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Thread summary:

Housing: real estate, debt crisis, loan, market home values, house investing.

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Old 07-23-2008, 06:18 AM
 
Location: Sitting on a bar stool. Guinness in hand.
4,429 posts, read 5,802,480 times
Reputation: 1708

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Roubini More Than 1 Trillion Needed to Solve Housing Crisis: Tech Ticker, Yahoo! Finance




Quote:
But $25 billion -- or even the GAO's worst-case $100 billion estimate -- pales in comparison to the cost of doing nothing, says Nouriel Roubini, NYU professor and chairman of RGE Monitor.

"We have to find a solution where government intervention prevents a disorderly outcome" in the housing market that leads to a "systemic banking crisis," Roubini says.



Quote:
Quote:
Roubini's main concern stems from a view that the "housing recession is not bottoming by any standards," in contrast to hopeful comments from Paulson on Fox News and Barron's last weekend.
The economist believes U.S. home prices will ultimately fall 30% from their peak -- vs. 18% to date according to the S&P Case-Shiller Index -- "before bottoming out some point in 2010."



Quote:
In the interim, the negative wealth effect of declining home values and increase in "underwater" mortgages will lead to more Americans walking away from their homes. Such "jingle mail" threatens to ultimately cost $1 trillion in credit losses, wiping out 75% of the capital of U.S. financial institutions, Roubini warns.

It is that "disorderly" outcome Roubini says the government cannot afford to let happen. With "the charade" that Fannie and Freddie weren't already government agencies over, he believes a nationalization of the 50% of mortgages not owned or guaranteed by Fannie and Freddie will be necessary, and the Frank-Dodd Bill is a small step down that road.



Quote:
From Roubini's view, nationalizing housing avoids the government having to nationalization the entire banking system, making it the lesser of two evils

I put this post in the real estate section as well.
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Old 07-23-2008, 06:56 AM
 
Location: Londonderry, NH
41,478 posts, read 52,760,224 times
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I am gratified that privatization is great when values are increasing but government help is mandatory when prices are falling. I have news for all you financial folks. The wealth (value) was never there! An inflationary upward spiral in prices created the boom without a commensurate increase in value. There was money created but not wealth.
In all boom economies the bust eventually happens. It is time for this correction. The government should stay out of this situation and let the bubble burst and the shards of the old economy fall where they may. Some people will loose their savings and some their investment portfolios. They took the risk; now let them pay the cost. Remember not all lottery tickets win.

People that bought houses because they needed housing and never expected to speculate by continuously trading up or taking out their equity will weather this storm quite well. The boomers that used their houses as income or investment will suffer losses as will the banking system that encouraged them.

Let it crash and them we can build a rational economic system from the debris as we did after the crash of 1928.
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Old 07-23-2008, 08:56 AM
 
3,698 posts, read 10,386,394 times
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Quote:
Originally Posted by GregW View Post
People that bought houses because they needed housing and never expected to speculate by continuously trading up or taking out their equity will weather this storm quite well. The boomers that used their houses as income or investment will suffer losses as will the banking system that encouraged them.
Bingo.
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Old 07-23-2008, 09:39 AM
 
28,905 posts, read 47,915,303 times
Reputation: 46167
Typical by-the-numbers reporting:

1) Find the most shrill, over-the-top, Chicken Little prediction to grab headlines.

2) Print article.

3) Have dupes in public run around in panic mode.

4) When prediction turns out to be patently wrong, heap scorn and abuse on the original source of prediction.

5) Rinse and repeat.
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Old 07-23-2008, 09:56 AM
 
48,509 posts, read 86,088,090 times
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I think the thing is that alot of the borrowers are beyond help really as many won't qualify for a fixed loan now just has they wouldn't have in the past.Once they really look at things like other debt to income ;that's it as far as far as a loan goes.I am surprised that people still ask about no down payment loans after all of this.
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Old 07-23-2008, 12:26 PM
 
Location: Sitting on a bar stool. Guinness in hand.
4,429 posts, read 5,802,480 times
Reputation: 1708
Quote:
Originally Posted by GregW View Post
I am gratified that privatization is great when values are increasing but government help is mandatory when prices are falling. I have news for all you financial folks. The wealth (value) was never there! An inflationary upward spiral in prices created the boom without a commensurate increase in value. There was money created but not wealth.
In all boom economies the bust eventually happens. It is time for this correction. The government should stay out of this situation and let the bubble burst and the shards of the old economy fall where they may. Some people will loose their savings and some their investment portfolios. They took the risk; now let them pay the cost. Remember not all lottery tickets win.

People that bought houses because they needed housing and never expected to speculate by continuously trading up or taking out their equity will weather this storm quite well. The boomers that used their houses as income or investment will suffer losses as will the banking system that encouraged them.

Let it crash and them we can build a rational economic system from the debris as we did after the crash of 1928.
I agree with you in theory. It is the way things should be, but I know it's not going to happen like that. The Sheople will panic, as usually, and complain about how they need help. Our government will cave to the pressure and try to halt the downward spiral, which I think we both know can't be stop. And this will cause the pain to be not quite as sharp but it will last a hell of a lot longer.
Also I would be a bit concerned if the market did crash. This because we can look a back at the crash and realize that we were pretty close to changing our democratic system to something that looked more like communism. Now while I believe the communism have been proven to not work. We may an increased movement toward some type of socialism. Now if this move would both you or some others, it might behoove you guys to allow for short term help from the government. This would be a "just in case" action to prevent thing from changing in status quo in the longterm.

Quote:
Originally Posted by cpg35223 View Post
Typical by-the-numbers reporting:

1) Find the most shrill, over-the-top, Chicken Little prediction to grab headlines.

2) Print article.

3) Have dupes in public run around in panic mode.

4) When prediction turns out to be patently wrong, heap scorn and abuse on the original source of prediction.

5) Rinse and repeat.
Anyone who dismisses Roubini (or Jim Rogers for that matter) out of hand is a fool.
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Old 07-23-2008, 12:34 PM
 
28,905 posts, read 47,915,303 times
Reputation: 46167
Quote:
Originally Posted by baystater View Post
I agree with you in theory. It is the way things should be, but I know it's not going to happen like that. The Sheople will panic, as usually, and complain about how they need help. Our government will cave to the pressure and try to halt the downward spiral, which I think we both know can't be stop. And this will cause the pain to be not quite as sharp but it will last a hell of a lot longer.
Also I would be a bit concerned if the market did crash. This because we can look a back at the crash and realize that we were pretty close to changing our democratic system to something that looked more like communism. Now while I believe the communism have been proven to not work. We may an increased movement toward some type of socialism. Now if this move would both you or some others, it might behoove you guys to allow for short term help from the government. This would be a "just in case" action to prevent thing from changing in status quo in the longterm.



Anyone who dismisses Roubini (or Jim Rogers for that matter) out of hand is a fool. He's been on point more times then not.

You know, I've sat at the table with Jim Rogers. He's a great self-promoter who is right about half the time. I can't begrudge him his success in commodities, but you also have to remember that right now he's pushing an agenda. After all, this is the guy who's been pushing the Chinese markets for years. Well, given that the Chinese markets have hemorrhaged 48% of their value since last October, given the fact that Chinese laws are notoriously fickle when it comes to fundamental things such as property rights, honest reporting, and a host of other issues, and how the long-term Chinese demographic curb is extremely doubtful, I cannot imagine how the guy can continue banging the Chinese drum with any integrity. Yeah, you can make money really quickly, but do you really want to bet the farm on it?
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Old 07-23-2008, 01:10 PM
 
Location: Sitting on a bar stool. Guinness in hand.
4,429 posts, read 5,802,480 times
Reputation: 1708
Quote:
Originally Posted by cpg35223 View Post
You know, I've sat at the table with Jim Rogers. He's a great self-promoter who is right about half the time. I can't begrudge him his success in commodities, but you also have to remember that right now he's pushing an agenda. After all, this is the guy who's been pushing the Chinese markets for years. Well, given that the Chinese markets have hemorrhaged 48% of their value since last October, given the fact that Chinese laws are notoriously fickle when it comes to fundamental things such as property rights, honest reporting, and a host of other issues, and how the long-term Chinese demographic curb is extremely doubtful, I cannot imagine how the guy can continue banging the Chinese drum with any integrity. Yeah, you can make money really quickly, but do you really want to bet the farm on it?
It's not so much that these guys are always right or that you should bet the farm on every little investment that they may hint at. I have just found that these guys are relatively honest about our financial situations both in the past and the here and now. Though I do agree that all businessmen have an agenda. Heck that's what makes them businessmen. But Mr. Rogers and Professor Roubini were way ahead to the curve on housing and laid out what was (is) going to happen. Basically they were trying to warn us, while a lot of others out there were drinking or serving the koolaid of "real estate never goes down." That why I don't take what Prof. Roubini says lightly and neither should anyone else. But make no mistake, people still have to do their own research and should be sheep that are lead by a Sheppard. That because the sometimes the Sheppard lead you to the slaughter house.
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Old 07-23-2008, 01:13 PM
 
190 posts, read 780,263 times
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The dot.com bust produced losses of 6 TRILLION $$'s, I read, so why should we be worried about 1,2, or even 3 trillion losses now????
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Old 07-23-2008, 01:19 PM
 
Location: Chino, CA
1,458 posts, read 3,004,957 times
Reputation: 553
Quote:
Originally Posted by JoeyT View Post
The dot.com bust produced losses of 6 TRILLION $$'s, I read, so why should we be worried about 1,2, or even 3 trillion losses now????
I think it's got to do with the number and kinds of people affected. The .com bust affected more of the wealthy and investor classes.... while a housing bust affects everybody that owns a home in the U.S. ~%65. Not to mention the residual affects on people that don't own homes. What about all those States that didn't have much of any run-up affected by this down-turn?

Since we live in a "democracy", it's the number of people affected that matters. If we were in China, and this were to happen there... the government could probably care less since the mass of the population only make a few dollars a day. In corrupt places, money talks...

I know I'm over generalizing.... but 'tis how it goes not everything is fair.

-chuck22b

Last edited by chuck22b; 07-23-2008 at 01:32 PM..
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