One good thing about the financial crisis

[Liar]

Oh yes, found one.

Shark Attacks Dip To Five Year Low In 2008
- Sagging Economy May Have Played A Role

http://cbs4.com/local/shark.attacks.george.2.938735.html


Yay?

 

[3113]

Oh yes, found one.

Shark Attacks Dip To Five Year Low In 2008
- Sagging Economy May Have Played A Role

The sharks can no longer afford to go to the beach where the people are?

 

[DeeZire]

There are actually many good things about the financial crises, although not related to sharks. For example:

Increased regulation in the financial sector (finally!)

Increased spending on green energy (finally!)

A revamped American auto industry focusing on more energy efficient cars (finally!)

A shift from suburban living (with the required commuting) to urban communities with commutes facilitated by public transportation or even bicycles. This would be combined with a focus on renting, rather than buying a home, so that the working population can be more mobile and go where the jobs are located. Don't laugh. Some guy just wrote a book about how the financial crises is going to turn the suburbs into slums and revitalize the concept of living close to where you work. Radical, yes, and it's not going to happen over night, but in lieu of some magical source of energy, it is the only viable future out there.

http://www.theatlantic.com/doc/200903/meltdown-geography

It's a long article, and he doesn't really get into the urbanization angle until the end, although he did talk about it in his NPR interview.

http://www.npr.org/templates/story/story.php?storyId=100824603

 

[voluptuary_manque]

There are actually many good things about the financial crises, although not related to sharks. For example:

Increased regulation in the financial sector (finally!)

Increased spending on green energy (finally!)

A revamped American auto industry focusing on more energy efficient cars (finally!)

A shift from suburban living (with the required commuting) to urban communities with commutes facilitated by public transportation or even bicycles. This would be combined with a focus on renting, rather than buying a home, so that the working population can be more mobile and go where the jobs are located. Don't laugh. Some guy just wrote a book about how the financial crises is going to turn the suburbs into slums and revitalize the concept of living close to where you work. Radical, yes, and it's not going to happen over night, but in lieu of some magical source of energy, it is the only viable future out there.

http://www.theatlantic.com/doc/200903/meltdown-geography

It's a long article, and he doesn't really get into the urbanization angle until the end, although he did talk about it in his NPR interview.

http://www.npr.org/templates/story/story.php?storyId=100824603

"New Urbanites" have been pushing this for years. I disagree. Plug-in hybrids that go 40 miles on an overnite charge are coming soon and that will allow people to live in the suburbs for the forseeable future. The New Urbanites will curse them, rend their garments and bewail the Phillistine Americans . . . all the while the Europeans who can afford suburban homes continue to flock to them, as well.

 

[DeeZire]

. . . all the while the Europeans who can afford suburban homes continue to flock to them, as well.

I think that was his point - the fact that the ability to afford a suburban home is becoming a relic of the past. It's not going to be a matter of choice, but rather economic viability. There are many people now choosing between buying gas to commute or paying their mortgage, since they can't afford both.

One of the author's points was the concept of "suburban renewal", which will be an issue when the current suburbs that are being abandoned because of foreclosures end up remaining uninhabited and falling into ruin.

Just like all major shifts in the structure of society, it's not going to happen without resistance. Fifty years ago, I don't think anyone could have conceived of something like internet. Fifty years from now, I seriously doubt that we'll be basing our society on the model that was sate-of-the-art in the 1980s.

 

[Guest]

Oh yes, found one.

Shark Attacks Dip To Five Year Low In 2008
- Sagging Economy May Have Played A Role

http://cbs4.com/local/shark.attacks.george.2.938735.html


Yay?

Layoffs.

But I hear they're unionizing.

 

[DesertPirate]

Lunch can't afford to get to the beach

 

[trysail]

Increased regulation in the financial sector (finally!)

It took seventy+ years for the banks to completely crackup from the inherently contradictory mandates of populism. For seventy+ years, the banking business has been— without question— THE most heavily regulated industry in America. You can't go to the bathroom in this business without reference to some rule of one of the four ( count 'em— 4— Treasury Department, Office of Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corporation ) Federal government regulators that DIRECTLY oversee the industry.

I'm not even counting all the other regulators— OSHA, HHS and god-only-knows-what-else or the various state banking regulators.

 

[Xelebes]

It took seventy+ years for the banks to completely crackup from the inherently contradictory mandates of populism. For seventy+ years, the banking business has been— without question— THE most heavily regulated industry in America. You can't go to the bathroom in this business without reference to some rule of one of the four ( count 'em— 4— Treasury Department, Office of Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corporation ) Federal government regulators that DIRECTLY oversee the industry.

I'm not even counting all the other regulators— OSHA, HHS and god-only-knows-what-else or the various state banking regulators.

You know, that means diddly squat. Canada has had similar oversight over it's banks and none of them are teetering. It truly comes down to the tinkering of regulations and improperly balanced tax codes - one that favours home ownership over renting by offering deductions on interest and no deductions to renters. Canada hasn't had the problem of either of those two. We don't allow deductions on interest.

 

[voluptuary_manque]

the meltdown occurred because the Clinton administration urged banks to make mortgage loans to people who had no real prospects of paying them back. It was one of those ideas that seemed good at the time. Of course, when the mortgage banks then packaged the subprime loans to sell to the investment banks in paper that made no sense to anyone but the people who wrote it, the the system became a house built on sand.

 

[DesertPirate]

the meltdown occurred because the Clinton administration urged banks to make mortgage loans to people who had no real prospects of paying them back. It was one of those ideas that seemed good at the time. Of course, when the mortgage banks then packaged the subprime loans to sell to the investment banks in paper that made no sense to anyone but the people who wrote it, the the system became a house built on sand.

When added to the fact that Congresscritters on both sides of the aisle just want to spend, spend, spend.

 

[amicus]

"...Increased regulation in the financial sector (finally!)

Increased spending on green energy (finally!)

A revamped American auto industry focusing on more energy efficient cars (finally!)..."

~~~~~

The poster has to be a paid advocate for socialism because no one with an ounce of self respect would blather such idiocy.

Fannie and Freddie are government creations and by definition, totally regulated...you want more? Gads!

'Green' enery is an oxymoronic phrase. Think about it, all energy on earth comes from the sun, be it coal, uranium, natural gas or anything else.

One can only speculate how that poster views the future. Single women with implanted babies, one each, all living a hive like existence with males in captivity only and everyone assigned a task in exchange for soylent green.

Your future, you're welcome to it!

Amicus...

 

[AvoidingRealWork]

the meltdown occurred because the Clinton administration urged banks to make mortgage loans to people who had no real prospects of paying them back.

I honestly don't see the problem here. Home values go up, and the people in the mortgage then sell and reap the equity increase. Why do the home values go up? Because of banks making more loans to people who have no real prospects of paying them back. Those people can, in turn, sell the home and reap the equity increase thanks to the banks making more loans to people who have no real prospects of paying them back, and so forth.

It's a perfect system, with no real drawbacks, guaranteed to build continuous wealth for Americans.

 

[amicus]

the meltdown occurred because the Clinton administration urged banks to make mortgage loans to people who had no real prospects of paying them back. It was one of those ideas that seemed good at the time. Of course, when the mortgage banks then packaged the subprime loans to sell to the investment banks in paper that made no sense to anyone but the people who wrote it, the the system became a house built on sand.

~~~

I wanted to repost that VM, because it is important....and I would like to add:

The government has no money. The government creates nothing.

Fannie and Freddie, political creations to impliment public policies. The 'Toxic Loans', were foisted on the private banking system as an 'either/or' scenario, either you take these mortgages and work with them or, you will be excluded from the world's financial inner circle.

Whas a poor capitalist to do?

Well..they found a way, didn't they? Even a rat backed into a corner will snarl.

Of course, it was not just the American monetary system, every banker in the world had to have, had to have, a share of the pie to even get in the game.

Political intervention in the private economy, even with the best intentions, always REPEAT always leads to disaster.

You'd think they'd learn,eh?

Amicus...

 

[AvoidingRealWork]

~~~

The government has no money. The government creates nothing.

You are confusing money with wealth. All money is, is an abstraction that we all agree on to represent wealth. And we all agree that those little green pieces of paper that the government prints out are a stand-in for goods, services, and the acquisition of property, because it is a convenient facilitator of commerce.

In effect, we agree by general social contract that government is the very source for money. Dollars and Euros and Yen are, by themselves meaningless constructs, but we provide value for them through the goods we produce and the services we perform.

Thus in modern capitalism the state has a very important role to play as the mediator of commerce through their creation of a fiat medium of exchange, without with it would be nearly impossible to determine a "fair value" for any bit of wealth.

 

[trysail]

[ Boldface mine ]

( Fair Use Excerpt )

July 29 (Bloomberg) -- American Express Co., the biggest U.S. credit-card company by purchases, bought back the last of the government’s stake by paying $340 million for warrants held by the Treasury’s bailout program.

The warrants would have entitled the U.S. to buy 24.3 million common shares, the New York-based company said today in a federal filing. Payments by American Express to the Troubled Asset Relief Program, including dividends on preferred shares, equal a 26 percent annualized return for taxpayers, the company said in a statement. American Express said June 17 it repurchased the $3.39 billion preferred stake.

Lawmakers have pressured the Treasury to extract higher prices from companies that want to buy back warrants and exit TARP. Lawmakers have said proceeds from some of the earliest buybacks were too low and didn’t compensate taxpayers for the risk they took by providing rescue funds for banks when the financial system was teetering near collapse last year.

Goldman Sachs Group Inc. said July 22 it redeemed U.S. warrants for $1.1 billion, at the full value determined by the Treasury, after repaying the government’s $10 billion capital injection last month. Taking into account the dividends that New York-based Goldman Sachs paid the government, the Treasury earned an annualized 23 percent return on its funds, according to estimates from the bank and the Treasury.

*****​

 

[xssve]

the meltdown occurred because the Clinton administration urged banks to make mortgage loans to people who had no real prospects of paying them back. It was one of those ideas that seemed good at the time. Of course, when the mortgage banks then packaged the subprime loans to sell to the investment banks in paper that made no sense to anyone but the people who wrote it, the the system became a house built on sand.

Bullshit - subprime loans are Fannie Mae/Freddie Mac's mandate, it's the reason they exist, government guarantees of loans that are known and expected to be risky, and they are mandated to find ways to manage and reduce that by working with their clients in ways that banks don't ordinarily do - lowering payments, etc., in order to avoid unnecessary foreclosures when there is a willingness to pay, but a disruption in ability to pay.

i.e., they were designed specifically to underwrite high risk loans, and Clinton didn't create them: the problems came about when they exceeded their mandate by underwriting speculative housing, which required their caps to be raised.

Speculative housing is not subprime lending, it's not designed to promote home ownership among the economically marginal, which includes a lot of younger families in starter homes, it's underwriting speculation on higher end homes designed for the prime market, built before lining up a specific buyer.

The subprime tranches of federally guaranteed home loans are actually near or below historical levels, higher than the prime market, but not unusual - the additional burden of speculative loans on housing for which buyers never materialized, and tranches of subprime loans that were fraudulently made - typically fraud on the part of the broker, not the debtor, are what busted the hump.

i.e., the subprime tranches that are in default were loans made to people who did not qualify for those loans, even under relaxed FNMA guidelines, and necessarily involved fraud, which again, appears to have occurred predominantly on the brokerage side rather than on the applicant side.

This was fueled specifically by the Bush administrations overriding of state regulations on predatory lending through the Comptroller of the Currency office - almost every state regulated lending practices up to that point to keep a lid on fee based brokerages in order to avoid just such an occurrence. After that it was pretty much a free for all, they pulled the plug, and it all started to swirl around the drain from that point on.

The brokers were the weak link in the system: working on commission, they have no ongoing interest in whether the loans foreclosed or not, and taking on no risk themselves, simply pass it on as systemic risk, which investment banks ate up, based on the misuse of the Li risk formula.

Due diligence failed all down the line, but it started with the brokers, with everybody else trying to cash in, pressuring FNMA to raise caps, which they were all too willing to do since they were making commissions on it too, while pretending somebody else would shoulder the risk - FNMA specifically, which is precisely what occurred.

It should have never gotten to that level, FNMA caps should be monitored closely - typical FNMA financed homes are like 1200 to 1500 sqft starter homes, in the 40 to 80K price range - I think the caps were raised to 250K, which is not really in the subprime range.

One of the problems is that hardly anybody want's to build those smaller houses now: most of the ones on the market were built in the Fifties and Sixties. Low income housing these days tends towards mobile homes, or "pre-manufactured" housing, and a lot of the speculation was in Condos, badly overbuilt in certain areas of the country, Florida for one.

Compounding this, were other speculators, private individuals who bought secondary housing under the notion that they could turn them over in six moths or a year at a profit in the inflationary market: these people for the most part, have the ability to pay, but refuse to do so because they agreed to mortgage terms on property that has lost half its value - i.e., they have the ability to pay, but not the willingness to pay - again, FNMA loans are supposed to be for primary, not secondary housing, and definitely not designed for speculative loans - which are high risk loans, they're just not necessarily subprime loans.

Again, this is not technically subprime housing, these are more typically gated communities, or McMansions in low property value tracts, designed to appeal to younger professionals rather than working class families, but guess what?

That's where the money is.

Or was.

Same thing happened in the Eighties, more or less, except that it was HUD diverting funds meant for low income housing into building high gated communities, while S&L's overbuilt commercial real estate to deliberately drive down the price on shares in the S&L's themselves.

To some extent, the government tried to prevent a fire sale on housing this time around, which they actually facilitated in the Eighties S&L debacle.

 

[trysail]

Bullshit - subprime loans are Fannie Mae/Freddie Mac's mandate, it's the reason they exist, government guarantees of loans that are known and expected to be risky,...

That would be news to Fannie, Freddie, Congress and every administration since FDR. If that was the case, one might reasonably ask how in god's name Fannie and Freddie ended being involved with fifty percent ( 50% ) of all the mortgages written in the U.S.

 

[xssve]

That would be news to Fannie, Freddie, Congress and every administration since FDR. If that was the case, one might reasonably ask how in god's name Fannie and Freddie ended being involved with fifty percent ( 50% ) of all the mortgages written in the U.S.

As I mentioned, they exceeded their original mandate, they were never meant to be a safety net for the entire real estate industry.

Blame whoever you want, it's indeed a very good question how they got to the point of underwriting 50% of the market, it's a question that needs to be asked, and answered.

I'm just tired of hearing it was the people that FNMA is supposed to be helping, the only people they were supposed to be helping.

It seems to me to be a no brainer, unless you believe that subprime loans are a legitimate 50% of the market.

 

[JackLuis]

Bullshit - -

=
To some extent, the government tried to prevent a fire sale on housing this time around, which they actually facilitated in the Eighties S&L debacle.

Thanks for the link to the correlation article. And David X. Lee. It flashed thru my mind when I was reading this that, If Nixon bribed China with recognition, and Reagan killed Communism, you might say that David X. Lee wounded Capitalism.

In a Tom Clancy world Lee could have been a long term sleeper, sent by the impoverished China to penetrate the heart of the Capitalist system, Investment Banking.
A cleaver lad willing to study and excel, Lee was chosen well out of a pool of 120,000 clever Chinese lads'
He is sent to Canada and works his way up the ladder, prospering, yet living simply.
He has a realization that the key to cracking Capitalism is not attacking the system, but Misleading it!

After all if you just told them that they could forecast risk by a single number and nobody called your bluff, the Ivy league Biss Admin MBA's would jump on the wagon. The Bush league MBA's thinking that they are printing money, running off the end of the pier in pursuit of enough money to satisfy their need for possessions in a cloud of debt.

China is happy, after all it is holding a $11 Trillion mortgage on America and if it just had African resources and immigration rights to supply it's own workers, things would be Fabulous!

Scary hunh?

 

[xssve]

Thanks for the link to the correlation article. And David X. Lee. It flashed thru my mind when I was reading this that, If Nixon bribed China with recognition, and Reagan killed Communism, you might say that David X. Lee wounded Capitalism.

In a Tom Clancy world Lee could have been a long term sleeper, sent by the impoverished China to penetrate the heart of the Capitalist system, Investment Banking.
A cleaver lad willing to study and excel, Lee was chosen well out of a pool of 120,000 clever Chinese lads'
He is sent to Canada and works his way up the ladder, prospering, yet living simply.
He has a realization that the key to cracking Capitalism is not attacking the system, but Misleading it!

After all if you just told them that they could forecast risk by a single number and nobody called your bluff, the Ivy league Biss Admin MBA's would jump on the wagon. The Bush league MBA's thinking that they are printing money, running off the end of the pier in pursuit of enough money to satisfy their need for possessions in a cloud of debt.

China is happy, after all it is holding a $11 Trillion mortgage on America and if it just had African resources and immigration rights to supply it's own workers, things would be Fabulous!

Scary hunh?

I would say it's exactly what you can expect in a country that has developed a "zero tolerance" policy for anything it doesn't want to hear.