The U.S. Mortgage Clusterfuck

bananaclubcock

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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.


I disagree with this. Short explanation: this is a political problem, not an economic one.

Long explanation:

The issue in the U.S. is the degree to which the government, including financing (taxation and debt issuance) and spending policies, is just being used to advanced narrow interests. The U.S. doesn't as a country face super serious constraints unless it continues ignoring the possibility of screwing over the ass clowns who created this mess. The ways out include: higher taxation on the ultra rich (who are more often than not thieves), inflation (which is basically the same as higher taxation on the ultra rich), and reduced government intervention on behalf of the ultra rich.

Why doesn't this happen? For one, there are many dupes in the world who pretend to identify with the Koch brothers or the Murdochs. Furthermore, federal power resides dis-proportionally with Red States (landlocked, mostly rural states) that use the federal government to extract tribute in the form of spending substantially over what they pay in taxes and decisions about federal priorities that increase their economic clout. The marriage between these constituencies is poisonous for the US.
 

Drifterwood

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OK - you are taking this some way away from what most non US members will follow, but strangely, I was discussing this with some friends from South Dakota yesterday. Incidentally, what really fantastic people they are.

I think you need to forget about the super rich, unless your definition of super rich is what I would call "Upper Middle Class". The super rich you won't touch, but most of them can fuck up anyway. The super super rich are another matter, and you won't touch them.

Too much corporate profit is off shore. If it wasn't, neither of our countries would have a problem. That's a different issue though. What I do want to say is that I disagree regarding inflation. Inflation really hurts the poorest. It represents a higher proportion of what they have to spend. If I only have to spend 10% of my income, then if inflation is 10%, it only costs me 1%. If I have to spend 100% to survive, then I have to cut back by 10% if my earnings don't go up.

Inflation is really hurting poorer people. Look where it is hitting, food and energy. Pretty basic needs eh?

I could get extremely cynical and or revolutionary about what is going on.
 
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B_New End

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Answered a million times where? I've not seen a serious piece discussing the wisdom of just letting large banks fail.

That's because you continue to listen to the fools that made the mess, the fools that said nothing was going to happen, the fools that said everything was fine in 2007, and call it "wisdom".

Meanwhile you ignore the wise men, who warned of the crash, who warned of not only the real estate bubble, but also gave the exact reasons as to why the economy was going to crash, and call them "fools".

So it's not that you haven't seen the wisdom in letting the banks fail. It is that you don't know the difference between wisdom and foolishness.
 
D

deleted15807

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That's because you continue to listen to the fools that made the mess, the fools that said nothing was going to happen, the fools that said everything was fine in 2007, and call it "wisdom".

Meanwhile you ignore the wise men, who warned of the crash, who warned of not only the real estate bubble, but also gave the exact reasons as to why the economy was going to crash, and call them "fools".

So it's not that you haven't seen the wisdom in letting the banks fail. It is that you don't know the difference between wisdom and foolishness.

How do I know you are not the fool? Making predictions is free. Anyone can do them and if you happen to be right you got lucky. The next prediction is free too. Everyday at CNBC there are tons of predictions which may come true and and some never come true no one keeps track because often they have as much value as daily horoscopes.

And you left unanswered the big elephant in the room. What happens when big banks fail? And what are the consequences? If your advice is to 'let them fail' then you should have detailed scenarios on how that will play out. Banks are not Circuit City or Blockbuster video stores or Fotomats.
 

dandelion

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I would personally like a constitution under which government taxing, spending and borrowing was limited, other than in exceptional circumstances.
Dont you think an upper limit might quickly become a target. And there might be a lot of recurrent exceptional circumstances?
 

B_talltpaguy

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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.

Stop being so damn sensible and honest. You're going to scare the wealthy entitlement class into another childish tirade.
 

B_New End

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How do I know you are not the fool? Making predictions is free. Anyone can do them and if you happen to be right you got lucky.

Yeah, it's luck when your experts turn out to look like idiots, but expertise when your personal view is affirmed by the idiots... regardless of the actual reality.

Somehow it was "luck" that Peter Schiff not only predicted the collapse, but laid out in hundreds of minute details exactly why it would crash.

Just luck. :rolleyes:

You are simply in denial.

What happens when big banks fail? And what are the consequences? If your advice is to 'let them fail' then you should have detailed scenarios on how that will play out.
I already told you what happens. Did you miss this?

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.

Believe me, when you are being loaned millions or even billions at 0% interest, it is not hard to make money.
 
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bananaclubcock

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OK - you are taking this some way away from what most non US members will follow, but strangely, I was discussing this with some friends from South Dakota yesterday. Incidentally, what really fantastic people they are.
First of all, noting you have friends in South Dakota, though I did point an angry finger at the politics of the landlocked states, I want to be clear I think all of us fall short. I don't want to imply that they are any worse as people.

I think you need to forget about the super rich, unless your definition of super rich is what I would call "Upper Middle Class". The super rich you won't touch, but most of them can fuck up anyway. The super super rich are another matter, and you won't touch them.

I am afraid I don't agree with this again. The "Upper Middle Class" has already been squeezed. A lot of the likely political dynamic is their fighting back. They were traditionally very Republican and that is less and less true with each day. And the super rich are exactly who will be fucked with. They have had much of the politics tailored to support them since the early 1970s and THAT, unlike Federal debt, is largely at its limit. Basically, it is fuck with them or become third world. The path of kissing super rich ass is stuck in a cul-de-sac, anything that resembles progress involves at least clipping their wings, if not shooting their balls off.

In the 1930s the super rich had to pay over 90% of their marginal earnings over US$10 million in taxes. And the Civil War destroy the existing super rich in the US, the state with the richest Americans in 1860 has been known since 1865 as about the most poor and backward place in the country. The US has gone after the super rich before, with very favorable results!

An aside: the US and the UK have among the oldest political orders in the world. But all political orders fall eventually. In the Anglo-Saxon world, we often forget this.

Too much corporate profit is off shore. If it wasn't, neither of our countries would have a problem. That's a different issue though. What I do want to say is that I disagree regarding inflation. Inflation really hurts the poorest. It represents a higher proportion of what they have to spend. If I only have to spend 10% of my income, then if inflation is 10%, it only costs me 1%. If I have to spend 100% to survive, then I have to cut back by 10% if my earnings don't go up.

Corporate profits and asset markets aren't the same as the health of the broad economy. The US has favored increase in asset prices (incl. corp. profits/stock market) over labor since the early 1970s. What the US needs now is more demand and that will have to come from higher labor income. The wealth basically needs to be transfered back from the super rich to the various tiers of the middle class.

Inflation is really hurting poorer people. Look where it is hitting, food and energy. Pretty basic needs eh?
Inflation is a tough beast to understand. It literally means money is worth less. Having a bunch of money means inflation is making you poorer. Owing a lot of money means inflation is making you less poor. While goods prices will go up, so should wages and the most importantly of all, debts become less of a burden.

I could get extremely cynical and or revolutionary about what is going on.

You're not the only one!
 

bananaclubcock

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Big E, facequeen, hungshyman, starinvestor, and anyone else operating under the assumption that this is just a problem involving a bunch of deadbeats simultaneously deciding not to pay their mortgages should read this piece from The Financial Times Alphaville Blog. This is technical, but it goes into why this is such a clusterfuck. And they don't even touch on how the caselaw supports the clusterfuck notion. FT Alphaville
 

B_talltpaguy

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^The sad part is how history repeats itself so closely, over and over, and people of the current generation ALWAYS delude themselves into thinking they're special, and that it won't happen again.
 

piercedjobbie

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Before I add any additional comment, may I state, unequivically, that this particular thread is the best that I've seen on this site and possibly others. I'm not a professional at observing and commenting, but it is very refreshing to get so much insight (read opinions if you want) from domestic folk and overseas folk as well.

There appears to be a couple of "sore points" that keep rising to the top -
1. big banks
2. inappropriate lending practices
3. poor government - this can be state as well as federal
4. consumers who want or expect more

Perhaps it is time that we think not of ourselves and what we want, but of the lives that we can give to our children. This would, in my mind, mean that we would do without so they may have. That "have" based on what I've read in this thread is not simply material possessions, but a lifestyle that is not encumbered with debt, is open to all aspects of life and one that respects people regardless of the cover of their book. We know not where angels tread unawares.

Beyond this, we need to speak our piece and also listen and learn to the spoken word of others. Somewhere, in all the the verbage is a touchstone upon which a good life can be had by all. Will any of us have everything we want? Hopefully not. That is another part of the gift that we give to all of our children.

Big banks - I remember - somewhat - my geometry maybe algebra, that the sum total is made up of the parts. If there is a mathematician out there please bail me out! The point being that each of us must act in a responsible way and cast aside the "look out for number one". Collectively we are number one, not individually. May I posit this? If we all live within our means, up to and including participating in a small local bank that cannot be bought by the big banks, and including other such things that would lend themselves to sound personal finanaces would we not benefit in the long run?

I love history, and I love the presidency of Abraham Lincoln above all, even Washignton. His close of the Gettysburg Address, which was pooh-poohed at the time best states my deepest thoughts regarding this country and the people. " and that the government of the people, by the people, and for the people, shall not perish from the earth".

Those of you who beg to differ are welcome to comment as this is also the purpose of this forum. As stated I'm not a professional, but I am a proud American who is saddened by what the politicians and Wall Street have done to US. You may read this as U.S.
 
D

deleted15807

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Yeah, it's luck when your experts turn out to look like idiots, but expertise when your personal view is affirmed by the idiots... regardless of the actual reality.

Somehow it was "luck" that Peter Schiff not only predicted the collapse, but laid out in hundreds of minute details exactly why it would crash.



Ha. I predicted the 'real estate' collapse. This wasn't exactly rocket science. Home values couldn't keep going up and up while wages remained stagnant. Seems like his prediction here didn't come true and here too. In fact it appears his clients lost money. Whatever.

If you are advocating the orderly breakup of big banks pre-catastrophe that I support. Though the likelihood of that happening via government intervention is nil. The plutocrats would never allow that to happen. Never.


^The sad part is how history repeats itself so closely, over and over, and people of the current generation ALWAYS delude themselves into thinking they're special, and that it won't happen again.

Over and over and over again. Mankind, for all the intelligence he thinks he has, it isn't enough to prevent serial disasters from occurring. The Borg were far ahead of mankind in that area.
 

B_New End

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Ha. I predicted the 'real estate' collapse.

Many of us did. But did you say exactly why, like Peter Schiff did? Did you know it would be because of the ARM's, and people refinancing?

Did you also perhaps think it was because of the phoniness of the economy?

If you answered yes to the last one... ...then why do you think we still need these fat behemoths like Goldman sachs... if the economy is phony anyways?


If you are advocating the orderly breakup of big banks pre-catastrophe that I support. Though the likelihood of that happening via government intervention is nil. The plutocrats would never allow that to happen. Never.

So give them more money and power?

:confused:

Ha. I predicted the 'real estate' collapse. This wasn't exactly rocket science. Home values couldn't keep going up and up while wages remained stagnant. Seems like his prediction here didn't come true and here too. In fact it appears his clients lost money. Whatever.
The google warrior shows his prowess... ...prowess to misunderstand the first article's meaning, and to buy a bunch of B.S. from the second.

Schiff has had to deal with this kind of press all the time. Just because something goes down in one year, doe snot mean it will in five years. On longer trends, schiff has been right, and called it rightly so.

And I am holding my silver until at least $75 an ounce. I expect to see that in a few years at the most. Depending on the inevitable inflationary acceleration, I may just hold out until $200.
 
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B_New End

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^The sad part is how history repeats itself so closely, over and over, and people of the current generation ALWAYS delude themselves into thinking they're special, and that it won't happen again.

if you told any european in 1913 that Europe would explode into the bloodiest war in history, they would have laughed at you. There hadn't been a major war except the Franco-Prussian war 40 years earlier, and the Crimean war really since Napoleon.

The world was stable, "everybody is too busy making money", they'd say.
 

bananaclubcock

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...

Perhaps it is time that we think not of ourselves and what we want, but of the lives that we can give to our children. This would, in my mind, mean that we would do without so they may have. That "have" based on what I've read in this thread is not simply material possessions, but a lifestyle that is not encumbered with debt, is open to all aspects of life and one that respects people regardless of the cover of their book. We know not where angels tread unawares.

Beyond this, we need to speak our piece and also listen and learn to the spoken word of others. Somewhere, in all the the verbage is a touchstone upon which a good life can be had by all. Will any of us have everything we want? Hopefully not. That is another part of the gift that we give to all of our children.

Big banks - I remember - somewhat - my geometry maybe algebra, that the sum total is made up of the parts. If there is a mathematician out there please bail me out! The point being that each of us must act in a responsible way and cast aside the "look out for number one". Collectively we are number one, not individually. May I posit this? If we all live within our means, up to and including participating in a small local bank that cannot be bought by the big banks, and including other such things that would lend themselves to sound personal finanaces would we not benefit in the long run?
...

I like the rest of your comment, but these paragraphs are the most important to me. I think you are absolutely right that we have to ask ourselves how we want this stuff to play out. My main reason for starting this was to see what others here think about this stuff.

I think I can dismiss the idea that all that happened was a huge number of people suddenly didn't pay their mortgage: banks are supposed to think about risks, they are paid to figure this stuff out. But I don't think any one person has the answers to these problem, they will require many inputs and a lot of careful thought. I hope more folks, from across all parts of society, take a lot at these issues and share their opinions.
 

bananaclubcock

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Foreclosure Fraud: It's Worse Than You Think

A quick overview of the clusterfuck, that is why the mortgages are a much, much greater mess than 'some deadbeats can't pay'. Basically, the procedures were so poorly handled, no one really knows who owns the mortgage and can foreclose.
 
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B_New End

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I'm curious as to who sees the inevitable second clusterfuck wave coming?
Right now, the first one is being held up by empty homes not getting foreclosed on, not to mention the commercial real estate collapse.
 
D

deleted15807

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So give them more money and power?

If you don't have the balls to dismantle them you have no choice. You want another run on the banks a la 1930's and another depression?

The regulatory environment we have today is toothless compared to the era when it could force the breakup of a huge iconic company like American Telephone and Telegraph.
 

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If you don't have the balls to dismantle them you have no choice. You want another run on the banks a la 1930's and another depression?

The run on the banks were a symptom, not a cause.
The panic was because the ponzi scheme collapsed.
The panic was a symptom.
The market ponzi scheme loaning money so traders could buy on margin was the cause.
90% of all money traded on the stock market was on margin when the great crash happened.

and regulation is useless if the regulators are owned by the companies.
Bringing back glass-steagall would be nice. Notice it is nowhere near happening.

You want to pay the ransom to the kidnappers when the hostage is already dead.
 

dandelion

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^The sad part is how history repeats itself so closely, over and over, and people of the current generation ALWAYS delude themselves into thinking they're special, and that it won't happen again.
Becoming a bank is a government sponsored licence to print money (though not quite literally nowadays. You have to print securities instead.). Why is anyone surprised that the bankers then run with this licence and make whatever they can? If the government gave you a licence to enter peoples houses and take five items from each, would you? Or would you be a good guy and only take 2 from each? The whole history of banking is littered with cases where banks have overreached themselves and failed. Why not? Nowadays its not even personal. The bank might fail but it doesnt belong to anyone who is running it. The operators only suffer in so far as they lose their jobs. But since the banks arent allowed to go out of business, not even that. So if i was a banker i would.....pay myself as much as i wanted......think up some new clever trick to get round the new regulations.....pay lots of the companies money to political parties....make the system as complicated and interconnected as possible to make it intervention proof...completely ignore governments etc demands and think about the best ways of keeping the juggernaut running.

if you told any european in 1913 that Europe would explode into the bloodiest war in history, they would have laughed at you. There hadn't been a major war except the Franco-Prussian war 40 years earlier, and the Crimean war really since Napoleon.

The world was stable, "everybody is too busy making money", they'd say.
Germany had the biggest army in the world and a prepared plan lying on the table to attack France, just waiting for the right moment. British admiral Fisher predicted the war would start one month after the Kiel canal widening was completed to allow battleships to move between the baltic and north sea (started 1907). It did. The famous killing of the austrian archduke was viewed by many as an excellent excuse to get things going. It wasnt the cause, merely a handy opportunity. Britain and Germany had been building up their fleets for 20 years, Britain in reaction to Germany but Germany from scratch was trying to build a fleet big enough to take down the british. The war started before they had time to do this, but the naval war was a sideshow to the main event. No TV. No wireless. Many people couldnt read, never mind buy newspapers, so most people probably didnt have a clue. But the movers and shakers did. The european war was caused by an expectation that you could make territorial gains within europe by force. Everyone believed in this, though most were worried they would be the losers in a fight. Thus the scramble to make alliances.
 
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