It’s getting SCARY out there folks…

[Anonymous]

Yes, regulation and underwriting standards, enforced by Fed and OHFEO, certainly WOULD have made a difference.

When the Fed “prints” money it is in reality making credit more available to banks through the overnight repo system.

If the banks don’t want the credit, i.e. they don’t feel comfortable deploying more capital at the level of acceptable risk, then they won’t.

This typically happens in the middle phases of a recession when everybody knows you’re in it and the Fed has already lowered rates significantly and yet the banks don’t see much increase in lending and investments since they feel conditions are poor credit risk is high. The phrase “pushing on a string” hits the Lexis-Nexis data bases of newpaper business sections for 10-20 months.

Japan’s central bank lowered rates to zero and yet most of the credit it created was NOT deployed inside Japan, but outside.

Also remember that if a central bank targets interest rates, which the Fed does, (as opposed to money supply, which the Fed attempted to do in the 1980’s for a certain period of time), then the Fed is setting the price of money. The quantity that customers take depends on their own business decisions. And if underwriting is lax, they want lots of it since they are under the delusion they can lend out to subprime scum, borrow from Fed or equivalents and make a fat vig, and repeat.

Stricter underwriting and sober credit risk understanding would have resulted in less demand for money. And less inflation.

[latesummer2008]

Well put, Dr.Chaos. Kind of like trying to “close the barn door once the horse is out” The only word the comes to mind is “IRRESPONSIBILITY” We have a mess, that is going to hurt alot of people and the ones responsible have been laughing all the way to the bank. The question is “what happens when they are finally caught?” This reminds me of Katrina and the GOVT response. They new sooner or later New Orleans would be hit, but just “hoped” it would miss. I’m afraid the mortgage mess is much larger than they want people to believe, “hoping” it will go away.

Bernanke is like a “deer in the headlights right now” “Hoping the economic mess goes away”. I don’t think so.

http://westsideremeltdown.blogspot.com

[latesummer2008]

Well put, Dr.Chaos. Kind of like trying to “close the barn door once the horse is out” The only word the comes to mind is “IRRESPONSIBILITY” We have a mess, that is going to hurt alot of people and the ones responsible have been laughing all the way to the bank. The question is “what happens when they are finally caught?” This reminds me of Katrina and the GOVT response. They new sooner or later New Orleans would be hit, but just “hoped” it would miss. I’m afraid the mortgage mess is much larger than they want people to believe, “hoping” it will go away.

Bernanke is like a “deer in the headlights right now” “Hoping the economic mess goes away”. I don’t think so.

http://westsideremeltdown.blogspot.com

[Anonymous]

Dr. C., you have much more confidence than I do in regulators to put in place “…stricter underwriting and sober credit risk understanding…” that allows prudent but profitable risk taking/lending.

I’m no bank officer nor regulator, but c’mon, the FSLIC sure didn’t prevent the S&L crisis, nor has the FDIC prevented silly lending by our banks this time around.

Nah, the only thing that works is for smart, experienced folks to have their own money at risk. That’s called ‘equity.’

[Anonymous]

Dr. C., you have much more confidence than I do in regulators to put in place “…stricter underwriting and sober credit risk understanding…” that allows prudent but profitable risk taking/lending.

I’m no bank officer nor regulator, but c’mon, the FSLIC sure didn’t prevent the S&L crisis, nor has the FDIC prevented silly lending by our banks this time around.

Nah, the only thing that works is for smart, experienced folks to have their own money at risk. That’s called ‘equity.’

[latesummer2008]

Equity? What’s that? Many people have or will have negative equity in the near future. With no money down, they can live rent free while they get evicted. Banks will have their hands full of properties. If you don’t believe me, check out the website:

http://www.Foreclosureradar.com

It will blow your mind…..

http://westsideremeltdown.blogspot.com

[latesummer2008]

Equity? What’s that? Many people have or will have negative equity in the near future. With no money down, they can live rent free while they get evicted. Banks will have their hands full of properties. If you don’t believe me, check out the website:

http://www.Foreclosureradar.com

It will blow your mind…..

http://westsideremeltdown.blogspot.com

[cr]

latesummer2008 and LA Renter. You guys are West LA, right? What do you think about the valley, namely Glendale/Burbank/La Canada?

These areas tend to have less room like the coastal areas (thought they still find room or build bigger) but I’m still seeing 50 year old 3br houses go for $700 in the decent areas, and many for more than that. Prices have definately dipped into the $500’s in some areas, but I will be a first time buyer so I don’t have massive equity from the bubble to use towards something I otherwise couldn’t afford.

You also get the Aerospace excuse out here, but I just laugh at that and follow it with Real Estate IS the new Aerospace.

What do you guys think?

[cr]

latesummer2008 and LA Renter. You guys are West LA, right? What do you think about the valley, namely Glendale/Burbank/La Canada?

These areas tend to have less room like the coastal areas (thought they still find room or build bigger) but I’m still seeing 50 year old 3br houses go for $700 in the decent areas, and many for more than that. Prices have definately dipped into the $500’s in some areas, but I will be a first time buyer so I don’t have massive equity from the bubble to use towards something I otherwise couldn’t afford.

You also get the Aerospace excuse out here, but I just laugh at that and follow it with Real Estate IS the new Aerospace.

What do you guys think?

[gracie]

what about San Diego….?

[gracie]

what about San Diego….?

[The-Shoveler]

Nor_LA-Temcu-SD-Guy

Don’t know much about “Glendale/Burbank/La Canada”,

But SCV seems to be falling fast.

sorry Gracie …

[The-Shoveler]

Nor_LA-Temcu-SD-Guy

Don’t know much about “Glendale/Burbank/La Canada”,

But SCV seems to be falling fast.

sorry Gracie …

[latesummer2008]

Not familiar with the Glendale Area. I would imagine it is being hit just like all the other areas now. 10-15% drops already and headed for more declines. Clean houses, PRICED RIGHT in decent areas are selling. But most property is just sitting and losing value as we speak.

Try checking Zillow for comparable sales.

http://westsideremeltdown.blogspot.com

[latesummer2008]

Not familiar with the Glendale Area. I would imagine it is being hit just like all the other areas now. 10-15% drops already and headed for more declines. Clean houses, PRICED RIGHT in decent areas are selling. But most property is just sitting and losing value as we speak.

Try checking Zillow for comparable sales.

http://westsideremeltdown.blogspot.com

[Author]

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