The following post from the Mark to Market forum at Capitalstool.com probably expresses the frustrations that so many have toward this government deal to delay the resets on subprime mortgages for 5 years. It was posted last night by Hausbare. Here it is, in its full unexpurgated, glory. By the way, neither I, nor the other writers or staff of The Wall Street Examiner, necessarily share in this opinion. They are those of the writers only. We’d love to see your comments too.
Wow!
Aren’t we lucky to live in a Democracy where Free Mkt Capitalists can
lobby for Communism?!Shrub is turning into a “Compassionate Socialist” and Christ only knows
what Hillary is turning into. Suddenly, they’re conceptually aligned.
Both are wanting to interfere with said free markets and change deals in mid stream. Hillary is good at this — remember White Water?
And let’s not forget our collective guilt as racists and welcome the most unabashed
free marketer — or should I say — extortionist to Wall St on the 10th, none other than the REVEREND JESSE JACKSON. He will be marching on Wall St in protest
of his disenfranchised minions demanding Mortgage Reparations!So Shrub is leaning toward Communism, Hillary toward…. Theocracy or maybe Sheocracy, and Jesse toward organized crime… HEY kinda like Wall St!
Supposedly, Shrub has reached an agreement with U.S. Bankers of some sort.
Hillary’s plan — not to be out done — is “voluntary”. Wonder if Shrub’s is “voluntary.”And will he/she/they decree that this is a Marshall Law thing so that law suits cannot be filed in time of national emergency or some such thing?
And supposedly this will not effect anyone monetarily — in a bad way.
Maybe they’ll use the half billion dollars they gave to Hurricane Katrina victims
for emergency relief, which said victims squandered on booze, smokes, tattoos, and gambling. (Uncle Sam is trying to track down the miscreants and get his money back, so he can give it to the Mortgage Victims, who will HONESTLY represent themselves as victimized and traumatized when they apply for the Teaser Rate Relief.)I guess they’ll have to set up a new bureacracy to run this thing, and won’t they have to have hearings on this in Congress? Or will it be where Shrub can shoot first and be asked questions later.
And just think, its all happening around Christmas time. (I don’t mean to offend anyone by saying Christmas)…. er … around Winter Solstace Time.
Kumbaya!!!
Is this a great country or WHAT?
I have previously made my opinion known that the deal is much ado about nothing. It should fall apart within days. It’s unenforceable, will result in additional writedowns, trigger countless lawsuits, and the simple announcement of the deal will reduce the mortgage market to a shambles. The secondary mortgage market will cease to function. How do you price this stuff if the government can force a change of terms at will?
I would just add this. Anyone who sold mortgage paper that carried a coupon escalating to 13% obviously knew that they were fleecing the borrower.
Anyone who bought this paper deserves whatever losses they suffer. The whole process of suckering weak credits into this toxic garbage was a crime. Mass theft on the greatest scale in history.
The mortgage bankers who created, sold and packaged this crap should all go to jail.
Morally, modifying the terms to reverse the devastating effects of this crime may be the right thing to do. The creators and holders of this toxic junk deserve whatever losses they suffer. Willful ignorance is not an excuse. The practical effect–everybody loses and the markets have been and will continue to be devastated– is simple proof of the maxim, “What goes around, comes around”, or even better, “You get what you pay for.”
Let the prosecutions begin. Hopefully, the banker/criminals who originally created this stuff will not get off scot-free.
The point is that everybody involved is to blame. The home buyer who overstated there income, or assumed they would just be able to refinance in a year when their home price doubled. The appraiser who was little more than a rubber stamp. The Mortgage broker who at best looked the other way, while the fraudulent mortgage application was filed, and more likely encouraged and advised on the fraud. The banks who apparently thought securitization was the holy grail and free money, and failed (or willfully ignored) the risks. The buyers of these securities were sophisticated investors who should have been able to assess the risk. Information on these risks was readily available, but people who raised these risks were laughed at. (Just watch Kudlow and Company any night to see this, as they still are laughing at ANY risks)…
I am not advocating throwing people out of their homes, but it is a question of responsibility. And the actions proposed will merely ensure that any resolution is postponed. The moral hazard is a real issue, and should not dismissed lightly. Every problem has become far more significant, as we roll over our sins, pushing the out like a giant snow ball gaining size.
This bailout punishes the person who saved and watched their spending to afford their home and rewards the person who abuses credit and takes no responsibility. Not a good precedent and not a way to maintain a strong economy. It is the personal version of “guns and butter”.
VOTE RON PAUL
these housing shenanigans have been going on for years and i am incredibly relieved to see it finally blow up. This is the classic theological argument: Everyone is to blame therefore no one can be blamed. But that’s not the case. People who saved, people who didn’t buy houses, and funds that didn’t buy toxic waste or fishy CDOs were absolutely not to blame. Obviously anyone–be they a borrower or a lender of a genius investment banker–who gets bailed out essentially gets the all-clear to do this, all over again.
The moral hazard is literally outrageous. I cannot express my anger in words. It’s utterly absurd. Maybe next we can get a bailout program for credit card debt. All I can say is that bubbles always burst, the Ponzi scammers always get the press to come out with “This time it is different” stories–remember “the New Economy”?–and the return to trend is a bitch. See you subprime lenders on the pink sheets.
Lee, I share many of the feelings expressed in the passage you quoted, although I stop short of the “if we could just get government out of the picture, the market would do everything right” assumption that seems to lie behind it. Instead of facilitating this travesty, our government could and should have played a major role in keeping it from happening.
But I agree COMPLETELY with your comments. The people who knowingly bought this stuff deserve the losses they’re likely to suffer, and the people who created it belong in jail.
The “silent majority of honest hard working Americans” are “sick and tired of those liberals” using the “power of the Federal Government” to impose “their regulations” on the “honest hard working middle class AMERICANS – who WORK for a living instead of living off of welfare, like those people”.
True Republicans KNOW that “those liberals” are “anti business (and hate the troop)” and use the “power of the Federal Government to stifle innovation” which is “necessary to keep the US the greatest and most powerful nation in the universe”. Only with “deregulation” can the “honest hardworking AMERICANS” use “free enterprise” to “better THEMSELVES (unlike those welfare queens that live off the tax money of the hard-working AMERICAN middle-class – who WORK for a living, instead of living off welfare like those people)”. And, by “cutting taxes on the honest hardworking AMERICAN middle-class” they will get to “keep their OWN money” instead of giving it to “THOSE people” because “THOSE liberals think they know how to spend your money better than YOU do.”
Only by reducing the power of the Federal Government can this great nation AGAIN be freed from the oppressiveness of “those liberals”. Only “economic freedom” will show WHO are the “most fit to survive”, unlike “those liberals” that use the “power of the Federal Government” to keep “THOSE welfare queens” alive.
The deeper problem, for which there is unfortunately no near term solution, is that a large percentage of Americans are financially illiterate and/or too lazy to closely investigate their finances.
Take Megan’s comment here from the CNBC reactions to this story:
http://www.cnbc.com/id/22129130
I bought my home at the age of 21 in 2005 with an adjustable rate mortgage. Because of my age, both banks and mortgage brokers suggested an ARM. The advice was that by the time my rate was scheduled to adjust I could refinance because of a longer credit history and the fact that my home’s value would increase. This would have worked fine except that my home value has decreased substantially. I guess buying a home at the age of 21, always paying my payments on time, and taking the advice of lenders is considered irresponsible and I’m disappointed in those who describe everyone in this situation as such. The only people who don’t deserve any help are those who are so cruel as to want to leave the rest of us out in the cold.”
Now, here’s the dilemma. I understand Megan’s predicament, but I specifically did not buy a house in the last few years because every “What Can You Afford?” model I saw assumed a 5-10% YOY increase in prices. That was ridiculous, but it seemed like a standard way of measuring affordability.
So in a sense, Megan got suckered. But in another sense, anyone who looked closely at the numbers knew they didn’t stand up. So why is the latter person being required to subsidize the former?
The deeper problem, for which there is unfortunately no near term solution, is that a large percentage of Americans are financially illiterate and/or too lazy to closely investigate their finances.
Take Megan’s comment here from the CNBC reactions to this story:
http://www.cnbc.com/id/22129130
I bought my home at the age of 21 in 2005 with an adjustable rate mortgage. Because of my age, both banks and mortgage brokers suggested an ARM. The advice was that by the time my rate was scheduled to adjust I could refinance because of a longer credit history and the fact that my home’s value would increase. This would have worked fine except that my home value has decreased substantially. I guess buying a home at the age of 21, always paying my payments on time, and taking the advice of lenders is considered irresponsible and I’m disappointed in those who describe everyone in this situation as such. The only people who don’t deserve any help are those who are so cruel as to want to leave the rest of us out in the cold.”
Now, here’s the dilemma. I understand Megan’s predicament, but I specifically did not buy a house in the last few years because every “What Can You Afford?” model I saw assumed a 5-10% YOY increase in prices. That was ridiculous, but it seemed like a standard way of measuring affordability.
So in a sense, Megan got suckered. But in another sense, anyone who looked closely at the numbers knew they didn’t stand up. So why is the latter person being required to subsidize the former?
Bill Gross has appeared on TV raving that the housing bubble bubble MUST be re-inflated by slashing rates — no matter what the cost to savers.
This “plan” is yet another POS offered up by this garbage administration.
The inmates are truly running the asylum.
Check – make that Goldman, they head key administrative posts, they head the NYSE/Euronext, and now their latest coupe is their take over of Merrill Lynch as John Thain moves over there. Should be fun to watch him provide his old buddy’s at Goldman insight into Merrill’s books so that they can sink Merrill by taking the other side of their trades and putting them into bankruptcy/liquidation.
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Paulson: Hey Mr. MBS investor we are going to allow the scumbags that bought the house you hold as collateral to put off the rate reset for another 5-years. The loan that is paying you 7.125% will stay there until 2012 instead of resetting to 13.25% in March 2008.
MBS Investor: WTF?!?!?!?! Are you phucking out of your mind?!?!?!? If these scumbags can’t pay the reset now with their income as maid and taxi cab drivers what makes you think they will be able to make the reset in 5-years? And by then the house that was financed for $700,000 will probably be worth only $250,000. I’d rather forclose today and get 75% of $700,000 than 100% of $250,000 5 years from now. Plus the place is gonna get trashed in the meantime!!!
Paulson: Well, nothing makes me think that. But by then I will be out of the POS job being jacked-off by this moronic president. As promised when I left Goldman they will take me back or get me a job as head of a major money center bank.
MBS Investor: You g-damn azzhole!!!
Paulson: Uh. Blow-me! BWAAAHAHAHAHHA