A-fucking-men.
My god. I think I’m becoming a fiscal moderate.
Mate
You have literally no idea of what you’re talking about.
You absolutely didn’t understand a bloody thing.
Well in the real world, most informed commentators were critical of the idea of the auctions to by mortgage backed securities of the varieties that are causing issues because of the strong chance that US Gov. would seriously overpay (and on the flip side side, paying fire sale prices would actually decapitalise the institutions leading to the inverse of the desired result).
Buying equity or buying the MBS are both buying assets, only in one instance you are buying a bit of ownership in the firm via tradeable equity securities, in the second you are buying a tradeable debt security based on cash flows of dubious mortgages, alhtough tradeable in this later instance is rather theoretical since no one wishes to buy (or few do).
No… the announcement clearly indicates taking equity - not grants. Your taxpayer dollars will be buying instead of dubiously valued non-transparent and non-liquid instrument with no rights per se, you get a transparent equity stake in the bank, which unless it goes absolutely bust, is likely to rebound in value once the crisis is over.
Bloody hell, you’ve likely gotten the better deal this way.
Your hysteric wailing could use a dose of actual knowledge. In both instances the banks were going to get cash, in one instance they offload troubled assets of dubious value, in the other your Gov does exactly what UK, Belgian, French and other govs decided was the best strategy, taking equity, clearly traded with a clear market value. Rather than taking the risk of being market maker in securities that may be utterly worthless (or not), you get a portion of the banks.
This is absolutely painfully stupid.
Leaving aside that your two government securitisers do not have positions in the troubled section of the market - the sub prime securitised mortgages - your logic here absolutely escapes me. If mortgage defaults do not rise substantially beyond current levels, the holders of the securities will be fine as well. Otherwise, both end up with a “real asset” - houses - that unoccupied depreciate rather quickly and which are losing substantial real value. Insofar as the overbuilt markets in the US, UK, etc may take 5-10 years to recover to the same real value as the original, this is a bloody disaster.
Uhuh.
The remortaging has not happened. Yet for the last month dopers have been complaining about the homeowners taking advantage of the system. The only ones taking advantage are the finance companies and banks. Paulson and his friends are making out quite well. They have gone through 350,000,000,000 dollars already. None of it went to home owners.
Eh?
Do expect there is a magic wand that does all this?
What the bloody fuck does reworking mortgages have to do with the Paulson plan (and please stop confusing the US Treasury plan with the bloody Central Bank window, the former is the bailout)?
The buying of the Mortgage Backed Securities was NEVER a plan to rework mortgages, a seperate and thorny challenge. It was to unfreeze the credit market. Your complaints are literally incoherent.
To be clear, people screwed by health problems, accidents, sudden job loss, etc. deserve help, IMHO. It’s the civilized thing to do.
Weird about the amortization document, the one I saw must have been due to bank policy, not law. Maybe part of why they are not going bankrupt like so many others.
I’m with you on there being plenty of blame to go around, but we are going to have to disagree on the idea of sharks scamming people who were “like babies”. The predominant stories in the news are not about lots of uneducated, low income people getting screwed by fast talkers. I hear mostly about white, college educated, upper middle class, suburban to gentrified urban people who thought they could beat the system by refinancing in time.
The well-timed ARM refinance is a fairly sophisticated plan. That kind of risk-taking doesn’t so much resemble a baby as it does a teenager. Regardless, these are adults we are talking about, and failure to understand the consequences of risking your life savings for a down payment on a loan that requires housing prices to not decrease in order to work out for you seems very, well, risky. Allowing refinancing at fixed rates for people who missed the window because they mistimed it is a way of retroactively removing the risk inherent in their plan at a cost to society as a whole. The result is shared pain for individual gain. Rewarding this behavior will only perpetuate it.
This is not to say the fast talkers shouldn’t burn. They most definitely should for throwing out integrity, prudence, and business ethics in exchange for a fast buck and a BMW.
The more I think about it, the better the class warfare angle sounds. The corporate overlords at the banks and automakers get bailouts and golden parachutes. The low level mortgage broker sharks keep their commissions and bonuses, and their jobs, and don’t have to face criminal charges or professional censure. The rich are still rich, and at least have a good laugh at the scrambling of all us ants to console them in their grief over having to drink the $1000 wine instead of the good stuff. The middle class people who over-reached, screwed up, and risked losing a lot get to keep playing the overconsumptive keep up with the Jones’s game, now with a little bit of everybody’s money. The poor? Still poor, hit hardest by rising prices and now in greater danger of losing their jobs. The Democrat and Republican bigshots are still entrenched and can slap themselves on the back for saving the day again, at least in the eyes of the most important voting blocs.
Interesting idea. The way I see it, the US American political, banking and financial systems are all broken. There is nothing you can do within your systems to fix the problems because the systems themselves are the problem. Your political system prevents creative destruction because the politician who lets things be destroyed on his watch loses votes, and all politicians do during their terms is work to be re-elected. You don’t have any politician with the stones to do what needs to be done to fix things, and the system wouldn’t let him do it, anyway.
The lobbying system and the rider system alone are unfathomably irresponsible. How can you possibly expect to get good government by allowing those two things to stand, as well as all the other systems that are in place to ensure that the rich and powerful keep doing things to benefit the rich and powerful? All of you little people mean nothing to your decision-makers, not the republicans or the democrats (who are virtually the same party, anyway), except as a faceless mass to manipulate and deceive in the hopes of getting votes. You think Obama will save you, but he’s a product of the broken system, just like everyone else in politics. And there is nothing that will fix your system, because your incredibly bloated bureaucracy is completely entrenched and won’t allow changes that will reduce it.
What I heard this morning was a proposed plan to cut the mortgage payment for those that qualify to 38%. They would still owe the same amount but it would make their payments more managable in hopes the housing market will recover enough for them to have equity in the future to refinance.
At least that is how I understood it.
38% of what?
The papers we were supposed to buy are mortgaged backed securities. They are not buying them. That was part of the plan.
38% of their current payment per month. I’ll try to find a link.
Wrong. 38% of current household income.
Wow. A good rule of thumb is to have no more than 25% of your income go toward housing expenses (this is almost impossible at present.) But still–dialing it back to 38%? I don’t even want to know what it is now.
Are you an idiot?
The MBS are NOT FUCKING MORTGAGES? They are pools of thousands of mortgages wrapped up and sliced and diced into derived securities.
This has not a fucking thing to do with the bloody mortgage holders you moron. The only entities effected (directly) by such purchases would be the fucking holders - that is the bloody banks. Buying those bloody things puts money in the fucking banks you idiot, that’s all it does (well it does make an artificial market in these derived securities, thus giving some pricing support in theory…)
Good bloody Christ you’re upset over something you never understood.
As for the mortgage program the American Treasury is proposing, it is only applicable to mortgages held by the US Gov backed entities Fannie and Freddie, but they do not own the problematic types, their default rate is merely 1 odd percent.
Shayna,
First, thanks for not turning my “rant” into a GD. I didn’t want it to go there.
However, I must disagree with a few of your assumptions. First, I don’t think it takes a master’s degree to understand simple money management. How about an example: I’m 10. I go to the store to buy a candy bar. I have a quarter, but the bar is 50 cents. Guess what? I either a) re-adjust my desire to eat the Snickers bar I crave, and rethink my priorities, b) leave the store and somehow EARN the extra 25 cents (hey mom, can I do a chore for a quarter?), or c) BUY SOMETHING I CAN AFFORD. I walk away with a pack of gum and a lesson. (I know there is a fourth choice, STEAL THE CANDY BAR! WOO HOO!, but for the sake of this example, I’ll stop at three). I don’t see how that lesson can’t carry on into real life, even if you attach the “complicated” concept of something like an ADJUSTABLE Rate Mortgage. Adjustable means it will go up or down, but since you could borrow at 1% or 2%, how many of these idiots actually thought their ARM would go down, meaning their mortgage payment would go down? C’mon… are Americans that stupid? (Never mind. I know the answer.)
Grateful? By the grace of God go I? No, Shayna. I’m pissed. By the grace of God I go like bobkitty. That’s a person that deserves my sympathy, empathy, and understanding. And since I have some experience in the area that bobkitty and her family are going through, I think comparing the two is insulting. I’m pretty sure you weren’t trying to do that, but you can’t paint with too broad a brush, as you might agree.
As to trading places with these people, of course not. By definition, I’d be an idiot. However, idiots don’t seem to worry. I know some. I’m surrounded by idiots. My family is full of them, so I know the arguments. “Hey, they gave me the mortgage/credit card/car loan/whatever… it’s not MY fault.” Yes it is, you moron. You entered into a financial contract. You are responsible. Not me, not the millions of taxpayers that you depend on to bail your pathetic ass out. But who has the last laugh after all? You want to compare ulcers? Please. I’m not independently wealthy, and I work (as my wife does) at the pleasure of the companies that hired us. And you can bet when my upper management and the board of directors see their bonuses threatened, shit will roll downhill. I worry about my job everyday. My wife is in sales. Her industry is not doing that well. Guess what is going to happen to her bonus? We all have worries. We all have families. We all have bills. Fuck those people who put themselves and their families at risk because they over-extended their credit, and now want the government (or anyone, actually… ) to take care of it and make it go away. And please. This does not include folks hit with something that they couldn’t plan for, like an unforseen illness, a parent or family member in distress, or the like. I know that pain, and my personal savings are in a shambles because of it. And guess what? If my wife and I lose our house, we’ll have to rent a place we can afford. I’ve rented before. I don’t want to, but I’ll have to rent again if I have to. I don’t see any of those relief dollars coming my way or bobkitty’s way anytime soon.
Helping out my neighbor who shouldn’t have been able to afford to move into my neighborhood doesn’t help. It is artificially building a false floor on the fair market value of the homes in my area. I’ve already lost money on my house, based on recent sales data. Are the tax assessors going to come around and readjust my home’s worth and push my property taxes lower? Fat chance. And why? Money. Local government needs it too, to make sure teachers get their 6% raises (plus COLA!), their own raises, and to maintain their own localized bloated bureacracy.
No matter how you slice it, doing everything right was exactly wrong. Paying 20% down was wrong because it takes me out of the running for consideration for rate re-negotiation with my lender. Period. I’m the idiot, because I tried to play by the rules that if you can’t afford it, you don’t buy it… and if you want it, you go out and earn the money for it. Part of that equation is borrowing money responsibly, since most of us don’t have the ability to buy a house with cash. That knowledge is causing the bile in my system. That bile will keep eating at my stomach wall.
As for your final thought, I agree with one part. My anger benefits no one. I’m the one who suffers, at least health-wise. But if you think that those of us that are pissed escaped anything, you are so wrong. And in a perfect world, those of the Angry Party would band together to run for offices and fix this mess from the inside out.
Where are we going as a country? I don’t care if you are a R,D,I,L, or anything else… you have to ask yourself this question. Do we want socialism? Nationalized medical care? Because of this crisis, regulation is coming again. And my guess is they will overcompensate and clamp down harder than they have to, just to show us all they are doing something.
Do any of you realize that the regulations that Clinton removed from the financial institutions in his last year in office (yes, congress passed, Clinton signed), were put into place because a very similar thing happened around 1907? The country went into a deep recession, and the regulations were put into place to never let it happen again. I encourage you to read a brief http://www.progress.org/2007/fold505.htm history lesson.
So, yes a lot of people are to blame. Most of the folks that really run this country, understand the money game, and pass laws to benefit themselves as well as perpetuate their existence are certainly to blame. (Term limit amendment, anyone?) And these people will never feel a financial crunch. But that doesn’t excuse the people that bit off more than they could possibly chew. Just because someone was dumb enough to leave their keys in the ignition and their car door open doesn’t make it legal for you to steal the car.
As for the auto industry, I agree with others who say let it go down the drain. Those plants will still exist, someone will buy them, and maybe they will turn out a vehicle that is worth buying. And before you pro-union people jump down my throat, I know it would be bad in the short term for employment. I grew up in a union household. My father’s union bargained him right out of a job when it was cheaper for the company to move the plant to Mexico than keep it here. NAFTA, a Clinton Administration legacy, screwed the very union people that supported him. Union households still vote overwhelmingly for democrats… and why? Their union reps tell them to. My father was so uninformed and until the end believed it would be fine. Boy did HE wake up. He still hates the evil Republicans, though. After all, THEY were responsible for NAFTA. “Wake up, people! Dad? Wake up, Dad!” It finally clicked in for him, but it was too late. Dems and Repubs are basically the same, and they look out for number one. Sometimes number one goes to the highest bidder.
If you bail out the auto industry, what’s next? The airline industry? Why not? What about the railroads? Major infrastructure improvements are expensive. Everything has other industries downstream that will be hit. We can’t save them all. Just ask the steel industry. We had no problem watching that industry go down the tubes (made in Japan, of course). Union wages and EPA regulations, among other things killed it. I don’t remember any bailout money or changes in law to help them compete. So they closed their doors. And then there is the credit card industry, which is going to be yet another shoe to drop. Lenders just can’t write off bad debt as easily as they used to.
Finally, the wars… An all-volunteer military will be a thing of the past. We are spread too thin, and the one thing we just can’t buy is human beings. People aren’t re-enlisting, which is why Afghanistan is so undermanned and going so poorly. Our allies are NOT offering huge numbers of personnel. What happens if tomorrow China decides it wants Taiwan back? How can we stop it? What if North Korea marches into South Korea? Without a draft, we won’t have the bodies. And war is big business. Eisenhower was right to warn us of the military/industrial complex. Money… it’s always the answer.
Oh, and I just read in the WSJ that Paulson has taken a $27 billion chunk of the $700 billion bailout and given it to AIG. That’s on top of what AIG has already received, now approx $150 billion. Why? Because he can. Oh, and because he apparently has a huge financial interest to protect. http://www.mydd.com/story/2008/9/27/205427/410.
Can anyone say "conflict of interest’? Why aren’t these people in jail?
oh yeah. Money.
Obama, McCain, it didn’t matter for solving these problems. I don’t like the “share the wealth” concept because it’s demotivating, and I hope Obama moves away from that idea before ever trying to implement something with that as its core philosophy. I think Obama’s first act as President should be to pardon Bush, Cheney, Clinton, Gore, and the Congress. They’d never go to jail anyway, and I like the symbolism.
to bobkitty, hang in there.
to the rest of us… hang on for a bumpy ride. It’s going to get worse.
Thank god for this forum… venting has been good for my wife.
I’ve begun to wonder how angry the colonists felt before they were ready and willing to raise arms against King George. This government clearly isn’t working anymore. I don’t think the concept the founding fathers came up with was wrong. Corruption and greed have turned a great idea into a cesspool. Maybe Jefferson was right, but a revolution would never happen today… hell, we wouldn’t want to miss the game on Sunday… after all, my friend just bought a $5000 TV (on credit, of course) that is so clear we’ll be able to see John Madden’s nose hair. Who’d want to miss that?
My apologies on the links. I think they work, but I couldn’t attach then to a word in the sentence, so I had to post the entire link.
It’s a lot easier to work in abstracts, like, “in the long run, a collapse will be better and stronger industries will emerge”. Yeah, I get that.
Doesn’t make the specifics and individual impacts not hurt because someday, things will be better. My dad got laid off from his job as a mechanic at a Chrysler dealership (franchised, so not really directly owned by Chrysler); he’s not the only one there who got canned because business is dead.
He didn’t do anything to contribute to the crappiness of the Big 3. He’s not union and he just fixes the products Chrysler makes. He’s 58 and not in great health, so he 1 - can’t take from his 401K without getting buttfucked with tax penalties, 2 - is too young to take social security and 3 - could apply for disability (again, not in great health; he’s been making himself keep going) but doing so takes forever and you can’t collect unemployment while trying to file for disability.
With our unemployment rate around 9% (which is just the people on the unemployment rolls; it doesn’t count the people who had unemployment run out on them and still haven’t found jobs), think he’ll find a job when there are younger mechanics who are also unemployed and don’t need to be paid as much?
Yeah, my mom and dad can just wait 10-20 years for the industry to rebuild itself. In the long run, it’s a good idea, but it doesn’t mean it doesn’t suck fucking ass for people who are basically collateral damage.
Negotiating a 100 page mortgage document with a lender who’s highly skilled at hoodwinking people is hardly equivalent to buying a pack of gum at the five and dime.
You’d be more than “pretty sure” if you had read carefully enough to see that I specifically excluded her (and by extension, those in similar positions).
I don’t know any individuals who expected the government to come to their rescue when the shit hit the fan. I’m pretty sure everyone expected to lose their homes, period. It’s not the people driving this “bail out”, it’s the government. The government failed this country when they deregulated the industry to the point that these thieves could come in and rape the system, and now the government thinks it’s their responsibility to do something to mitigate the damage being done to the overall (including the world) economy.
Don’t know about yours, but I recently got my property tax bill and it did, in fact, go down. I don’t know about your area, but it might be possible to request a reassessment. Find a property tax specialist and give them a call.
These two sentiments contradict each other.
The fact of the matter is, regardless of who gets assistance with renegotiating their mortgages, you still did better than they did, and you should find solace in that. Or if not solace, how about bragging rights? You’re smarter than they are – Woo Hoo!
And I hope they do! That’s where it needs to be fixed – from the inside! The government cannot legislate individual financial responsibility. But they can and should regulate businesses from taking advantage of schemes that will put our nation at this kind of financial risk for the sake of lining their greedy pockets.
Hope your day gets better!
I hate to tell you this, but the “low-level mortgage broker sharks” are not all keeping their jobs, and are certainly not maintaining anything close to the income level they had during even the normal real estate market years, not to speak of the boom.
My brother-in-law was, until a couple of months ago, a mortgage officer with Countrywide. He worked primarily on commission. Yes, he had a couple of kickass years, during which my sister could more or less afford to work part-time and/or stay home with her baby (who is now 3 years old). Because of his increased income, his ex-wife went back to family court and got his child support increased to the tune of nearly 100%, which comes straight out of his check before he even has the chance to see and/or budget it.
Fast-forward to the housing meltdown: none of his customer base can qualify for loans or refinancing, so no commissions, so he is basically making minimum wage. But the child support, which was calculated based on the previous year’s out-of-whack income, still comes straight out of his check. What does this leave them with? Close to zilcho. Admittedly they also made some poor financial decisions (like not stashing more cash away when he had a good month, and yes, my sister has been in denial that she needs to do what millions of other moms do, which is get a FT job and stick her son in day care). But poof, before the rest of the family even realizes what is going on, they have an eviction order and on something like a week’s notice, end up having to move into my poor mom’s dining room, the alternatives being moving back in with his family in Iowa (which would leave him with no job and would probably give my sister a nervous breakdown) or ending up in a homeless shelter. My poor mom, who can’t even afford to retire, though she is past retirement age and is trying to scrape by on 30 hours a week working in a pre-K program. And no, I can’t even help them - my landlord wouldn’t even let me take one of their cats, even temporarily, and I have nowhere to put them, nor would my lease allow it.
So yes, sometimes a combination of poor planning and extremely adverse circumstances leaves people in a bind, but let’s not pretend that there is no fallout on people who have done everything they were supposed to do. Let me tell you, the past 3 months have been very hard on our family, especially on my mom, who was certainly not at the point in her life when she wanted three people, including a very active three-year-old, living in her dining room.
The housing market will have hit rock bottom once the last person finally realizes that buying a house in an inflated market is not something you are “suppose to do”.
The point is ,people on the dope are bitching about how people have taken advantage of the system and have had their mortgages cut. It has not happened. Every economic thread ,dopers say these people are evil for taking advantage of the mortgage companies and are evil bad people. But, the mortgages have not been rewritten. It has not happened.
Then many economists think believe it should be done for the good of the economic system and the well being of the country. But .the doper responds. I paid my bills why should they get a break. If saving the economic system does not help us all, then I got nothing.
My problem with Paulson is the Bait and Switch. Sold us one thing and did another. Paulson did address the re-writting of mortgages. He backed off to drop billions in the banks. It did not unfreeze the lending because they used the money for other purposes. Are they lending now?