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Old 09-27-2008, 07:26 AM
 
19,183 posts, read 27,744,233 times
Reputation: 4000

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Quote:
Originally Posted by SuSuSushi View Post
So basically you're saying the consumer has no culpability here. Riiight.
Who is "the consumer"? It's just like The Naked City...either the movie or the TV show. If you've never seen either, the final line is...There are eight million stories in the naked city...this has been one of them. If all you can do is imagine people only through their memberhsip in one or more of a handful of predefined groups, you aren't going to get very far. In international law, collective punishment is a war crime. Just something to consider...

Quote:
Originally Posted by SuSuSushi View Post
You can't pin this whole thing on the banks.
Banks (and other lenders) want to make money. People want to own houses. You can bring these two groups together within a variety of environments. Under some, you see rational, stable, viable systems emerging. Under others, you don't. Guess which one we've been under since about 2002.

Quote:
Originally Posted by SuSuSushi View Post
And yes, my neighbor down the street did just what I represented here.
If he abandoned a perfectly good house simply because its market value was below the mortgage value, then he was every bit as dumb as you say. Did you do anything to try to talk him out of such folly?

Quote:
Originally Posted by SuSuSushi View Post
When I see someone represented in the news as a "victim" of this whole thing, and the story says they make $40k a year and bought a $400,000 house on an ARM or an interest-only loan, yes I consider them to be part of the problem.
As a rule of thumb, you don't want to spend more that 30% of your income for housing. An interest-only loan for 100% of a $400K home would have worked out to about 33% of a $40K annual income. That's a stretch, but you have plenty of people out there who are managing to get by at 40% and higher. You're jumping on people here not so much for poor decisonmaking as for poor tea-leaf reading.

Quote:
Originally Posted by SuSuSushi View Post
They aren't victims, they were just caught by their own greed...
Greed, is it? Are you any less greedy? Do you not want the best that you can afford for your family? Are there things that you could do to improve the lives and prospects of your children that you do not do because it would seem too greedy to undertake them? I'd like to see the list...

Quote:
Originally Posted by SuSuSushi View Post
...and now that greed is costing me and other people who didn't spend frivolously, and didn't go massively into debt for toys, and didn't buy way more house than we could afford by any stretch of the imagination.
So because lightning didn't strike your house, because the roll of the dice didn't come up snake eyes for you, you are morally superior to those who were handed the short end of a stick that neither you nor they even knew existed? That sounds really cool to me.

Quote:
Originally Posted by SuSuSushi View Post
Blame the banks all you want, it takes two sides to sign a mortgage contract.
And you signed one yourself. Under the same condition of ignorance of the future as everybody else. Like theirs, your fate was sealed that day, and you no longer had any control over it at all. Who knows? If we don't get some sort of patch put on the system, maybe in another year or two it will be you who is being wiped out. But in that case, you'll deserve it...for having been so greedy and made such poor decisions. Right?
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Old 09-27-2008, 07:36 AM
 
Location: Chino, CA
1,458 posts, read 2,898,870 times
Reputation: 546
Again,
Yes, it takes two sides to tango... BUT... there wouldn't have been much credit to play with in the first place if the Banks didn't have "funding" or buyers for their securities.

If you have a credit limit, if you don't have credit... guess what folks... you can't buy. Hence the tightening now.

Anybody guessed yet? Who did the funding for our credit expansion?


-chuck22b
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Old 09-27-2008, 07:47 AM
 
19,183 posts, read 27,744,233 times
Reputation: 4000
Quote:
Originally Posted by GhostInTheShell View Post
I sincerely hope this thread doesn't continue to degenerate into another one of the Jerry Springer type debates better reserved for the Political forum. Your standoffish, emotional posts are completely in opposition to the rules of the Great Debates forum. The second post of this thread not only answered the OP's question, but it provided a good staging point for an argument for or against laissez-faire capitalism. Any subsequent argument should at least try to address the points mentioned in that post. To do anything less is an injustice to the forum. Emotionally charged posts and trite statements like "capitalism doesn't work" contribute nothing to the discussion unless they're backed with logic or fact while also addressing the points made in the previous posts. Nothing you said addressed anything that wasn't already refuted by the second post. Admittedly, several of the other posts were also unnecessary.
I'm sorry if your Paulist sensibilities have been offended. There are reasons why Dr. Paul is not taken seriously by much of anybody. It is not obligatory to launch into a recitation of all of those every time someone copies and pastes the latest quote from his website. I'm sure that copy and paste was not one of the things that C-D staff had in mind when defining the Great Debates forum. I would love to see the level of debate here maintained at higher levels. But in an opinion expressed very early on in the forum's history, I have my doubts as to whether the majority of at least P&OC types is actually capable of such levels. There have been some very good runs of proper debate in GD. There have been some that have not been so good. But if you are asking me to grant a license to others that will not be granted to me as well, I expect to have to decline. The level of debate here will be set by the group, not by any individual. I suggest that you do the best you can to hold up your end of the deal, while I will do the best I can to hold up mine. After that, things are pretty much beyond our control...
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Old 09-27-2008, 08:00 AM
 
19,183 posts, read 27,744,233 times
Reputation: 4000
Quote:
Originally Posted by NCN View Post
America is living on too much credit. The young people who are borrowing so much have no caution because things have always been good.
How much credit is too much? How much would have been just enough? Do historically low interest rates change the amount that would be just enough? Does deflection of productivity gains that would generally have accrued to the benefit of society as a whole into corporate profits and away from wage gains leading to declining real household income have any effect on things? All tough questions. But until one has an idea of the answers, a simple "too much credit" seems like something of an oversimplification...
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Old 09-27-2008, 08:10 AM
 
19,183 posts, read 27,744,233 times
Reputation: 4000
Quote:
Originally Posted by Mircea View Post
It should be locked since the original premise is patently false, because the OP is ignorant of economics. The US is not in a depression. It isn't even in a recession yet. You will know when the US enters a recession when the GDP for a quarter is below 0%, ie the economy contracted.
Depression was indeed the wrong word to have used. There is no common and accepted standard for defining a depression, but the most common definitions tend to be related to employment and the lack thereof.

Recessions are a different matter. The official call on these is made by the National Bureau of Economic Research, but their calls are made only with the benefit of hindsight. Their formal defintion of a recession is "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." There is no need in their view for actually negative GDP growth to occur.
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Old 09-27-2008, 10:12 AM
 
Location: The Netherlands
8,567 posts, read 14,520,600 times
Reputation: 1573
Originally Posted by SuSuSushi
Quote:
Blame the banks all you want, it takes two sides to sign a mortgage contract.
HMMMmmm, can we compare investing in stocks with gambling?
Gamblers call people who aren't willing to take a risk (read: who don't go to casinos) fools, because he who doesn't dare will never hit the jackpot, right?
Then again, there is a difference between a traditional bank (a bank who only deals in saving & loans) and investment banks (those who deal in stocks) and / or bank holding companies*.

Quote:
* New or smaller banks often re-structure themselves into bank holding companies to take advantage of the greater financial flexibility this corporate and legal status permits. Becoming a bank holding company makes it easier for the firm to raise capital than as a traditional bank. The holding company can assume debt of shareholders on a tax free basis, borrow money, acquire other banks and non-bank entities more easily, and issue stock with greater regulatory ease. It also has a greater legal authority to conduct share repurchases of own stock.

The downside includes responding to an additional regulatory authorities, especially if there are more than 300 shareholders, at which point the bank holding company is forced to register with the Securities and Exchange Commission. There are also added expenses of operating with an extra layer of administration.

Source: Bank holding company - Wikipedia, the free encyclopedia
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Old 09-27-2008, 12:47 PM
 
19,183 posts, read 27,744,233 times
Reputation: 4000
Another difference that is quite significant with respect to current affairs is that investment banks must mark their assets to market on a daily basis. When some classes of assets fail to trade, there is no market to mark to and suddenly the position of the bank can take a dramatic turn to the south. Assets must be classified as non-performing or be written down to some credibly defensible level. This discipline is intended to serve as an important control on bank management relative to risk and exposure to it. Bank holding companies on the other hand can carry assets at essentially their value at maturity, disregarding the effects of current market ups and downs. In exchange for this, they accept a detailed regime of internal controls that bank officers as well as overseers and regulators are then supposed to monitor. Thus, even though they might hold the same assets, the standard financial picture of a bank can look different, depending on whether it is an investment bank or a bank holding company.

An additional and potentially important difference is that bank holding companies typically have access to the Fed discount window, from which they can acquire short-term capital to cover any emerging incidental shortages. Investment banks do not have such access.
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Old 09-27-2008, 02:06 PM
 
Location: vagabond
2,631 posts, read 4,832,743 times
Reputation: 1300
Quote:
Originally Posted by SuSuSushi
Blame the banks all you want, it takes two sides to sign a mortgage contract.
And you signed one yourself. Under the same condition of ignorance of the future as everybody else. Like theirs, your fate was sealed that day, and you no longer had any control over it at all. Who knows? If we don't get some sort of patch put on the system, maybe in another year or two it will be you who is being wiped out. But in that case, you'll deserve it...for having been so greedy and made such poor decisions. Right?
i'm not gonna claim to know what kind of mortgage (or various other invetments) susu has, or anyone else here, until they decide to post it for the rest of us to see. but there is a difference between a smart buy and a stupid buy. those that knowingly bought something way out of their price range, hoping that credit would somehow save them, or handed out lines of credit like candy, hoping that the government would bail them out on the off-chance that we had some sort of financial crisis, made stupid buys, signed stupid contracts, and unfortunately, are bringing everyone else down with them for their stupid decisions.

those that made good buys, within their means, hopefully will survive this. it would really **** me off if i lost my house, not because i made a stupid decision, but because some moron down the street, or some greedy bankers made poor decisions, whether caused by lack of education and budget skills, or greed and apathy.
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Old 09-27-2008, 08:47 PM
 
Location: Raleigh, NC
475 posts, read 1,148,264 times
Reputation: 341
The people who could not afford the homes they bought and the banks who gave loans to people without even asking about income.
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Old 10-01-2008, 12:52 PM
 
372 posts, read 760,952 times
Reputation: 126
I blame the Beatles, more specifically John Lennon.

If he doesn't pen "Imagine" perhaps our society wouldn't have seen it fit to see eveyone as equals. Congress wouldn't have forced banks to make loans to substandard buyers. Property values wouldn't have escalated as quickly due to a an oversupply of buyers in the late 90's and early 2000's. Foreclosures wouldn't be as high, because buyers would have been more qualified and less ARM would have been used. Less inventory would have been built, and prices would be lower.
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