Comments on: Nine Years Ago Today

By: Pixelkiller

Pixelkiller — Thu, 02 Oct 2008 20:00:28 +0000

Skippie-san;
Yeah, housing has dropped 14%. It’s still overpriced by about 20/25%. Or, that’s my understanding from looking at the charts of inflation and housing costs. (Think tulip-mania). Housing and inflation lines began to diverge back in the early 90′s.
When your “new fangled mortgage” could be the same or less than rent, WTF, buy! Others, the smart ones, were working the angles with re-financed money so they could “flip that house”.
Curse both their houses! They are deserving of the hair-cut they are getting. May each have sand in their vasoline! When you gamble and lose, you have lost. If you borrow money and gamble with it and lose, well, in my part of the world, your legs get broken in four or five places.
Ultimately, the “real price” has to be found. More artificiality in the form of any government intervention will only distort and prolong that “real price”.
My Dad, an old fashioned doctor used to muse that when a patient’s problem was “treated”, that meant a long term income stream. (Lots of tongue clucking and expensive salves). If you cured that patient, well, you got paid, got a card every christmas with enclosed pictures and maybe a flat or two of home-made raviolis delivered to your front door on Thanksgiving. (He liked the second way)
And oil, by-the-way, is dropping. Will it get to 50/60 bucks a barrel? Depends on us.
The bullskat out of Washington and the MSM is getting deeper by the minute. This will only hurt those totally financially irresponsible. Or the greedy.
Would that I was 20 years younger and could trot through congress with a machete.
Keep your powder dry.

By: Scott

Scott — Thu, 02 Oct 2008 14:40:14 +0000

Flit — I recognize Glass-Stegall repeal is an article of faith on the left, but on closer examination, that idea is more of a political ALE-47. By 1999, the Act was OBE — securities firms were offering depository accounts, international banks were buying in to U.S. securities dealers (Sumitomo bought a large stake in Goldman, Sachs in 1986 — something a U.S. bank could not do), etc. In fact, as a 2000 study from the Comptroller of the Currency said:

Since the barriers that separated banking from other financial activities have been crumbling for some time, GLBA (Gramm-Leach-Bliley Act — the repeal act) is better viewed as ratifying, rather than revolutionizing, the practice of banking.

As Michael Flynn says, there are six linked causes of this mess :

Mortgage-backed securities
Post 2001 Fed weak money policy
Fannie Mae and Freddie Mac accounting irregularities
Failure to reform Fannie and Freddie, and a subsequent rush into subprime lending
Slowing of the housing market (once they ran out of greater fools), unravelling the required continual appreciation model of subprime lending
Bank investments in MBSs were suddenly worthless (due in part to FASB 107), reducing capital below regulatory limits, and curtailing lending

It wasn’t GLBA that made banks carry MBSs as investment grade securities. Indeed, it was the failure of the SEC to insist upon adequate capitalization of those MBS, which should be laid at Chris Cox’s feet — McCain was right to call for his resignation. In fact, the board of the SEC, split between Democrats and Republicans, should have raised the warning flag long ago concerning the high levels of leverage in the MBSs.

So, there is more than enough blame to go around on both sides. What is most troubling, is the determination to gain partisan political advantage from this, symbolized by Dear Leader Pelosi’s corrosive, borderline irrational speech just before the House vote. Furthermore, the Dear Leader, who let House committees spend the last two years looking into every *hit house rumor concerning the Bush adminstration, doesn’t appear too interested in finding out how to prevent this from happening again.

Further, according to House Oversight Committee staff, Emanuel has received assurances from Pelosi that she will not allow what he termed a “witch hunt” to take place during the next Congressional session over the role Fannie Mae and Freddie Mac played in the economic crisis.

Emanuel apparently is concerned the roles former Clinton Administration members may have played in the mortgage industry collapse could be politically — or worse, if the Department of Justice had its way, legally — treacherous for many.

By: Snake Eater

Snake Eater — Thu, 02 Oct 2008 14:29:41 +0000

Hey listen up… all you Milton Friedman wanna-bees I need some advice on a pressing issue that you all just might be quilified to comment upon…here it is…

I received a credit card solicitation yesterday for a so-called ” Business Card”… the terms were …

0% fixed APR until January 1, 2010, on balances transferred ( from other credit cards) NOW;
3% cash back on busines essentials;

1% on other purchases;

a credit line up to $ 33,000.00; and no annual fee… Oh and I almost forgot the solicitation came from Washington Mutual ( a/k/a Wa-Mu) …should I apply ? Best

By: Skippy-san

Skippy-san — Thu, 02 Oct 2008 13:12:52 +0000

Pixiekiller,

I’m not so sure the problem is fixing itself. Home prices are still falling, stock market can be considered down an overall 14% from the begining of the year 2008. And wait till the unemployment report comes out.

The only way I can see it fixing itself would be if oil dropped by 50%. Which could happen over the long term-but its gonna be painful getting there.

By: BMG Mike

BMG Mike — Thu, 02 Oct 2008 12:50:44 +0000

“Here endeth the lesson”? I don’t really think so!
There will be a “bailout” that will not benefit the taxpayer one whit. The Bureau of Printing and Engraving will need to work a few overtime shifts to print up the $1 trillion (more or less) that this fiasco is priced at. Everyone’s wealth will become devalued in the process. Except that of the bankers.

I think that the lesson is that Congress screwed up in 1913 by abandoning its Constitutional duties to a private banking cartel, and has repeatedly screwed up in the meantime by bailing out members of said cartel when their greed blows up in their face. Taxpayers are impoverished as a result.

I doubt that the right lesson has been learned yet.

Mike

By: Pixelkiller

Pixelkiller — Thu, 02 Oct 2008 11:49:32 +0000

The longer nothing is done, the more it fixes itself. (But not necessarially in ways our betters, (representatives), would like). To me that’s what’s wonderful about capitalism. It repairs itself. If you add in pinches of marxism and dollops of socialism so as to make it fair or more fair, it never really heals. It becomes a running sore. Look to Europe. Hell, look here!
KM: your right. I saw it here in Doity Joisey too. People thought trees grew to the sky. (I have a good friend who, if he sold “the condo” in Florida today would have to bring 175 grand to the closing)
Filterman: Since 1994 when the Republicans took over, the Democrats have worked diligently to polarize the country. (They lost so they took their ball and went home). In 2000 when Bush won it got worse, (selected, not elected, etc), and they have played their silly little political games ever since. (They’re still doing it. Look at the Senate bill! The original request from the Treasury was 3 pages. Now, it’s a novel).
I think there’s plenty of blame to go around, but the original cancers were from Carter and Clinton.
John: I think you’re correct. We hang them after the trial. Unfortunately it wont happen. Even after this their “subjects” will still vote for them. WTF, there are a lot of really stupid subjects scattered about. (Once found, nurtured and made dependant that is. I’m thinking of Tom Lear’s old song, The Old Dope Peddler.
Damn! Am I really that old?)
Good luck to us all.