Re: Foreclosure data add to US housing gloom

On Sep 10, 11:51 pm, Too_Many_Tools <too_many_to...@xxxxxxxxx> wrote:
On Sep 10, 7:21 pm, Dan <dnada...@xxxxxxxxxxx> wrote:





hot-ham-and-che...@xxxxxxxxxxx wrote:
On Sep 10, 1:38 pm, Dan <dnada...@xxxxxxxxxxx> wrote:
Note that sub-prime mortgages, while a risky part of the overall
mortgage market, have been around for quite a few decades with no huge
problems (except to the individuals involved) until the Republicans got
their hands on the process (c.f., Fed negative net interest rates
emplaced to save us from the Republican "booming economy").

Dan, 'splain that, please. The "republican" part.

Some of it (there is much more):

* subprime mortgage companies have existed for decades as regulated
entities, loaning money to people with modest credit at higher rates, to
make up for the known increase in delinquencies through foreclosures
expected for such risky loans, all above board.

* Bush is elected, and through much fault of his own, his Party's, and
some not entirely of his doing, the economy tanks, causing the FED to
ease interest rates.

* eventually, through extremely poor management and decision-making, the
economy gets so bad that the FED lowers interest rates below the rate of
inflation

* a group of people finds a loophole in the recent legislation that
allows them to speculate on an entire industry, fueling a firestorm of
questionable to criminal refinancing activity in the subprime arena,
totally separate from the existing regulated markets, and furthermore
allows these same crooks to sell derivatives, and derivatives on
derivatives, on the loans so generated.

(a friend described it thus: a guy walks into a bank with some "paper,"
tells the bank what the "paper" is worth, and borrows from the bank 10x
that 'face-value' amount of real money, using the "paper" as collateral.
Rinse and repeat.)

* the bank sells the loans, which it has repackaged and divided (each
loan into several different investments, through intermediaries to
brokers who shuffle it off to clients, who... All unregulated.

* the Republican owned, controlled, and consolidated mainstream media
does PR for the economy, selling it as robust, selling the housing and
refinance boom as genuine, generating a feeding frenzy among people who
do not know better that to get fleeced. These people do not know to
look at the Fed rates and dollar devaluation abroad to see that the
economy is, in fact, in very poor shape, inflation is underreported,
competing nations are bidding up raw materials, and oil is going through
the roof because of the administration's mishandling (?) of the Iraq
war. They only know they personally are not making a living working,
(partly because their jobs have been shipped overseas) and are
"encouraged" to take the pseudoequity out of their houses to make ends
meet at misrepresented rates and terms.

* the money thus generated by the debt does prop up the failing economy,
barely, and temporarily, allowing the stock market to kind of get back
to where it was when Bush took office (allowing the people who know how
to work the system to make serious money). The money used to prop up
the stock market was largely the Bush tax cut money, concentrated in the
top few percent, though the real money was made in overseas markets.

* the move now seems to be to dump the overappreciated US stocks onto
middle class people with 401Ks and IRAs holding mainly mutual funds, but
I'll get back to you on that.

[The above totally ignores things like ENRON and other large-business
frauds that occurred on Bush's watch, and whose participants, both
political and business, were Republicans, but were not,
strictly-speaking, Republican Party problems.]

So, a few of the things that I have personally seen, based on REPUBLICAN
mismanagement or plain gutting of the economy, regulation, various
speculative and investment markets, foreign policy, etc.

That is merely the tip of the iceberg. The effects of the recent
gutting of the bankruptcy laws still remains to be seen, but it won't be
pretty.

Note that during Clinton's administration, the whole internet-business
bubble, with similar manipulation and fraud, caused some modest damage,
but was not a systematic problem with economy-wide implications, but a
more normal speculative bubble in a new industry, as seen previously in
the electronics and genetic-engineering booms. Nor was it implemented
by poor policy decisions.

Ciao.

Dan

Good discussion.

This bust will be very different than the dot com downturn.

Losing your home is much, much different than losing some money on a
few stocks.

The Republicans will be crucified by the voters in 2008.

TMT-

TMT, this bust will be meaningful to you only if you learn the
difference between ratios and "PERCENTAGES."

.

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