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We had exactly this discussion at tea this morning. The majority opinion, which included a Chinese fund money manager, a regional transportation manager, and a French journalist (diversity of background), was that it will be another S&L bailout.
I am the perpetual optimist, and would like to think that people will be held responsible for their actions, and am thinking (wishing??) that there will be repercussions for those who bought things beyond their means and the greedy folk who lent to them knowing there would be no hope of repayment. I am thinking repercussions such as losing the house and jail time or major fines for fraud (depending upon the extent by the individual).
Just what the hell can you do now?
Become a subject of the Grimaldis? Try San Miguel Allende?
Bruce,
Argentina is nice, the currency exchange is good, food is good.
sfbubblebuyer
@
2007 Mar 12, 3:37am
Yah, there will probably be a bailout of the banks. I don't know if there is a 'right' way to do it, but I hope that however it works out, the executives of the failing institutions get held accountable in some way.
For instance, for subprime lenders, I'd like major stakeholders with influence on operations to be held personally responisible from any moneys they have recieved from stock sales. Never going to happen, but it just bugs me that a##wipes sat there selling off their stock for millions of dollars while saying "All is well!" until their companies tanked this year. They purposefully used a bad business plan to make massive short term profits at the expense of long term viability of the company, and they knew it. That smacks of stock manipulation on a grand scale.
After having visited much of eastern Oregon over the weekend (and actually seeing some SUN!) I'm feeling much more positive these days! So positive in fact that I'll go so far as to say a bail-out isn't going to happen. At least not on a scale FB's and FL's (lenders) desperately need to see.
The only thing I can possibly see actually working is to create programs where FB's on the verge of default are allowed to do some kind of "exchange of collateral" where their neg. equity is rolled over to a loan they CAN afford (just w/an extra 10 years or so tacked on).
Of course none of this can take place without a reduction in FICO score so lenders may be able re-coup some of their losses through higher int. from FB's other forms of credito (auto loans, plastic etc.)
As per the FDIC spokesperson (thus far) the SPMD (Sub Prime MeltDown) has been "an earnings event" NOT a regulatory event! It's just hard for me to imagine any kind of a "quick turnaround" for RE b/c they have a solid percentage of their potential buyers addicted to "Zero Down" howmuchamonth financing platforms and coming away from their closing w/ZIP and/or a short sale who will have the down payment to re-ignite sales on the other end?
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The subprime meltdown has swallowed its biggest victim. NEW is almost certain to file for bankruptcy as it doesn't have anywhere near 8+ billion to repurchase its mortgage obligations. CFC sees "earnings volatility" and LEND shares are down over 20% today (again).
Just 2 months ago everything was going to be fine in Goldilocks economy. Today, no one knows how bad it will get. The ARM resets are just beginning. In general there is near universal agreement that we are just at the beginning of a financial storm.
On MSN investor, Bill Fleckenstein says ...
One who does [understand] is Lou Ranieri, sort of the father of the mortgage bond market. In a recent interview, he warned: "This is the leading edge of the storm. . . . If you think this is bad, imagine what it's going to be like in the middle of the crisis." In his opinion, more than $100 billion of home loans are likely to default. ("Just divide $100 billion by the average loan amount and you get a lot of people, a lot of families.") He also expects to see some form of bailout at some point, because "foreclosures in those amounts are politically unacceptable."
The B-word again ! Coming not from a doom-gloom blogger but from a reputed source. So it's worth visiting this hated word again.
What kind of bailout ? Bailout who ? The lenders or the borrowers ? Or both ? By doing what ? Pumping liquidity ? Forgiving loans ? Giving tax breaks ? None of the above or all of the above and more ?
What kind of bailout do you see the government attempt ? What's your conspiracy theory ? Of course adding 3 zeros to everyone's bank balance is not what the Fed/Government will realistically do.
Bailout or no bailout. The economy won't be fine - to make an understatement. Even if the bailout comes from the Government, it will probably come too late and it's unlikely to help common folks who actually need it. This is just an observation of typical inadequacy of Government measures.
So as a financially conservative person who did not participate in the mad party, what do you do ? Just what the hell can you do now ?
StuckInBA
#housing