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Old 11-04-2019, 09:26 AM
 
2,414 posts, read 1,699,159 times
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Quote:
Originally Posted by Northern Maine Land Man View Post
I am a real estate broker - 30 years experience. (Pay no attention to what some spammer put up there under my handle.) I recently sold a home to a 92 year old lady. The bank took a 30 year mortgage on the home. Why would a bank do that?

Virtually all home mortgages are backed by you, the taxpayer. When the 92 year old lady passes on, her heirs will inherit the home and continue paying the mortgage. Her "kids" are retired and have limited incomes. The town of Millinocket, Maine recently sold 16 homes for $48,000. That wasn't each; that was an average of $3,000 each.

So, what happens to the house that was sold for $3,000? The resident's cousin bought it and the cousin living there paid the buying cousin $3,000. Happens all the time. Back in the 1920s, Henry Ford said, "If the American citizens understood the Federal Reserve, there would be a revolution before Monday."

In 1919 you could buy a cow with a $20 gold piece. Today you can buy a cow with that same $20 gold piece. A $20 federal reserve note will get you about four pounds of good hamburg. At the county fair, you can buy a $1,000,000 bill from Zimbabwe for a dollar. That's where we are headed with bonds yielding less than one percent. It's funny money.

Buy the five G's: gold, grub, guns, gas and ground.
This is happening again? I remember before last recession many of my neighbors were doing this. no one knew, unless they told you. Owner would foreclosure on purpose because why pay more money than one has to, then a relative would buy the property at really cheap price. My dad wanted to jump on board and do this but my mom wasn't on board. She was worried, what if things go wrong and she is out of home. We, kids also offered to help pay for mortgage instead of taking the shady route.
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Old 11-04-2019, 09:28 AM
 
Location: Tennessee
25,706 posts, read 19,086,542 times
Reputation: 30563
To me, the most recent thing has to be the Fed's involvement in the repo market. Even these relatively basic operations are requiring some lubrication to keep the gears moving. It's a troubling sign.
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Old 11-04-2019, 09:57 AM
Status: "State of Satisfied Bliss and Indifference" (set 25 days ago)
 
Location: western East Roman Empire
7,019 posts, read 11,026,260 times
Reputation: 6541
Quote:
Originally Posted by Serious Conversation View Post
To me, the most recent thing has to be the Fed's involvement in the repo market. Even these relatively basic operations are requiring some lubrication to keep the gears moving. It's a troubling sign.
It is a sign of trouble, bubbling up to the surface since the mid-2000s mortgage finance fiasco, and brewing since the mid-1990s, yet it still seems few want to understand it.

Why is it that banks do not have enough liquidity to lend each money overnight and for other short-term periods?

Why is it that banks do not have enough customer deposits, i.e. real customers, real people, doing real jobs, earning real wages, enough to save real money, to make real deposits?

Was it such a great idea to go full throttle, at break-neck speed, on undermining wage-earning jobs and replacing them with credit-driven consumption and flushing it all out through the global credit-based monetary system?

On a totally related note, European banks have experienced the same trouble, if not worse, since especially the mid-2000s mortgage finance fiasco, Chinese banks also scramble to gather liquidity, while Japanese banks have been zombies since the late 1980s.

Yes, let's hang the bankers and not look at the underlying problems in the real economy, easy scapegoat in the merry-go-round.

All the best!
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Old 11-04-2019, 12:41 PM
 
4,803 posts, read 1,264,655 times
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So if it was bad when a asset value bubble bursts, it should be a good thing when a debt bubble bursts, right?!?!
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Old 11-04-2019, 03:16 PM
 
Location: Northern Maine
9,936 posts, read 15,344,182 times
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A burst bubble cannot be repaired, no matter what name you give the bubble.

Back around 1988, there was a "savings and loan crisis". Like a bubble, it was not real. Because of local boards and prudent lending practices, local S&Ls were healthy, efficient and good for both local economies and local borrowers. The mega-banks were jealous. They got a friendly court to analyze small town banks. Auditors swept in.

A family of home builders took out loans to build homes. They did this every spring and paid off the loans in the fall as the homes were sold. The family of home builders had been in business at the same location for nearly a century and had never defaulted.

The auditors swept in and declared that the banks lending practices were irresponsible. They were not sound lending practices and the bank was not a sound bank. The ank was seized and auctioned off to a mega-bank. Local shareholders lost their investments. Depositors were protected by 5the FDIC. This happened in Maine and in small towns all across America.

The Keating Five had a lot to do with the enormous scam. Books have been written about it. We got our first home computer at Christmas of 1987. There was no internet, just bulletin boards where we could post information. People say, "How do you know this stuff?" I lived it.
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Old 11-04-2019, 03:38 PM
 
4,803 posts, read 1,264,655 times
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Quote:
Originally Posted by Northern Maine Land Man View Post
A burst bubble cannot be repaired, no matter what name you give the bubble.

Back around 1988, there was a "savings and loan crisis". Like a bubble, it was not real. Because of local boards and prudent lending practices, local S&Ls were healthy, efficient and good for both local economies and local borrowers. The mega-banks were jealous. They got a friendly court to analyze small town banks. Auditors swept in.

A family of home builders took out loans to build homes. They did this every spring and paid off the loans in the fall as the homes were sold. The family of home builders had been in business at the same location for nearly a century and had never defaulted.

The auditors swept in and declared that the banks lending practices were irresponsible. They were not sound lending practices and the bank was not a sound bank. The ank was seized and auctioned off to a mega-bank. Local shareholders lost their investments. Depositors were protected by 5the FDIC. This happened in Maine and in small towns all across America.

The Keating Five had a lot to do with the enormous scam. Books have been written about it. We got our first home computer at Christmas of 1987. There was no internet, just bulletin boards where we could post information. People say, "How do you know this stuff?" I lived it.
I'm sorry if I'm missing the outcome for the home builders... what became of them? Were the loans called, or were the loans simply not an option come next spring?
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Old 11-05-2019, 09:08 AM
 
Location: plano
6,801 posts, read 8,440,330 times
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Most builders go bankrupt often not just for the reason cited.
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Old 11-05-2019, 10:35 AM
 
6,875 posts, read 5,141,979 times
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Quote:
Originally Posted by Questioner1981 View Post
It seems since the nineties Tech bust, Enron, Worldcom, Arthur Anderson, S&L debacle we as a society have been going from one bubble to the next. So, now are we in a debt bubble? I don't know too much about fixed income analytics but it seems the deficit of the US is too high, many local states in a Deficit, and many companies are over-leveraged.

The Federal Reserve keeps lowering interest rates, which signals Economic Concerns. So, could we be in another bubble with potentially major ramifications when it bursts?
This is just sky is falling BS.

The tech boom came and went. Lots of greedy people thought they would make a killing on stocks for tech companies that made no profits. Yup, it hit the fan. Again, ancient history. Currently bringing in money for new companies, tech or otherwise, is very difficult and few IPOs do well. Buyers want to see returns or at least a high probability of returns in the very near future.

Very few companies are highly leveraged. In fact a great many companies have used profits to buy back stock instead of attempted to expand rapidly.

State and Federal deficits are a whole different sort of issue and as can be noted for decades are not tied to the success of the economy of individual companies or investments.

"Economic concerns" centers around slowing economies worldwide and is in many respects opposite of a "bubble" which is over spending and over investing due to irrational exuberance.
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Old 11-05-2019, 11:26 AM
 
3,658 posts, read 1,009,264 times
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Quote:
Originally Posted by Questioner1981 View Post
It seems since the nineties Tech bust, Enron, Worldcom, Arthur Anderson, S&L debacle we as a society have been going from one bubble to the next.
No, we haven't. You haven't mentioned a single bubble. The S&L crisis, by the way, was in the 80s, not the 90s.

Quote:
Originally Posted by Questioner1981 View Post
So, now are we in a debt bubble? I don't know too much about fixed income analytics but it seems the deficit of the US is too high, many local states in a Deficit, and many companies are over-leveraged.

The Federal Reserve keeps lowering interest rates, which signals Economic Concerns. So, could we be in another bubble with potentially major ramifications when it bursts?
Every dollar of debt purchased exists because it previously was saved.

To say we have too much debt is the same thing as saying we save too much.
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Old 11-06-2019, 08:25 PM
 
7,352 posts, read 6,954,085 times
Reputation: 3424
Quote:
Originally Posted by ddm2k View Post
I'm sorry if I'm missing the outcome for the home builders... what became of them? Were the loans called, or were the loans simply not an option come next spring?
The loan becomes asset of the bank that buys the old banks, and the home builders pays the new bank, terms stay the same.

That is my guess.
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