[quote=sdrealtor]Five years ago you were among the most vocal that the problem was too vast for the government to manipulate its way through. You said over and over there was NO way they could. They have and even though we aren’t done yet it’s time to admit you didn’t believe they could do what they have done. Not saying its right just that they did it.
Your comments consistently show a small and closed point of view. It is what is.
Btw I have been in SAn Diego since 1986 with the exception of a few years here and there. We’re there no normal markets here in the last 26 years?[/quote]
Funny, here I am in 2010 (using quotes I made in 2007) refuting this very accusation. Not sure if you were directing it at me in this thread, but I responded to it, anyway.
[quote=CA renter]Just in case anyone thinks I believed the govt wouldn’t bail out the deadbeats:
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Comment by CA renter 2007-03-17 12:28:23
The way I see it, there are two groups who stand to lose if there is no bailout: the lenders and the FBs.
If the market is allowed to do its thing, foreclosures will flood the market, making the losses swift and certain (as they should be, IMHO).
The way to stem the tide would be to force the lenders to re-write the loans (or sell at a steep discount to GSEs or other institution which could be set up by the govt). The loans would be re-written at fixed rates (lower than current FRM rates). Negative equity would not be a factor as the new loans would cover 100% of current mortgage, irrespective of collateralization.
These loan terms would be extended to 40 or 50 years, and the borrower could make I/O payments for the entire time they live in their homes. Only upon sale would the “lender” expect principal payment, and the lender could have an agreement whereby they share risk/reward — like they could be entitled to 50% of the appreciation/depreciation.
In the meantime, the Fed would be working overtime, trying to inflate our dollars, so in 15 years, the FBs might be able to break even and finally get out from under their “homes”.
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FB wins by not losing home & not having to pay what they originally agreed to pay.
Lender wins because they will lose much less than if the market were flooded with foreclosures. Collateral prices would drop, but not as significantly.
As lenders take losses, the big banks/financial firms move in and take over the mortgage companies. They (who, in many cases represent the final lenders) would be able to buy these mortgages for pennies on the dollar. They win the biggest piece of the pie.
“…So everything we have been saying here is becoming a reality and at this point I have to ask, “Are we missing anything here?” What are the potential events or actions that could stop housing prices from tanking big time? Heck, it even looks like BB is taking the tough love approach. Is there anything happening now or that could happen that we may be somehow blind to? Anything that in 2 years we would slap our foreheads and say, “Duh! Why didn’t we see that?”
…
I wrote this:
“Comment by CA renter
2006-06-10 01:26:29
1. A housing “tax credit” for all homeowners (hyperinflation). Say, each homeowner can qualify for an additional $5,000+ each year because they are part of the “ownership society.”
2. Some form of debt forgiveness as the govt offers to cover lenders’ losses on mortgages/bail FBs out.
3. More “downpayment gifts” by the govt or some such thing that forces even more money into the housing market.
4. Our dollar loses value (the govt prints money to pay off international debts) and we can once again export more than we import (imports too expensive/exports cheap) and get back to making things in the US. Not that other FCBs would allow that to happen, but it’s a thought.
Not that I think any of these things are likely or wouldn’t have tremendously bad consequences…just trying to imagine the worst.”
I routinely argued against bailouts, long before the “financial crisis” because they would reward the very people who destroyed our economy (irresponsible borrowers and lenders) at the expense of savers/fixed-income recipients, workers, prudent buyers. I repeatedly said that these bailouts would not work over the long run, and that our economy would be eventually be even worse off — over the long run — than if they had allowed things to fall quickly and severely.
So far, I have been proven right. Look at what’s going on all around the world right now. Most of that is due to the credit bubble and the various govt/central bankers’ attempts to keep the asset-based Ponzi scheme going. The economic crisis is nowhere near over.
