 MaxoYour tax dollars at work.Premium,VIP
join:2002-11-04
Tallahassee, FL | This is nice ... ... but let's wait until we actually have $150 billion to spend. We don't have that money so the only way we are going to get it is through borrowing. Excessive borrowing is how we got in to this mess. |
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 major marcoRes Firma Mitescere NescitPremium
join:2003-02-13
Stepford, CA | said by Maxo: [...] Excessive borrowing is how we got in to this mess. Not quite. Excessive speculatory ::GREED:: as in financial institutions lending money to homebuyers who did not have the finances to ultimately pay back the loan is what got us into the current clusterfck. But worry not, Paulson's golf buddies will be bailed out on the taxpayer dime per the usual. Nothing more to see here, move on.
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The Toll
Tracking Lord Stanley
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MaxoYour tax dollars at work.Premium,VIP
join:2002-11-04
Tallahassee, FL | said by major marco:said by Maxo: [...] Excessive borrowing is how we got in to this mess. Not quite. Excessive speculatory ::GREED:: as in financial institutions lending money to homebuyers who did not have the finances to ultimately pay back the loan is what got us into the current clusterfck. But worry not, Paulson's golf buddies will be bailed out on the taxpayer dime per the usual. Nothing more to see here, move on. It's actually more than just excessive borrowing, or just lending money to homebuyers who can't afford the mortgage long-term, but I was just summarizing one of the major aspects that have caused the collapse, and I find it ironic that continued excessive borrowing is part of the 'stimulus" package. |
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MaxoYour tax dollars at work.Premium,VIP
join:2002-11-04
Tallahassee, FL | I'd also like to add that one good point in this plan is that it is borrowing to build infrastructure, which is different than the problem borrowing which was nothing more than to continue buying into imaginary wealth that didn't physically exist. |
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 dnoyeBFerrous Phallus
join:2000-10-09
Southfield, MI | reply to major marco
The problem was not lending to homebuyers that ultimately could not pay back the loan. The problem was lying about the fact that they were lending to homembuyers with questionable ability to pay back the loan.
They rated the loan as AAA top quality when it should have been rated much worse. That is the problem. Investment is risk/reward. When someone lies about the risk, the balance is lost.
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dnoyeB
"Then said I, Wisdom [is] better than strength: nevertheless the poor man's wisdom [is] despised, and his words are not heard. " Ecclesiastes 9:16
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MaxoYour tax dollars at work.Premium,VIP
join:2002-11-04
Tallahassee, FL
1 edit | Re: This is nice ... Dear God,
Please forgive me for starting this thread.
Amen. |
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Gogo1
join:2004-05-27
Brooklyn, NY | reply to Maxo
Yes. Big difference between borrowing to invest in something sound that will give real genuine growth in the future, and people borrowing that shouldnt be that creates artificial demand and artificial price rises. |
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Sure we do.. Ask Bush, he's borrowed 6 trillion dollars and sank us into a recession. Money, HAH, we got plenty of it. Thanks China, Russia, etc. We love your loans to fund our economy, since we can't live inside our own means. Please don't ask for the money back though, we're BROKE and in a recession. |
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Gogo1
join:2004-05-27
Brooklyn, NY | reply to major marco
said by major marco:said by Maxo: [...] Excessive borrowing is how we got in to this mess. Not quite. Excessive speculatory ::GREED:: as in financial institutions lending money to homebuyers who did not have the finances to ultimately pay back the loan is what got us into the current clusterfck. And also the irresponsibility/greed/sense of entitlement of those people that applied for and accepted the loans that were beyond their means to pay back. |
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Reviews:
 ·magicjack.com
| said by Gogo1:And also the irresponsibility/greed/sense of entitlement of those people that applied for and accepted the loans that were beyond their means to pay back. It seems like strange logic to me to place the responsibility on the borrower when the person with the money willingly gave it to the borrower.
It seems to me like the person with the money has the greater responsibility for what they do with their money -- not the person they give it to.
I.e., if we followed your logic, banks wouldn't be expected to exercise the due diligence of using alarms, cameras, a vault. They would just leave their doors unlocked at night because "nobody has the right to our money."
IMO the mortgage mess is more complicated than simply lenders and borrowers. Mortgages were bundled and sold as securities (like corporate bonds). There was little transparency into whether the individual mortgages in a bundle really qualified for the grade they received.
There was no potential consequences for the mortgage brokers who flew fast and loose to crank the loans out, and create more CDO bundles. If an investor bought it, it was "caveat emptor" (with no consequence for the mortgage broker, or the rating agency like Standard and Poors).
Both parties operated under the belief that prices would continue going up, so there was no risk. 1) The lender that if the borrower stayed in the home for a year, then the lender was protected against loss because the home's value would increase enough in one year to cover the loan. 2) The borrower felt they stood to make money if they stayed in the home for 2 years, and flipped it.
It's only when everything went bad that people start trying to blame the borrower. They had the least skin in the game. And, therefore, the least responsibility for everyone else's financial choices (to give money to a bad borrower, or to buy bundled mortgages).
Mark |
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Gogo1
join:2004-05-27
Brooklyn, NY
1 edit | Im not necessarily saying they share equal responsibility. But they do share in the responsibility. Plenty of blame to go around for more than just one group. More people are to blame than simply "GREEDY BANKERS." When someone starts screaming "greedy bankers" and nothing else it is usually just a politically/jealousy/hatred motivated rant. And no Im not a banker or anywhere near it.
In your bank example, of course the bank would be irresponsible for not securing their money. And though there is something to be said for people being decent enough to not steal, thats just not the world we live in. But Im sure you are not suggesting the robber is free of blame for the robbery are you? Or do you feel he is nothing but a poor victim of society? |
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·magicjack.com
4 edits | said by Gogo1:Im sure you are not suggesting the robber is free of blame for the robbery are you? Or do you feel he is nothing but a poor victim of society? I'd say the robber (who took money from a bank that felt they didn't need to use vaults, alarms, cameras or door locks) did exactly what I would expect a robber to do. In fact, it might have been an otherwise law-abiding person, tempted to "robbery" by the way the bank was essentially giving its money away.
I'd even go so far as to say it's not necessarily robbery when a bank takes no steps to secure its money. And, I think the police (and insurance company) would treat it similarly by refusing to spend much time investigating it, (or paying the claim.).
This doesn't mean I have sympathy for the interrupted homeowners. They only lost something because the bubble gave them something. If it weren't for the bubble, they would have had nothing to lose. (I'm sure there are some who were deceived about a loan's terms. But, I think most were unqualified borrowers who didn't really lose anything.).
But, none of this would have happened if there weren't people willing to give their own money to these borrowers. Investors were pouring money into mortgage-backed CDOs in pursuit of higher returns. They even engaged in a "carry trade." They would borrow low-interest money (from Japan, for example, where rates were even lower than here) and put that cash into ultra short-term bond funds which were heavily weighted in mortgage-related instruments (and paying higher returns than other funds).
Nobody forced those investors to put their money in those bonds (or short-term funds). But, by doing it they created more demand for CDOs, which created more demand for brokers to sign more deals. The banks didn't care if the deals were properly vetted. The investors didn't care (because S&P rated the bundle as an A+, with no possibility for consequence).
The real insult is that those who are in charge of regulating the markets *knew* this stuff was happening (and that the Credit Default Swap market was exploding from billons of $ into trillions of $). And they did nothing. Instead of a modicum of regulatory oversight, we have regulatory bailout. Just because when things are going well, we have a nativist habit of believing it's bad to "interfere in free markets" (until they fail).
I agree it's not just "greedy bankers." It was a lot of things (including Greenspan keeping rates too low for too long, and Bernanke raising them too far too fast). I just think those with the money bore more responsibility for what they did with their money than those who borrowed it (with little criteria applied to giving it to them).
Mark |
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Gogo1
join:2004-05-27
Brooklyn, NY
1 edit | I take back what I said earlier. IMO people that took loans they could not afford behaved just as irresponsibly as those that offered them. It takes both groups to decide to do something they shouldnt do before the transaction can take place.
quote:
I'd say the robber (who took money from a bank that felt they didn't need to use vaults, alarms, cameras or door locks) did exactly what I would expect a robber to do. In fact, it might have been an otherwise law-abiding person, tempted to "robbery" by the way the bank was essentially giving its money away.
The bank is not giving its money away at all. Securing it poorly does not mean they are giving it away. It means they are securing it poorly!
Maybe the guy should sue the bank since you feel its the banks fault he became a thief.
You not wearing a bullet proof vest is "tempting" me, an otherwise law-abiding citizen, to shoot you. If you are not going to take suitable protection from bullets how can you complain? In fact its your fault for tempting me with your poor protection.
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I'd even go so far as to say it's not necessarily robbery when a bank takes no steps to secure its money. And, I think the police (and insurance company) would treat it similarly by refusing to spend much time investigating it, (or paying the claim.).
Insurance not paying out is totally irrelevant. Bank pays premium, agrees to take certain precautions. If they dont take the precautions, they break the terms of the agreement and dont get paid. That has absolutely nothing to do with whether a person taking the banks money is right or wrong. It in no way justifies it.
It would be a very scary world if everyone could do anything they want and justify it by saying "the other party made it easy for me."
I think we might as well stop right here. If you think someone not securing their property (something they have earned through work) very well, gives someone else justification for just taking it, then we are never going to agree on anything.
Ill just say this in closing: So many people on this site seem to blame "people with money" for everything wrong in their lives. Apparently none of it is their fault; theyve never done anything wrong. Its all somebody elses fault. Everything is the fault of "people with money," as you put it. Someone takes something that is not theirs, blame people with money. Someone takes a loan they cant afford, blame people with money. Im sorry those people cant be honest with themselves about where that feeling is coming from.
Mark.
(We might be in agreement about what the coolest name is  ) |
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·magicjack.com
2 edits | said by Gogo1:IMO people that took loans they could not afford behaved just as irresponsibly as those that offered them. It takes both groups to decide to do something they shouldn't do before the transaction can take place. I agree. I'd only take it a step further by saying that the one loaning money has more responsibility than the person receiving it. If the receiver isn't asked about their income, credit record, ability to repay, etc., how is that their fault that someone was willing to put (collateralized) money in their hands?
said by Gogo1:The bank is not giving its money away at all. Securing it poorly does not mean they are giving it away. On a philosophical level it doesn't. But, on a realistic level it does. In reality, the police aren't going to waste their time investigating a "burglary" of a bank that wanted to exercise their philosophic right to leave their hundreds of thousands of $$$ on the counter, with no alarm, camera, vault, or door locks.
It's just reality that those with something to lose take care not to lose it. To the extent they don't, it looks like "giving it away" (regardless of whether the recipient had any right to it). That's just the reality. It's why you don't leave your car keys in the ignition when you go to the mall.
Mark |
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