patrick.net

tatupu70 says

Actually, according to some sources, CRA loans failed at a rate lower than the average loan after the bubble burst. So CRA actualy lessened the impact.

Your "some sources" are utterly delusional. Just look at the value collapse in the sub-optimal neighborhoods vs. the better neighborhoods. One way to arrive at the delusional conclusion you cite is refuse to recognize losses in the bad neighborhoods as the collateral assets have collapsed so far below water, whereas foreclosing in better ones in order to capture remaining equity.

Yes, GSEs got into the game late like you say above. They had a mandate to loan money and they couldn't because private industry was giving away money with no standards. They adjusted so they could keep up.

There is no "private industry" in mortgage lending, except for "hard money" loans. The FDIC insured banks, like IndyMac, had employees in the business of throwing money out of the window and collect bonuses based on how much money they threw away, then have the taxpayers to pay for the eventual institutional losses.

tatupu70 says

Reality says

The suspension of accounting rules is causing the bubble right now!

Where is there a bubble now? Certainly not nationwide.

LOL. Do you not see the bubble in bank stocks? And what do you think is the consequence of that bubble? Not nationwide?

tatupu70 says

Reality says

The assumption in your statement was of course that too little of the CORRECT KIND of government intervention

Yes, I think that is obvious.

Yet, facts and history repeatedly show that government officials (monopolists and nexus of monopolies) are far more prone to make the WRONG KIND of interventions. Do you still wish to stick by your position of advocating for more interventions?

tatupu70 says

errc says

The bailouts were not necessary, so now how do you rationalize them.

I'm assuming you are writing that to me. And my answer is--how the hell do you know if they were necessary??

I guess it depends on what your definition of necessary is,,,,

You are the one that stated that they were necessary, the onus is on you to prove your statement,,,

Mind blown

You claim they were necessary. I reply that is false, and you reply by asking me how the hell could I know that they were not necessary?

How could you know that they were necessary? Because warren buffet said so?

tatupu70 says

No, actually CRA was a good kind as I just told you. CRA loans did NOT cause nor even contribute to the bubble.

Are you kidding? Did you drink Martini for breakfast? The historically red-lined areas had the greatest bubble and bust during the real estate bubble-bust, often times tripling value between 2003 and 2007 then collapsing back. Whether the banks recognize those bad loans at any given point in time is highly dependent on how the banks cook books in order to hide their insolvency. For example, Wachovia kept bad loans as loans accruing theoretical interest payment for years.

As to whether government knows the CORRECT KIND of intervention--it depends on who you elect. The people I vote for know the correct types of regulation--I suspect the same cannot be said of you.

So who did you vote for and elect? Let's have the list and burst your own personal bubble. Unless we are talking about someone like Ron Paul, the overwhelming majority sitting in Congress and White House either did not know the correct type of regulations (which is hardly any, except on regulations on government officials themselves) or deliberately make the bad choices.

Reality says

It worked out very well for the financial engineers at Lehman, Bear and IndyBank: they went on working for different banks that were "bailed out" and reaped huge bonuses at taxpayer expense. "Banks" don't make decisions; Banksters do!

We're not talking about the financial engineers--we're talking about banks as entities and the owners of such. If you want to talk about the incentives that those owners gave to their employees--that's a different issue.

Reality says

Neither Goldman nor AIG had $80 Billion cash asset sitting around. When they entered a $80 billion bet, there was 100% certainty that one of them would lose the bet, yet in the absence of government bailouts, that would be a non-enforceable contract. Yet, with government bailouts, the taxpayers are forced to pay the two of them $80 Billion! It doesn't really matter which one of them gets bailed out and which employees work for which company. It's as if the two of us bet $100 Million on the next coin flip when each one of us is worth only $1Mil. With government bailout to fulfill the contract, it is a guarantee that the two of us will make $98Million from the fraud even if one of us will be nominally cleaned out; we can split the $98Mil regardless who loses the $1Mil nominally.

What the hell are you talking about--they didn't bet $80MM on the Super Bowl. That is not at all how it worked. The large banks took out derivatives as insurance to cover themselves in case the housing market fell. And AIG sold them. There was no guarantee that one side would lose--if housing stayed steady or rose, everyone is happy.

Reality says

2. With Indymac, the fraud is in pre-selling the bonuses. The bank employees loaned depositors' money to uncreditworthy borrowers (essentially throwing the money out of the window), then collected bonuses on the loans generated / money thrown away. Any wonder why the American work force has lost work ethics but pine for the next get rich quick scheme?

No shit. I know how it works. But--where's the bailout?? I thought precedent was set a decade earlier, right? Didn't the owners of IndyMac "know" that they would get bailed out??

errc says

You are the one that stated that they were necessary, the onus is on you to prove your statement,,,

lol--I'm the only one? You must not get out much.

errc says

Mind blown

You claim they were necessary. I reply that is false, and you reply by asking me how the hell could I know that they were not necessary?

How could you know that they were necessary? Because warren buffet said so?

In truth, I say that I don't know if they were necessary. I wasn't close enough to the situation (and neither were you).

Here's what I'll say--there are a LOT of unknowns in a situation like that. Nobody can guess with 100% certainty how things will unfold. So, I'll ask you. If there's a 50% chance that the financial system melts down, do you do the bailouts? How about 25%? 10%? What is an acceptable risk to take when the consequence is a complete financial meltdown?

tatupu70 says

Reality says

Thank you for dodging the question. The question was not what you'd prefer if you were the creator of the universe from the beginning, but were you against the bailing out of AIG? Were you against the bailing out of GM? Were you against the bailing out of the big banks? No, you were advocating/apologizing for the bailing out of every single one of them!

You don't read very well, do you? Let me repost my direct answer.

tatupu70 says

I don't know--I wasn't close enough to the situation at that time to know what the consequences would have been if they were allowed to fail.

You spent days advocating the bailouts of big banks and GM a few years ago. Somehow your now admitted ignorance did not prevent you from debating people who advocated against bailouts. Are you sure you know what the correct type of government intervention is? much less which politicians know ?

Reality says

The historically red-lined areas had the greatest bubble and bust during the real estate bubble-bust, often times tripling value between 2003 and 2007 then collapsing back.

lol--you're full of shit, like normal.

tatupu70 says

errc says

You are the one that stated that they were necessary, the onus is on you to prove your statement,,,

lol--I'm the only one? You must not get out much.

So your proof is that there is a consensus that it was necessary?

Y'all love some consensus science. As a contrarian, I'm always open to the possibility that the majority got it wrong

tatupu70 says

Reality says

It worked out very well for the financial engineers at Lehman, Bear and IndyBank: they went on working for different banks that were "bailed out" and reaped huge bonuses at taxpayer expense. "Banks" don't make decisions; Banksters do!

We're not talking about the financial engineers--we're talking about banks as entities and the owners of such. If you want to talk about the incentives that those owners gave to their employees--that's a different issue.

Aha, that's where the real difference between Austrians vs. the blind faith-based crowd emerge: Do banks think, talk, eat or even do anything without the banksters?

Only Individuals are capable of actions. All the "entities" and "instutions" are mind-fucks for the gullible. Incentives for the individuals are what influence actions. "Entities" and "Institutions" are helplessly blind, dumb and lame . . . because they are imaginative entities when they are not natural persons.

tatupu70 says

Reality says

The historically red-lined areas had the greatest bubble and bust during the real estate bubble-bust, often times tripling value between 2003 and 2007 then collapsing back.

lol--you're full of shit, like normal.

That would be a good description of yourself. You are obviously clueless. The Beta/volatility in sub-optimal neighborhoods are much greater than the good neighborhoods.

tatupu70 says

Here's what I'll say--there are a LOT of unknowns in a situation like that. Nobody can guess with 100% certainty how things will unfold. So, I'll ask you. If there's a 50% chance that the financial system melts down, do you do the bailouts? How about 25%? 10%? What is an acceptable risk to take when the consequence is a complete financial meltdown?

What the fuck is "a complete financial meltdown"? Does the sun the fail to rise? Do crops all die in the field when the otherwise happy corn stalks hear it? Do people march off into the ocean like Lemmings like you? You are such a blind faithful in the banking religion of apocolypse. The bailouts are the financial suicide for the society as a whole . . . as shown to you in spades over the past half decade.

Good morning everybody!

tatupu70 says

errc says

Mind blown

You claim they were necessary. I reply that is false, and you reply by asking me how the hell could I know that they were not necessary?

How could you know that they were necessary? Because warren buffet said so?

In truth, I say that I don't know if they were necessary. I wasn't close
enough to the situation (and neither were you).

Here's what I'll say--there are a LOT of unknowns in a situation like that. Nobody can guess with 100% certainty how things will unfold. So, I'll ask you. If there's a 50% chance that the financial system melts down, do you do the bailouts? How about 25%? 10%? What is an acceptable risk to take when the consequence is a complete financial meltdown?

Actions have consequences. Whatever probability your predictive models would have spit out, would have been an acceptable amount of risk, to have passed on the bailouts. You must not get out much. Step outside and take a look at the world around you. This is a result of the bailouts

errc says

So your proof is that there is a consensus that it was necessary?

Y'all love some consensus science. As a contrarian, I'm always open to the possibility that the majority got it wrong

And I am wide open to that possibility as well. Let's look back and learn from the mistakes of the "majority". But let's not pretend that it's KNOWN that the bailouts weren't necessary.

errc says

Actions have consequences. Whatever probability your predictive models would have spit out, would have been an acceptable amount of risk, to have passed on the bailouts. You must not get out much. Step outside and take a look at the world around you. This is a result of the bailouts

No, I do. I also know what the world could have looked like, however, in the absence of bailouts.

tatupu70 says

What the hell are you talking about--they didn't bet $80MM on the Super Bowl. That is not at all how it worked. The large banks took out derivatives as insurance to cover themselves in case the housing market fell. And AIG sold them. There was no guarantee that one side would lose--if housing stayed steady or rose, everyone is happy.

You don't understand what derivatives are, do you? For every dollar that one party wins/loses in a derivative contract, there is an exact same amount lose/win on the part of the counter-party. The contracts that GS took out were not protective derivatives because they did not have that much exposure to protect to begin with. In fact, at one point, there were more derivative contracts betting against subprime lending than total subprime lending itself! It would be like if I took out 10 "insurance policies" each insuring the whole value against your house, then started hiring arsonists.

Reality says

Incentives for the individuals are what influence actions. "Entities" and "Institutions" are helplessly blind, dumb and lame . . . because they are imaginative entities when they are not natural persons.

Exactly. And incentives for individuals are set by the bank owners. And the free market. If they favor short terms gains over long term health--like at IndyMac--that's the free market at work.

tatupu70 says

Reality says

Incentives for the individuals are what influence actions. "Entities" and "Institutions" are helplessly blind, dumb and lame . . . because they are imaginative entities when they are not natural persons.

Exactly. And incentives for individuals are set by the bank owners. And the free market. If they favor short terms gains over long term health--like at IndyMac--that's the free market at work.

No it is not. IndyMac was subsidiary of Countrywide, and mostly owned by the same gang of crooks. What they counted on was massive executive pay and short-term payouts at the expense of eventual closing down and bailout by FDIC.

tatupu70 says

errc says

So your proof is that there is a consensus that it was necessary?

Y'all love some consensus science. As a contrarian, I'm always open to the possibility that the majority got it wrong

And I am wide open to that possibility as well. Let's look back and learn from the mistakes of the "majority". But let's not pretend that it's KNOWN that the bailouts weren't necessary.

Our entire exchange occurred this morning because you claimed that the bailouts were necessary. I'm glad to see that you've retracted that false statement. We don't want to go on pretending that we know that the bailouts were necessary

tatupu70 says

Reality says

2. With Indymac, the fraud is in pre-selling the bonuses. The bank employees loaned depositors' money to uncreditworthy borrowers (essentially throwing the money out of the window), then collected bonuses on the loans generated / money thrown away. Any wonder why the American work force has lost work ethics but pine for the next get rich quick scheme?

No shit. I know how it works. But--where's the bailout?? I thought precedent was set a decade earlier, right? Didn't the owners of IndyMac "know" that they would get bailed out??

The owners of IndyMac already got the money when the bank was open: in high executive pay and selling stocks as the "revenue"/loan-generation/throwing-money-out-the-window volume increased. They counted on FDIC coming to the rescue when the bank eventually go bust, and get the banksters themselves off the hook of potential personal risk for stealing people's money; they don't even have to spend the rest of their lives in protective custody like Madoff does. FDIC was created during FDR administration.

tatupu70 says

No, I do. I also know what the world could have looked like, however, in the absence of bailouts.

No you do not. You envisioned "financial system failure" as if the sun wouldn't rise the next day. Whereas in reality, the bankruptcy of major existing banks would give way to massive debt reduction in the financial system and rejuvenate the economy, like in Iceland, when all three of their biggest banks (and they only had 3 big banks at the time) failed and were not bailed out by their government.

tatupu70 says

And I am wide open to that possibility as well. Let's look back and learn from the mistakes of the "majority". But let's not pretend that it's KNOWN that the bailouts weren't necessary.

What "majority" are you talking about? The American people were overwhelmingly against bailouts. The elected crooks were the bought and paid for stooges who voted for the bailouts. . . mostly the crooks that you and your dumb ilk elected.

Reality says

You don't understand what derivatives are, do you? For every dollar that one
party wins/loses in a derivative contract, there is an exact same amount
lose/win on the part of the counter-party.

All fine and dandy except for the leverage on the contracts. $1 premium collected had open ended risk in some instances.

Think dominos. One party cannot meet its obligations, causing the policy holder to NOT collect the insurance benefit. They in turn hold positions that were made based upon the belief that their downside was covered, but when it was not, their downside became larger (or unlimited).

They can't meet their obligations.

Another domino falls. And another, and another. Suddenly, your tenants can't pay their rent because the company they worked for got caught up, and they can't meet their payroll because credit is frozen at their bank. Then you can't meet your mortgage obligations. You think "Oh, I'll just sell" - but the market is frozen and there is zero qualified demand. Then your bank fails because it was leveraged and landlords like you are defaulting left and right, and there is a run on bank deposits.

The FDIC steps in, but it doens't have the reserves available to meet all the demands. The FDIC fails. People starve in the street, cops abandone their posts, looting occurs. Basically New Orleans during Katrina. Government collapses.

But hey, the market cleared. Your wet dream.

control point says

All fine and dandy except for the leverage on the contracts. $1 premium collected had open ended risk in some instances.

Then the issuer of the policy was in violation of margin/reserve requirement . . . and the buyer of the policy (a transaction among investment banksers, neither party being average consumers) was being a gullible fool . . . unless of course the buyer of the policy was counting on the government to do the bailout and pay up.

Think dominos. One party cannot meet its obligations, causing the policy holder to NOT collect the insurance benefit. They in turn hold positions that were made based upon the belief that their downside was covered, but when it was not, their downside became larger (or unlimited).

Your domino theory stops as soon as it is revealed that GS did not have nearly enough subprime exposure to require the "insurance" for coverage. It was not covered call or covered put protection situation, but sheer speculative naked puts. In fact, at one point, the volume of drivatives on subprime far exceeded the value of the loans themselves.

So what GS couldn't get the $80B, so they had to live with $200k year end of bonus on average instead of $300k year end bonus in 2008 . . . what exactly is your problem?

control point says

But hey, the market cleared. Your wet dream.

If the crooks did not take their pound of flesh on the rest of us, the economy would have some of the debt burden relieved along with reduced tax burden compared to what's happening in the past half decade. Yes, the market would have cleared better; that means more jobs would have been created. Less people would have to go on disability fraud and food stamps. The youth would have found gainful legal employment instead of the drug dealing, prostitution, flash mobs and "knock-outs."

Mark D says

Call it Crazy says

WARPED, DISTORTED, MANIPULATED, FLIPPED HOUSING MARKET

or simply investors and savers wisely buying after clear signs of a bottom.

permanent bottom?

BTW, your domino theory would dictate that no big business can ever be allowed to fail due to their inter-connectedness. Which means, how can any big business be allowed to exist at all? Or is that what you are essentially advocating: that we should be in a government-big business combine, where no big business is ever allowed to fail . . . i.e. we should all be slaves to a fascist state!

Call it Crazy says

I guess that depends where the bottom is....

Clearly he does not understand which is the correct bottom out of multiple bottoms.

control point says

Suddenly, your tenants can't pay their rent because the company they worked for got caught up, and they can't meet their payroll because credit is frozen at their bank. Then you can't meet your mortgage obligations. You think "Oh, I'll just sell" - but the market is frozen and there is zero qualified demand.

This is gratuitous bullshit. Landlords who can not carry the property on their own for a period of time have no business being landlords. In fact, those marginal landlords should be kicked out of the market place by a good down turn, so the tenants can have more reliable landlords. Good cleansing like that is what makes capitalistic free market work, unlike the socialist dead-weights in bureaucratic costumes managing someone else' property.

bgamall4 says

Here is Murray Rothbard, king of libertarians:

“The parent should not have a legal obligation to feed, clothe, or educate his children, since such obligations would entail positive acts coerced upon the parent and depriving the parent of his rights. … The parent should have the legal right not to feed the child, i.e., to allow it to die.

Isn't that what safe harbor rules are? That new mothers can legally give up their children shortly after birth.

There is no "king of libertarians," in case having your own thought is an alien concept to you.

bgamall4 says

You libertarians deregulated the financial system, enabling it to create a fascist state. It all started in the Square Mile, where the bank of England, controlled by the Rothschilds Zionists, is found.

Liar loans came from England, the Square Mile, where they were called self certified loans.

Do you not realize that you can only enjoy your conspiracy theories in a relatively libertarian society?

In any case, the Square Mile would be much less powerful if there were less power in British government and the US government for it to exercise through. All the trash paper generated would just have been ignored if not for the central banking rules forcing us to use the money that they artificially create.

bgamall4 says

Reality says

Isn't that what safe harbor rules are? That new mothers can legally give up their children shortly after birth.

Yes, give them up to someone who will feed them you idiot.

Do you really think the new parent would likely do otherwise? and those few who do otherwise wouldn't be immunized under "temporary insanity"? What exactly is your point?

Do you live on the same planet as the human race? No, I forgot, libertarians don't live on our planet. They try to satellite around the Zionists.

You have no idea what my view of Zionism is, or even for that matter, who "the chosen people" are, or for what they are "chosen."

bgamall4 says

Reality says

Do you not realize that you can only enjoy your conspiracy theories in a relatively libertarian society?

No, freedom and liberty are not the same as libertarianism. My libertarian ebook is free today on Amazon. You should read it:

So long as you enjoy your own freedom and liberty, and respect the same for others, that's fine. I will pass on your ebook; thanks but no thanks.

1. They can't save for downpayment
2. Even when they can theoretically save for downpayment, they choose to spend money on entertainment/going out and as a result don't save.
3. Student loan death pledge ain't helping matters.
4. Boomers are working longer which is causing ripple effect of younger generation not having the previous access to the prime paying jobs.

In Russia healthcare.com infects you.

New Renter says

No, I think he would say it was one of if not THE greatest buying opportunity in history.

Really if the DOW crashed all the way to Zero, you would consider that a "Buying" opportunity? What you would think that you would be Special, that you would get a heads up call, just minutes before the mass exodus and next crash?

dublin hillz says

4. Boomers are working longer which is causing ripple effect of younger generation not having the previous access to the prime paying jobs.

Orrrrrrrrrrrrrrrrrrrrrrrrrrrr!

It could be the Mark Zuckerberg's of the world, are shifting software from productivity, to prying and spying on a honey trap of useless games and chatter. While there's a shit load of money to be made by the advertisers in that model. There's not even one single penny to be had by the users.

Those Geezers still knows what in the hell, all of the function keys on a full sized keyboard does.

Now run along and play with your Pad doodad thingy, Daddy has work to do on his computer.