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August 28, 2007 at 1:51 PM in reply to: Nasty day at the stock market today. Dow lost nearly 300 pts…. #82294
LA_Renter
ParticipantForm our friend wiki
“Moral hazard in finance
Financial bail-outs of lending institutions by governments, central banks or other institutions can encourage risky lending in the future, if those that take the risks come to believe that they will not have to carry the full burden of losses. Lending institutions need to take risks by making loans, and usually the most risky loans have the potential for making the most money. A moral hazard arises if lending institutions believe that they can make risky loans that will pay handsomely if the investment turns out well but they will not have to fully pay for losses if the investment turns out badly. Taxpayers, depositors, other creditors have often had to shoulder at least part of the burden of risky financial decisions made by lending institutions.
Moral hazard can also occur with borrowers. Borrowers may not act prudently in the view of the lender when they invest or spend funds recklessly due to the belief that they have access to a large line of credit. For example, credit card companies often limit the amount borrowers can spend using their cards, because without such limits those borrowers may spend borrowed funds recklessly.”
Personally I don’t care who won or lost in this last boom. If you made a ton of money,,,,good for you, if you lost…I’m sorry to hear that. What I am concerned about is having the market correct and move forward without putting additional people or the entire US economy in harms way. The degree that we bail people out equals the same degree of risk artificially removed from the market and thus no longer a free market. The bailout whether from the central bank or federal government will only prolong the slump and create inefficiencies in the market…..remember the soviet bloc countries.
Now I do agree with the argument that perhaps each and every foreclosure be put under the microscope and investigated for fraud from the borrower to the mortgage broker to the lender. If fraud is found then we can turn over to the law of the land.
LA_Renter
ParticipantForm our friend wiki
“Moral hazard in finance
Financial bail-outs of lending institutions by governments, central banks or other institutions can encourage risky lending in the future, if those that take the risks come to believe that they will not have to carry the full burden of losses. Lending institutions need to take risks by making loans, and usually the most risky loans have the potential for making the most money. A moral hazard arises if lending institutions believe that they can make risky loans that will pay handsomely if the investment turns out well but they will not have to fully pay for losses if the investment turns out badly. Taxpayers, depositors, other creditors have often had to shoulder at least part of the burden of risky financial decisions made by lending institutions.
Moral hazard can also occur with borrowers. Borrowers may not act prudently in the view of the lender when they invest or spend funds recklessly due to the belief that they have access to a large line of credit. For example, credit card companies often limit the amount borrowers can spend using their cards, because without such limits those borrowers may spend borrowed funds recklessly.”
Personally I don’t care who won or lost in this last boom. If you made a ton of money,,,,good for you, if you lost…I’m sorry to hear that. What I am concerned about is having the market correct and move forward without putting additional people or the entire US economy in harms way. The degree that we bail people out equals the same degree of risk artificially removed from the market and thus no longer a free market. The bailout whether from the central bank or federal government will only prolong the slump and create inefficiencies in the market…..remember the soviet bloc countries.
Now I do agree with the argument that perhaps each and every foreclosure be put under the microscope and investigated for fraud from the borrower to the mortgage broker to the lender. If fraud is found then we can turn over to the law of the land.
LA_Renter
ParticipantForm our friend wiki
“Moral hazard in finance
Financial bail-outs of lending institutions by governments, central banks or other institutions can encourage risky lending in the future, if those that take the risks come to believe that they will not have to carry the full burden of losses. Lending institutions need to take risks by making loans, and usually the most risky loans have the potential for making the most money. A moral hazard arises if lending institutions believe that they can make risky loans that will pay handsomely if the investment turns out well but they will not have to fully pay for losses if the investment turns out badly. Taxpayers, depositors, other creditors have often had to shoulder at least part of the burden of risky financial decisions made by lending institutions.
Moral hazard can also occur with borrowers. Borrowers may not act prudently in the view of the lender when they invest or spend funds recklessly due to the belief that they have access to a large line of credit. For example, credit card companies often limit the amount borrowers can spend using their cards, because without such limits those borrowers may spend borrowed funds recklessly.”
Personally I don’t care who won or lost in this last boom. If you made a ton of money,,,,good for you, if you lost…I’m sorry to hear that. What I am concerned about is having the market correct and move forward without putting additional people or the entire US economy in harms way. The degree that we bail people out equals the same degree of risk artificially removed from the market and thus no longer a free market. The bailout whether from the central bank or federal government will only prolong the slump and create inefficiencies in the market…..remember the soviet bloc countries.
Now I do agree with the argument that perhaps each and every foreclosure be put under the microscope and investigated for fraud from the borrower to the mortgage broker to the lender. If fraud is found then we can turn over to the law of the land.
August 27, 2007 at 3:11 PM in reply to: San Diego year over year inventories down for third month in a row #81728LA_Renter
ParticipantI have a question for the realtors, last year when inventories hit their all time peak high….how much of that inventory was due to people trying to cash out at the top? I guess you could call that soft inventory (what the hell, lets throw it out there and see how much we can get). I imagine the inventory today has a much different composition. This has probably been discussed on other threads I was just curious if anybody assigned a percentage to the amount of soft inventory last year.
August 27, 2007 at 3:11 PM in reply to: San Diego year over year inventories down for third month in a row #81863LA_Renter
ParticipantI have a question for the realtors, last year when inventories hit their all time peak high….how much of that inventory was due to people trying to cash out at the top? I guess you could call that soft inventory (what the hell, lets throw it out there and see how much we can get). I imagine the inventory today has a much different composition. This has probably been discussed on other threads I was just curious if anybody assigned a percentage to the amount of soft inventory last year.
August 27, 2007 at 3:11 PM in reply to: San Diego year over year inventories down for third month in a row #81880LA_Renter
ParticipantI have a question for the realtors, last year when inventories hit their all time peak high….how much of that inventory was due to people trying to cash out at the top? I guess you could call that soft inventory (what the hell, lets throw it out there and see how much we can get). I imagine the inventory today has a much different composition. This has probably been discussed on other threads I was just curious if anybody assigned a percentage to the amount of soft inventory last year.
LA_Renter
Participant“This thread is pathetic and symbolic of the overall feel of this blog. What are your real motivations for stopping foreclosures?”
First of all that post is coming from a very myopic view IMO. Are you familiar with the term “Moral Hazard”? Chris, this housing bubble has created a huge mess to the point of literally putting the global financial system at risk of collapse. If we bail people out of this debacle…what prevents them from engaging in this behavior in the future. The concept of risk must be returned to this asset class from the buyer to the lender to the hedge fund for it to ever recover.
“Rooting against my fellow americans is just not something I care to do.”
That is a pathetic thing to say. Especially in the face of a financial crisis that is putting all Americans at risk. All people want is some form of fiscal responsiblity to return to the great American pasttime of home ownership.
LA_Renter
Participant“This thread is pathetic and symbolic of the overall feel of this blog. What are your real motivations for stopping foreclosures?”
First of all that post is coming from a very myopic view IMO. Are you familiar with the term “Moral Hazard”? Chris, this housing bubble has created a huge mess to the point of literally putting the global financial system at risk of collapse. If we bail people out of this debacle…what prevents them from engaging in this behavior in the future. The concept of risk must be returned to this asset class from the buyer to the lender to the hedge fund for it to ever recover.
“Rooting against my fellow americans is just not something I care to do.”
That is a pathetic thing to say. Especially in the face of a financial crisis that is putting all Americans at risk. All people want is some form of fiscal responsiblity to return to the great American pasttime of home ownership.
LA_Renter
Participant“This thread is pathetic and symbolic of the overall feel of this blog. What are your real motivations for stopping foreclosures?”
First of all that post is coming from a very myopic view IMO. Are you familiar with the term “Moral Hazard”? Chris, this housing bubble has created a huge mess to the point of literally putting the global financial system at risk of collapse. If we bail people out of this debacle…what prevents them from engaging in this behavior in the future. The concept of risk must be returned to this asset class from the buyer to the lender to the hedge fund for it to ever recover.
“Rooting against my fellow americans is just not something I care to do.”
That is a pathetic thing to say. Especially in the face of a financial crisis that is putting all Americans at risk. All people want is some form of fiscal responsiblity to return to the great American pasttime of home ownership.
LA_Renter
Participant“Is it time to buy???”
No!
New home sales had a slght uptick from June (a horrible month, they are still way down from last year which was a bad year). Inventories peaked this time last year in San Diego, this has been predicted by many on Piggington including the resident realtors.
The data that will be rolling in starting Sept will be of the most interest. We will begin to see the impact of the credit crunch then. This is a whole new ball game.
LA_Renter
Participant“Is it time to buy???”
No!
New home sales had a slght uptick from June (a horrible month, they are still way down from last year which was a bad year). Inventories peaked this time last year in San Diego, this has been predicted by many on Piggington including the resident realtors.
The data that will be rolling in starting Sept will be of the most interest. We will begin to see the impact of the credit crunch then. This is a whole new ball game.
LA_Renter
Participant“Is it time to buy???”
No!
New home sales had a slght uptick from June (a horrible month, they are still way down from last year which was a bad year). Inventories peaked this time last year in San Diego, this has been predicted by many on Piggington including the resident realtors.
The data that will be rolling in starting Sept will be of the most interest. We will begin to see the impact of the credit crunch then. This is a whole new ball game.
LA_Renter
ParticipantYou Can Still ADVERTISE for Risky Loans
“Mike Larson, a real estate analyst for Weiss Research in Jupiter, Fla., said that “the nicest” way to describe these companies is that they are “optimists,” adding, “Even if they get a customer in the door this way, it’s going to be a lot harder to qualify that customer than it was six months ago.”
I think if you read the article it points out that this is how mortgages are advertised to attract attention. It ponts out that these risky loans cannot be sold in the secondary market and the likelyhood of getting throughescrow are very small. The credit crunch is very real and mortgages are going to be to tough for some time to come.
LA_Renter
ParticipantYou Can Still ADVERTISE for Risky Loans
“Mike Larson, a real estate analyst for Weiss Research in Jupiter, Fla., said that “the nicest” way to describe these companies is that they are “optimists,” adding, “Even if they get a customer in the door this way, it’s going to be a lot harder to qualify that customer than it was six months ago.”
I think if you read the article it points out that this is how mortgages are advertised to attract attention. It ponts out that these risky loans cannot be sold in the secondary market and the likelyhood of getting throughescrow are very small. The credit crunch is very real and mortgages are going to be to tough for some time to come.
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