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Old 07-16-2008, 02:16 PM   #76
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Can I mention here how much I love my credit union?
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Old 07-22-2008, 08:27 PM   #77
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Great.

Genius over here decides THIS is the time to have a kid.
Don't worry. Some of the most interesting people I've ever met in my life grew up as kids in the 1930's depression.
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Old 09-03-2008, 01:34 PM   #78
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SEC accuses 2 brokers of $1B subprime fraud - Yahoo! News
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Old 09-06-2008, 07:05 AM   #79
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WASHINGTON -- The Treasury Department is putting the finishing touches to a plan designed to shore up Fannie Mae and Freddie Mac, according to people familiar with the matter, a move that would essentially result in a government takeover of the mortgage giants.

The plan is expected to involve putting the two companies into the conservatorship of their regulator, the Federal Housing Finance Agency, said several people familiar with the matter. That would mean the government would take the reins of the companies, at least temporarily.

It is also expected to involve the government injecting capital into Fannie and Freddie. That could happen gradually on a quarter-by-quarter basis, rather than in a single move, one person familiar with the matter said.
U.S. Near Deal on Fannie, Freddie - WSJ.com

So taxpayers get to foot the bill to help bail out banks, and non-homeowners get to bail out homeowners with loans up to $730k - wonderful.
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Old 09-06-2008, 10:09 AM   #80
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So taxpayers get to foot the bill to help bail out banks, and non-homeowners get to bail out homeowners with loans up to $730k - wonderful.
Unfortunately, there's no alternative. Their corporate bonds are treated like government bonds by other foreign government investors, and to let these bonds evaporate in case of a bankruptcy would be tremendously damaging to our economy.

That's why I when people say that we should "run the U.S. government like a business." We can't declare bankruptcy or merge with a larger government when our idiot businessmen mismanage us into insolvency--although Bush seems incredibly determined to test that theory.
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Old 09-06-2008, 01:13 PM   #81
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Their corporate bonds are treated like government bonds by other foreign government investors, and to let these bonds evaporate in case of a bankruptcy would be tremendously damaging to our economy.
The bond prospectuses say that they are not government-backed. China lost a lot already in treasuries when the dollar tanked. Bank profits are privatized, but losses are socialized - I guess that's the part that gets me riled up.
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Old 09-06-2008, 01:26 PM   #82
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The bond prospectuses say that they are not government-backed.
You are correct, but it doesn't change the fact that it has been treated that way, because it has been presumed that the government would bail them out in case of insolvency. The international fallout would be tremendous if the government did not bail them out.

A "moral hazard"? You bet. Our businesses are in a very sad state of affairs, and I blame our "business leaders" for making them fat, inefficient, and highly entitled. And now they're all on welfare these days. So much for "personal responsibility."
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Old 09-06-2008, 02:01 PM   #83
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Interestingly, the Chinese central bank has been hammered so hard on their foreign bonds that they are now in need of a capital infusion:

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Main Bank of China Is in Need of Capital

HONG KONG — China’s central bank is in a bind.

It has been on a buying binge in the United States over the last seven years, snapping up roughly $1 trillion worth of Treasury bonds and mortgage-backed debt issued by Fannie Mae and Freddie Mac.

Those investments have been declining sharply in value when converted from dollars into the strong yuan, casting a spotlight on the central bank’s tiny capital base. The bank’s capital, just $3.2 billion, has not grown during the buying spree, despite private warnings from the International Monetary Fund.
http://www.nytimes.com/2008/09/05/bu...q=china&st=cse
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Old 09-06-2008, 06:56 PM   #84
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Melon in another thread mentioned the possibility of a Japanese style deflationary period. I agree that this is a possibility. I personally think it's more likely than not, but not a certainty. On the other hand, we could end up with monetization-induced stagflation or even recessflation or hyperinflation. I really don't know at this point.
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Old 09-06-2008, 07:03 PM   #85
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U.S. Near Deal on Fannie, Freddie - WSJ.com

So taxpayers get to foot the bill to help bail out banks, and non-homeowners get to bail out homeowners with loans up to $730k - wonderful.
What a mess, eh?

While everyone has sympathy with people who lose their homes, I tend to think that walking away from mortgage debt obligations is too easy in the US, at least in some states. If I understand it correctly, mortgagees who find that value of their home is less than the mortgage can simply 'hand the keys back to the bank' and though it would affect their credit record that would only be for a few years.

So there's actually an incentive even for people who CAN repay their mortgages to hand the keys back to the bank if they are in negative equity and let the bank take the hit. Come to think of it, it could be seen as another example of moral hazard.

In the UK and Ireland, it is much more difficult. I have heard of cases of Irish people who walked away from mortgages in the UK during the early 1990's property market crash and moved back to Ireland, but the banks were still able to pursue them in the courts in Ireland for the unmet balance, as some of the UK banks have Irish operations.
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Old 09-06-2008, 07:07 PM   #86
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Melon in another thread mentioned the possibility of a Japanese style deflationary period. I agree that this is a possibility. I personally think it's more likely than not, but not a certainty. On the other hand, we could end up with monetization-induced stagflation or even recessflation or hyperinflation. I really don't know at this point.
I tend to lean towards a period of stagflation
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Old 09-06-2008, 07:09 PM   #87
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I tend to lean towards a period of stagflation
That is the least worst possibility at this point, in my opinion. Most of the alternatives are worse.
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Old 09-06-2008, 07:14 PM   #88
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That is the least worst possibility at this point, in my opinion. Most of the alternatives are worse.
I totaly agree.
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Old 09-06-2008, 07:17 PM   #89
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You are correct, but it doesn't change the fact that it has been treated that way, because it has been presumed that the government would bail them out in case of insolvency. The international fallout would be tremendous if the government did not bail them out.

A "moral hazard"? You bet. Our businesses are in a very sad state of affairs, and I blame our "business leaders" for making them fat, inefficient, and highly entitled. And now they're all on welfare these days. So much for "personal responsibility."
Bail Out!!! Thank you J.P. Morgan and The Rockefellers
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Old 09-06-2008, 07:33 PM   #90
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What a mess, eh?

In the UK and Ireland, it is much more difficult. I have heard of cases of Irish people who walked away from mortgages in the UK during the early 1990's property market crash and moved back to Ireland, but the banks were still able to pursue them in the courts in Ireland for the unmet balance, as some of the UK banks have Irish operations.
Dang. I wonder if something like that over here would've made the people who took out the expensive mortgages they couldn't afford think twice about it before they did it.
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