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Old 02-21-2013, 04:10 PM
 
621 posts, read 547,195 times
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Quote:
Originally Posted by cpg35223 View Post
You aren't familiar with the pressure that the Federal government put on lenders to give mortgages to people with no ability to pay. Regulators would come through a bank and audit the books to see how many loans were written to targeted demographics.
I've worked in the Pharmaceutical business. If they don't like the way you are doing things then they shut you down. By reputation I understand what you are talking about.
Quote:
Originally Posted by cpg35223 View Post
Shucks, I consulted for one large mortgage bank. Every six months, they would start to look at their numbers and sweat it out if they didn't have enough lending to people that the entire initiative was designed to put into homeownership. And the government would demand explanations if the quotas weren't met. So your belief that banks could have just said 'no' to bad loans strikes me as uninformed.
I know why you would say this and after the fact it is easy to see things clearly.
Quote:
Originally Posted by cpg35223 View Post
The only choices were either to lend money or go out of business entirely. There was no middle ground.
You got it. And the correct choice was to go out of business.
Quote:
Originally Posted by cpg35223 View Post

The best way to play the game was to not have played it at all. In order to put another 4% of the country's families into homeownership, the banking industry was ravaged, home prices soared, municipal government's financial projections went off the charts, and the deficit soared. It was a classic case of the Law Of Unintended Consequences at work.
I think that was the intend behind what they did. But I'm a bit of a cynical person.
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Old 02-21-2013, 04:12 PM
 
621 posts, read 547,195 times
Reputation: 265
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Originally Posted by pie_row View Post
I think that was the intend behind what they did. But I'm a bit of a cynical person.
The reason I want enough inflation to push houses above the peek of the last bubble is to undo as much of the damage to the economy by that bubble as we can.
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Old 02-22-2013, 07:15 PM
 
Location: New York City
4,036 posts, read 8,645,283 times
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The US financial crisis was largely about private debt whereas the European crisis was a mixture of private and pubic debt (particularly the PIGS). The policies were different but the effect was similar: to encourage people, particularly the lower-middle class, to live beyond their means.

Iím sure some budget hawks will go on and on about the deficit and the debt, but at present, public debt in the US is not the problem it is in Europe.

Itís a good case study for the US about allowing public to get out of control. But itís also a case study in how austerity can be counterproductive.

I think the best policy is to encourage growth with prudent retrenchment as the economy recovers. We still have that option. Greece didnít.
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Old 02-23-2013, 08:36 AM
 
17,749 posts, read 15,023,452 times
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Quote:
Originally Posted by cpg35223 View Post
So your belief that banks could have just said 'no' to bad loans strikes me as uninformed. The only choices were either to lend money or go out of business entirely. There was no middle ground.
Most bad information comes from assumption. Most of those come from failure to observe. If I walk into a green house I define the result, not by the number of plant tenders, not by how hard it is to tend plants, but by the growth of the plants I like. Food plants and ornamental plants make for a nice contrast on a Maslow hierarchical value system . So all work is defined as edible fruit and what is pleasing to the eye. The bank dilemma you speak may occur with too many scavengers. That assumes we need any at all. Yes, it seems half the country wants to be the middle man which is the claim on wealth like finance and law.


Quote:
The best way to play the game was to not have played it at all. In order to put another 4% of the country's families into homeownership, the banking industry was ravaged, home prices soared, municipal government's financial projections went off the charts, and the deficit soared. It was a classic case of the Law Of Unintended Consequences at work.
It was intended. How many times do you have to fall for it? The poor and the wealthy each have a virtue to swindle . However they also each have on obstacle. The wealthy have something of value however it serves as evidence that they accumulate it, and thus it is not so easily parted from them. The poor on the other hand have the virtue of tending to hold onto nothing.

A rich person would pay a low interest rate on a loan while a poor person may default. So the best of both worlds is to discover the poor sick mother of a billionaire and give her a high interest loan, for example.

So the financial sector moved money to where it is easily separated and dumped the liability on the public. They love giving money to the poor. To boot they got rid of the smaller banks to kill off the small competition in the wake. Sure there were plenty of liberal useful idiots , but it was intended. They intended to make a quick buck and they did, billions of it.

Step one in any heist is to grab it when it is least defended on the high ways between the cities. Moving money out of the vault to a poor man's mattress is half stolen already.
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Old 02-23-2013, 08:53 AM
 
17,749 posts, read 15,023,452 times
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Quote:
Originally Posted by tpk-nyc View Post
The US financial crisis was largely about private debt whereas the European crisis was a mixture of private and pubic debt (particularly the PIGS).
The sovereign states in the EU act like private debt to the ECB. So it is certainly very much a mixed bag.

Quote:
The policies were different but the effect was similar: to encourage people, particularly the lower-middle class, to live beyond their means.
Flying us all to Pluto is beyond our means. Since it happened it was clearly within someone means and what you really means is that there is remorse. The real argument is over a very ancient concept and that is what can compensate creditor remorse?
6 ďNo man shall take the lower or the upper millstone in pledge, for he takes oneís living in pledge.
What they want are the national assets of Greece. That may be exactly what they wanted.

Quote:
Iím sure some budget hawks will go on and on about the deficit and the debt, but at present, public debt in the US is not the problem it is in Europe.
Oh they surely will fueled by complete ignorance of the money system. Ironically deficit hawks will make the foreign debt side of the Triffin dilemma worse. They have already been making it worse since the "tool" ZIRP they are using is causing massive dollar out flows , but little domestic economic activity.

Quote:
Itís a good case study for the US about allowing public to get out of control. But itís also a case study in how austerity can be counterproductive.

I think the best policy is to encourage growth with prudent retrenchment as the economy recovers. We still have that option. Greece didnít.

FICA just went up and ZIRP remains. We just keep adding to the risk.
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Old 02-25-2013, 11:29 AM
 
24,711 posts, read 26,777,106 times
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Quote:
Originally Posted by kanhawk View Post
When the recession and financial collapse happened in 2008 in the US, Bush and his policies were blamed for it. Yet most of Europe also had a major economic downturn and their policies are much different than George Bush's were.
Why would such different policies lead to the same economic recession?
Because we have a world economy now, run by a tiny elite. The elites created housing bubbles not only in the U.S. but also the U.K., Spain, Denmark, and Ireland. Some say there are real estate bubbles in Canada and Australia that are about to pop. Many southern European governments, like Greece, were living beyond their means, promising pay and benefits to anyone and everyone and running up big deficits...so it didn't take that much to take them down the toilet.

If you really take a look, you start realizing that economic policies in various countries are not much different. They are all designed to get ordinary folks throughout the world to live beyond their means and to have ordinary folks expect their governments to do the same in the name of social welfare. Debt is one of the major ways the elites maintain power and control over all of us.
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