Financial Meltdown (2 Viewers)

[Canadian Samurai]

Same old song, when things are going right, it's always because of the genius of private enterprise, when things go wrong it's always government to blame.

Sorry, don't buy it. It was the private sphere, driven by the entirely private interest of GREED, that thought it could make a few more bucks by selling mortgages in the sub-prime market. Unless the US was a communist system, the government does not have that kind of power, to direct where private banks, mortgage and insurance companies direct their private money. You can't blame the government for this one, aside from being too inactive in the market. And if government did set unrealistic home ownership targets (note the word targets not requirements), it's only because the private sphere was outright demanding it so the CEOs could meet their quarterly growth targets.

I think we can safely hold private financiers accountable for this mess.

 

[Louis Badolato]

I have to agree with Canadian Samurai on this one. As Americans we are all raised to believe that free enterprise will always get it right (capitalism is instilled in us like a religion), but throughout the history of this nation, it has only been when free enterprise is reigned in by outside forces that innate human greed didn't screw something up.

But the deregulation is the only thing I put on the government in this mess. The government rarely gets anything right, but enforcement of existing laws or regulations is one thing it is actually qualified to do. To blame the government for the idiot lending institutions loaning money to unqualified people is ridiculous. It was the greed of the individuals running these institutions, who could turn a big profit on paper, and warrant huge salaries and bonuses in the short run, while screwing the people whose pensions and life savings were entrusted to them in the long run who are clearly at fault.

At least during the great depression those low lifes had the decency to jump out of buildings. The new breed of scum comes equipped with golden parachutes.

 

[Canadian Samurai]

At least during the great depression those low lifes had the decency to jump out of buildings. The new breed of scum comes equipped with golden parachutes.

Beautiful.

Greed is a powerful incentive for economic progress, but if no boundaries are in place to control it (be it government, religion or a personal code of ethics), it will end up destroying us all.

 

[Pierre]

(...)

(...)

At least during the great depression those low lifes had the decency to jump out of buildings...

You probably don't care, but I applaud... Laud and clear.

 

[Pierre]

(...)

(...)

The new breed of scum comes equipped with golden parachutes.

And they smell s*** all the way down and still smell it after landing... It's the way to recognize them...

Why do I have the following lines in mind?...

You can shine your shoes and wear a suit
You can comb your hair and look quite cute
You can hide your face behind a smile
One thing you can't hide
Is when you're crippled inside

You can wear a mask and paint your face
You can call yourself the human race
You can wear a collar and a tie
One thing you can't hide
Is when you're crippled inside...

 

[Beaufighter]

Umm, but isn't that exactly the political principle you guys believe so fanatically in?

"You guys." I would strike such a generalization like that before speaking for all of "us" as it deprives your personal written views of any credibility whatsoever.

Respectfully,
Beaufighter

 

[Rutledge]

At least during the great depression those low lifes had the decency to jump out of buildings...

And they smell s*** all the way down and still smell it after landing... It's the way to recognize them...
------------------------
As someone who makes his living in the financial industry, I find these two posts/statements HIGHLY offensive.

There is plenty of blame to go around. There was a great deal of fraud going on, perpetuated by realtors, mortgage brokers, appraisers and the borrowers themselves. To say that greed was/is the sole province of the financiers is small minded and bigoted.

Capitalism suffers its excesses on occassion. This is one of those times. An unpleasant thing to go through. But it will be stronger, and we will be smarter, on the other side.

"As Americans we are all raised to believe that free enterprise will always get it right"

This is absolutely, utterly untrue. We are taught that capitalism is the BEST system in an imperfect world. The depression and New Deal are not ignored in text books. Their causes and creation are examined as part of examples of the great imperfection of capitalism.

No school worth a hoot teaches that there is ANYTHING that ALWAYS gets it right.

But look around you. No country in the world has achieved so much in such a short time. Coincidence?

This crisis has nothing to do with pension funds. It has to do with loose lending practices --- and some really smart people thinking that through "securitization" they had figured out a way to make it so that lots more people could own a home than actually deserved to. So in fact while the pursuit of profit (horrors!) played a role, many other people initially benefitted (or seemed to at the time) as they previously could not have afforded to purchase such nice homes.

 

[Njja]

Same old song, when things are going right, it's always because of the genius of private enterprise, when things go wrong it's always government to blame.

I'm quite suprised someone from a foreign country would tell and American

how this happened.

Most of the people in this country didn't see it coming.

Wall street didn't see it coming........

President Busch didn't see.......well thats another story

 

[nmrocks]

For me the real problem is what to do? I've thought about pulling out of the market, but if it collapses there's no shelter anywhere.
The incidious thing is in one day gov't has just started to pull the strings behind the curtain of some of the biggest companies in the world. If you don't think there are politicians who are going to take advantage of that, I have a bridge for sale.....
Ray

 

[Njja]

I have to agree with Canadian Samurai on this one. As Americans we are all raised to believe that free enterprise will always get it right

Louis!

I always love to hear from my attorney friends! You know how much I

respect you! I was never happier then the day my only child graduated from

law school!

Free enterprise, hard work and common sense built America and left alone

with our Constitution it will keep it strong.

After 30 years in the market I was barely scratched during the meltdown,

and after friday insignificant change for the week.

I am not in Mutual Funds (where you own nothing) or involved in any

financial stock as I knew the MBS's were going to be a big problem.

I did consider taking a run at Goldman Sachs at 100 but a rule is a rule.

With free enterprise in play the risk takers would have failed the poor CEO's

would have lost their positions and the strong companies with solid leadership

would have emerged.

Classic survival of the fittest.

What we have instead is a Government backed bailout in the Trillions....

which is 1/10th of our National Debt, which is inflated.

All of the bad paper is going to be taken over by the govenment $.45 on the

dollar and who learned their lesson?

I'd like to know if any of those knuckleheads in Washington ever ran a

company or made a million dollars themselves.

 

[Njja]

We shall see next week, but I believe the worst is over.

Everyone knows the FDIC is underfunded.....that will have to be fixed.

MBS's Sub Prime will no longer be a marketable security.

Goldman Sachs will survive.......Morgan Stanley will be bought out.

AIG will fight to again become private and stick closer to its core business.

AXA (France) will continue to be a major stock holder in Prime US Companies

(check the major holders in your favorite companies) Oil may even drop

as the producers fear a world economic breakdown.

I will sleep tonight, and I want to thank all the Forum Members that posted

to this thread.....for you can feel you all saved the world tonight!

In a small way you did!

 

[Njja]

At least during the great depression those low lifes had the decency to jump out of buildings...

Excellent points one and all!

First it is silly to take comfort in the demise of another human being. I have

known men that lost everything and could not face their children and lost

the will to go on. Nothing to joke about.

When I see a successful man I listen to what he has to say. If he is honest

and truthful I will learn something that will make me a better man.

If he is dishonest, or disingenuous I move on, and I have met that type also.

I believe this happened for a combination of reasons....stupidity as well as

greed.

Lets say you were a banker, a loan officer charged with disposing of

5 Million into home mortgages. You connect with several realitors and

before long you have written 5 Mil in good paper. The market is booming,

houses are going up 50% what do you do?

Do you bow out, sever your connection with the realtors and say I'll see you

next year? This is how it began.....in my opinion.

Your boss sells the 5 Mil for a modest profit and re-capitalizes you and says

"Go to Work"

Everyone is making money, you, the bank, the realitor.....(Louis and Brad are

handling the closings) every thing is on the up and up........

Only problem is as the house prices rise....the pool of qualified buyers gets

smaller........in steps house flippers........now we have trouble.

Here is where the Bank.....or the FDIC.....or someone, should have stepped in

and said like Donald Trump "You want to buy in my building 50% down"

Why didn't this happen?

Heres the answer! House prices were increasing at to fast a rate.

Houses were doubling I watched a house I was looking at on LBI climb from

$550K to 1.7M in less then a year.

Banks relaxed their requirements because in 6 months a buyer might have

50% equity in his new home.

The paper kept getting sold, everyone was getting paid, everyone was

making money.....and AIG was insuring all the paper what could go wrong?

Its hard to pinpoint the exact blame, I knew it was coming and I thought

the important people did also.......they did not.

Every time we travel up to NJ and I meet with realtors (wife is on first

name basis with several) I patiently go from home to home until I always ask

the same question......."Who exactly are you selling these homes to"

I'm always told they have an exclusive cliental and no problem finding buyers.

My favorite Long Beach Island currently has 304 homes for sale over 1 Mil

sales Jul-Sep 2008......TWO!
sales Jul-Sep 2007...... 124

My favorite home.....brand new....still unsold.....built 2006!

 

[Njja]

For me the real problem is what to do? I've thought about pulling out of the market, but if it collapses there's no shelter anywhere.


Ray:

There are plenty of solid Blue Chip companies for you to consider. Do your

research, but companies such as Coke, Pepsi, Johnson & Johnson, Merk, Esso

all have strong financial positions and are well managed and proven

performers.

Stay away from Mutual Funds as they are managed and past performance

is no guarantee.

Never invest money you might need, set aside 10% or what you can afford

and start slowly. Buy 10 shares, then join the shareholder plan and invest

what you can a month until you get 100. Then move on to your next choice,

keeping large sums in the bank at 3% doesn't even keep pace with inflation.

Don't get involved with someone unless you know all the fees involved....

and always ask "Are you a Millionare" if the answer is No......move on.

I don't want to be taught how to fly a plane by a bus driver.

What about tax free municipal bonds, zero coupon bonds, hey how about

Gold?

If you have to ask ......its not for you!

Read, read, read, so when the time comes to ask for advice you can

understand the answer.

Have fun, remember most people's home is their largest investment.

Less then 1% of the people leave an estate in excess of 1 Million.

Someone becomes a millionare every day......oh thats Monopoly

 

[Pierre]

(...)

(...)

This is absolutely, utterly untrue. We are taught that capitalism is the BEST system in an imperfect world...

You should be remembered social democracy...

 

[jazzeum]

There is an interesting article in today's Times by their business writer, Joe Nocera,who sees the government's plans as equivalent to a hail mary and that much more pain is on the way, particularly if the government proposes buying mortgages at half or less of their value as the actual price will have to be marked down on the seller's balance sheet, generating further losses.

You can probably find the article on the web but I can always post it later.

 

[Spitfrnd]

I have to agree with Canadian Samurai on this one. As Americans we are all raised to believe that free enterprise will always get it right (capitalism is instilled in us like a religion), but throughout the history of this nation, it has only been when free enterprise is reigned in by outside forces that innate human greed didn't screw something up.

Regulation has its place but more is not better and usually worse if you examine the results carefully enough.

But the deregulation is the only thing I put on the government in this mess. The government rarely gets anything right, but enforcement of existing laws or regulations is one thing it is actually qualified to do. To blame the government for the idiot lending institutions loaning money to unqualified people is ridiculous. It was the greed of the individuals running these institutions, who could turn a big profit on paper, and warrant huge salaries and bonuses in the short run, while screwing the people whose pensions and life savings were entrusted to them in the long run who are clearly at fault.

You may think it is ridiculous but the fact is that the basis for lowering the standards came from the government's objective and encouragement. I am not sure how much clearer you can make this but to expand the percentage of home ownership, there was no alternative and the assumptions underlying the alternative turned out to be wrong. Greed had its part but it was not the the basis for the problem. As to governernment's qualification to enforce the law; well to do that in an area this complicated, they have to make regulations and that is frequently a giant mess. Even after that, enforcing the regulations is far from a simple matter. Adding another layer of complexity and opportunity for error is frequently not a good thing.

 

[fmethorst]

It's funny how corporate liabilities can sometimes end up on the tax payer's balance sheet while profits always remain private.

What happened to that economic and industrial giant of the 20th century, the one that helped win two world wars?

Perhaps it is inevitiable that hegemons get complacent as they mature and forget it's hard work that got them to where they are? If one looks at past economic powers such as Great Britain, the Netherlands, Spain etc. it certainly appears that hubris and finance are in the fore in their waning years.

I am not an economic expert by any stretch but even as a layman certain things jump out at me. The rise in government, corporate and private debt appears to be dramtic and unsustainable. Financial Services as a portion of GDP continues to grow and supplant industry. Post 9/11 consumption appeared to be tied together with patriotism. "Go out and spend money. What you don't have any money, no problem, borrow it. Here we'll lower interest rates to help." The trend seems to be towards deregulation with large Financial Service institutions having undue influence on policy. Young and unsophisticated borrowers appear to be fair game. People seem to have more protection for a household appliance such as a toaster than they do from risky financial products.

 

[Njja]

There is an interesting article in today's Times by their business writer, Joe Nocera,who sees the government's plans as equivalent to a hail mary and that much more pain is on the way, particularly if the government proposes buying mortgages at half or less of their value as the actual price will have to be marked down on the seller's balance sheet, generating further losses.

As long as they have access to the funds they need for daily operations it

shouldn't be a major problem. If the Fed comes in and buys the paper that

was unsaleable it should give them the breathing room they require. Debts

can be written off long term, and valuable solid assets will not have to be

liquidated via a fire sale to raise capital.

I experienced the same situation when my last package arrived

Wife & daughters birthday is coming up (both on same day 25 years apart)

I was informed that I had better not have forgotten about it

I stopped short of putting a For Sale Sign on Boo!

We agreed on a compromise!

 

[jazzeum]

Gents,

This is starting to veer off into the political. Let's keep it confined to economics.

 

[Spitfrnd]

Gents,

This is starting to veer off into the political. Let's keep it confined to economics.

LOL; funny thing is that is what some would like to say to our government about their most recent set of domestic actions.