.e. an organised withdrawal as opposed to a total rout. Of course we are trying an organised withdrawal but the cost is genuinely horrendous, the alternative of bank failure would be worse IMO, because you would lose everything now rather than paying for it over a longer period.

The longer that this debate has gone on, the more I am angered by the lack of regulation.

Bleak times.

 

[dandelion]

I think your wrong that capitalism requires growth. Its just that people have come to expect growth and have planned accordingly. I remember 25 years ago having a debate with someone over whether getting a mortgage to buy a house meant you were in debt, or meant you had made an investment. I was surprised he suggested it meant you were in debt. He was older than me. At that point throughout all my life property had risen steadily in price. Perhaps he remembered differently. For the next 25 years property has continued to rise, though with a few ups and downs. I think he is right, it will end eventually and might be quite soon. But the trick with modern investment is to get out befiore the market crashes. What do you US guys call it? a ponzi scheme?

 

[unabear09]

i disagree, ie buying a car. most buy the very most the can get credit for. they may be able to pay it but that doen't mean they can afford it.

and for housing unless the mortgage had fixed rarte, thet we're jjust dreaming. there was time wher a house payment was less than rent and no money down. why not you really don't loose anything. worst case scenario you back to renting.

i think most of the screw ups were just o get thing out of the way. i don't think the screw up will have any bearing on those who coould have afforded their. if that were the case they wouldn't have been in forclousure in the first place.

just like the california welfare recipients spending hteir money on vacations and at the casios. people don't appreciate what they don't have to earn.

what? That was a horribly confusing post. oh and, I'm a pessimist, but even I know people aren't just out to pull one over on everyone.

 

[B_talltpaguy]

i disagree, ie buying a car. most buy the very most the can get credit for. they may be able to pay it but that doen't mean they can afford it.

and for housing unless the mortgage had fixed rarte, thet we're jjust dreaming. there was time wher a house payment was less than rent and no money down. why not you really don't loose anything. worst case scenario you back to renting.

i think most of the screw ups were just o get thing out of the way. i don't think the screw up will have any bearing on those who coould have afforded their. if that were the case they wouldn't have been in forclousure in the first place.

just like the california welfare recipients spending hteir money on vacations and at the casios. people don't appreciate what they don't have to earn.

Nope, AMurrika don't need no ed-ju-ma-ca-shun!

 

[deleted15807]

TOO BIG TO FAIL IS A LIE SO BIG PEOPLE ACTUALLY BELIEVE IT!

Then how do you deal with institutions that are so intricately interconnected that one failure would lead to the failure of the other and then the next and the next and the next?

 

[maxcok]

i disagree, ie buying a car. most buy the very most the can get credit for. they may be able to pay it but that doen't mean they can afford it.

and for housing unless the mortgage had fixed rarte, thet we're jjust dreaming. there was time wher a house payment was less than rent and no money down. why not you really don't loose anything. worst case scenario you back to renting.

i think most of the screw ups were just o get thing out of the way. i don't think the screw up will have any bearing on those who coould have afforded their. if that were the case they wouldn't have been in forclousure in the first place.

just like the california welfare recipients spending hteir money on vacations and at the casios. people don't appreciate what they don't have to earn.

How's it working out with you, facequeen, and hungshyman all sharing one brain?

 

[B_VinylBoy]

How's it working out with you, facequeen, and hungshyman all sharing one brain?

And to think it still doesn't add up to a whole one? :wink:

 

[maxcok]

And to think it still doesn't add up to a whole one? :wink:

Oh, I don't know. The Brain. Whose was it? :biggrin2:


http://www.youtube.com/watch?v=dQ_pKqiB5Rg

 

[B_New End]

Then how do you deal with institutions that are so intricately interconnected that one failure would lead to the failure of the other and then the next and the next and the next?

This question has been answered a million times.

Bye bye big banks. You fail. there are plenty of people who will take free money from the fed, and find ways to loan it out more efficiently in their local economies.

Good night, too big to fails. You got too big, and now the little bankers, credit unions and mom n pop entreprenuers are going to eat your lunch. Welcome to capitalism, you lose.

There is no reason to keep these big bankers around. believe me, the sun will shine the next day. They don't need their bonuses to keep America running. That was a giant fucking lie.

Hell, the banks could have been chopped to pieces, and sold off to local investors/co-ops/microcredit institutions at the local level. Money in maine would not be shipped off to the filthy rich in Manhatten every time someone in salem made an interest payment.

 

[deleted15807]

People keep lending the US money, and as far as I know, she has no plan to repay it.

Every day bonds mature the U.S. pays her debts. There is no likely scenario that will not continue to happen.

This question has been answered a million times.

Answered a million times where? I've not seen a serious piece discussing the wisdom of just letting large banks fail. In fact every country around the world rushed in to save their banks from France to Germany to the U.K. We've already seen the disaster that ensued when Lehman Brothers failed. And what if AIG had been let to fail what other cascade effects would have happened?How much would society be willing to pay in this uncontrolled experiment of letting big banks fail?

 

[vince]

If you don't want them to go belly up, the answer to "to big to fail", is regulation. When some institution(s) become so valuable or important to the well-being of the public, then the public has to control and regulate them. Bankers are suppose to be sober and conservative when they invest other people's money. If they can't control themselves then government must do it for them.

In Canada, there are only five big national banks and a few credit unions. By any measure, these are big, profitable banks. They wanted to deregulate and merge and buy up American banks in the 1990's and pushed the federal government for legislation to allow them to do so. They were turned down for the most part and it is what saved their hides and the Canadian economy. They had very little exposure to the junk mortgages sold around the world by US and British institutions and they are required to adhere to accepted bookkeeping practices. Therefore, they do not have the current problems American bankers do.

It is time those in charge of American banks and other financial institutions were treated like the incompetents (or criminals) they are.

 

[noirman]

What I don't really understand about all this is the line between prosperity and falling off the cliff.

Let's say you have a business and it grows steadily, but then you have a bad year and contract by 10%. The company wouldn't normally crash.

We used to think of Banks as the bastion of "safe", but the reality seems to be that their very model, fractional reserve lending and a model that is dependent upon growth, makes them amongst the most precarious systems that we have.

Banking and capitalism only work when you grow. We don't seem to have a sensible fall back position, i.e. an organised withdrawal as opposed to a total rout. Of course we are trying an organised withdrawal but the cost is genuinely horrendous, the alternative of bank failure would be worse IMO, because you would lose everything now rather than paying for it over a longer period.

The longer that this debate has gone on, the more I am angered by the lack of regulation.

Bleak times.

Echo that:frown1:

 

[Drifterwood]

Every day bonds mature the U.S. pays her debts. There is no likely scenario that will not continue to happen.

I realise this, but my point is that there seems to be no real attempt to control the growth of national debt, let alone to get it to below a certain percentage of GDP or GNP. Presumably the government attitude to debt will rub off to some degree on the citizens.

I would personally like a constitution under which government taxing, spending and borrowing was limited, other than ih exceptional circumstances.

I'm from the UK, we don't have a constitution as such.