- This topic has 45 replies, 6 voices, and was last updated 16 years, 10 months ago by
SD Realtor.
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February 24, 2008 at 11:36 PM #159635February 24, 2008 at 11:43 PM #159638
SD Realtor
ParticipantDealhunter…Not so sure I agree… Left to recover on it’s own devices one may argue that the following will occur:
1 – The market will correct much faster because the depreciation will be that much sharper.
2 – The sharper depreciation will lead to a much fast consumption. As you would agree, the amount of money currently on the sidelines is indeed staggering.
3 – You are also conveniently sidestepping the continuation of letting current homeowners continuing to live in the home that they never could afford to begin with.
4 – Nothing is free. Measures like this do one thing. They INCREASE RISK to lenders who lend money. There is no argument and to believe that this will not increase the risk premium of lending money is naive.
I am not proposing scrapping capitalism. In fact socialistic moves like this are very much contrary to capitalism wouldn’t you think? Measures like this do nothing to help markets, they simply will inhibit the free movement of markets. One should not forgive debt, one should let the market operate freely. Not only will this weed out inefficiencies, it will give birth to innovation, stronger companies, and insure that better more efficient entities survive. Otherwise you get what is known as the airline industry. An industry that suckles off subsidies for survival because it has not had to compete to survive.
Finally, make no mistake about it… these sorts of bailouts are as cosmetic as things get. It doesn’t matter who stays in a home and who does not. It doesn’t even matter if some lenders go belly up or not. What is more important is that there is so much investment in the secondary market… in cdos, mbs… that sort of thing, that basically we may have reached the point where we actually cannot let the market act efficiently. That the shock to pensions, 401ks, municipal and state government investments, etc… would be so harsh (because of their investments in these investments) that there would be problems like we have never seen…
So maybe you are right, but for the wrong reasons. Just my cynical opinion…
SD Realtor
February 24, 2008 at 11:43 PM #159717ParticipantDealhunter…Not so sure I agree… Left to recover on it’s own devices one may argue that the following will occur:
1 – The market will correct much faster because the depreciation will be that much sharper.
2 – The sharper depreciation will lead to a much fast consumption. As you would agree, the amount of money currently on the sidelines is indeed staggering.
3 – You are also conveniently sidestepping the continuation of letting current homeowners continuing to live in the home that they never could afford to begin with.
4 – Nothing is free. Measures like this do one thing. They INCREASE RISK to lenders who lend money. There is no argument and to believe that this will not increase the risk premium of lending money is naive.
I am not proposing scrapping capitalism. In fact socialistic moves like this are very much contrary to capitalism wouldn’t you think? Measures like this do nothing to help markets, they simply will inhibit the free movement of markets. One should not forgive debt, one should let the market operate freely. Not only will this weed out inefficiencies, it will give birth to innovation, stronger companies, and insure that better more efficient entities survive. Otherwise you get what is known as the airline industry. An industry that suckles off subsidies for survival because it has not had to compete to survive.
Finally, make no mistake about it… these sorts of bailouts are as cosmetic as things get. It doesn’t matter who stays in a home and who does not. It doesn’t even matter if some lenders go belly up or not. What is more important is that there is so much investment in the secondary market… in cdos, mbs… that sort of thing, that basically we may have reached the point where we actually cannot let the market act efficiently. That the shock to pensions, 401ks, municipal and state government investments, etc… would be so harsh (because of their investments in these investments) that there would be problems like we have never seen…
So maybe you are right, but for the wrong reasons. Just my cynical opinion…
SD Realtor
February 24, 2008 at 11:43 PM #159643ParticipantDealhunter…Not so sure I agree… Left to recover on it’s own devices one may argue that the following will occur:
1 – The market will correct much faster because the depreciation will be that much sharper.
2 – The sharper depreciation will lead to a much fast consumption. As you would agree, the amount of money currently on the sidelines is indeed staggering.
3 – You are also conveniently sidestepping the continuation of letting current homeowners continuing to live in the home that they never could afford to begin with.
4 – Nothing is free. Measures like this do one thing. They INCREASE RISK to lenders who lend money. There is no argument and to believe that this will not increase the risk premium of lending money is naive.
I am not proposing scrapping capitalism. In fact socialistic moves like this are very much contrary to capitalism wouldn’t you think? Measures like this do nothing to help markets, they simply will inhibit the free movement of markets. One should not forgive debt, one should let the market operate freely. Not only will this weed out inefficiencies, it will give birth to innovation, stronger companies, and insure that better more efficient entities survive. Otherwise you get what is known as the airline industry. An industry that suckles off subsidies for survival because it has not had to compete to survive.
Finally, make no mistake about it… these sorts of bailouts are as cosmetic as things get. It doesn’t matter who stays in a home and who does not. It doesn’t even matter if some lenders go belly up or not. What is more important is that there is so much investment in the secondary market… in cdos, mbs… that sort of thing, that basically we may have reached the point where we actually cannot let the market act efficiently. That the shock to pensions, 401ks, municipal and state government investments, etc… would be so harsh (because of their investments in these investments) that there would be problems like we have never seen…
So maybe you are right, but for the wrong reasons. Just my cynical opinion…
SD Realtor
February 24, 2008 at 11:43 PM #159622ParticipantDealhunter…Not so sure I agree… Left to recover on it’s own devices one may argue that the following will occur:
1 – The market will correct much faster because the depreciation will be that much sharper.
2 – The sharper depreciation will lead to a much fast consumption. As you would agree, the amount of money currently on the sidelines is indeed staggering.
3 – You are also conveniently sidestepping the continuation of letting current homeowners continuing to live in the home that they never could afford to begin with.
4 – Nothing is free. Measures like this do one thing. They INCREASE RISK to lenders who lend money. There is no argument and to believe that this will not increase the risk premium of lending money is naive.
I am not proposing scrapping capitalism. In fact socialistic moves like this are very much contrary to capitalism wouldn’t you think? Measures like this do nothing to help markets, they simply will inhibit the free movement of markets. One should not forgive debt, one should let the market operate freely. Not only will this weed out inefficiencies, it will give birth to innovation, stronger companies, and insure that better more efficient entities survive. Otherwise you get what is known as the airline industry. An industry that suckles off subsidies for survival because it has not had to compete to survive.
Finally, make no mistake about it… these sorts of bailouts are as cosmetic as things get. It doesn’t matter who stays in a home and who does not. It doesn’t even matter if some lenders go belly up or not. What is more important is that there is so much investment in the secondary market… in cdos, mbs… that sort of thing, that basically we may have reached the point where we actually cannot let the market act efficiently. That the shock to pensions, 401ks, municipal and state government investments, etc… would be so harsh (because of their investments in these investments) that there would be problems like we have never seen…
So maybe you are right, but for the wrong reasons. Just my cynical opinion…
SD Realtor
February 24, 2008 at 11:43 PM #159328ParticipantDealhunter…Not so sure I agree… Left to recover on it’s own devices one may argue that the following will occur:
1 – The market will correct much faster because the depreciation will be that much sharper.
2 – The sharper depreciation will lead to a much fast consumption. As you would agree, the amount of money currently on the sidelines is indeed staggering.
3 – You are also conveniently sidestepping the continuation of letting current homeowners continuing to live in the home that they never could afford to begin with.
4 – Nothing is free. Measures like this do one thing. They INCREASE RISK to lenders who lend money. There is no argument and to believe that this will not increase the risk premium of lending money is naive.
I am not proposing scrapping capitalism. In fact socialistic moves like this are very much contrary to capitalism wouldn’t you think? Measures like this do nothing to help markets, they simply will inhibit the free movement of markets. One should not forgive debt, one should let the market operate freely. Not only will this weed out inefficiencies, it will give birth to innovation, stronger companies, and insure that better more efficient entities survive. Otherwise you get what is known as the airline industry. An industry that suckles off subsidies for survival because it has not had to compete to survive.
Finally, make no mistake about it… these sorts of bailouts are as cosmetic as things get. It doesn’t matter who stays in a home and who does not. It doesn’t even matter if some lenders go belly up or not. What is more important is that there is so much investment in the secondary market… in cdos, mbs… that sort of thing, that basically we may have reached the point where we actually cannot let the market act efficiently. That the shock to pensions, 401ks, municipal and state government investments, etc… would be so harsh (because of their investments in these investments) that there would be problems like we have never seen…
So maybe you are right, but for the wrong reasons. Just my cynical opinion…
SD Realtor
February 24, 2008 at 11:44 PM #159644ParticipantThank you FLU… you got me to crack a good laugh before I crash…
SD Realtor
February 24, 2008 at 11:44 PM #159647ParticipantThank you FLU… you got me to crack a good laugh before I crash…
SD Realtor
February 24, 2008 at 11:44 PM #159722ParticipantThank you FLU… you got me to crack a good laugh before I crash…
SD Realtor
February 24, 2008 at 11:44 PM #159331ParticipantThank you FLU… you got me to crack a good laugh before I crash…
SD Realtor
February 24, 2008 at 11:44 PM #159630ParticipantThank you FLU… you got me to crack a good laugh before I crash…
SD Realtor
February 25, 2008 at 12:01 AM #159642Deal Hunter
ParticipantAh, there’s the rub. There’s no such thing as a free market. There hasn’t been in this country since the creation of the Federal Reserve. Why is it that when the government does a stimulus it is socialism countering captialism, but when the Fed lowers the rate it’s OK?
Not allowing markets to correct on their own is counter to capitalism whether it’s done by congress or the Fed lowering rates. You see, there’s no difference to me whether over leveraged homeowners are allowed to stay in their homes – the asset itself has lowered in value, so what is truly being lost is potential interest profit to the bank and equity wealth to the homeowner. The parallel with an individual homeowner is exactly that to the simultaneous fiscal and monetary stimulus done on the large scale. Both are “phantom” wealth/debt that when eliminated translates directly into cash MOVING hands.
Finally, you really hit the nail on the head about why the market cannot be allowed to act freely now. Too many pensions, 401ks and trillions in paper assets are tied up in the shadow banking system. And make no mistake, I am far more cynical than you about all of this.
February 25, 2008 at 12:01 AM #159737ParticipantAh, there’s the rub. There’s no such thing as a free market. There hasn’t been in this country since the creation of the Federal Reserve. Why is it that when the government does a stimulus it is socialism countering captialism, but when the Fed lowers the rate it’s OK?
Not allowing markets to correct on their own is counter to capitalism whether it’s done by congress or the Fed lowering rates. You see, there’s no difference to me whether over leveraged homeowners are allowed to stay in their homes – the asset itself has lowered in value, so what is truly being lost is potential interest profit to the bank and equity wealth to the homeowner. The parallel with an individual homeowner is exactly that to the simultaneous fiscal and monetary stimulus done on the large scale. Both are “phantom” wealth/debt that when eliminated translates directly into cash MOVING hands.
Finally, you really hit the nail on the head about why the market cannot be allowed to act freely now. Too many pensions, 401ks and trillions in paper assets are tied up in the shadow banking system. And make no mistake, I am far more cynical than you about all of this.
February 25, 2008 at 12:01 AM #159658ParticipantAh, there’s the rub. There’s no such thing as a free market. There hasn’t been in this country since the creation of the Federal Reserve. Why is it that when the government does a stimulus it is socialism countering captialism, but when the Fed lowers the rate it’s OK?
Not allowing markets to correct on their own is counter to capitalism whether it’s done by congress or the Fed lowering rates. You see, there’s no difference to me whether over leveraged homeowners are allowed to stay in their homes – the asset itself has lowered in value, so what is truly being lost is potential interest profit to the bank and equity wealth to the homeowner. The parallel with an individual homeowner is exactly that to the simultaneous fiscal and monetary stimulus done on the large scale. Both are “phantom” wealth/debt that when eliminated translates directly into cash MOVING hands.
Finally, you really hit the nail on the head about why the market cannot be allowed to act freely now. Too many pensions, 401ks and trillions in paper assets are tied up in the shadow banking system. And make no mistake, I am far more cynical than you about all of this.
February 25, 2008 at 12:01 AM #159664ParticipantAh, there’s the rub. There’s no such thing as a free market. There hasn’t been in this country since the creation of the Federal Reserve. Why is it that when the government does a stimulus it is socialism countering captialism, but when the Fed lowers the rate it’s OK?
Not allowing markets to correct on their own is counter to capitalism whether it’s done by congress or the Fed lowering rates. You see, there’s no difference to me whether over leveraged homeowners are allowed to stay in their homes – the asset itself has lowered in value, so what is truly being lost is potential interest profit to the bank and equity wealth to the homeowner. The parallel with an individual homeowner is exactly that to the simultaneous fiscal and monetary stimulus done on the large scale. Both are “phantom” wealth/debt that when eliminated translates directly into cash MOVING hands.
Finally, you really hit the nail on the head about why the market cannot be allowed to act freely now. Too many pensions, 401ks and trillions in paper assets are tied up in the shadow banking system. And make no mistake, I am far more cynical than you about all of this.
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