[kenberg]

Largely I agree Winston, although not entirely.

Around here there are townhouses, very modest, not anything special, that are going for a quarter million and up. How could this happen? Speculation fever, of course, but I think that this creative financing idea had a role to play as well. Go back a few years, not many, when the price for the same place was maybe 150. A careful sensible family could save up 30K for a 20% down payment. You didn't need to be a CEO to accomplish this. But the requirement would sort the careful from the frivolous. Enter creative financing. Any fool with a pen, and the bank will supply the pen, could get a loan. Demand goes up, prices go up, and now the sensible careful guy who was prepared to buy the house for 150 with 30 down finds that the price is 250. Oops.

The banking community has always presented itself as careful sensible folks who can be trusted. Probably it was a bit naive to take that at face value but at any rate that is all in the past. Whether they are morons or scoundrels or both, an old quip on skepticism is about to be updated: I'm from the bank and I'm here to help you.

[Winstonm]

Well, Ken, Treasury Secretary Henry Paulson (Former CEO Goldamn/Sachs) had this to say:

Quote

“I’m seeing a series of ideas suggested involving major government intervention in the housing market, and these things are usually presented or sold as a way of helping homeowners stay in their homes,” Mr. Paulson said. “Then when you look at them more carefully what they really amount to is a bailout for financial institutions or Wall Street.”

There is no reason to bail out homeowners who made poor decisions - they relied on being able to refinance or sell - that is risk.

The banks lent them too much money on the premise that the buyer could refinance or sell - that is risk.

Risk is a two-way street.
Can't afford to play, then don't gamble.

[Winstonm]

kenberg, on Feb 28 2008, 08:15 AM, said:

Largely I agree Winston, although not entirely.

Around here there are townhouses, very modest, not anything special, that are going for a quarter million and up. How could this happen? Speculation fever, of course, but I think that this creative financing idea had a role to play as well. Go back a few years, not many, when the price for the same place was maybe 150. A careful sensible family could save up 30K for a 20% down payment. You didn't need to be a CEO to accomplish this. But the requirement would sort the careful from the frivolous. Enter creative financing. Any fool with a pen, and the bank will supply the pen, could get a loan. Demand goes up, prices go up, and now the sensible careful guy who was prepared to buy the house for 150 with 30 down finds that the price is 250. Oops.

The banking community has always presented itself as careful sensible folks who can be trusted. Probably it was a bit naive to take that at face value but at any rate that is all in the past. Whether they are morons or scoundrels or both, an old quip on skepticism is about to be updated: I'm from the bank and I'm here to help you.

Sure, Ken, there were a number of factors that drove prices higher - the entire system engaged in euphoria-driven overoptimism.

Everyone involved has a share in the blame, including the buyers of the houses that were unaffordable.

[kenberg]

Thanks for the quote from Paulsen. I thought he might be a good appointment and this seems to support that.


I hope he speaks to the banking industry in language that they can understand. Seems as if he might be doing just that. Now if he can just get his boss to pay a little attention.

[mike777]

Wow you guys are pretty tough.

We can only hope in 11 months we get a President who cares about:
1) Helping people not lose their home
2) Helping people not lose their jobs in banking, mortgage/credit bus.
3) Helping anyone who owns banks in their pension or ret fund not lose money.

Spending a zillion bucks on Health care/global warming is very important but if millions are losing home, job or their retirement account...........just kill us....

[Winstonm]

mike777, on Feb 28 2008, 08:34 PM, said:

Wow you guys are pretty tough. 

We can only hope in 11 months we get a President who cares about:
1) Helping people not lose their home
2) Helping people not lose their jobs in banking, mortgage/credit bus.
3) Helping anyone who owns banks in their  pension or ret fund not lose money.

Spending a zillion bucks on Health care/global warming is very important  but if millions are losing home, job or their retirement account...........just kill us....

While we are at it, let's not forget all those who cannot afford the cars they bought and are having them reposessed, all the credit-card debtors who have taken on too much debt and can only afford minimum payments that keep rising, developers who borrowed too much to finance overpriced commercial real estate, leveraged buyouts failing because of tight lending standards and overpriced buyouts, the 50% of all banruptcy filings that are caused by health care bills......

Hell, let's just socialize everthing and get it over with.

Fidel for President.

[mike777]

Winstonm, on Feb 28 2008, 09:23 PM, said:

mike777, on Feb 28 2008, 08:34 PM, said:

Wow you guys are pretty tough. 

We can only hope in 11 months we get a President who cares about:
1) Helping people not lose their home
2) Helping people not lose their jobs in banking, mortgage/credit bus.
3) Helping anyone who owns banks in their  pension or ret fund not lose money.

Spending a zillion bucks on Health care/global warming is very important  but if millions are losing home, job or their retirement account...........just kill us....

While we are at it, let's not forget all those who cannot afford the cars they bought and are having them reposessed, all the credit-card debtors who have taken on too much debt and can only afford minimum payments that keep rising, developers who borrowed too much to finance overpriced commercial real estate, leveraged buyouts failing because of tight lending standards and overpriced buyouts, the 50% of all banruptcy filings that are caused by health care bills......

Hell, let's just socialize everthing and get it over with.

Fidel for President.

Well I prefer to vote for whoever is for:
1) Very strong defense
2) Very strong economy
3_ Jobs
4) Cutting taxes!!!!!!!!
5) Fiscal responsibility
6) Helping the sick
7) helping the poor
8) Education
9) Helping the children
10) For human rights ...yes even including women.
11) Stopping pollution and global warming.
12) stopping high gas/heating oil prices
13 For peace not war.


So far I only see one person to vote for .....

If you prefer to be heartless

[kenberg]

So far I only see one person to vote for .....

Hillary?

[helene_t]

Mike, how can you have so narrow priorities, would you really vote for someone who doesn't guarantee nice weather, winning finesses and 2-2 trump splits?

[PassedOut]

mike777, on Feb 28 2008, 09:47 PM, said:

Well I prefer to vote for whoever is for:
1) Very strong defense
2) Very strong economy
3) Jobs
4) Cutting taxes!!!!!!!!
5) Fiscal responsibility
6) Helping the sick
7) helping the poor
8) Education
9) Helping the children
10) For human rights ...yes even including women.
11) Stopping pollution and global warming.
12) stopping high gas/heating oil prices
13 For peace not war.

A nice list, but how are the other items compatible with number 4?

We are already running huge deficits.

[kenberg]

PassedOut, on Feb 29 2008, 01:18 PM, said:

mike777, on Feb 28 2008, 09:47 PM, said:

Well I prefer to vote for whoever is for:
1) Very strong defense
2) Very strong economy
3) Jobs
4) Cutting taxes!!!!!!!!
5) Fiscal responsibility
6) Helping the sick
7) helping the poor
8) Education
9) Helping the children
10) For human rights ...yes even including women.
11) Stopping pollution and global warming.
12) stopping high gas/heating oil prices
13 For peace not war.

A nice list, but how are the other items compatible with number 4?

We are already running huge deficits.

Volume!