I have never been so disgusted with the actions of this government than I am right now. Rome is burning and these pieces of shit are simply ensuring their bonuses and salaries are intact (the management) with Congressional Blessing. Another forum has a thread where someone linked an article (I'll try to find it) about how people are resistant to the 25 billion in loans that three automakers have requested - GM, Ford and Chrysler - and how Goldman Sachs, in perspective, has asked already paid out 12 billion just in bonuses from the 850 billion dollar bailout (soon to exceed 1 trillion?).
Why would anyone expect transparency from a private corporation, owned by the international wealthy? What planet are you on? Whomever still thinks the Fed is part of the government or controlled by the government is either high or ignorant. Ignorance can be cured. Druggies are just hopeless.
Agree about just subprime. I was paraphrasing. Its subprime, arm, alt-A, and a bit of jumbo. Basically, the high and moderate risk mortgages. Everything is built and derivatized around that. Yea, you got your credit card, auto, home loan stuff, but thats not securitized in derivatives, to my knowledge. Even if it was, those defaults compared to mortgage defaults are a shadow. The Gov needed to buy the mortgages, take them off book, guarantee payments, and then outlaw CDS. Thats it.
It's all securitized. Figures on credit card debt put it at close to $1T, which is about what the total sub-prime end of the market was. The annual market on car loans was around $550B the past few years and the majority of those loans were also securitized. Worse is that the bulk of them were 5 or 6 year loans that financed between 95-125% of the note. People are going to default on their credit cards and cars long before they do on their mortgage. Disagree. The CDS market needs to be declared null & void, worldwide first. The banks need to eat the credit and car debt since there's nothing of value to salvage. In the long run, we'd be better of facing several years of painful inflation to reflate the only market worth salvaging -- housing.
Capitalism never worked the way they sold it to you. It was always based on corruption. Surprise Surprise
Comparing auto defaults to mortgage is saying a grape is the size of a cantaloupe. Every person that files for BK and sends jingle mail defaults on everything. The House is valued at 300K. The car - 25K. The Credit cards, maybe 25K. Mortgage default is 6 TIMES whatever the ancillary consumer debt is. If thatâs CDS'd, then yea, thatâs a problem too! But nowhere near as big as mortgages. "Saving the housing market" - couldn't be more wrong. Thatâs what Japan did. And it sure helped them, huh? Prices need to return to mean. That includes Real Estate, Equities, Auto's, Commodities - everything. There is no fundamental reason to prop real estate values at 50% over premium other than to save homeowners and underwater banks. Fuck the Banks. And fuck the Buyers. If the RE market "Crashed" to 2001 Levels, you know who would still own Real Estate?! Everyone that bought in before 2001 and held actual equity in their home (and a job to cover). The problem isn't home values. Its MONEY SUPPLY and Generated Bubbles from ridiculously low rates. The System needs to clean out. We Prop everything and this Market will still tank and we won't grow for another 4 years. Ever consider what all this liquidity is gonna do once the economy recovers?! Rob People. And create another Bubble bigger than the last. What do we do then? Save that Crash with more Inflation?!! It doesn't work. The System is broken. Crashes can't be saved by generating even bigger and bigger Bubbles. Thats pure currency debasement that will eventually lead to a collapse in the Dollar, our stock markets and general economy. Peoples money will be debased to half its original value. Their porfoilios will be worth a fraction. And the dollar can't buy shit on the market, so the Government folds on its entire spectrum of Services that can no longer be financed with Foregin Debt purchase. So rates go through the roof to "Save" the Dollar and generate much needed cash flow. Then the Economy goes into a Depression. 20% Interest Rates with 50% less consumer wealth. Oh yea. Great idea.
So, where do you think we're going to be when the rate of default on consumer debt becomes 10-20 times the rate of mortgage defaults? Unfortunately, it is just as big. BTW, CDSs, are a different kettle of fish from the underlying due to the fact that a lot of them are essentially naked trades with no underlying asset. No, Japan refused to force the banks to write off their bad loans. What I'm saying is not at all the same. First, the unsecured consumer loans should be written off, now. Second, declare all CDSs null & void. Third, the government underwrites the mortgages that are underwater which keeps these people in these homes until inflation can raise wages up to the point to where the housing market can start to function again. Much as I agree with you the unfortunate reality is that deflation never works uniformly across markets, sectors and asset classes. What you're saying is both logically and viscerally correct but it's completely wrong from practical perspective. What you'd end up with is the entire country facing the same blight that Detroit, southern CA and parts of Florida and Arizona are facing where large sections of neighborhoods are carrying empty homes. You not only need buyers, you need occupants otherwise you end up with a wider and deeper deflation of all homes. There's no point in winning the battle if it ends up costing you the war.
The average family cannot afford their house. Even if the refinance,their home will have too many fixed costs. Any attempt by the government to delay the decline in housing will only prolong the suffering of millions of homeowners. One maintenance disaster such as a new a/c system will kill the average homeowner, unless they finance more debt on top of existing debt. The entire system was based on a continual debt chain. A ponzi scheme economy. No reason the government should bail anyone or any company out.
You're comparing apples to oranges. Vast majority of defaulted homes did not GTZ or anywhere close. Combined with your earlier incorrect statement about types of loans "to my knowledge" not being securitized, I respectfully suggest you have some reading to do before you're in a position to suggest solutions.
I'm as outraged as anyone else at those that got the country into this situation. But, to force individual communities to shoulder the burden by kicking these people out of their houses is stupidly short-sighted. Keeping them in it, even if it means that they're only paying rent to the government for a few years until they can either buy it back or someone else does is much better for the community as a whole then it is to to have it sit there empty. As for bailing companies out, well, the aftermath of what's happened since the government "let" Lehman Brothers fail should be enough for anyone to realize that it's the connected debt obligations that are real problem here. We should definately go after Fuld, Mozilo and everyone else who was at the wheel, but blowing up their companies is the wrong way to go about it.