[equalizer]

[quote=XBoxBoy][quote=equalizer]However flawed the part ownership, it is better than outright principal reduction. [/quote]

While I’m not exactly sure of the details of Taleb’s plan I think it’s straightforward principal reduction in exchange for a part ownership that has little if any value and potentially lots of administrative headaches. If that’s better than outright principal reduction it is only a very small amount better.

[quote=equalizer] Do you have any better ideas short of foreclosure? [/quote]

Back up a second. The problem is that the banks hold loans that due to falling prices are no longer sufficiently collateralized. If the borrower continues to pay the mortgage, the bank does not have a problem. However, if the borrower stops paying the mortgage, the bank has three choices:

1) Take their losses either with a foreclosure or short sale.

2) Outright principal reduction. This is a particularly bad option because doing this for one person only encourages others to go into default hoping to get their principal reduced.

3) Try some scheme that kicks the payments down the road, hoping that some time in the future somehow the borrower coughs up more money. My perspective is that virtually all the schemes put forward, including this one from Mr. Taleb, are nothing more than a fancy cover for this option. They are not a fix, just a postponement of the problem.

Notice that before I listed the bank’s options, I made clear that if the borrower continued to make payments there was no problem. So, if the bank was thinking things through they would realize that a very high priority is to make sure that people keep paying in full at the agreed upon terms. Option 2 and 3 undermine that. (As we’ve discussed in a number of threads here on piggington)

So, regardless of the area I think it’s pretty clear foreclosure and/or short sales are the best answer.

In regards to your comments about areas where the economy is collapsing. (Modesto, Bakersfield, Detroit) In these areas, it’s the broad economic issues that need to be addressed first before housing can be addressed. (ie, what are people in these areas going to produce/sell that will generate the cash coming into the community so that it can grow) Since these issues are not being addressed seriously, I doubt that any kicking the problem down the road will work, only postpone the problem.

XBoxBoy[/quote]
Thanks for insightful reply.
In the blighted communities there may be a case made for alternatives, pushing the can if you will. Banks, Feds, the towns can’t handle a crush of foreclosures at the same time. If they ideally spread out over several years the pain could be reduced. That’s me and Wishful thinking.

[equalizer]

[quote=XBoxBoy]
Bottom line here is there is no free lunch that’s going to make things better. And “experts” like Taleb need to stop proposing things as if they will.

XBoxBoy

[/quote]
Good points.
However flawed the part ownership, it is better than outright principal reduction. Do you have any better ideas short of foreclosure? Foreclosure may be right idea in San Diego with high demand but in Modesto, Bakersfield, Detroit it may be a disaster.

[equalizer]

[quote=XBoxBoy]
Bottom line here is there is no free lunch that’s going to make things better. And “experts” like Taleb need to stop proposing things as if they will.

XBoxBoy

[/quote]
Good points.
However flawed the part ownership, it is better than outright principal reduction. Do you have any better ideas short of foreclosure? Foreclosure may be right idea in San Diego with high demand but in Modesto, Bakersfield, Detroit it may be a disaster.

[equalizer]

[quote=XBoxBoy]
Bottom line here is there is no free lunch that’s going to make things better. And “experts” like Taleb need to stop proposing things as if they will.

XBoxBoy

[/quote]
Good points.
However flawed the part ownership, it is better than outright principal reduction. Do you have any better ideas short of foreclosure? Foreclosure may be right idea in San Diego with high demand but in Modesto, Bakersfield, Detroit it may be a disaster.

[equalizer]

[quote=XBoxBoy]
Bottom line here is there is no free lunch that’s going to make things better. And “experts” like Taleb need to stop proposing things as if they will.

XBoxBoy

[/quote]
Good points.
However flawed the part ownership, it is better than outright principal reduction. Do you have any better ideas short of foreclosure? Foreclosure may be right idea in San Diego with high demand but in Modesto, Bakersfield, Detroit it may be a disaster.

[equalizer]

[quote=XBoxBoy]
Bottom line here is there is no free lunch that’s going to make things better. And “experts” like Taleb need to stop proposing things as if they will.

XBoxBoy

[/quote]
Good points.
However flawed the part ownership, it is better than outright principal reduction. Do you have any better ideas short of foreclosure? Foreclosure may be right idea in San Diego with high demand but in Modesto, Bakersfield, Detroit it may be a disaster.

[equalizer]

[quote=patientrenter]It is indeed true that the more money is created to support spending on some type of good or service, the more prices rise for that good or service.

When you increase the supply of money for some large sector of the economy by 100%, it seems that the supply goes up by 5 or 10 or 20%, and the price goes up by the rest. In other words, most of the money is wasted.

We have seen this in home prices (boosted by more money from home loans, then ever more tenuous versions of home loans, and by special tax breaks), medical care (with money funneled from Medicare and tax deductions for employer-paid health insurance), and higher education (with money funneled from special tax breaks for college expenses and special easy money loan schemes for students’ tuition).

I have come to the conclusion that the only way to encourage more of a certain type of good or service is to subsidize only a small % of the people demanding it, and exercise tough love for the rest. Think about how much the prices of homes, medical care, and universities would drop if only 10% of consumers for each could benefit from any form of government support. They would become much more affordable for most of us, simply paying out of our own pocket. [/quote]
Excellent analysis.

[equalizer]

[quote=patientrenter]It is indeed true that the more money is created to support spending on some type of good or service, the more prices rise for that good or service.

When you increase the supply of money for some large sector of the economy by 100%, it seems that the supply goes up by 5 or 10 or 20%, and the price goes up by the rest. In other words, most of the money is wasted.

We have seen this in home prices (boosted by more money from home loans, then ever more tenuous versions of home loans, and by special tax breaks), medical care (with money funneled from Medicare and tax deductions for employer-paid health insurance), and higher education (with money funneled from special tax breaks for college expenses and special easy money loan schemes for students’ tuition).

I have come to the conclusion that the only way to encourage more of a certain type of good or service is to subsidize only a small % of the people demanding it, and exercise tough love for the rest. Think about how much the prices of homes, medical care, and universities would drop if only 10% of consumers for each could benefit from any form of government support. They would become much more affordable for most of us, simply paying out of our own pocket. [/quote]
Excellent analysis.

[equalizer]

[quote=patientrenter]It is indeed true that the more money is created to support spending on some type of good or service, the more prices rise for that good or service.

When you increase the supply of money for some large sector of the economy by 100%, it seems that the supply goes up by 5 or 10 or 20%, and the price goes up by the rest. In other words, most of the money is wasted.

We have seen this in home prices (boosted by more money from home loans, then ever more tenuous versions of home loans, and by special tax breaks), medical care (with money funneled from Medicare and tax deductions for employer-paid health insurance), and higher education (with money funneled from special tax breaks for college expenses and special easy money loan schemes for students’ tuition).

I have come to the conclusion that the only way to encourage more of a certain type of good or service is to subsidize only a small % of the people demanding it, and exercise tough love for the rest. Think about how much the prices of homes, medical care, and universities would drop if only 10% of consumers for each could benefit from any form of government support. They would become much more affordable for most of us, simply paying out of our own pocket. [/quote]
Excellent analysis.

[equalizer]

[quote=patientrenter]It is indeed true that the more money is created to support spending on some type of good or service, the more prices rise for that good or service.

When you increase the supply of money for some large sector of the economy by 100%, it seems that the supply goes up by 5 or 10 or 20%, and the price goes up by the rest. In other words, most of the money is wasted.

We have seen this in home prices (boosted by more money from home loans, then ever more tenuous versions of home loans, and by special tax breaks), medical care (with money funneled from Medicare and tax deductions for employer-paid health insurance), and higher education (with money funneled from special tax breaks for college expenses and special easy money loan schemes for students’ tuition).

I have come to the conclusion that the only way to encourage more of a certain type of good or service is to subsidize only a small % of the people demanding it, and exercise tough love for the rest. Think about how much the prices of homes, medical care, and universities would drop if only 10% of consumers for each could benefit from any form of government support. They would become much more affordable for most of us, simply paying out of our own pocket. [/quote]
Excellent analysis.

[equalizer]

[quote=patientrenter]It is indeed true that the more money is created to support spending on some type of good or service, the more prices rise for that good or service.

When you increase the supply of money for some large sector of the economy by 100%, it seems that the supply goes up by 5 or 10 or 20%, and the price goes up by the rest. In other words, most of the money is wasted.

We have seen this in home prices (boosted by more money from home loans, then ever more tenuous versions of home loans, and by special tax breaks), medical care (with money funneled from Medicare and tax deductions for employer-paid health insurance), and higher education (with money funneled from special tax breaks for college expenses and special easy money loan schemes for students’ tuition).

I have come to the conclusion that the only way to encourage more of a certain type of good or service is to subsidize only a small % of the people demanding it, and exercise tough love for the rest. Think about how much the prices of homes, medical care, and universities would drop if only 10% of consumers for each could benefit from any form of government support. They would become much more affordable for most of us, simply paying out of our own pocket. [/quote]
Excellent analysis.

[equalizer]

state budget is $105B, the cuts in LAT options are only 5%-9% of the each category. Salaries comprise 80% of most segments, but they are untouchable, not even up for discussion. As barnaby33 has stated, CA is a high cost state. This is going to be a monumental fight.

My friend TG is a good guy who doesn’t have to deal with these slime ball lobbyists. But these slime balls helped create this mess. Lakers lobby and the beer lobby stopped beer and ticket tax. Instead we had massive car and sales tax that hits the working poor.

The prison guard union has been #1 lobby for decades, while other unions are right behind them. That lobbying helped create structural problems (super benefits) that are much worse than other states. Try to get that union job at the LA port district, the office job not the super skilled crane workers job. Easier to get in to CalTech. Most of these union jobs are closed to general public. Good GM jobs had 5 year wait lists in 80’s and 90’s.

But what do I know? I’m just a slumdog. Coulda been a millionaire and be able to see a Lakers game if I just listened to TG and bought F and more GE back in March.

[equalizer]

state budget is $105B, the cuts in LAT options are only 5%-9% of the each category. Salaries comprise 80% of most segments, but they are untouchable, not even up for discussion. As barnaby33 has stated, CA is a high cost state. This is going to be a monumental fight.

My friend TG is a good guy who doesn’t have to deal with these slime ball lobbyists. But these slime balls helped create this mess. Lakers lobby and the beer lobby stopped beer and ticket tax. Instead we had massive car and sales tax that hits the working poor.

The prison guard union has been #1 lobby for decades, while other unions are right behind them. That lobbying helped create structural problems (super benefits) that are much worse than other states. Try to get that union job at the LA port district, the office job not the super skilled crane workers job. Easier to get in to CalTech. Most of these union jobs are closed to general public. Good GM jobs had 5 year wait lists in 80’s and 90’s.

But what do I know? I’m just a slumdog. Coulda been a millionaire and be able to see a Lakers game if I just listened to TG and bought F and more GE back in March.

[equalizer]

state budget is $105B, the cuts in LAT options are only 5%-9% of the each category. Salaries comprise 80% of most segments, but they are untouchable, not even up for discussion. As barnaby33 has stated, CA is a high cost state. This is going to be a monumental fight.

My friend TG is a good guy who doesn’t have to deal with these slime ball lobbyists. But these slime balls helped create this mess. Lakers lobby and the beer lobby stopped beer and ticket tax. Instead we had massive car and sales tax that hits the working poor.

The prison guard union has been #1 lobby for decades, while other unions are right behind them. That lobbying helped create structural problems (super benefits) that are much worse than other states. Try to get that union job at the LA port district, the office job not the super skilled crane workers job. Easier to get in to CalTech. Most of these union jobs are closed to general public. Good GM jobs had 5 year wait lists in 80’s and 90’s.

But what do I know? I’m just a slumdog. Coulda been a millionaire and be able to see a Lakers game if I just listened to TG and bought F and more GE back in March.

[equalizer]

state budget is $105B, the cuts in LAT options are only 5%-9% of the each category. Salaries comprise 80% of most segments, but they are untouchable, not even up for discussion. As barnaby33 has stated, CA is a high cost state. This is going to be a monumental fight.

My friend TG is a good guy who doesn’t have to deal with these slime ball lobbyists. But these slime balls helped create this mess. Lakers lobby and the beer lobby stopped beer and ticket tax. Instead we had massive car and sales tax that hits the working poor.

The prison guard union has been #1 lobby for decades, while other unions are right behind them. That lobbying helped create structural problems (super benefits) that are much worse than other states. Try to get that union job at the LA port district, the office job not the super skilled crane workers job. Easier to get in to CalTech. Most of these union jobs are closed to general public. Good GM jobs had 5 year wait lists in 80’s and 90’s.

But what do I know? I’m just a slumdog. Coulda been a millionaire and be able to see a Lakers game if I just listened to TG and bought F and more GE back in March.

[Author]

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