patrick.net

Peter P, I was being sarcastic. I hope that was clear in my post. Maybe not.

As for the New Deal, I don't like the historical accuracies anymore than the neorevisionism that's popular today.

The world was not a happy place in 1933. The New Deal was, at the minimum, a very important political tool that kept the country unified well enough to enable it to mount the war effort. In comparison to war-build spending, the New Deal spending was minuscule. Most people think far more money was spent on the New Deal than actually did because they confuse ND spending with war effort spending. An example is the "cost-plus" system which compensated manufactures churning out war machines. I always hear this called a "New Deal policy", when in fact it was entirely unrelated to (and not implemented by) the New Deal.

Sometime I think everyone analyzing Depression era economics forgets about the underlying world drivers at that moment in history. Economics may have been the fuel, but a colossal clash of ideologies which would decide how the world would be organized for the next century was the game.

Anyone see this gem (posted over at Ben's). Almost restores my faith in American journalism... almost. Pay close attention to the parts about Liz Seither and try to deduce the author's attitude towards her:

Down, but not out: "I'm not a real estate bum," Realtors say

*inaccuracies*

this little factoid seems to haunt just about every textbook explanation of the great depression. can you explain this statement further? no one else seems to be able to.

The War gave people a new focus. It created demand. It created employment. It set the stage for American supremacy in the 20th century.

Economics may have been the fuel, but a colossal clash of ideologies which would decide how the world would be organized for the next century was the game.

And thanks to the invention of nuclear weapons, a deal was reached.

"all Americans — no matter what their income level — should have the power to reach for that dream."

This statement bothers me the most. First off, calling it a "dream" is perpetuating the image RE agents have been using for decades to play on the emotions of potential buyers. It's not a dream, it's just a house/condo/townhouse. Reminds me of car salesmen who refer to the vehicle as "sexy". A house is not a dream and a car is not sexy. They're just things.

Second, the notion that all Americans, no matter their income, should be able to buy a house is irresponsible. It denies the very real, very un-dreamy financial responsibility that comes with purchasing a house. It's the same kind of rhetoric that got us into this mess.

It doesn't surprise me Obama made that statement. His words have been consistently empty since he started his campaign. All his flowery talk makes me long for another 4 years of Bush bloopers. At least those make me laugh.

His words have been consistently empty since he started his campaign.

I agree. No matter how hard he tries, he is not MLK. He should fire his speech-writer and hire David LeReah.

im talking about the ‘bailers’ from asia and europe. who were they? when and how did it happen?

Who? Huh? The Original Axis of Evil.

Peter

TOB == TOS == Troll

Subsequent Trolling will be yanked.

Sounds like a REIC bailout more than a FB bailout.

Would the 'fund' make the lender whole on the short sale loss? That will popular on wall street. And fraud street.

I believe the reason the short sale is very difficult to get approved is due to lender has to agree to a real loss and the FB has tax consequence.

When these are removed you would see a MASSIVE abuse of the new federal short sale make whole system. Probably realtors/investors asking for short sales (and getting them!) for insane reductions.

The new mortgage rating system is just mumbo jumbo - non monetary so who cares.

who were the ‘evil men’?

A. H.
B. M.
Emperor H.

Bernanke (politely) brushes off Senator 'Bailout please' Schumer with a "Dear Chuck" letter:

http://blogs.wsj.com/economics/2007/08/29/text-of-bernankes-letter-to-schumer/

The short version via the 'ol bullshit-filter:

"Yeah, those FBs and hedgies sure are in a pickle, huh? Must suck to be them...

Oh, wait, a lot of reckless, irresponsible subprime lenders 'n hedge funds are based in your state, aren't they? And a lot of your buddies are up for re-election next year, aren't they? Damn, it must sure suck to be you too!

Hey, maybe you bleeding hearts in Congress can turn the FHA into some kind of subprime borrower payment-reset refi squad or something... I mean, assuming the borrowers are like "creditworthy" 'n stuff (most obviously aren't). As long as it's off *my* plate, I could give a rat's patoot.

Oh, and btw, I'm *still* not lowering the FF rate or encouraging Fannie/Freddie to start buying more Alt-A toxic waste. But you have nice day anyway, m'kay?

Peace out,
Ben"
XOXOX"

I'm gaining more respect for old HeliBen day by day.

I’m gaining more respect for old HeliBen day by day.

Same here.

I do think the 417K FHA limit is too arbitrary. It should be 0.

The real victims in this crisis are the millions of borrowers who followed the rules, whose only crime was taking out mortgages lenders told them they could afford.

It's the house FBs can not afford. I really object to this language that it is the loan that is a problem. There is a minority of borrowers whose problem is the loan but that' is not the common case at all.

Normally these borrowers could avoid foreclosure by refinancing their mortgages or selling their homes.

I fail to see to how being forced to sell your house because you can't make the payments and being foreclosed on is really any different when FB put 0% down. They have nothing to lose. Yes, their credit will be foobar but that's an accurate reflection of their ability to handle credit. The biggest problem foreclosed FBs have is the 1099 from the bank for the loan forgiveness amount. But Obama concerned about that, no. He'd prefer a massive intervention in the mortgage market by the federal government.

Perhaps Obama thinks the natural order of things is that asset prices only go up which would make him a President who is very dangerous for the economic health of this nation.

Too bad Ron Paul makes so much senses that it is difficult for him to get elected.

A housing bust will be good for the environment. A massive shutdown of home equity will reduce surely carbon emission.

Any bailout will directly or indirectly contribute to global warming.

Normally these borrowers could avoid foreclosure by refinancing their mortgages or selling their homes.

No. Normally, these borrowers could avoid foreclosure by being financially responsible. The past few years were not normal.

FYI: Right on target for this thread, SLATE is co-sponsoring a candidate Q&A forum and taking questions via email:

http://www.slate.com/id/2172924/nav/tap3/

My Question for Senator Obama (Wild Card):

"Senator,

You recently expressed interest in proposing some form of federal bailout program for distressed mortgage borrowers who took out subprime or "liar loans". I have a 2-part question for you on this subject:

1) Do you really think that all subprime or "liar loan" borrowers were really "victims", or just victims of their own greed and overconfidence?

2) Should all taxpayers, including responsible people who did NOT participate in the housing bubble, be forced to subsidize the irresponsible people who made large, reckless gambles and lost?

Thanks,
(HARM)"

Obama doesn't stand a chance of getting elected, America is not ready for a black President yet. His name sounds like Osama, a bad sign. Case closed.

Can we talk about more likely candidates? I don't think Hillary stands a chance either, she provokes too much dislike in non-supporters (myself included), and I don't think she has a Karl Rove behind her.

What is Edwards' stance on this? Romney's? Plus, whoever is going to be the next President is almost doomed from the very beginning, an one-termer most likely. Let's concentrate on the likely candidates for 2012.

His name sounds like Osama

And his middle name is Hussein.

“all Americans — no matter what their income level — should have the power to reach for that dream.”

With the overbuilding, recession, and threat of better border patrol, there will be PLENTY of places to squat, regardless of your income level. For the first time in years, no homeless people.

I got a call from Obama's fundraising team (Yah, I donated to Gore/Kerry at different times, I'm a marked man) who hit me up for campaign donations. I told them flat out I wouldn't be making a donation because of Obama's stance on FBs needing a bailout. I told her it was fiscially irresponsible, a moral hazard, and made me think Obama wasn't fit to be in charge of the US's budget. I told her the good news was Hillary was just as bad, so she wouldn't be getting any money either. The bad news was her call convinced me to donate to Ron Paul's campaign.

She said "Who's Ron Paul?"

Yup... he's got no chance. Too bad. With a demo congress, there'd be no chance that his socially backwards ideology on women/gays/etc would get implemented, but MAYBE he could get some real reform done on the Fed, FHA, Fannie/etc.

I may have missed this (yesterday?) if posted earlier, but we are now getting reports on the Chinese exposure to MBSs. Bank of China has about $10 billion sitting in its vaults, but never fear:
Yan said sufficient liquidity available with these banks will ensure they're able to hold their investments in subprime-related assets "until maturity, and so won't be forced to realize mark-to-market losses in a forced sale."
Nice to see we are just as good at producing cr@p as they are. I can't imagine this is engendering good feelings abroad.

Ron Paul is the best candidate. But he has as much chance as Ross Perot had. :(

I do believe in miracle.

Al Gore should run. At least he has good condo taste (SF St. Regis).

his socially backwards ideology

Can you explain?

Slightly off-topic, I read somewhere this morning that lenders are more and more reluctant to give our jumbo loans (> 417,000) because they are not guaranteed by the FMs (and no one else wants to buy these securities anymore).

With that being the case, in areas like the bay area where the median house price is higher than that, will we start to see increased downward pressure on home prices?

He's actually moderated the anti-gay angle for the campaign, but he's still firmly anti-abortion to the point of being anti-morning after pill. And honestly, that's the ONLY thing about him that bugs me. I would vote for him over any other candidate I've seen out there. He even supports the seperation of church and state, which is death to 'conservative support' from the bible belt.

I think Al Gore will run in 2012.

He is a smart man. Only half smart arsses will run for 2008. If you want to be the next Roosevelt, why would you place yourself in a seat that is set up for failure? My biggest hope is all this mess will blow up right in Bush's face when he is still in the white house, unfortunately it is quite impractical for things to unravel that fast.

Sriram, (BTW, I have a good friend named Sriram... but he's a Ganapaty, so I know it's not you.)

What it means is that those loans will have to be held on the books. Local banks/CUs/etc that engaged in sensible lending would still be able to make these kinds of loans as their balance sheets will not be imploding with foreclosures.

The question is... how many banks are going to be in that condition?

If investors continue to refuse to buy these loans, the rates will go up and up until you CAN sell these loans on to WS, which will have an impact. If loans for 417 are at 6.5, and loans above that are at 9-12%, there will be a big push down on all the middle-to-lower-upper areas. Areas where a large percentage of houses are bought by ACTUALLY wealthy as opposed to people who have to borrow money will not really drop. Woodside proper, maybe Atherton... Anybody who leveraged to get IN there is screwed if they can't make payments, but most of those houses were probably bought for mostly cash, and don't go on the market all that often.

The rest of the Alt-A Bay Area could be in SERIOUS trouble. One of the reasons sub-prime collapsed first is those buyers typically have very little reserves. Alt-Aers that bet and overleveraged will usually have more reserves to deplete before they are foreclosed and punted. They will hold out for 'break even' as long as they can, but without loans, no dice. And cash only buyers are NOT going to shell out 1.2 million to buy a house in Cupertino. (unless they're retarded and rich, like Forrest Gump.)

He’s actually moderated the anti-gay angle for the campaign, but he’s still firmly anti-abortion to the point of being anti-morning after pill.

There is nothing wrong with being pro-life. Although I believe the Federal government has no business in this issue, I think that abortion is wrong. It is vile to consider it as a "woman's choice." However, the option should remain open because the society will be worse off if abortion is illegal.

Alt-Aers that bet and overleveraged will usually have more reserves to deplete before they are foreclosed and punted.

Alt-Aers are just subprime people with slightly higher income.

Remember, the middle class is simply the lower class but with assets to lose.

sfbubble, I have a good friend named SFBubble... but he's a Seller, so I know it's not you :)

Sorry, couldn't resist making that lame joke. Thanks for the explanation, that makes sense.

I really hope something like this triggers panic and real downward pressure in the peninsula and south bay.

Peter P :
I don't mind him being anti-abortion, I mind the fact that he shows every indication of supporting legislation banning it should it hit his desk. His waffle on it is that he wouldn't support putting women to death who had an abortion. However, he mostly manages to fall behind the "Keep the federals out of it" shield on most of the issues that I really dislike his stance on.

Let's not get sidetracked on abortion or other standard fare divisive pseudo-issues. Arguing about shit like that is *exactly* what the election engineers thrive upon.

Let's stick to making it crystal clear what responsible, thinking, tax paying American citizens and legal, tax paying residents have to say about this issue.

So far, I've found very little to disagree with in every comment on this thread. That is powerful given I know that many of us have very different "ideological" perspectives. But the common ground we all share is that irresponsible, corrupt and outright stupid treatment of the US housing market has left the most responsible US Taxpayers at least a little poorer, and quite a lot pissed off.

But the common ground we all share is that irresponsible, corrupt and outright stupid treatment of the US housing market has left the most responsible US Taxpayers at least a little poorer, and quite a lot pissed off.

Rest assured that the solution to this problem will make us even more pissed off.

Singling out Obama among all the populist, "I'm for the middle class" platitude-filled democrats is probably unfair to Obama. He's no better and no worse in ideology. Like everyone else, he panders to interest groups, and frankly he is more disappointing than say, Hilary, who you knew was going to turn out just as she has.

It's a sad day when the French leader (Sarkozy) sounds more reasonable and free-market oriented than almost any viable US presidential candidate.

Dang Peter, that makes me upper-low class ….. down from lower-mid class ….. crud!

My point is that there is no differences between the two. :)

It’s a sad day when the French leader (Sarkozy) sounds more reasonable and free-market oriented than almost any viable US presidential candidate.

Sarko is my Hero. He is not just any French leader.

I wanted to donate to Ron Paul too but I can't because I am not a citizen.
But that makes me think... maybe I only want to be a U.S. citizen if Paul or someone like him gets to lead this nation.

You know that Sarko is not excessively free-market minded, nor is he anywhere near as meritocracy-friendly as us Anglo-Economy types would wish to believe.

For one, Sarko is trying to bully the ECB into putting monetary control under political guidance. For another he's very protectionist. All in all Merkel is more free market compatible, even with the annoying German corporate governance system.