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Foreclosures and Financing

TheAnk

By TheAnk
in Providence

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TheAnk Hamlet

TheAnk

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Also, TheAnk, Fannie and Freddie are NOT (or were not) government agencies.

"full faith and credit of the US Gov" per my trusty Series 7 books.. GSEs.. And what happened? The US Gov extended their full faith and credit, just as described... Its a clever shell game; not a gov entity, but if anything happens we'll take over.. As you saw.. If it walks like a duck........

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TheAnk Hamlet

TheAnk

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you see, this is why I get irate when people say "the free market is to blame for this mess".. These calls for socialism, etc are just so far off.. It would be like me, an admited art retard, going to a gallery and critiquing things I know nothing about, albeit very confidently... Thats what a fool does..

FRE and FNM are gov created entities to prevent THIS EXACT THING FROM HAPPENING.. They were built to PROVIDE liquidity.. Now the government, through its 9-11 scare tactics is blaming private capital for this. Why? To own the industry?? Its so beyond retarded its inexplicable.. They failed at it once, so how do they fix it? By trying the failed business model AGAIN and harder... Its insanity..

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pete11 Whistle-Stop

pete11

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The number is too big for my calculator. It said it's 3 x 1014. 14 zeros is a lot.

For my money, the 1999 changes in credit rules were not nearly as important to this as the 2004 move by 5 broker/dealers to increase their maximum leverage from 12:1 to 40:1 - that's better than triple, since we're doing math here. Those 5 firms were:

  1. Bear Stearns

  2. Lehman Brothers

  3. Morgan Stanley

  4. Goldman Sachs

  5. Merrill Lynch

What do they all have in common? They're all belly up, except for MS and GS who've been lucky enough to get their charter switched amid stream so they can gobble up all the other failed firms' assets without mark-to-market requirements.

So basically, these guys begged the SEC to give them three times the rope. Big surprise: they hung themselves. How do we know this to be a more significant factor? Because the rate of mortgage default is orders of magnitude smaller than the MBS collapse. If you will, 1999 was the tree, post 9/11 "free money" interest rates were the horse, and the 2004 leverage rules were the rope. Still, those jackasses had to spur the horse, over and over and over. It's really quite a piece of work.

Also, TheAnk, Fannie and Freddie are NOT (or were not) government agencies. The fact that many, many, many fairly well-informed people THOUGHT these firms had the explicit backing of the G played a role in the over-leveraging game. So far as I know, executives at government agencies don't get paid in the tens of millions of dollars.

Again, I commend to everybody's reading Infectious Greed for wide-ranging and well informed discussion of these issues.

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frymasterspeck Hamlet

frymasterspeck

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Pete, I get it. You're smart, you called it right and you made money.

Still, all of that discussion is about the underlying mortgages and the values of the houses. What is your response to my assertion that the 2004 leverage rule changes are what made this particular meltdown what it is? The mortgage/housing situation is bad, but not to the extent that these derivatives which are absolute dead weight.

And I ask the question without sarcasm. I'm interested in your well-informed opinion.

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pete11 Whistle-Stop

pete11

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Pete, I get it. You're smart, you called it right and you made money.

Still, all of that discussion is about the underlying mortgages and the values of the houses. What is your response to my assertion that the 2004 leverage rule changes are what made this particular meltdown what it is? The mortgage/housing situation is bad, but not to the extent that these derivatives which are absolute dead weight.

And I ask the question without sarcasm. I'm interested in your well-informed opinion.

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pete11 Whistle-Stop

pete11

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Pete, I get it. You're smart, you called it right and you made money.

Still, all of that discussion is about the underlying mortgages and the values of the houses. What is your response to my assertion that the 2004 leverage rule changes are what made this particular meltdown what it is? The mortgage/housing situation is bad, but not to the extent that these derivatives which are absolute dead weight.

And I ask the question without sarcasm. I'm interested in your well-informed opinion.

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TheAnk Hamlet

TheAnk

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This debate (on TV) is fascinating.. Lets call it Who Can Distance Themselves From Bush Better... Also, its far more heated than any one I can remember..

Housing already (at least in my foreclosure striken area) is well below the ratios.. We are already way beyond the rational on the downside.. The problem, I'll admit.. Is lending.. Its very tough to get a loan.. Investor, impossible...

I hear that is going to change come Jan 09.. Rumor says changes to FHA will welcome investors by allowing multiple loans.. Right now, anyone at any time can only have one fed guar loan..

I think, its time they stopped shutting investors out.. We can provide a much needed backstop to the lack of buyers for foreclosures.. It may not be the best thing for home ownership, but its certainly a rational business model for these festering properties..

Thoughts?

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TheAnk Hamlet

TheAnk

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Obama killing McCain on healthcare.. McCain killing Obama on foreign policy.. McCain is a LITTLE too high on vets for the average joe.. Here's an honest question.. Obama is half white, half black.. Multiracial. Its very insulting to me that he doesn't admit/adress that.. It casts a huge could over bi-racial people.. Its kind of sickening to me actually..

After that debate, its my opinion that neither one of them have any clue about economics.. Which, is pretty much my only issue..

Does anyone else drink to watch debates??? :w00t:

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RestedTraveler Metropolis

RestedTraveler

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Obama killing McCain on healthcare.. McCain killing Obama on foreign policy.. McCain is a LITTLE too high on vets for the average joe.. Here's an honest question.. Obama is half white, half black.. Multiracial. Its very insulting to me that he doesn't admit/adress that.. It casts a huge could over bi-racial people.. Its kind of sickening to me actually..

After that debate, its my opinion that neither one of them have any clue about economics.. Which, is pretty much my only issue..

Does anyone else drink to watch debates??? :w00t:

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TheAnk Hamlet

TheAnk

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My gripe with McCain is he comes off as a crazy war guy.. I guess understandable with him being a POW. But where there's smoke......

My (personal) point on Obama is be proud of who and what you are.. I feel he is running as a "black" candidate, when he is multiracial.. The future of the world as a better place, in my opinion, is to promote interracial relationships, and he fails to be the advocate he should be.. I don't expect people to agree, but thats just my personal take.. And 10000% unrelated to foreclosures and financing, for sure..

So to bring this back to topic, the bailout is the single biggest crime in american history..

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pete11 Whistle-Stop

pete11

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This debate (on TV) is fascinating.. Lets call it Who Can Distance Themselves From Bush Better... Also, its far more heated than any one I can remember..

Housing already (at least in my foreclosure striken area) is well below the ratios.. We are already way beyond the rational on the downside.. The problem, I'll admit.. Is lending.. Its very tough to get a loan.. Investor, impossible...

I hear that is going to change come Jan 09.. Rumor says changes to FHA will welcome investors by allowing multiple loans.. Right now, anyone at any time can only have one fed guar loan..

I think, its time they stopped shutting investors out.. We can provide a much needed backstop to the lack of buyers for foreclosures.. It may not be the best thing for home ownership, but its certainly a rational business model for these festering properties..

Thoughts?

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frymasterspeck Hamlet

frymasterspeck

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If there's all this cash amassed in hedge funds sitting on the sidelines and these mortgage derived securities are so grossly undervalued, then what's the low-down on the slow-down? It's not like Lehman and Bear and Merrill WOULDN'T sell. They COULDN'T sell. The market is, literally, seized.

There is no first buyer, hence this 'bail-out.' Disabuse me...

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pete11 Whistle-Stop

pete11

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If there's all this cash amassed in hedge funds sitting on the sidelines and these mortgage derived securities are so grossly undervalued, then what's the low-down on the slow-down? It's not like Lehman and Bear and Merrill WOULDN'T sell. They COULDN'T sell. The market is, literally, seized.

There is no first buyer, hence this 'bail-out.' Disabuse me...

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