patrick.net

am I making unpatriotic comment again? darn

SP,

I'm sorry? What were you saying? I was in deep meditation trying to get "in touch" with how I felt about all of this.

"dyslexics and others" LOL!

"This is a really interesting perspective. Do we really want to save the status quo? Are we ready to accept the pain suffering torture and death that would inevitably result in a transition to a new order?"

I'm not. Especially since I don't think it will do any good. The same behavior that might bring this empire down will just pop up again in the next one.

It would be pretty much pointless. Except housing will be cheaper in this new world.

it did bring the deficit front and center making it a top priority for Clinton.

I remember Clinton saying on a TV debate that he was unconcerned about a balanced budget. I believe he achieved a balance budget not because it was a priority, but as a result of his push through of NAFTA, GANTT, and tax revenue from the tech boom.

Oops, mispelled GATT

At least please tell me that it will have *only some* effect.
Didn't you get the memo on the CA court's "war on homeschoolers" -- everyone is fleeing to Crapertino :-)
Closed out my Wells short this morning (hopefully, if E*Trade comes through). Quite a rush to take on Buffet for the short haul.
Headset, always good to have someone waving the Deflationista flag around here.
TAF seems to be getting more coverage these days. Nice to see Bloomberg is reporting on the number of banks taking advantage of TAF (which has always been a question of mine):
Repos allow the central bank to inject funds into primary dealers, a group of 20 banks that trade securities directly with the New York Fed. By contrast, the TAF operations offer funds to deposit-taking institutions; the most recent auction included 72 banks.

@SP

So, why is a real-estate crash my problem?

Its not unreasonable to assume that violent crime will skyrocket. Very admirable and congratulations on your success and planning. In the serious downturn we are about to face, all bets are off. It matters to you because your daughter could be raped walking home from the market, your neighbors foreclosure turned into a violent crack house, your assets could inflate away to nothing, whatever "vehicle" your savings are in are not as safe as you may think. Civil liberties? Freedom? Good luck with that. You may not even have access to patrick anymore due to the spread of insidious ideas there.

Believe me, a housing crash matters to you. Its not really about a housing crash anymore, its about the destruction of trust in our financial system. It is a very big deal. And I'm sorry if you don't see it coming. Heck, if I'm really hungry and you look well fed and plump I might be coming in your backwindow for your cupboard myself :-)

The world in which we live is about to change radically. For instance, I understand financial assistance for higher education is becoming scarce, expensive, and more difficult to obtain. This is not isolated and I see no clear path back to where we were in this area. The world is changing. This is very serious and a very big deal.

kewp,

I agree, a lot of goods/services probably WERE being paid for w/ bubble-bucks. Then again, so many of their competitors wouldn't even BE around had it not been for the easy financing bubble-bucks offered?

Even among the realtors the common refrain was "You just wouldn't believe how many new agents there are!" In fact I believe that while NAR commissions peaked at around $60 bil. in 2005 (avg. realtor income went down)

Can someone get Ayn Rand to bake a damn pie already!

"A real estate crash with a side-order of credit-deflationary collapse is not the end of the world"

you keep saying that SP. Want to go into some of the reason why it's not? We've seen some pretty drastic results across the board just from the small contraction that's happened so far. Even conservative estimates don't even put us 1/4 of the way to where it's headed.

I'm not claiming I know. Just interested in the "it's not that bad" opinion, because I'm just not seeing it.

And NO, I do NOT want a f&$% bailout.

I was in deep meditation trying to get “in touch” with how I felt about all of this

lol. Well done.

Headset,

I'm sure Clinton probably didn't care? It was always fairly easy for him to simply say that Hawks ran up the defense bill and it wasn't his doing. (Others weren't ready to let the topic die that easily). One way or another we worked our way through it just like we'll work our way through this mess.

Back to meditation! Uhmmm.... Uhmmm..

BayAreaIdiot :

:-) OK. I understand about Gilroy. But wasn't Evergreen going to be the next Cupertino ? Are we still on that plan or has anything changed ?

“Great Depression of 1990″ by Ravi Batra

“Bankruptcy 1995: The Coming Collapse of America and How to Stop It” by Harry E. Figgie and Gerald J. Swanson

Excellent examples - I used to own Batra's book, and yeah, it was about as good a predictive tool as Dow 36,000.

The world is *not* coming to an end just because some well connected rich guys made some big, bad bets and are losing money as a result. It's also not coming to an end just bause Joe Howmuchamonth can no longer bid up the price of basic shelter to insane heights and fill up his new 3-car garage with Chinese made crap. Far from it.

I care about total meltdown because I know that peace and stability brings greater contentment and happiness to a larger measure of humanity. In a total financial meltdown and collaspe, violence and suffering will occur on a grand scale.

I view this as something of a false dichotomy (e.g., "Either we keep spending or the terrorists win."). I do not believe we have to choose between economic Armaggedon OR maintaining the status quo. I also do not believe that hitting the "reset" button on our (hopelessly corrupt, dysfunctional, cheap credit-addicted) financial system necessarily means extreme pain for everyone. That is the whole point of this thread.

We have other options, people.

Remember though, Figgie was from an entirely different era of businessman. One of the most profound experiences of his young life was as a G.I in post-war Germany watching housewives use a wheel barrow to have enough money to buy a loaf of bread.

That impression is bound to stay with a guy. Harry was just a guy that loved his country and didn't want to see that happen here.

G.I in post-war Germany watching housewives use a wheel barrow to have enough money to buy a loaf of bread.

You may want to check your dates. The "wheelbarrow" was pre-war, not post war, Germany.

SP Says:

> So, why is a real-estate crash my problem?

Then northernvirginiarenter Says:

> Its not unreasonable to assume that violent crime
> will skyrocket.

Crime always goes up in every economic downturn.

> It matters to you because your daughter could
> be raped walking home from the market,

You just need to stay away from the markets in bad areas since more women are hit by lightning each year than are raped outside Whole Foods stores in yuppie neighborhoods…

> your neighbors foreclosure turned into a violent
> crack house,

If you live in a neighborhood where people don’t smoke crack you have nothing to worry about (it will be a cold day in hell before a crack house opens near me in Presidio Heights or near my parents in Hillsborough)…

> your assets could inflate away to nothing, whatever
> “vehicle” your savings are in are not as safe as you
> may think.

Every day one asset class will either out perform or under perform the market so if you diversify you will be fine (cash and stocks have lost value this year but commodities and rents are up this year)…

> Civil liberties? Freedom? Good luck with that. You may
> not even have access to patrick anymore due to the
> spread of insidious ideas there.

My liberal friends always complain about the loss of “Civil Liberties” but can never name anything specific that they want to do they want to do but are prohibited from doing. If you make a little effort you can read Patrick.net in China so I don’t predict that it will go away any time soon in the US.

> Believe me, a housing crash matters to you. Its not
> really about a housing crash anymore, its about the
> destruction of trust in our financial system. It is a very
> big deal. And I’m sorry if you don’t see it coming.

It is a big deal, but most people still trust the financial system and over time they will just learn that the financial system let them may bad decisions (like the ability to buy a home with no money down and a neg am loan)…

> Heck, if I’m really hungry and you look well fed and
> plump I might be coming in your backwindow for
> your cupboard myself

Most hungry guys will pick another back window when they hear a single pump from the pistol grip Mossberg…

> The world in which we live is about to change radically.

The world is always changing, Dinosaurs don’t roam the earth any more and you can’t just head west and get free land like you could less than 100 years ago…

> For instance, I understand financial assistance for
> higher education is becoming scarce, expensive,
> and more difficult to obtain.

Every school I went to is currently offering more financial aid than ever and all have endowments that are bigger than ever (Stanford is now FREE):
http://www.mercurynews.com/crime/ci_8322329

Sure the real estate crash will suck for a lot of people, but if you were not stupid and continue to work hard you will be fine…

Believe me, a housing crash matters to you. Its not really about a housing crash anymore, its about the destruction of trust in our financial system. It is a very big deal. And I’m sorry if you don’t see it coming.

The "destruction of trust" in our financial system is already a fait accompli, regardless of what I or anyone else here thinks --and is well deserved. You can thank 30+ years of reckless deregulation and creeping corporate socialism for that. And yes, it IS a very "big deal". But manning the Bailout Pumps won't put Humpty Dumpty back together again.

Some things once done cannot be easily undone.

@ StuckInBA

I will enlighten you because you seem rather out of touch. I don't know where you got this propaganda that Evergreen = Cupertino but it is false. I'll let you in on a little secret: all the "truly cool" areas of Silicon Valley and the South Bay have Spanish names (Palo Alto, Los Gatos, Saratoga etc). No one will even bother with anything named Evergreen. Frankly this is part of the secret code longtime residents understand. I'm surprised you aren't up to date on that. That's why East Palo Alto is crime ridden whereas Palo Alto proper is heaven on earth - all its good juju was sucked out by that Anglo word. There are exceptions to each rule of course (e.g. I hear parts of Belmont are good) but those are just that: exceptions. Don't be a "looser".

Headset,

My bad. You're right. By the end of the war only the upper crust of society could afford luxuries like that! LOL!

And what FAB said :-).

Oh, and I second that welcome back to skibum.

Crime always goes up in every economic downturn.

Didn't crime go down during the Great Depression?

Everybody is getting creative now. This from Martin Feldstein:

The federal government would lend each participant 20% of that individual's current mortgage, with a 15-year payback period and an adjustable interest rate based on what the government pays on two-year Treasury debt (now just 1.6%). The loan proceeds would immediately reduce the borrower's primary mortgage, cutting interest and principal payments by 20%. Participation in the program would be voluntary...

Anybody think this is a good idea?

# StuckInBA Says:
But wasn’t Evergreen going to be the next Cupertino ? Are we still on that plan or has anything changed ?

Not much has changed. Only that we are now expecting Cupertino will become the next Evergreen. :-)

FuzzyMath Says:

“A real estate crash with a side-order of credit-deflationary collapse is not the end of the world”

you keep saying that SP. Want to go into some of the reason why it’s not?

Because, as HARM put it, it is a false dichotomy.

The loan proceeds would immediately reduce the borrower’s primary mortgage, cutting interest and principal payments by 20%.

Gee. Prices will not have to rise as much for the debtor to HELOC again!

Evergreen is on the wrong side of the Bay Area.

All the cool areas have to be on the west side.

’ll let you in on a little secret: all the “truly cool” areas of Silicon Valley and the South Bay have Spanish names (Palo Alto, Los Gatos, Saratoga etc).

You forgot Los Bano.

And how would Feldstein's plan cut down on payment amounts? Making a large prepayment on a loan does not lower the payments, it shortens the term.

It looks to me as if Feldstein is also trying to address the PMI issue by taking some pressure off of them. If this is about supporting prices, well then I don't like it.

Let me just copy part of my "unpatriotic" message stuck in moderation.

I am most concerned about the crime rate of the US, because this is probably the most violent developed country I've been to.

This is not Japan, this is America. "Loser" don’t kill themselves and their immediate families out of shame, we American heroes come out with a rifle to randomly whack people out. The pattern of mass murder is very distinctive here, the murderer will take out as many people as possible before he kills himself simply because he went through a divorce or lost a job. Well, it usually doesn’t operate this way elsewhere in the world. People in Hong Kong or Japan just kill themselves, and I have no problem with absolutely no bailout in that sort of society.

Prices will not have to rise as much for the debtor to HELOC again

exactly! what there not to love :-)

In all seriousness, this seems to be the best Harvard brains can come up with. Pathetic really, but not as bad as the alternative: more "lefty" brains (Brad Delong for example), actually say that the gov. should make Fannie Mae's guarantee explicit and use it to start buying up mortgages....makes you wonder what'll happen if BO wins in November. He seems more likely to listen to Brad Delong than Feldstein.

"it is a false dichotomy"

true. But that fact doesn't predicate a certain outcome either. Just because we have other options doesn't mean they are likely to happen.

It seems to be common sense that if you take away half of everyone's money, that there will be some hardship going on. I guess I'm just not seeing your argument. Beyond pointing out logical fallacies you're not giving me a reason why it won't happen.

Harm

I view this as something of a false dichotomy

Point taken and agreed.

And how would Feldstein’s plan cut down on payment amounts?

I think that would happen because 20% of the loan would now be at a very very low interest. At least as long as short term treasuries are at 1-2%.

Plus -maybe- what DinOr said about PMI.

As far as supporting prices, I think that would have to be determined by what type of loans would be available to *new* buyers.....so I don't really see how Feldstein's plan does anything other than let the gov. take the 20% hit to the prices instead of the markets.

An analyst on CNBC pointed out today that with the $400B markdown so far we have effectively removed the equivalent of an entire year's government spending, $3.4 Trillion from the economy. Puts it in perspective.

That's a kick to the balls for sure. Uppercut and kick to the head coming.

Bay,

I still do not follow. If you had a $100k 30 year mortgage, and I gave you $20k to apply to the principle balance, your monthly payment would not change. You would just be making fewer payments over the term of the loan. The only way to lower the payments would be to pay off the loan in full and generate a new loan.