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The problem with our economy today is from a liberal thinking congress,
senators, and presidents, as well as greed and dishonesty. When you put these together it spells disaster in any area of our life. * Under Jimmy Carter we received the Community Reinvestment act. This law says banks have to make loans in low income areas and it has forced many lending institutions to seek to make loans to people in areas that lenders would not normally go because of the risk and low property values. (Sub Prime Loans). This was in 1977. In 1980 president Carter and a Democratic controlled congress passed the Depository Institutions Deregulation and Monetary Control Act-- The law also removed the power of the Federal Reserve Board of Governors under the Glass-Steagall Act and Regulation to set the interest rates of savings accounts. A Sad fact is we are all still feeling the effects of his policies and decisions 30 years later. http://en.wikipedia.org/wiki/Glass-Steagall_Act http://en.wikipedia.org/wiki/Regulation_Q * Then in 1995, Bill Clinton, (in between interns) made changes to the Community Reinvestment Act, that forced an increase in the number of loans to these people and the aggregate do llar amounts loaned.-- Larger loans to people with less income in areas where the collateral value would go down instead of up. ( Clinton should have had his mind on the long range effects of this instead of Monica an d a good cigar.) This was in response to pressure from "community organizer." Can you think of a former Community organizer running for president? Hint - he's a Democrat * In 1999 Mr. Clinton signed to repeal the Glass-Steagall act which had protected taxpayers since the Great Depression. * In 2003 President Bush tried to propose a change in regulatory control over Freddie Mac and Fannie Mae and place both companies under the control of the Department of the Treasury, but was voted down by the liberal democrats led by Barney Frank. Remember the name Barney Frank, he is one of Obama's top two economic advisors the other is Jim Johnson who was the head of Freddie Mac and walked away with $24,000,000. * Now, Mr. Obama and his liberal cronies are spinning the facts so you will believe that all our financial problems are because of Bush's failed economic policy. However, OBAMA'S two MOST TRUSTED ECONOMIC ADVISERS TO HIS CAMPAIGN are the very people that were in control of Freddie Mac- Jim Johnson $24,000,000 and Fannie Mae - (Franklin Raines $90,000,000 in 6 years). In addition, since 1989 their have been several politicians who have received campaign donations and kick backs from these two failed institutions. The #1 recipient is Senator Chris Dodd-D RI and the runner up is none other than Senator Barrack Obama who received the second largest amount of donations (over $500,000) which is phenomenal because he has only been in the Senate for 3 years. When Enron went belly up, we demanded Senate hearin gs and investigations. Why aren't the Democrats demanding the same with these companies? But, oh yeah, I forgot. It is Bush's fault! (Yeah, Right, Sure it is). I am Jerry Teasley, banker, and I approved this email. -- jlrogers±³© "Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves." William Pitt "Those who would give up a little freedom to get a little security shall soon have neither." Benjamin Franklin |
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You really have to be a total tool to not see that Bush and his people have ruined this country. You have to be an even bigger tool to start talking about liberal this and conservative that. Bush is NOT a republican and never has been. If he was then the country would be in far better shape. I doubt McCain or Obama can do much in the near future to repair what Bush has done. 8 years and insane partisan fruitcakes still make the same old chants from BOTH camps. The time for that is over and most polls show that even hardcore republican nuts realize what's been done to them. RB |
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"jlrogers±³©" wrote in message
... complete BS removed jlrogers±³© "Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves." William Pitt "Those who would give up a little freedom to get a little security shall soon have neither." Benjamin Franklin I think you should vote for McCain! -- "j" ganz @@ www.sailnow.com |
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"Dave" wrote in message
... Generally accurate, but with two exceptions. First, removing the guvmint's ability to dictate interest rates under Regulation Q has very little or nothing to do with the present problems. Those of us who were dealing with the financial sector back then recall the economic distortion those guvmint fixed rates caused. The one small exception is that repeal of Regulation Q opened up the possibility of brokered deposits, which are somewhat more volatile than other CDs. However, the regulators have been fairly vigilant in keeping an eye on brokered deposits. For example, a bank that is not well capitalized under the regulations is prohibited from taking brokered deposits, and the term "brokered deposits" is very broadly interpreted. Even before this rule kicks into play, there is a fair amount of informal pressure to reduce brokered deposits. The rule can, however, become significant if a bank holds large amounts of brokered deposits and then falls below the well capitalized level. The result is that the bank is unable to roll over maturing high rate CDs, reducing its lending ability. Second, repeal of Glass-Steagall by Gramm-Leach-Bliley also has little to do with the present problems. It simply added a new category, called financial holding companies, to the universe of bank holding companies. Financial holding companies can own a somewhat broader range of finance-related businesses than bank holding companies. A bank holding company cannot convert to a financial holding company unless it is well capitalized, well managed, and received a satisfactory rating on its last CRA exam. This last requirement was insisted upon by the Dems as a condition to voting for the bill, making it veto-proof. It may have some bearing on the current crisis in that it provided an added incentive to lend in poorer areas. Banks remained subject to the same regulations and regulators as previously. Federally chartered commercial banks remained subject to regulation by the OCC; state chartered banks remained subject to regulation by the FDIC at the federal level and the state banking departments at the state level; thrifts and thrift holding companies remained subject to regulation by the OTS and FDIC and, if state chartered, the state banking authorities; bank holding companies and financial holding companies remained subject to regulation by the Federal Reserve Board; securities brokers and dealers remained subject to regulation by the SEC. Note that in both cases the passage you quoted gives no reasons whatever to support the assertion that those two changes play a role on the present crisis. Yeah, and you forgot to tell us the economy is in great shape! -- "j" ganz @@ www.sailnow.com |
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wrote in message
... On 9 Oct 2008 11:16:01 -0500, Dave wrote: Generally accurate, but with two exceptions. First, removing the guvmint's If you would stop spelling government in cutesey baby-talk, you might gain at least slight credibility, Dave. Not guaranteed, of course... He's attempting to show contempt for an institution of which he's a part. -- "j" ganz @@ www.sailnow.com |
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On Thu, 09 Oct 2008 11:16:01 -0500, Dave wrote:
Generally accurate, but with two exceptions. Really? Please quote the clause in the Community Reinvestment Act that told investment banks to leverage their position in subprime CD0s to suicidal heights. This mess isn't because of the CRA, it's because of greed, and Wall Street group-think. Subprime mortgage defaults are only the visible cause. A healthy bank can withstand a 25% default rate in the subprime sector, leverage that risk to 33-1, as one bank did, and it's bye-bye. Greed and bad business practices brought on this mess. |
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"Dave" wrote in message
... On Thu, 9 Oct 2008 09:57:33 -0700, "Capt. JG" said: Yeah, and you forgot to tell us the economy is in great shape! Who was it that said "I am confident about the American economy"? I guess since about 7/8 years ago when I was saying it wasn't so good. -- "j" ganz @@ www.sailnow.com |
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"Dave" wrote in message
... On Thu, 9 Oct 2008 10:19:31 -0700, "Capt. JG" said: an institution of which he's a part. I don't think so. Really? So you don't believe you have any say about how we govern ourselves.... -- "j" ganz @@ www.sailnow.com |
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On Thu, 09 Oct 2008 13:51:07 -0500, Dave wrote:
On Thu, 09 Oct 2008 13:26:02 -0500, said: Really? Please quote the clause in the Community Reinvestment Act that told investment banks to leverage their position in subprime CD0s to suicidal heights. This mess isn't because of the CRA, it's because of greed, and Wall Street group-think. Subprime mortgage defaults are only the visible cause. A healthy bank can withstand a 25% default rate in the subprime sector, leverage that risk to 33-1, as one bank did, and it's bye-bye. Greed and bad business practices brought on this mess. I think you'd best go take a nap while those who know something about the topic have this discussion. Like the management of Bear Stearns, Merrill Lynch, Lehman Brothers, AIG? |
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wrote in message
t... On Thu, 09 Oct 2008 13:51:07 -0500, Dave wrote: On Thu, 09 Oct 2008 13:26:02 -0500, said: Really? Please quote the clause in the Community Reinvestment Act that told investment banks to leverage their position in subprime CD0s to suicidal heights. This mess isn't because of the CRA, it's because of greed, and Wall Street group-think. Subprime mortgage defaults are only the visible cause. A healthy bank can withstand a 25% default rate in the subprime sector, leverage that risk to 33-1, as one bank did, and it's bye-bye. Greed and bad business practices brought on this mess. I think you'd best go take a nap while those who know something about the topic have this discussion. Like the management of Bear Stearns, Merrill Lynch, Lehman Brothers, AIG? I think we should all take a listen to President Ronald Reagan's words... http://www.youtube.com/watch?v=IqfedYAAGEI -- "j" ganz @@ www.sailnow.com |
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said:
Really? *Please quote the clause in the Community Reinvestment Act that told investment banks to leverage their position in subprime CD0s to suicidal heights. *...... *A healthy bank can withstand a 25% default rate in the subprime sector, leverage that risk to 33-1, as one bank did, and it's bye-bye. *Greed and bad business practices brought on this mess. Dave wrote: I think you'd best go take a nap while those who know something about the topic have this discussion. Looks like he he does know something about it.... ....something you'd rather sweep under the rug in the rush to blame those evil libby-rull Democrats! DSK |
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"Dave" wrote in message
... On Thu, 9 Oct 2008 11:44:17 -0700, "Capt. JG" said: Who was it that said "I am confident about the American economy"? I guess since about 7/8 years ago when I was saying it wasn't so good. ???? Are you perhaps answering the wrong message? The question was a "who" question, not a "when" or "since" question. You're right. My mistake. You said it, although not exactly as typed. -- "j" ganz @@ www.sailnow.com |
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"Dave" wrote in message
... On Thu, 9 Oct 2008 11:44:17 -0700, "Capt. JG" said: Who was it that said "I am confident about the American economy"? I guess since about 7/8 years ago when I was saying it wasn't so good. ???? Are you perhaps answering the wrong message? Maybe you're smoking something? What I asked was: Who was it that said "I am confident about the American economy"? Your answer seems to have nothing to do with the question. The question was a "who" question, not a "when" or "since" question. Oh, I get it... you mean this quote, of which you convenient left out the last part... "I am confident about the American economy. But we're going to have to have some leadership in Washington." The answer is Sen. Barack Obama. -- "j" ganz @@ www.sailnow.com |
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"Dave" wrote in message
... On Thu, 9 Oct 2008 13:03:37 -0700, "Capt. JG" said: Who was it that said "I am confident about the American economy"? I guess since about 7/8 years ago when I was saying it wasn't so good. ???? Are you perhaps answering the wrong message? The question was a "who" question, not a "when" or "since" question. You're right. My mistake. You said it, although not exactly as typed. Nope. Not even close. That's an exact quote from your boy Obama in the last debate. No, it's not an exact quote. You shouldn't fib, especially when it's easy to check. "I am confident about the American economy. But we're going to have to have some leadership in Washington." -- "j" ganz @@ www.sailnow.com |
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On 9 Oct 2008 13:47:02 -0500, Dave wrote:
On Thu, 09 Oct 2008 13:02:10 -0400, said: If you would stop spelling government in cutesey baby-talk, you might gain at least slight credibility, Dave. Not guaranteed, of course... It's a literary allusion, Not at All. Ever read Huckleberry Finn? With apologies to Lloyd Bentsen, you, sir, are no Mark Twain! When you do it, it's just baby-talk. |
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On 9 Oct 2008 13:51:07 -0500, Dave wrote:
On Thu, 09 Oct 2008 13:26:02 -0500, said: Really? Please quote the clause in the Community Reinvestment Act that told investment banks to leverage their position in subprime CD0s to suicidal heights. This mess isn't because of the CRA, it's because of greed, and Wall Street group-think. Subprime mortgage defaults are only the visible cause. A healthy bank can withstand a 25% default rate in the subprime sector, leverage that risk to 33-1, as one bank did, and it's bye-bye. Greed and bad business practices brought on this mess. I think you'd best go take a nap while those who know something about the topic have this discussion. There you go, attacking the messenger rather than addressing the issue. Maybe try throwing in some baby-talk to reinforce your lack of a real and substantive response. |
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"Dave" wrote in message
... On Thu, 9 Oct 2008 13:22:52 -0700, "Capt. JG" said: Who was it that said "I am confident about the American economy"? I guess since about 7/8 years ago when I was saying it wasn't so good. ???? Are you perhaps answering the wrong message? The question was a "who" question, not a "when" or "since" question. You're right. My mistake. You said it, although not exactly as typed. Nope. Not even close. That's an exact quote from your boy Obama in the last debate. Perhaps someone can see a difference between the sentence I quoted and the first sentence you quoted. I don't see it. Yes. That's clear. No, it's not an exact quote. You shouldn't fib, especially when it's easy to check. "I am confident about the American economy. But we're going to have to have some leadership in Washington." Here's your guy in Washington (btw, the Dow dropped 679 points today... the economy is doing great!) http://www.youtube.com/watch?v=IDofbll86dY -- "j" ganz @@ www.sailnow.com |
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"Dave" wrote in message
... On Thu, 9 Oct 2008 11:53:04 -0700, "Capt. JG" said: an institution of which he's a part. I don't think so. Really? So you don't believe you have any say about how we govern ourselves.... Well, I do go to the polls and vote. Does that mean I'm a part of the guvmint? It means you are part of the problem. LOL -- "j" ganz @@ www.sailnow.com |
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On 9 Oct 2008 15:20:01 -0500, Dave wrote:
On Thu, 9 Oct 2008 13:03:37 -0700, "Capt. JG" said: Who was it that said "I am confident about the American economy"? I guess since about 7/8 years ago when I was saying it wasn't so good. ???? Are you perhaps answering the wrong message? The question was a "who" question, not a "when" or "since" question. You're right. My mistake. You said it, although not exactly as typed. Nope. Not even close. That's an exact quote from your boy Obama in the last debate. What he said was that he had faith in the economy as far as it's ability to eventually recover. He did not say it was good now. He said quite the opposite. |
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On 9 Oct 2008 15:28:02 -0500, Dave wrote:
On Thu, 9 Oct 2008 11:53:04 -0700, "Capt. JG" said: an institution of which he's a part. I don't think so. Really? So you don't believe you have any say about how we govern ourselves.... Well, I do go to the polls and vote. Does that mean I'm a part of the guvmint? Only if you believe in Democracy. In a Democracy, the citizens own the government (that's "guvmint", for all you three year olds) |
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"Dave" wrote in message
... On Thu, 9 Oct 2008 13:18:53 -0700, "Capt. JG" said: of which you convenient left out the last part... When I was listening to the debate I nearly burst out laughing. Here he was trying to take McCain to task for saying the economy was basically sound, and then saying when he was asked whether he thought the economy would get much worse before it gets better: "No. I am confident about the American economy." Gimme a break. I'm sure you need one, but I didn't almost burst out laughing when McCain said: "I have a plan to fix this problem" "And with the plan that -- that I have, that will do that" "We've got to have a package of reforms and it has got to lead to reform prosperity and peace in the world. And I think that this problem has become so severe, as you know, that we're going to have to do something about home values." "I like Meg Whitman [former CEO of eBay and current McCain campaign adviser], she knows what it's like to be out there in the marketplace. She knows how to create jobs." (and lay them off, apparently) "I left my campaign and suspended it to go back to Washington to make sure that there were additional protections for the taxpayer in the form of good oversight, in the form of taxpayers being the first to be paid back when our economy recovers -- and it will recover -- and a number of other measures." -- "j" ganz @@ www.sailnow.com |
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On 9 Oct 2008 16:56:02 -0500, Dave wrote:
On Thu, 09 Oct 2008 17:18:08 -0400, said: With apologies to Lloyd Bentsen, you, sir, are no Mark Twain! When you do it, it's just baby-talk. Ah, some have no sense of the finer points of the language. Well, at least you admit THAT. |
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On 9 Oct 2008 17:08:01 -0500, Dave wrote:
On Thu, 09 Oct 2008 17:19:24 -0400, said: There you go, attacking the messenger rather than addressing the issue. See my reply to Doug. Didn't see it. This is usenet, Dave. Not all posts make it to all servers. You are no Mark Twain, and I guess we can add that you are no Sherlock Holmes, either. |
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On 9 Oct 2008 18:32:01 -0500, Dave wrote:
On Thu, 09 Oct 2008 17:22:29 -0400, said: What he said was that he had faith in the economy as far as it's ability to eventually recover. That may have been what his handlers had told him to say, but it certainly wasn't what he said. Read the question he was answering, and then the answer. I think you are "handling yourself" on this one Dave. |
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...something you'd rather sweep under the rug in the rush to blame
those evil libby-rull Democrats! Dave wrote: Nope. I blame the failures of the investment banks on their own stupidity in over-leveraging their capital and their undue concentration of assets. The guvmint should have let all of them run to the bankruptcy courts if they couldn't continue to meet their obligations, instead of bailing them out. OK, good so far. The only problem I have is that if we simply let the banks fail in an economy that has grown increasingly dependent on credit.... addicted to it, you might say.... then failure will spread quickly thru every level of the economy. Bank failure was one of the tripwires of the Great Depression. But apparently Thunder doesn't know the difference between a bank and an investment bank. No one who did would mention CRA in the same sentence with investment bank. That's why I suggested he take a nap while those who know something about the subject discuss it. I think I got it. We have a financial crisis caused by the CRA and commercial banks giving mortgages to unsuitable lenders. But the investment banks have nothing at all to do with the CRA and they're the biggest part of this crisis. Maybe you can explain just a little further Dave. You may be making a leap of faith here that I can't follow.... DSK |
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wrote in message ... ...something you'd rather sweep under the rug in the rush to blame those evil libby-rull Democrats! Dave wrote: Nope. I blame the failures of the investment banks on their own stupidity in over-leveraging their capital and their undue concentration of assets. The guvmint should have let all of them run to the bankruptcy courts if they couldn't continue to meet their obligations, instead of bailing them out. OK, good so far. The only problem I have is that if we simply let the banks fail in an economy that has grown increasingly dependent on credit.... addicted to it, you might say.... then failure will spread quickly thru every level of the economy. Bank failure was one of the tripwires of the Great Depression. But apparently Thunder doesn't know the difference between a bank and an investment bank. No one who did would mention CRA in the same sentence with investment bank. That's why I suggested he take a nap while those who know something about the subject discuss it. I think I got it. We have a financial crisis caused by the CRA and commercial banks giving mortgages to unsuitable lenders. But the investment banks have nothing at all to do with the CRA and they're the biggest part of this crisis. Maybe you can explain just a little further Dave. You may be making a leap of faith here that I can't follow.... DSK Many investment banks bought huge amounts of the mortgages and packaged them into "Collateralized Mortgage Obligations" ("CMO"), slicing and dicing the packages into multiple tranches and then selling the various tranches to investors, including banks, private investors, and hedge funds. The MBA's on Wall Street kept getting wilder and wilder until no one knew what they were buying anymore, or what the CMOs were worth. When rates went up and mortgage holders with adjustable rate mortgages started defaulting some of the higher yielding tranches (riskier tranches) cash flow became impaired and investors started asking hard questions. The answers scared them and they quit buying. Market values fell, mark to market rules required write downs, and now we are in free fall. |
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"jlrogers±³©" wrote:
Many investment banks bought huge amounts of the mortgages and packaged them into "Collateralized Mortgage Obligations" ("CMO"), slicing and dicing the packages into multiple tranches and then selling the various tranches to investors, including banks, private investors, and hedge funds. *The MBA's on Wall Street kept getting wilder and wilder until no one knew what they were buying anymore, or what the CMOs were worth. *When rates went up and mortgage holders with adjustable rate mortgages started defaulting some of the higher yielding tranches (riskier tranches) cash flow became impaired and investors started asking hard questions. *The answers scared them and they quit buying. *Market values fell, mark to market rules required write downs, and now we are in free fall. Yep, looks right on the mark to me... but how is it the CRA's fault? Just because everything from gas prices to warm beer is always blamed on the nearest handy Democrat? Looks to me like the crash was caused by greed & stupidity, helped along by some concurrent bubbles popping. As a private individual, if I buy an investment without carefully researching it's true risk, then it's my fault if it goes south. I take the hit. If dozens of investment banks do the same thing, to the tune of squajillions of dollars, then it drags the rest of us down... a bail-out to avoid massive bank failure may be in the best public interest (although my vote would be to take the first round of bail- out money from the pockets of those CEOs)... it's sure not the fault of some muddle-headed doo-gooders who decades ago said, "hey wouldn't it be nice if banks offered nice mortgages to poor people?" The proble is that we Americans have a whole slew of unhealthy addictions. Addiction to oil and addiction to credit are the two biggies. Our borrow-and-spend government is merely a reflection of the fact that the U.S. has a negative savings rate. The "average" US household carries about $10K in credit card debt and our total average indebtedness is over $150K per person. I've pointed this out as a problem many times (even though it's not the way I manage my own finances) long before the current banking/mortgage/credit crisis hit the headlines. We are addicted to oil and credit. Both are very destructive habits that we *will* break in the near future... one problem we have is that oil companies and financial companies are both profiting heavily from these bad habits, just like cigarette companies profit from addiction to nicotine. It's going to be either a fight break free or a complete wreckage of the nation when we hit bottom. Fresh Breezes- Doug King |
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wrote in message ... "jlrogers±³©" wrote: Many investment banks bought huge amounts of the mortgages and packaged them into "Collateralized Mortgage Obligations" ("CMO"), slicing and dicing the packages into multiple tranches and then selling the various tranches to investors, including banks, private investors, and hedge funds. The MBA's on Wall Street kept getting wilder and wilder until no one knew what they were buying anymore, or what the CMOs were worth. When rates went up and mortgage holders with adjustable rate mortgages started defaulting some of the higher yielding tranches (riskier tranches) cash flow became impaired and investors started asking hard questions. The answers scared them and they quit buying. Market values fell, mark to market rules required write downs, and now we are in free fall. Yep, looks right on the mark to me... but how is it the CRA's fault? Just because everything from gas prices to warm beer is always blamed on the nearest handy Democrat? Looks to me like the crash was caused by greed & stupidity, helped along by some concurrent bubbles popping. As a private individual, if I buy an investment without carefully researching it's true risk, then it's my fault if it goes south. I take the hit. If dozens of investment banks do the same thing, to the tune of squajillions of dollars, then it drags the rest of us down... a bail-out to avoid massive bank failure may be in the best public interest (although my vote would be to take the first round of bail- out money from the pockets of those CEOs)... it's sure not the fault of some muddle-headed doo-gooders who decades ago said, "hey wouldn't it be nice if banks offered nice mortgages to poor people?" The proble is that we Americans have a whole slew of unhealthy addictions. Addiction to oil and addiction to credit are the two biggies. Our borrow-and-spend government is merely a reflection of the fact that the U.S. has a negative savings rate. The "average" US household carries about $10K in credit card debt and our total average indebtedness is over $150K per person. I've pointed this out as a problem many times (even though it's not the way I manage my own finances) long before the current banking/mortgage/credit crisis hit the headlines. We are addicted to oil and credit. Both are very destructive habits that we *will* break in the near future... one problem we have is that oil companies and financial companies are both profiting heavily from these bad habits, just like cigarette companies profit from addiction to nicotine. It's going to be either a fight break free or a complete wreckage of the nation when we hit bottom. Fresh Breezes- Doug King CRA was the catalyst. In the old days mortgages to be sold to Freddie and Fannie had to meet rigorous criteria with respect to specific financial ratios (e.g., loan to value, income to loan amount), verifications with respect to employment, income, and net worth. Rates were fixed, so the borrower could depend on a fixed payment. The requirements were so strict it took "forever" to close a loan. CRA was the beginning of removing the standards. Adjustable rates was the killer. CRA |
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Dave wrote:
Hope this helped. Yes, well done & thanks. Some of what you've written here, I already knew... some is new to me. I don't have much of a head for business, machinery is much more straightforward thanks. But I do have at least a bit of a head for numbers and what a lot of people have been saying does not add up. The CRA is part of the crash picture, chalk that up to the Law of Unintended Consequences. But it ain't the biggest root cause. We should work at raising the level of public discourse, not lowering it. Next... how about health care! I'll start- saw a statistic a few weeks back that the "average" US household spends about the same on electronics as on health care... I bet this doesn't include employer-paid or gov't-supplied benefits, but still it shows where the priority is. Regards- Doug King |
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On Fri, 10 Oct 2008 14:09:55 -0500, "jlrogers±³©"
wrote: wrote in message ... ...something you'd rather sweep under the rug in the rush to blame those evil libby-rull Democrats! Dave wrote: Nope. I blame the failures of the investment banks on their own stupidity in over-leveraging their capital and their undue concentration of assets. The guvmint should have let all of them run to the bankruptcy courts if they couldn't continue to meet their obligations, instead of bailing them out. OK, good so far. The only problem I have is that if we simply let the banks fail in an economy that has grown increasingly dependent on credit.... addicted to it, you might say.... then failure will spread quickly thru every level of the economy. Bank failure was one of the tripwires of the Great Depression. But apparently Thunder doesn't know the difference between a bank and an investment bank. No one who did would mention CRA in the same sentence with investment bank. That's why I suggested he take a nap while those who know something about the subject discuss it. I think I got it. We have a financial crisis caused by the CRA and commercial banks giving mortgages to unsuitable lenders. But the investment banks have nothing at all to do with the CRA and they're the biggest part of this crisis. Maybe you can explain just a little further Dave. You may be making a leap of faith here that I can't follow.... DSK Many investment banks bought huge amounts of the mortgages and packaged them into "Collateralized Mortgage Obligations" ("CMO"), slicing and dicing the packages into multiple tranches and then selling the various tranches to investors, including banks, private investors, and hedge funds. The MBA's on Wall Street kept getting wilder and wilder until no one knew what they were buying anymore, or what the CMOs were worth. When rates went up and mortgage holders with adjustable rate mortgages started defaulting some of the higher yielding tranches (riskier tranches) cash flow became impaired and investors started asking hard questions. The answers scared them and they quit buying. Market values fell, mark to market rules required write downs, and now we are in free fall. And it didn't help that the lowest yielding, most secure tranches were often rated AAA by the rating agencies, so investors thought they were getting a sound investment. It turns out that many of those so called triple A's became riddled with defaults. But Doug, when problem solving you always need to look for root cause. The red X in statistical DOE terms. There are many contributing factors, however the root cause, the red X is simply setting up a system to give people who could not afford these properties and loans in the first place a way to get them with no skin in the game. That's why I blame the dems. Just another social engineering experiment gone bad. If the systems were not set up, they wouldn't get the loans, they wouldn't get the properties, they wouldn't default the loans, the loan originators, incentified by commission and no skin in the game wouldn't have sprouted on every street corner, the stinky CMO's would never have been created, the CEO's of Fannie and Freddie would not have become multimillionaires based on an incentive system that resulted from quantitiy of loans made, demand for housing wouldn't have accelerated artificially driving prices higher, and the list goes on......... On the other side of the once heated market is the pre-construction flipper. Another entity with no skin in the game, but at least in that game someone other than the taxpayer had to take the hit. Frank |
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Dave wrote:
Hope this helped. That's got to be one of the better explanations I've read, thanks Dave. It would appear that there is a lot of places to lay blame. The phrase you used earlier (I think it was you) "Perfect Storm" seems most apt. Cheers Martin |
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On Fri, 10 Oct 2008 18:10:17 -0400, Marty wrote:
wrote: Next... how about health care! Ah now don't do that, Dave is sure that if you had some kind of universal health care the "po" folks, having nothing better to do with their time would spend most of their time enjoying the untold comforts and amusements to found in your nations emergency rooms and physicians waiting rooms. I'll start- saw a statistic a few weeks back that the "average" US household spends about the same on electronics as on health care... I bet this doesn't include employer-paid or gov't-supplied benefits, but still it shows where the priority is. \ Actually I think that you spend about about $12,000 per capita on health care, about the same that we do, except we all get it up here, not just those who can afford it. Don't know where you made up that figure, I ran a large, self insured, employer based operation, and spent approximately $4000 per capita,on an 80/20 cost sharing ratio with a demographic about twenty years of age above the national average. suggest you check your figures. Cheers Martin A |
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Marty wrote:
Don't know where you made up that figure, I ran a large, self insured, employer based operation, and spent approximately $4000 per capita,on an 80/20 cost sharing ratio with a demographic about twenty years of age above the national average. suggest you check your figures. Factor in the Medicaid/Medicare budgets.... Actually, you are closer Frank, 12k per family, more like 4K-5K per capita. Oh and don't forget the sizable chunk of population that gets health care through VA. Cheers Martin |
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Vic Smith wrote:
But the worst mistake is that most of those in charge - gov and business - abandoned their fiduciary responsibilities. Bingo. It's as much an epidemic of irresponsibility as a fiscal crisis. A vast fleet of ships with drunken captains. I like that analogy. Many people who have no clue what it means to be a Captain think everything is going fine. And many more think it's fine because it's a lot of fun as long as you're one of the drunks! DSK |
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Frank Boettcher wrote:
*And it didn't help that the lowest yielding, most secure tranches were often rated AAA by the rating agencies, so investors thought they were getting a sound investment. *It turns out that many of those so called triple A's became riddled with defaults. True enough... part of the problem is that these were a new type of instrument that nobody knew how to assess the risk of; but it's also true that there was little accountability and due diligence as these intruments were marketed thru-out the finance world. The default rate, as a percent, has only gone up a small amount. A bigger problem is the crisis of confidence... when it turns out that even the safest-rated instruments can be hit by default, *and* the insurance is worthless, then people panic and want to dump their investment before they lose the whole pie. After all, what makes a $20 bill worth $20? The fact that people will accept it as valuable for a certain range of goods & services... pretend for a moment that terrorists had broken into the Mint and infected random $20 bills with AIDS (or something), then you'd have the same effect... free-fall! And this is *still* only part of the problem, as I see it... we've been thru cycles of tight credit before, and cycles of loan default (remember the junk-bond scandals). The answer is, people who have money to loan insist on higher interest rates. But now we (the U.S.A. is not just addicted to credit, we need CHEAP credit! We cannot afford to take on higher debt just to service the debt we've already taken on! The country is balancing on the edge of a cliff here and Paulson & Bernanke are desparate not just to ease credit but to keep interest rates low. But Doug, when problem solving you always need to look for root cause. Agreed. And I think the CRA (you might as well add in President Bush's 'Ownership Society') is indeed part of what got us here. I just don't see it as The Big Cause. The red X in statistical DOE terms. *There are many contributing factors, however the root cause, the red X is simply setting up a system to give people who could not afford these properties and loans in the first place a way to get them with no skin in the game. But they *did* have skin in the game. The same as you or I... keep paying or lose your home. Dave's point about computers enabling the dizzying array of mortgage loan terms is also a good one. IMHO one of the inherent factors in being "conservative" means to be leery of new things such as new types of financial instruments. Regards- Doug King |
O/T Is this true?
Don't know where you made up that figure, I ran a large, self insured,
employer based operation, and spent approximately $4000 per capita,on an 80/20 cost sharing ratio with a demographic about twenty years of age above the national average. Factor in the Medicaid/Medicare budgets.... Marty wrote: Actually, you are closer Frank, 12k per family, more like 4K-5K per capita. *Oh and don't forget the sizable chunk of population that gets health care through VA. Hey! HEY!!! Guys, I was only JOKING about bringing up health care!! DSK |
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