[QUOTE=elucidator]
Just one thing I want somebody to tell me: where did all the money go? I mean, its gone, right? But it didn’t just evaporate, did it? Go “poof” - gone? So, somebody’s got it, right? Can we make them hock it up, like a hairball of Benjamins? Can we ship them off to Club Fed, where the chef can’t make a decent white sauce?
[/quote]
I don’t have time to type a basic accounting lesson, but I’ll give the McDonald’s drive through version.
The banks make the loans to the homeowners. So Joe Homeowner now has $500,000 of the banks money with which he uses to purchase his home. So the actual money goes to whoever sold the house. Usually some family or whoever. So for all intents and purposes of our discussion, the money is gone.
Joe Homeowner, however, now has an asset equal to $500,000 (his house) and a liability of $500,000 to the bank (plus interest, which is where the bank makes money on this deal). What he does not have, however, is cash to pay the bank with. His paycheck might have covered the monthly payments at 4% interest but not 6%.
Normally, what happens is when you can’t pay the loan back, the bank will work with you to refinance or as a last resort they may take your house. They don’t really want your house. Not because of any altruism on their part. Evicting people and reselling their foreclosed homes is time consuming and expensive and the bankreally isn’t in the selling foreclosed homes business.
So “the money” actually went to a bunch of people who were just legitimately selling their houses and isn’t available to be “hocked up like a hairball”.
The problem is that are are hundreds of thousands of people who OWE money to banks and they can’t pay it back. There are so many people, in fact, that the banks don’t even have the resources to forclose on that many homes. Not that making hundreds of thousands of people homeless is a solution anyway.
The banks are losing billions because they made a bunch of shitty deals. The problem is that a lot of people are indirectly affected by those banks financial difficulties. It’s not simply a matter of telling a bunch of Lehman Brothers bankers to forgo their multi-million dollar bonuses. There are thousands of regular people who may lose their jobs, not to mention ordinary people who will see loses in their 401ks and other investments.
Basically what has happened is that a systematic failure in the financial system has destroyed billions in wealth (not money). It can be argued, however, that wealth was never there to begin with. Like the dot-coms, much of it was the product of a speculative bubble. How would you get the money back from the dot-com bubble? You can’t. It’s gone. People bought something that eded up not worth anything. Same thing here - banks invested a lot of money in uncollectable loans.
[QUOTE=elucidator]
Thing is, I sense a somewhat bizzare morality at play here. If the fuckees weren’t smart enough, that’s too bad for them, should have paid more attention in school, or some such. Why is it that a man who wouldn’t dream of robbing a blind man or a cripple has no problems screwing someone who isn’t as smart? Mathtards like me are fair game?
Rob somebody with a gun, go to jail. Rob them with a nice clean spreadsheet, fart through silk undies and order frappuccino. Wrong. Just plain wrong.
[/QUOTE]
You seem very indignant about something you admit not to understand. Everyone knows the expression “a fool and his money are soon parted”. Who’s the bigger fool? The fool who asks for a loan he has no hope of ever paying back or the fool who gives it to him? If you go into a financial deal without understanding it, the onus is is not on the other party to do your due dilligence.
