truth!

 

Excellent! So sad but true...

 

This is definitely fishing related. If it weren't for this bubble burst and the dot.com one in 2001, I'd be retiring in two months with enough income to fish my way around the world. Instead I'll be working my way through several years of retirement.

Sg

 

Thanks for the post... it's simplified, but explains what happended exactly. Damn, I'm furious about this and the following bail-outs.

j

 

Maybe in the future people will wise up and not buy houses they can't afford. Although I do think the bank bail out is prob a good thing.

 

Maybe in the future people will wise up and not buy houses they can't afford...

You are funny. Good one! :rofl:

 

Salmo you just need to marry (or preferably live in sin with) a sugar momma and have her support your fishing and drinking habits..

 

We all need sugar mommas...

 

My scam meter is starting to creep up. I don't trust Bush or should I say Bush’s puppeteers. I can't help but think this bail out is another Bush administration way of raping the public and putting money into their cronies’ pockets. They need to get this done before Bush is out of office.

I'll likely get this thread shut down with this statement.

 

My scam meter is starting to creep up. I don't trust Bush or should I say Bush's puppeteers. I can't help but think this bail out is another Bush administration way of raping the public and putting money into their cronies' pockets. They need to get this done before Bush is out of office.

I'll likely get this thread shut down with this statement.

Joe public can't get raped. 80% of the total income tax is paid by the top 20% income earners. Joe public got to live in a big house he couldn't afford for 2 years paying a low subprime mortgage. Then re-finance and buy a motorhome. Then default on mortgage still keep the mortorhome. Then complain about the bailout when he is really not paying his share of the income taxes anyway. The fact is that its higher income earners who never participated in the subprime mess that is paying the most for this.

 

Now, Kerry. How could anybody have such a cynical attitude about the wealthy members of our society and their politicians after all they've done for us?
D

 

Of note is that an annual income of $85,000 will put you in the top 13% of wage earners in the US.

 

True but that wage level is still paying a low share of the total income tax bill. The under 110K income level still only pays under 21% of the total tax bill. I am not trying to come across as an Ahole as I am not rich...I am just pointing out that this bailout will be directly helping the under 110K crowd as they are the ones likely looking for loans for new fishing boats.

 

Thanks for the laugh, Kent. Except that this isn't very funny.

The top 20% of income earners probably voted for the assholes in Congress who enabled this to happen. Major dickheads like Phil Gramm. Don't get me goin on this. That's all I'm going to say.

 

Although I guess in some way you can blame congress for not protecting american tax payers from themselves (by allowing them to buy things they can't afford). Its still the fault of joe public who is defaulting on loans.

 

Phil Gramm, when he was a senator, authored legislation which removed (then) existing protections and regulations concerning the trading of highly risky derivatives. These regulations were installed by Congress after the Great Depression, to prevent exactly this kind of mess from happening.
We got bent over and screwed by an elephant. Could not have happened without the help of some stupid jackasses who voted for it, though. Throw 'em all out of office.

 

I'll just say this about that slideshow: mortgage bankers are given product to sell. They just didn't make up fantasy rules and produce mortgages based on their own whims. Yes, there were preditory lenders, but the majority were just doing their job... if all of these subprime loans were such a bad idea, why were they given to them to sell in the first place?

It's not just the person defaulting on the loan's fault that their home is being foreclosed on. When these zero down "arm" loans convert, the monthly payment jumps considerably. What the mortgage industry was counting on was that 1) home values would increase and 2)people would refinance before their arm expired. However, because housing prices dropped, they're often times not worth what is owed on the loan and cannot be refinanced. The homeowner is stuck and it some cases it makes more sense to just walk away.

We have no choice but to bail out our economy unless you're OK with our standard of living dropping considerably....although it's quite possible that'll happen anyway.

 

I'll just say this about that slideshow: mortgage bankers are given product to sell. They just didn't make up fantasy rules and produce mortgages based on their own whims. Yes, there were preditory lenders, but the majority were just doing their job... if all of these subprime loans were such a bad idea, why were they given to them to sell in the first place?

It's not just the person defaulting on the loan's fault that their home is being foreclosed on. When these zero down "arm" loans convert, the monthly payment jumps considerably. What the mortgage industry was counting on was that 1) home values would increase and 2)people would refinance before their arm expired. However, because housing prices dropped, they're often times not worth what is owed on the loan and cannot be refinanced. The homeowner is stuck and it some cases it makes more sense to just walk away.

We have no choice but to bail out our economy unless you're OK with our standard of living dropping considerably....although it's quite possible that'll happen anyway.

The homeowner is "stuck" because they made a bet on the future that the rest of us responsible people didn't. The rest of us locked in 30 year mortgages at a higher rate...having to buy less home and paying a higher monthly payment because we are not idiots. It is true though that the lending industry made bad bets on these mortgages as well. They are half to blame for not pricing risk properly.

 

wow I've never seen it explained better...

 

I'm pissed too. Would like to kick the SOBs that profited but I'm still not sure who exactly that is.
Saw a figure the other day indicating that the 700 number bailout would cost each family something like $3,700. (I might have that wrong.) While it just plain sucks, I'd gladly write that check in a heart beat if we could move forward quickly.
Likely not though. Lot of posturing going on. For once at least, McCain's right-on (I think) calling for an oversight committee to monitor who gets paid what. Last thing we need is another missing 700 billion like the consultant fees in Iraq. On the down side tho, any oversight committee is likely to take months to make each decision. Oh, I have an idea, lets hire a fact finding committee too....
Leaves a hole in your gut doesn't it.

 

The SOB who profited is the subprime homeowner who defaulted and the people who sold their home at the top. Also the cost of 3700 to each family is wrong. This bail out is not an expenditure. Instead the government is paying 700B and receiving the crappy mortgage debt backed by the houses. In short the government is getting an asset worth near 700B. In truth the government could likely make money on this deal depending on future home prices and forclosure rates.

 

cj - Question: How does the subprime home buyer, that walks away from a mortgage he can no longer afford, make any money? I admit high finance isn't my specialty but I don't get that.
Also, it may be that the Govt makes money once/if the subject properties go up in price. But someone paid for these properties and unless I'm missing something, that's us. I doubt seriously that even IF they go up, we'll see any profit in the form of less taxes or a rebate of some kind. There will be more important dragons to slay.
Not trying to be argumentative.

 

cj - Question: How does the subprime home buyer, that walks away from a mortgage he can no longer afford, make any money? I admit high finance isn't my specialty but I don't get that.

Sub prime home buyers didn't make any money per se. They basically just benefited from being able to own a home that they probably couldn't realistically afford at a very low interest rate. Maybe you could say that instead of "made money", they "SAVED money" by not having to pay what it really should have cost them to own that home all those years given their actual financial position. There's nothing wrong with an ARM if you have the resources to back it up when the interest rates rise. Irresponsible decisions on the part of alot of people - some who knew better and some who didn't (and probably should have) but got duped into it. Leverage can be a great tool when applied properly and responsibly.

 

Philster nailed it. Not my damn problem if you live beyond your means. Bailing out the economy is simply putting the entire country further in debt to finance peoples ridiculous spending.

 

Philster, I think you are my hero.

Yeah, I know I am a RDCP. I have been in touch with the people that bought my house. As a matter of fact I picked up the majority portion of a $5,000.00 tab for a sewer connection that I could have just as easily forced thier title company to pay. Being mostly honest does have its drawbacks. I don't know how they are going to fair with the current mortgage crisis but they are using the house to run a small business and I think they are savy enough to protect themselves. I believe they may have a few more options open then many other have.

 

Philster, I think you are my hero.

I know the world needs Heroes right now, but neither Barrack, McCain, or Philster qualify

 

I doubt Kerry lobbied congress for the deregulation that created the bubble that he took advantage of. I see a large difference there.

I wish that we had a leader in place that I had some confidence in to come up with a better fix then to hand 700 Billion to Paulsen to dole out as he sees fit, with oversight being illegal and no idea how to keep this from repeating itself. Unfortunately we have a same leader who never saw a deregulatory scheme he disliked. To make this worse, congress has little power here because of the general scare that is going on and an election in November.

There are deregulators who always trumpet that the market will correct itself, that there is no need for financial regulation (or any other type). Well, the market is doing just that, corecting itself. This banking crash hurts a bit too much for the nation to buy into the "market always works" philosophy again.

The godess of deregulation likely won't bite me too hard given my age, stage and employment but it will be a bitch for my generation to pay the debt service on a 700 billion dollar bail out.


Sox are in,
cds

 

I doubt Kerry lobbied congress for the deregulation that created the bubble that he took advantage of. I see a large difference there.

There are deregulators who always trumpet that the market will correct itself, that there is no need for financial regulation (or any other type). Well, the market is doing just that, corecting itself. This banking crash hurts a bit too much for the nation to buy into the "market always works" philosophy again.

I was merely pointing out that throughout history there are those who drive bad things, and the rest of us who criticize them, but often ride on their coattails:rofl: Lets say you didn't put Japanese-Americans in camps but you did buy property they owned at a low price. Still bad right?

Kerry didn't do anything evil like that by any means. He simply bought cheap, improved the property, and sold high, taking a considerable personal risk with the loan he took to finance it. Now karmically did he deserve $100,000 for his efforts while folks are starving in Haiti? Of course not. Did I karmically deserve it when I sold my first home for 50% more than I paid for it after owning it for 6 years without major improvement? Of course not. For both of us it was right place, right time, and if anything he deserved it more because he probably did bust his ass. But that's what we got, and we both took advantage of every litte tax code loophole "Bad" people lobbyed for when we did to avoid paying "our fair share of taxes". We both could have taken steps to pay more taxes, or donate a large percentage of our money, but at least I didn't. Kerry may have!

I'm just saying if you have profited considerably from the rules, criticizing those who have profited more is a slightly dishonest action, probably containing some jealousy.

 

The lucky wise people who simply sold their homes at the top had their eyes open. I would not call them SOBS. The liars on both sides of the game trying to get in on the action were all SOBs, though.
This "housing bubble" had to pop. It was turning into a "mania." All the buyers late to the game were blinded by greed...they wanted to get in on the hot action and make some profit. The lenders wanted to profit off this. Everybody was bending the rules or lying to each other, wanting to "qualify" the buyer for getting a loan, and "everybody gets rich."

What I can't believe is all the expensive maxed-out McMansions that went up all over the place.
All bubbles eventually must burst. Most knew this one would. I could see prices getting way too high around my area...old beach cabins and mildew palaces being spiffed up and sold for 3 or 4 times what they were going for only 10 years ago. Cashing in while the getting was good.
This is why we hate and need the govt. regulation. It helps to protect us (on both sides of a deal) from our own greed.

One of my friends refinanced and got out of his ARM, wangling a 15 year fixed rate in the mid 6% range. The bank tried to screw him during the negotiations, suddenly telling him that they were ceasing to offer fixed rate refis at the rate they originally agreed upon, but he held firm to the bank's original agreements and insisted they stick to the original deal. The bank tried to bully him and gave him a line of bullshit, but my friend wouldn't buy into it. The bank finally caved in, but told him not to tell anyone else about it. They were doing their damnedest to keep people locked into their ARMs. The greed...the greed....

 

I just read what Philster wrote while I was writing. i agree, except that I like to think of myself as a "yellow running dog of capitalism." I don't feel like a pig at all.

 

Maybe my scale and mirror are conspiring against me... I feel quite pig-like at the moment...

 

 

I'll use my stepdad as an example of why this annoys me.

My stepdad took a financial risk and opened up a business. It did well. He didn't get rich, but he made a living.

My problem is that the people who caused the sub-prime problems (CEO's , executives, and brokers who were paid based on how many loans they could make) are getting all the profits (look at 2006 and 2007 CEO pay at all the companies we are now saving) but taking none of the risk. That isn't capitalism any more. If the people making the money aren't the ones taking the risk, then you are in a socialist system. The few in power get rich off the backs of the many who work.

One of the most basic tenants of capitalism is that if you think you can do something better you can get rich. If you fail, you go broke. The CEO's and stockholders of these companies are now getting their asses saved even though they were stupid and greedy. In comparison, what happened to my stepdad when his (previously successful) business had to close because raw material prices rose far past what he could absorb (a risk you always have to deal with when you are running a business)?

Nobody gives a shit. That's what happens. And now he is auctioning his equipment while my tax money is going to save companies that were wrecked by men making millions and millions every year.

It isn't red vs blue in this country, that is a load of crap that the politicians pray we will keep swallowing. It's rich vs poor. Industry vs the individual. Corporate welfare costs in this country dwarf what we spend on social welfare. Nobody in Washington DC gives a piss about you as long as you keep fighting with your neighbor about gay people getting married and stem cell research. We let ourselves be distracted and the politicians keep robbing us. It's the American way.

 

Josh, Great post! i agree with your assessment completely. These financial institutions should be allowed to fail. This bailout proposal is socialism by any other name, and verging on fascism.
Any executives that made lousy, risky decisions for any of these financial institutions should be required to give all of their bonus back. No golden parachutes. Why should they skate with our dough? Where do think those extra "points" on your loans went to? Some of it paid for commissions and bonuses for these robbers.

I just viewed a vid on Yahoo Finance with some talking heads suggesting we take the route Sweden did when they were faced with a similar crisis. No bailout. Make the lending institutions bite the bullet and write down their bad loans and go from there.
This isn't Sweden, and it might not work the same here.

I just had a thought: Any corporations that might need to raise capital might have to issue more shares of stock if they can't get a loan. This will be dilutive to the company's stock price. If you own shares of any company that is carrying a lot of debt already, and has no free cash flow, lookout! They won't be able to borrow any money for their needs.
My market observations lately lead me to conclude that the big money is still using every ralley attempt to sell their positions. They can't just liquidate all at once without crashing the price of the stock being liquidated. It takes a while for these funds to unwind a large position. Whenever "joe public" investors bail out of mutual funds, the fund managers must return them their money. Sometimes, the funds must sell even good, fairly valued stocks to raise the capital, if the fund is being vacated by enough fleeing investors. They have to raise the cash somehow. This "redemption selling" on a massive scale will (and has been doing so) drag down the entire market.
Individual investors with relatively small positions, can just hit the sell button and go to 100% cash until there is some clarity about what's going to happen with all of this, and thus protect their capital. I missed a good opportunity to do just that several times this year, the last one being on Friday. :beathead: Late April would have been skookum! But I like to trade...and still have some skin in the game. I see road rash in my future.
Perhaps this suddenly announced bailout plan was issued to head off the panic that was affecting the markets last week, to allow the big money a chance to liquidate some more before the value of their total assets declines any further. The market sure did pop on the announcement, but now it is selling off again.

I'm sort of a CFA, but that stands for Certifiable Fish Aholic

 

Salmo, I was planning on retiring shortly, too, but alas, my 401K is looking sad. However, Sen. McCain has a new economic plan I'm looking into that may save me.
http://www.theonion.com/content/video/mccain_s_economic_plan_for_nation

 

Hmmm...guess I'm not feeling inspired to comment on said crisis or the bailout thingy. Will say it's a bit more complex than our understanding in most cases (self included). I'm no more fond of it than the next guy but anyone fed up with the ol' American way, there's the door.....I'm positive your quality of life would be greatly enhanced elsewhere. Anyone?......anyone?......really?......no takers?......wow, shocking.

We really do have it rough...best lifestyle on the planet plus freedom of speech to boot so we can complain about it. God bless us all.

Anyhow, never mind the crap...just wanted a turn at the spoon. Where's the fun if you can't grab it and stir. BTW, I loved the cartoon.

Next!...

 

Hmmm...guess I'm not feeling inspired to comment on said crisis or the bailout thingy. Will say it's a bit more complex than our understanding in most cases (self included). I'm no more fond of it than the next guy but anyone fed up with the ol' American way, there's the door.....I'm positive your quality of life would be greatly enhanced elsewhere. Anyone?......anyone?......really?......no takers?......wow, shocking.

We really do have it rough...best lifestyle on the planet plus freedom of speech to boot so we can complain about it. God bless us all.

Anyhow, never mind the crap...just wanted a turn at the spoon. Where's the fun if you can't grab it and stir. BTW, I loved the cartoon.

Next!...

Mill Creek ( South ) ain't it great...http://www.nickelsvilleseattle.org/

http://www.bloomberg.com/apps/news?pid=20601087&sid=ay_QVzLE0.VE&refer=home

As Goldman's chief, Paulson himself received an $18.7 million cash bonus for the first half of 2006, and in 2005 he was the highest paid chief executive officer on Wall Street, reaping $38.3 million in salary, stock and options.

He had also accumulated 3.23 million shares of Goldman's common stock worth $492 million, plus restricted shares worth $75.2 million and options to purchase 680,474 shares, according to a Goldman regulatory filing on July 2, 2006.

Paulson wasn't required to pay a 20 percent tax penalty on some of his compensation from Goldman under an Internal Revenue Service rule that waived the tax on executives forced to sell stock to comply with government ethics rules.

Think he has an off shore account... just as little hedge " for when the s$!^ hits the fan "

Sorry for the language, ment to say " Reality hits the fan "