There goes your 401k again

[DaveH]

tjamz;238945 wrote:
I'm seriously pressed to find a single industry that has been better for the public after deregulation.

Insurance: Nope
Airlines: Nope
Banking: Nope
Investments: Nope

Actually, the reason we are in this financial mess is because of regulation. The feds were basically forcing lenders to lend to people who had no business owning a house, all in the name of fairness. Poor people deserve homes too right? So borrow them money for one even tho there is no way they can pay it back. Credit was basically way too easy to get, and lenders weren't worried about it because they had freddie and fannie to back them up. If they were truely on their own in the free market they never would have given the loans that they did.

[24valvenotak]

now now kids settle down. havent you heard walmart sells steak now? if people with a McJob can raise their kids on steak, the economy is just fine.

[DaveH]

24valvenotak;239091 wrote:
now now kids settle down. havent you heard walmart sells steak now? if people with a McJob can raise their kids on steak, the economy is just fine.

At 4:00am its time to put the crack pipe down man.....

:drunken_smilie:

[Guest]

But Dave, this latest round isn't about the bad mortgages, it's about the bad practice of allowing mortgages to be traded as commodities. I agree w/ you about the too easy to get credit thing...I have available CREDIT CARD credit of over $100,000 w/ 4.99% APR FIXED RATE. Don't get me wrong, i'm glad I have that much available, but seriously...that is low interest....and this is just me.

After I was divorced in '99 I had horrible credit (long story)...but was still able to get low interest cards for tens of thousands of dollars within 2 years...was able to buy a house w/ ridiculously low interest within 3 years...etc...and I wasn't making dick for money back then. Fortunately, things worked in my favor and I'm doing significantly better now.

Again, this has nothing to do with the banking/investment banking crisis we are seeing now. Had there been regulation against trading mortgages in your investment portfolio, things would be different....meaning only the banks that took the mortgages on would be on the hook and not the bank AND the investment banks that the mortgages were traded to to hedge their wagers.

This is not sounding the way I intended...but hopefully you get the idea of where I was going with this...if not, i'll try and explain better.

[SmitEvo]

tjamz;239155 wrote:
But Dave, this latest round isn't about the bad mortgages, it's about the bad practice of allowing mortgages to be traded as commodities. I agree w/ you about the too easy to get credit thing...I have available CREDIT CARD credit of over $100,000 w/ 4.99% APR FIXED RATE. Don't get me wrong, i'm glad I have that much available, but seriously...that is low interest....and this is just me.

After I was divorced in '99 I had horrible credit (long story)...but was still able to get low interest cards for tens of thousands of dollars within 2 years...was able to buy a house w/ ridiculously low interest within 3 years...etc...and I wasn't making dick for money back then. Fortunately, things worked in my favor and I'm doing significantly better now.

Again, this has nothing to do with the banking/investment banking crisis we are seeing now. Had there been regulation against trading mortgages in your investment portfolio, things would be different....meaning only the banks that took the mortgages on would be on the hook and not the bank AND the investment banks that the mortgages were traded to to hedge their wagers.

This is not sounding the way I intended...but hopefully you get the idea of where I was going with this...if not, i'll try and explain better.

It really isnt from the trading of mortgages....not all mortgage trading is bad. Its just the ones from the idiots that got interest only loans or ARM loans. Then their houses which were overly inflated in price came down to real values and now they cant make payments or cash in. I blame the companies for their bad business practices and they should go bankrupt. Time for change...

[DaveH]

Yep, what smitevo said. I don't really like the fact that loans were sold like they were, but the real prob is that people are defaulting because they were set up in loans that they could never repay.

[thrash]

The majority of loans are resold to other agencies. Packaging up a bundle of loans into a CDO allows them to be resold. The money you are loaned has to come from somewhere.. and allow investors to buy a stake in a bundle of loans is a perfectly reasonable way of doing it.

My best friend is the head software developer at a fund that specialized in CDOs.. (collateralized debt obligations).. and ran a "distressed fund". His software was able to do the per-instrument analysis in packages of CDOs and their fund was actually fine.

THere were a lot of agencies complicit in the CDO meltdown.. Moody's was doctoring the ratings on some of the securities... other people didn't have the capacity to do proper due dilligence on what they were buying.

As is always the case -- people that took risks got burned badly. The system worked.

My dad personally runs a hedge fund of his design based on derivatives trading. He's managing a few hundred million dollars (iirc). He's an actuary and works for (primarily) the American operations of a global insurance firm. His company isn't tanking.

The smart people that did what they were supposed to are fine.

In many cases the behavior we saw from people doing things they weren't supposed to was because the government was giving them the wrong signals. People felt that investing in Fannie/Freddie was "Safe" because the Fed was buying their debt (Wtf?). People felt that making loans to risky borrowers was good because the feds said to do so. Then when home prices skyrocketed (higher demand -> higher prices) the feds lowered rates to make credit for shaky folks even more affordable ( compounded demand -> compounded prices).

It might be a nice heartfelt good idea for everyone to have their own house, as the democrats have wanted, but it has an absolutely obvious effect on home prices -- they go up. When that happens, you can either print more money and loosen lending requirements, as the fed did, or you can say "at some point our social agenda is going to have to meet its economic maker". The democrats never went for the latter.

There have been multiple attempts to chisel away at the structural problems in the lending and housing industry. They have been blocked at every juncture by democrats. Ask fucking bill clinton about it -- he'll tell you that democrats blocked increased fannie/freddie oversight and that contributed to our current mess.

[24valvenotak]

DaveH;239101 wrote:
At 4:00am its time to put the crack pipe down man.....

:drunken_smilie:

It would be irresponsible to smoke crack in broad daylight.

But that doesn’t change the fact that my post was not accurate. ...

The economy is fine. Bush is on it. Relax. ... Im sure he is praying right now.