The new forums will be named Coin Return (based on the most recent vote)! You can check on the status and timeline of the transition to the new forums here.
The Guiding Principles and New Rules document is now in effect.
The invisible hand out
PirateJon
Registered User regular
Registered User regular
So another bail out.
Or it could cost more than $25 billion! A trillion or more! Even those poor suffering bankers are taking pay cuts.
And it'll get worse:
That's our system. Capitalism for the poor, Socialism for the wealthy. I think its time to acknowledge that our version of capitalism is a failure and start moving towards a more fair and equitable system. We're already close.
Fannie Mae and Freddie Mac would cost taxpayers an estimated $25 billion over two years under the Bush administration's rescue plan, the Congressional Budget Office said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAsOifUPPUNU&refer=home
Or it could cost more than $25 billion! A trillion or more! Even those poor suffering bankers are taking pay cuts.
Awww...Fannie Mae (FNM.N) CEO Daniel Mudd received $12.2 million in total compensation last year, down 15 percent from 2006, the government-sponsored enterprise said on Wednesday. Mudd's pay included his $990,000 salary, a $2.23 million bonus and a $9 million "long-term incentive" award, the company said.
And it'll get worse:
July 21 (Bloomberg) -- Investors worldwide are betting more than $1 trillion on a collapse in stock prices.
http://www.bloomberg.com/apps/news?pid=20601086&sid=abz3Png6wvrM
FDIC Plans Staff Boost for Bank Failures
http://calculatedrisk.blogspot.com/2008/03/fdic-to-hire-more-workers-braces-for.html
http://www.bloomberg.com/apps/news?pid=20601086&sid=abz3Png6wvrM
FDIC Plans Staff Boost for Bank Failures
http://calculatedrisk.blogspot.com/2008/03/fdic-to-hire-more-workers-braces-for.html
That's our system. Capitalism for the poor, Socialism for the wealthy. I think its time to acknowledge that our version of capitalism is a failure and start moving towards a more fair and equitable system. We're already close.
all perfectionists are mediocre in their own eyes
PirateJon on
0
Posts
No, they are not going to get away without having quite a bit of their wealth dissolved.
It is strictly necessary. It also lets them know that no matter how horribly they gamble, they will get bailed out.
What's most upsetting is that we're not using the bailouts to actually get these companies under control.
So if you ignore all the horrible stuff that happens for everyone else, I might make it out of this okay.
But yeah, the "F" in FNMA and FRMC stands for "Federal." The More You Know...
The Fed has proposed that investment banks will be required to submit to increased federal regulations in exchange for having access to their window as the lender of last resort...
Cyclical history blah blah blah?
Oh look, it's Yar trying to shift the blame for private actors acting like idiots to the government, like always. I swear, you can set your watch by him.
He knows the investors were idiots. He's just pointing out that the government is full of them as well, which didn't help things in the least.
That's great for you, Doc, but my wife and I are trying to sell our condo. Which has lost something like 25K$ in value since 2004 because...well, we were sorta dumb and bought in the Boston North Shore. Where nobody wants to buy, there's too much on the market, and we're kinda screwed.
On the other hand, we're planning on renting an apartment in Connecticut for a year, then buying. By that time we should be able to buy a house for the price of a large pizza. And probably get the pizza thrown in the deal.
IOS Game Center ID: Isotope-X
The problem is that lenders may be more wary of approving home loans now - raising the standards beyond the 20% down payment of the past - before sub-prime loans. I'm not sure that this happening currently, but it's one trend to watch for those of us looking to buy a home in the next few years.
On top of that, if you are looking for a house, you should care. Again Fannie Mae and Freddie Mac are part of what allow banks to give out as many home loans as they do. If the government didn't bail them out, there would most likely be a lack of funds for banks to give out any more loans period - no matter your financial qualifications.
No, he's trying to say "but the reason that they made all those bad loans was because of the mean old government, so they're the real victims here!" Which is classic Yar.
It's actually Fannie Mae. The name is still a problem, though...lots of consumers got it mixed up with Fanny May, and thought they were buying tasty, gourmet chocolates. Only later did they find out they had bought a home at 8.5% interest.
IOS Game Center ID: Isotope-X
The biggest issue is how foreclosures fuck up an entire neighborhood. It can also lead to an increase in crime thanks to the 'broken windows' aspect, eventually reducing the individual home to be condemned and adding extra expense to the community in order to demolish it, on top of any negative externalities that could have cropped up along the way from occupied to unoccupiable. Arsonists, squatters, drug dealers, etc.
Which would be why half of the subprime mortgages came from lenders not under CRA?
The banks weren't forced into shit, they saw a stupid chance for a short term income boost and fuck the long term consequences. People make that choice all the time out of stupidity.
Yeah, like I said earlier, a bailout is necessary.
Which is interesting since Fannie and Freddie pretty much stayed away from all the bad paper, unlike Countrywide and their ilk, and more or less kept to normal standards.
And the taxpayers pick up the tab.
So we can't have a true free market then. What's wrong about socialism again?
No, this time is apparently different from what happened in the 80's. Don't ask me how, because I have no idea.
And are going to be paid back by JPMorgan for that loan to ensure that they bought Bear Sterns. Which was worth a logarithm more than $30b just the week before.
Nothing, which is why we are a socialist nation.
No doubt about it, alot of people made dumb decisions. To be fair, it's very hard for people to predict their economic situations in the future; for many people, one accident or illness or layoff and their finances are stripped to the bone. What looks like a good idea at the time might turn out to be a massive mistake later.
Of course, there were also people who bought houses for $240 grand while making $28K a year. There were decisions that were obviously foolish from the beginning.
IOS Game Center ID: Isotope-X
Education is sort of an issue.
Don't buy it. People were greedy, but the deregulation that the bad loans be made is more at fault. That would be the neo-cons running the Fed. I like this picture.
This would have approximately doubled the US national debt. Instead the Fed and Treasury took some unprecidented, but necessary steps. They opened up the discount window to FNM and FRE (though both have said they don't need to use it). They proposed enacting legislation to allow the fed to buy preferred shares in both companies (preferred shares are more like bonds than common stock). And theytightened restrictions regarding 'uncovered shorts' for FRE, FNM and the other large banks. (shorts are when you borrow shares to sell them, uncovered shorts are when you sell shares without borrowing them and is technically illegal).
so, about a week ago I thought the financial sectors were looking more and more like the complete collapse of the world economy was about to happen and a deep, worldwide recession was going to take hold. Until the fed stepped in and took the action I described above.
And just to comment on this specific topic. It's my understanding that the current plan is to extend a $25 billion line of credit to these two government mandated entites. Whether or not the line of credit will actually be used seems to be about a 40/60 proposition right now. The point is that offering the line of credit bolsters confidence in the market. And confidence is really all there is to any modern financial system.
I teach high school math and for the last few years I've tried to take a couple days each year to talk about things like credit cards, mortgages, interest rates...basic personal finances. The profusion of online amoritization tables has been great for this. When you can show very quickly what happens if, say, an interest rate on a house increases by half a percent, or if you pay an extra 100 bucks per month on your car, and they can quickly see what the long-term effect on the cost is, it really sinks in.
Of course, it helps if you have students who give a shit. And who have fairly developed math skills. And easy Internet access in the school. And....
IOS Game Center ID: Isotope-X
I, quite literally, decided against a business minor because I was do disgusted with a class on the topic, and how it was all geared to trick people rather than simply divulge information.
For those of us who haven't been exposed to this, can you explain what you mean?
IOS Game Center ID: Isotope-X
For one - that $25 billion seems a might fishy.
http://www.nakedcapitalism.com/2008/07/cbo-fannie-freddie-rescue-to-cost-25.html
For B - this doesn't really fix anything does it, just kind of delay depression 2.0.
Just little things here and there. Compound interest is a fun one, especially. Basically how 10% is never 10%.
Yeah, I don't really hold the people who received these loans that liable - when you have banks/lenders falling all over to loan you money (and they KNEW these people could afford the loans they were giving them) then what are you supposed to do? This could have been avoided if this administration cared at all about regulating anything - but that rant is for another day. The reality is that these lenders never should have been able to offer these ridiculous loans and then drop them on other investors by relabeling them as "AAA+ *thumbs up!* Guaranteed Can't-Fail Investments!!!!"
It's like a cartoon I saw shortly after this blew up - "Gee, I guess people with no money and bad credit CAN'T afford to buy a house!"
But both FRE and FNM have solid balance sheets, their only problem is a potential lack of cash. Which hasn't been a problem yet and doesn't look to be a problem soon. In the last week they've sold at least $3 billion in bonds, and didn't have any problems selling those. If the housing market takes a dramatic downturn in 2010 then there will be more/bigger problems than this.
FRE and FNM are both currently cutting back on their lending (decreased housing prices + decreased demand = less lending) so their liquidity problems should get better over the next two years.
If your looking to buy something, you should be asking yourself:
1. Is this really worth $X00,000. Would it cost that much to build it? Or is this supply&demand bullshit?
Because if it is supply&demand bullshit driving the price up...you might as well be buying overpriced stock in the stock market...its just as risky.
2. Can I afford this?
Because if you can't pay it off in a reasonable amount of time and be expecting interest may go up a little, then your setting yourself up for failure.
And the banks knew who they were giving loans to....if anything they should be more culpable.
If the government could ignore the problem I'm sure they would.
Isn't that the ARM reset year? so... stock up on canned goods and ammunition?