dagblog - Comments for "The Republican Suicide Strategy"

The point wasn't thata they

PeraclesPlease — Tue, 08 Jan 2013 14:22:39 +0000

In reply to Then we will have to agree to

The point wasn't thata they didn't co-sign unsecured mortgages. It's that these were a small part of the problem - institutional defaults were much greater. But it's easy to talk about poor people in ghettoes defaulting than speculators and banks defaulting and government bailing out banks that were trading in worthless assets. I'm not saying you blame them, but you're quick to talk about "those who didn't work", whether for mortgages or social security.

Some used their mortgages as an easy bank loan - stupid - and others thought refinancing with variable rates was risk-free - also stupid. But people who were keeping up on their mortgages until the huge economic crash hit aren't terribly guilty, whether they put down a down-payment or not. They didn't push the fed to print low-interest money, they didn't ask for an unfunded war in Iraq to spike oil prices and kill auto sales & jobs, they didn't tell the administration not to monitor banks & insurance companies and the stock exchange as all sorts of malfeasance was going on, they didn't tell Congress to check out and stop doing their job. If you'd had a job for 15 years and suddenly the worst crisis since 1929 hits because of assholes in Washington, how much are you to blame for lack of foresightedness? If the housing bubble popped and you didn't have a variable interest mortgage, it didn't matter. If you lost your job along with 20 million others, it doesn't much matter what kind of mortgage you had.

Illegally repossessed homes sadly were not a small percentage of the total. And while the individual is responsible, so are banks - why so much money went to Goldman Sachs and Citibank and GMAC/Cerberus, but the HAMP program for homeowners was such crap that almost no one used it? If we're all going to suffer, then let's all suffer. Instead we have simple class warfare, and the bankers had an open door to the White House and Congress. We bailed out Fannie Mae, who'd been ruthlessly lobbying Congress since the 90's, but we leave individuals who were blind-sided on the hook.

It's also worth noting that homeowners are paying banks almost pure interest the 1st 10 years. Even an unsecured mortgage - what does it matter? There's almost no risk to the bank - they just take the property on default. The homeowner's paid her mortgage for how many years, so the bank's made a profit. The only problem is that the banks and the Fed had built up the housing bubble over a decade, so houses really weren't worth that much. But consumers paid excess mortgage payments on that inflated property - excess profit to banks - but when the great shithouse as Atrius calls it came tumbling down, houses reverted to real value and mortgage companies then had to write down that inflated price. Like musical chairs, some got left without a seat, but they'd already ripped off their profits in the preceding decade. But in any Ponzi scheme, someone held the bag - the taxpayer.

Well anonymous, you're

ocean-kat — Tue, 08 Jan 2013 08:41:55 +0000

In reply to You raise great points. So

Well anonymous, you're obviously right when you say we would not have had a housing bubble and crash if hadn't changed our conventional loan model. And you are right as well to say that the government was "cosigning" loans, mostly by Freddie and Fannie.buying subprime loans. That was certainly part of the problem and democratic politicians have to take some blame for that. It was mostly a democratic program. Though Bush was just as aggressive in pushing Freddie to buy up those subprime loans as democrats in the name of his compassionate conservative message. But I don't think it was the largest part of the problem.

From my reading only about 20% of the subprime loans were held by Freddie and Fannie. So while part of the problem it wasn't the largest part of the problem. 80% were on the private market and not insured by the government, So why were private banks, investment firms, and private investors buying these toxic assets?

Imo the main cause of the housing bubble and crash was the repeal of Glass Steagle. Over about a dozen years with a few bills congress gutted most of it. We passed legislation allowing bank mergers and started the process of too big to fail. We stopped regulating loans and the banks created adjustable rate mortgages and other risky mortgages. Then we allowed banks and investment firms to merge.

Banks didn't care about the solvency of the borrower when they were going to sell them to and investment firm, make a profit, and no longer carry them on their books. Investment firms bundled subprime loans with higher rated loans, got rating agencies to rate these mixed bundle of loans triple A, and sold them to investors.

I could go on about how this scam spiraled out of control but the fundamental issue was not the problem caused by the small amount of subprime loans insured by the government but the 80% of subprime loans on the private market brought about by deregulation, specifically the end of Glass Steagle.

That link is so

Resistance — Tue, 08 Jan 2013 03:27:13 +0000

In reply to No, they didn't "work the

That link is so enlightening.

I hope others appreciate the work you do, when finding these gems.

I've already emailed the previous link, discussing the Tarp Program to many of my email friends and look forward to passing this particular link on, also.

Thanks again.

I always thought the idea of

Resistance — Tue, 08 Jan 2013 03:04:02 +0000

In reply to Then we will have to agree to

I always thought the idea of letting people own houses, was a heck of a lot better than constructing public housing; where they eventually ended up being a blight and crime ridden.

I still believe it would have been better, but the greedy bastards, ruined that ideal.

Now they don't care what happens to the poor.

Now those who benefited most, by the bailout can prove Government doesn't work for the people; but it sure does work for the well connected.

The government of, by, and for the people had a choice to make

"To small to succeed" or "Too big to fail" and the rest is history, if you can dig deep enough; it turned into, "Too big to pass up" .

Why weren't the homeowners offered interest rates as low as 1/2 percent ?

But I do understand the concept of hard work and reward, if the bankers and our government wouldn't have picked the winners.

Winners who "will gladly donate to your reelection, since you were so helpful"

Then we will have to agree to

Anonymous — Mon, 07 Jan 2013 23:58:51 +0000

In reply to Yes, disagree - there would

Then we will have to agree to disagree. Why was the a housing bubble in the first place? The government co-signed on loans for people who would not otherwise qualify. This created thousands of new home buyers lured in with no income verification and zero down. This artificially drove up home prices (and as you correctly point out rents as well). If everyone would have had to qualify and put 20% down, there is no bubble because there is no spike in demand driving prices up. The bubble can't burst if it never starts. Yes, in a good economy prices go up, in a poor economy they go down, but the 20% equity usually prevents people from being underwater.

I am sure that there were some home illegally repossessed, but this has to be a tiny fraction of the mortgage defaults.

TARP is a joke, the controls are absurd, and none of this money should have been authorized the way it was nor spend the way it was spent. I am not demonizing the poor. But I am demonizing the people who I know who purchased a home they could not afford, took out the equity to buy new cars and other things they could not afford, and they cried foul when the economy turned and they "lost" their home. They were irresponsible, isn't there some point in time where the individual is responsible for their own situation?

No, they didn't "work the

PeraclesPlease — Mon, 07 Jan 2013 21:11:17 +0000

In reply to I never said the banks got

No, they didn't "work the system the government put in place"- they wrote the system the government put in place. Heads of Citigroup & Goldman Sachs & JP Morgan were sitting in the White House and Congress putting pen to paper. They paid for the representatives, they paid for the executive branch, they paid for access, they got their heads like Paulson and Summers and Geithner - all industry men - lining it right up for them, whether under Bush or Obama. Along comes Steve Rattner - financial, not auto go - not just to bankrupt & restructure GM & Chrysler, but to fully prop up their financial arms, including Cerberus/Chrysler Financial that had gutted Chrysler to walk away with 100 cents on the dollar. What a sweetheart deal, $22billion payday. Yikes.

And then Rattner fired the guys who knew about how to make cars. All the tough restructuring over 10 years trumped by a quick bankruptcy execution. With the mistakes not to appear for another 4 years.That's one reason it's hard to fight this stuff - the effects get too detached from the acts, no one really sees it.

Yes, disagree - there would

PeraclesPlease — Mon, 07 Jan 2013 20:19:09 +0000

In reply to I never said the banks got

Yes, disagree - there would have been lost jobs with defaulted homes from non-payment when the economy crashed; there still would have been illegally repossessed homes through robosignings (remember, there were people who had paid up completely who still lost their homes), and most of the housing speculators were institutions - not poor people.

Once again they made a "welfare queen" poster child that demonized poor people and hid the greed of banks with their worthless toxic assets and all sorts of subterfuge. And then when with TARP bailout the banks were supposed to use free loans to loan out to people, and use HAMP to help homeowners - it turned out to be a Potemkin Village - the banks just kept the money. MERRY CHRISTMAS!!! And the average joe/jane that lost a house had typically saved for decades to afford it. Too small to succeed vs. too big to fail. I guess if they'd been working for $4/hour they would never have hit this predicament of investing their savings into their home.

Frankly, I didn't want to own a home, but I almost had to buy one simply because the housing bubble had pushed rents up so high that it was extortion - so buying a home provided a tiny bit of a paycheck to be "saved" - presuming "saved" lasts past the next financial crash/trillion dollar theft.

"When I was younger I spent half my money on women and booze - the other half I wasted. I said after my 3rd divorce that next time I was just going to go buy a house and give it to a complete stranger. Little did I know it'd be a bank."

I never said the banks got

Anonymous — Mon, 07 Jan 2013 19:50:02 +0000

In reply to You should read the below

I never said the banks got ripped off (they worked the system the government put in place). What I said was that if every borrower was required to show income, put 20% down, and got a conventional 15 or 30 year loan, we would have never had the housing crisis. Do you disagree?

You should read the below

Resistance — Mon, 07 Jan 2013 19:29:27 +0000

In reply to You raise great points. So

You should read the below link about the TARP program,, before assuming the poor banks got robbed on home mortgages.

Twofer - insurance & Wall Street theft

http://dagblog.com/reader-blogs/twofer-insurance-wall-street-theft-15956

In Germany they're somehow

PeraclesPlease — Mon, 07 Jan 2013 19:24:15 +0000

In reply to You raise great points. So

In Germany they're somehow able to pay decent wages without losing all jobs to East Europe. Perhaps offshoring is more than rushing to the cheapest day-worker, that quality and dependability and innovation are involved?

And you miss out that US companies are happy to pay workers less, even if they're not going to outsource those jobs. Why don't we just have everyone work for $4/hour and get over it? Why shouldn't companies keep all the profit? They take all the ~~tax subsidies~~ risk (expect the risk of being thrown out on the street with your pension fund stolen - thanks Mitt).