You cannot have it both ways

[bubba99]

Just wanted to be clear that the “government” is not bailing out anyone. The poor savers here and abroad, who have been funding this at 2%-5% annual interest rates have been funding the bubble, and will fund the bail out.

The loss of 5% or 6% because of inflation vs. the FED’s artifically low interest rate has paved the way for the bubble, and looks to be the FED’s solution to the problem.

IF the yield curve gets inverted again, and mortgage rates go to 2 or 3%, problem solved – and paid for by the “moral” savers who fund the mess with negative real rates of inflation.

It must be hubris that allows someone to speak of a borrower being immoral while walking away from a bank that has been robbing its depositors for years.

[patientrenter]

bubba, if borrowers can get better-than-market deals from banks by walking away from debts in bad times while paying relatively low interest rates in good times, then banks have to scr*w their depositors to make up for the losses. Banks are just the intermediary – borrowers are scr*wing the savers.

Patient renter in OC

[patientrenter]

bubba, if borrowers can get better-than-market deals from banks by walking away from debts in bad times while paying relatively low interest rates in good times, then banks have to scr*w their depositors to make up for the losses. Banks are just the intermediary – borrowers are scr*wing the savers.

Patient renter in OC

[patientrenter]

bubba, if borrowers can get better-than-market deals from banks by walking away from debts in bad times while paying relatively low interest rates in good times, then banks have to scr*w their depositors to make up for the losses. Banks are just the intermediary – borrowers are scr*wing the savers.

Patient renter in OC

[patientrenter]

bubba, if borrowers can get better-than-market deals from banks by walking away from debts in bad times while paying relatively low interest rates in good times, then banks have to scr*w their depositors to make up for the losses. Banks are just the intermediary – borrowers are scr*wing the savers.

Patient renter in OC

[patientrenter]

bubba, if borrowers can get better-than-market deals from banks by walking away from debts in bad times while paying relatively low interest rates in good times, then banks have to scr*w their depositors to make up for the losses. Banks are just the intermediary – borrowers are scr*wing the savers.

Patient renter in OC

[Anonymous]

“What has to change is people’s attitudes. If you enter into an obligation honor it, do not look for loopholes to weasel out of it. As a midwesterner by birth, it is something I see time and time again having lived in CA now for 26 years. Be it a wife, a dog, a kid, as soon as something falls out of favor on a short term basis too many look for the exits. Why not return to a time when a man’s handshake meant something.”

This isn’t going to happen. Today’s society has conditioned people to believe that you look out for number #1. Always. You put a piece of cheese in front of a rat and he’s gonna take it.

[Anonymous]

“What has to change is people’s attitudes. If you enter into an obligation honor it, do not look for loopholes to weasel out of it. As a midwesterner by birth, it is something I see time and time again having lived in CA now for 26 years. Be it a wife, a dog, a kid, as soon as something falls out of favor on a short term basis too many look for the exits. Why not return to a time when a man’s handshake meant something.”

This isn’t going to happen. Today’s society has conditioned people to believe that you look out for number #1. Always. You put a piece of cheese in front of a rat and he’s gonna take it.

[Anonymous]

“What has to change is people’s attitudes. If you enter into an obligation honor it, do not look for loopholes to weasel out of it. As a midwesterner by birth, it is something I see time and time again having lived in CA now for 26 years. Be it a wife, a dog, a kid, as soon as something falls out of favor on a short term basis too many look for the exits. Why not return to a time when a man’s handshake meant something.”

This isn’t going to happen. Today’s society has conditioned people to believe that you look out for number #1. Always. You put a piece of cheese in front of a rat and he’s gonna take it.

[Anonymous]

“What has to change is people’s attitudes. If you enter into an obligation honor it, do not look for loopholes to weasel out of it. As a midwesterner by birth, it is something I see time and time again having lived in CA now for 26 years. Be it a wife, a dog, a kid, as soon as something falls out of favor on a short term basis too many look for the exits. Why not return to a time when a man’s handshake meant something.”

This isn’t going to happen. Today’s society has conditioned people to believe that you look out for number #1. Always. You put a piece of cheese in front of a rat and he’s gonna take it.

[Anonymous]

“What has to change is people’s attitudes. If you enter into an obligation honor it, do not look for loopholes to weasel out of it. As a midwesterner by birth, it is something I see time and time again having lived in CA now for 26 years. Be it a wife, a dog, a kid, as soon as something falls out of favor on a short term basis too many look for the exits. Why not return to a time when a man’s handshake meant something.”

This isn’t going to happen. Today’s society has conditioned people to believe that you look out for number #1. Always. You put a piece of cheese in front of a rat and he’s gonna take it.

[ucodegen]

@SD Realtor

Actually, my statement with respect to is fairly accurate, though quite un-PC. It can be seen in the behavior of Goldman Sachs stating that there will be no problem when they were in the midst of the CDOs/MBSs.. once they got clear of the toxic waste, they come out with a statement (reference on piggington) that a drop of 40% is likely in the works.

In fact one would argue the exact opposite, that in fact they DID know that the cycle would turn and they were either negligient or assumed some sort of bailout or delay would save them. Or that they didn’t give a hoot because the loan would be sold to another party.

Seriously though, to argue that they felt unabated appreciation would continue is something that I feel you do not really believe.

Actually I think it is a mixture (Some thought it would continue unabated, others didn’t. My personal opinion was that it wouldn’t because I have seen it before). There are some lending institutions whose management thought that this was a new paradigm (remember the tech bubble?). In fact, I think some even came out and said it. On the other hand, there were others that were very conservative during this period. The underlying problem is related the underlying reason why many mutual funds underperform the indexes. They are paid for short term, not long term performance. There may be some aspect of self delusion on the part of the lending institution participants here too.. They were all marking to model, not to market (Don’t have time to Warren Buffet quote on this.. but he did state that they should mark to market not model on these instruments).

The other regulatory measures you spoke of could not hurt either. Altough again, if you are going to allow someone to walk away from a loan, then why not let them walk away from a security or stock bought on margin?
This is one I had a bit of a fight with myself on. My purest belief is that they shouldn’t. But there are secondary issues. Effectively, if I form a corporation that is an investment vehicle, I can walk away from margin losses (corp declares bankruptcy, I’m clear). In addition, some stocks have 0 intrinsic value, or can go to it. Land always has some intrinsic value. If the LTV was the same as margin rates, I would have no problem with purchase loans being recourse.. but who can put down 50% right now (stock margin req is 50%)? I know I can, but who else? If it goes to all recourse, I think it will need to be done in steps.

uco this last rant is not aimed at you but at the topic overall… why are any piggs waiting to purchase then?
Because the effect on your credit of a foreclosure makes it hard to get financing when it might be a good time to buy (lenders will only loan to you at a high interest premium). Besides, you will be paying higher than rental rates all the way down too.. so might as well rent until the cost to buy becomes closer to the cost to rent.

[ucodegen]

@SD Realtor

Actually, my statement with respect to is fairly accurate, though quite un-PC. It can be seen in the behavior of Goldman Sachs stating that there will be no problem when they were in the midst of the CDOs/MBSs.. once they got clear of the toxic waste, they come out with a statement (reference on piggington) that a drop of 40% is likely in the works.

In fact one would argue the exact opposite, that in fact they DID know that the cycle would turn and they were either negligient or assumed some sort of bailout or delay would save them. Or that they didn’t give a hoot because the loan would be sold to another party.

Seriously though, to argue that they felt unabated appreciation would continue is something that I feel you do not really believe.

Actually I think it is a mixture (Some thought it would continue unabated, others didn’t. My personal opinion was that it wouldn’t because I have seen it before). There are some lending institutions whose management thought that this was a new paradigm (remember the tech bubble?). In fact, I think some even came out and said it. On the other hand, there were others that were very conservative during this period. The underlying problem is related the underlying reason why many mutual funds underperform the indexes. They are paid for short term, not long term performance. There may be some aspect of self delusion on the part of the lending institution participants here too.. They were all marking to model, not to market (Don’t have time to Warren Buffet quote on this.. but he did state that they should mark to market not model on these instruments).

The other regulatory measures you spoke of could not hurt either. Altough again, if you are going to allow someone to walk away from a loan, then why not let them walk away from a security or stock bought on margin?
This is one I had a bit of a fight with myself on. My purest belief is that they shouldn’t. But there are secondary issues. Effectively, if I form a corporation that is an investment vehicle, I can walk away from margin losses (corp declares bankruptcy, I’m clear). In addition, some stocks have 0 intrinsic value, or can go to it. Land always has some intrinsic value. If the LTV was the same as margin rates, I would have no problem with purchase loans being recourse.. but who can put down 50% right now (stock margin req is 50%)? I know I can, but who else? If it goes to all recourse, I think it will need to be done in steps.

uco this last rant is not aimed at you but at the topic overall… why are any piggs waiting to purchase then?
Because the effect on your credit of a foreclosure makes it hard to get financing when it might be a good time to buy (lenders will only loan to you at a high interest premium). Besides, you will be paying higher than rental rates all the way down too.. so might as well rent until the cost to buy becomes closer to the cost to rent.

[ucodegen]

@SD Realtor

Actually, my statement with respect to is fairly accurate, though quite un-PC. It can be seen in the behavior of Goldman Sachs stating that there will be no problem when they were in the midst of the CDOs/MBSs.. once they got clear of the toxic waste, they come out with a statement (reference on piggington) that a drop of 40% is likely in the works.

In fact one would argue the exact opposite, that in fact they DID know that the cycle would turn and they were either negligient or assumed some sort of bailout or delay would save them. Or that they didn’t give a hoot because the loan would be sold to another party.

Seriously though, to argue that they felt unabated appreciation would continue is something that I feel you do not really believe.

Actually I think it is a mixture (Some thought it would continue unabated, others didn’t. My personal opinion was that it wouldn’t because I have seen it before). There are some lending institutions whose management thought that this was a new paradigm (remember the tech bubble?). In fact, I think some even came out and said it. On the other hand, there were others that were very conservative during this period. The underlying problem is related the underlying reason why many mutual funds underperform the indexes. They are paid for short term, not long term performance. There may be some aspect of self delusion on the part of the lending institution participants here too.. They were all marking to model, not to market (Don’t have time to Warren Buffet quote on this.. but he did state that they should mark to market not model on these instruments).

The other regulatory measures you spoke of could not hurt either. Altough again, if you are going to allow someone to walk away from a loan, then why not let them walk away from a security or stock bought on margin?
This is one I had a bit of a fight with myself on. My purest belief is that they shouldn’t. But there are secondary issues. Effectively, if I form a corporation that is an investment vehicle, I can walk away from margin losses (corp declares bankruptcy, I’m clear). In addition, some stocks have 0 intrinsic value, or can go to it. Land always has some intrinsic value. If the LTV was the same as margin rates, I would have no problem with purchase loans being recourse.. but who can put down 50% right now (stock margin req is 50%)? I know I can, but who else? If it goes to all recourse, I think it will need to be done in steps.

uco this last rant is not aimed at you but at the topic overall… why are any piggs waiting to purchase then?
Because the effect on your credit of a foreclosure makes it hard to get financing when it might be a good time to buy (lenders will only loan to you at a high interest premium). Besides, you will be paying higher than rental rates all the way down too.. so might as well rent until the cost to buy becomes closer to the cost to rent.

[ucodegen]

@SD Realtor

Actually, my statement with respect to is fairly accurate, though quite un-PC. It can be seen in the behavior of Goldman Sachs stating that there will be no problem when they were in the midst of the CDOs/MBSs.. once they got clear of the toxic waste, they come out with a statement (reference on piggington) that a drop of 40% is likely in the works.

In fact one would argue the exact opposite, that in fact they DID know that the cycle would turn and they were either negligient or assumed some sort of bailout or delay would save them. Or that they didn’t give a hoot because the loan would be sold to another party.

Seriously though, to argue that they felt unabated appreciation would continue is something that I feel you do not really believe.

Actually I think it is a mixture (Some thought it would continue unabated, others didn’t. My personal opinion was that it wouldn’t because I have seen it before). There are some lending institutions whose management thought that this was a new paradigm (remember the tech bubble?). In fact, I think some even came out and said it. On the other hand, there were others that were very conservative during this period. The underlying problem is related the underlying reason why many mutual funds underperform the indexes. They are paid for short term, not long term performance. There may be some aspect of self delusion on the part of the lending institution participants here too.. They were all marking to model, not to market (Don’t have time to Warren Buffet quote on this.. but he did state that they should mark to market not model on these instruments).

The other regulatory measures you spoke of could not hurt either. Altough again, if you are going to allow someone to walk away from a loan, then why not let them walk away from a security or stock bought on margin?
This is one I had a bit of a fight with myself on. My purest belief is that they shouldn’t. But there are secondary issues. Effectively, if I form a corporation that is an investment vehicle, I can walk away from margin losses (corp declares bankruptcy, I’m clear). In addition, some stocks have 0 intrinsic value, or can go to it. Land always has some intrinsic value. If the LTV was the same as margin rates, I would have no problem with purchase loans being recourse.. but who can put down 50% right now (stock margin req is 50%)? I know I can, but who else? If it goes to all recourse, I think it will need to be done in steps.

uco this last rant is not aimed at you but at the topic overall… why are any piggs waiting to purchase then?
Because the effect on your credit of a foreclosure makes it hard to get financing when it might be a good time to buy (lenders will only loan to you at a high interest premium). Besides, you will be paying higher than rental rates all the way down too.. so might as well rent until the cost to buy becomes closer to the cost to rent.

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