Well, President Bush finally signed the Housing Bill today and our government will be the financial life line for Fannie and Freddie… I’m really upset – despite the loud voice saying it’s really needed to stablilize the markets and relieve the strapped homeowners etc. Homeowners? I’m laughing at them (unless those could afford within their means), what do they own? They virtually own nothing! Irresponsible lenders? Yes, they are not just irresponsible, they are greedy. Look at all those bad debts (in Billion $$$) they tucked in their “belly”, they are really no difference than the pig eaters. I’m wondering why America has a system that punishes the financially responsible people and award financially reckless ones? Did you hear that MER ex-CEO Stan O’Neal will walk away with fat retirement package without even bothered with the firm’s problem and its shareholders’ pain? Bear Stearns should have been allowed to fail. Lehman, MER, WaMu, Wachovia should fail if they have to, so do Fannie and Freddie… The market can take care of it much more efficiently than the government ever could. The market is much wiser and better than government planners ever could be.
Thanks Hyang for the most naive post I have read on AF this year.
Hyang, You are 100% correct. Ignore the previous post. He is some cowering investment banker who is thanking his lucky stars that the government bailed his job out. I’ll let you in on a secret about wall street people… when they are wrong, they act like they are right. Not only do they do it confidently, they act this way arrogantly, “Of course I’m right there can be no other way what are you thinking I’m not going to stand and listen to this blah blah blah”. If you’re weak or undecided, or if you’re a politician in particular, you will question your own reasoning in the face of such an arrogant and strongly stated opinion. Face it, there are a zillion pros and cons to every position. When somebody espouses a position strongly it is more influential. If the previous poster was a taxpayer instead of a wall street worker, he’d probably not be so arrogant. But, he needs his job and he’s pushing the party line. The last laugh is on them, tho’. If you invested in hard assets when you saw this financial mess starting to develop then you’d be so far ahead of wall street right now (even after the recent oil correction) that it wouldn’t matter. Meanwhile, wall street was telling airlines not to hedge. They are short sighted salesmen. Don’t ever buy what they are selling you unless you understand it. Anyway… you nailed it. Good post.
DanLieb Wrote: ------------------------------------------------------- > Thanks Hyang for the most naive post I have read > on AF this year. Yeah, right. I guess you read one post.
I agree that parts of the ^^ are naïve, but I feel the frustration too. I was in Orange County California as this craziness was going on. My husband and I make a stable and decent income and we saved a large potion of it while we saw others around us who were in a far less financially stable position get sucked into these 0% down ARMs so they could keep up w/ the Jonses at any cost. Now, a couple years later when all is crumbling it appears that instead of allowing the market to properly reset prices to equilibrium, the various policies will instead encourage inflation. Now I feel like the “responsible” choice I made is backfiring since the purchasing power of my saving is quickly being eaten away. Letting banks fail is not ideal, but I am so sick of seeing all the sap stories about ppl who might “loose” the home they’ve never really owned; it seems to go against the basic ideals of our ideals of taking responsibility for ones choices.
Naïve or not, time will tell. We might be all naïve one way or the other of something at some point in our life. If those Wall St. genius were really as smart & innovative as they think they are, they and WE won’t be in such a mess today. This Housing Bill is at the expense of the future of America. It’s going to crush the dollar.
Bear Stearns failing was bad enough. If a large bank like Wachovia went under the repercussions would be devastating to the world’s economy. Mass hysteria would set in and the banks would collapse like dominoes with people making runs on their accounts. I for one think that the government is retarded for not protecting American homeowners from “teaser rates” and predatory lenders 10 years ago. This bailout for FRE and FNM is just a band-aid that has been lazily slapped on a gushing wound. And of course we have to pay for the unregulated lending practices that led to this bailout.
Mass hysteria?
Even though the battle between Keynes and Friedman has been won by the latter in most academic circles, Keynes’ “Government should do something” approach wins in politics. What’s interesting is even CNN readers, typically more liberal, voted 75-25 that this bill was bailing out irresponsible homeowners and shouldn’t be done. So Congress is passing bills nobody wants just to be seen as doing something. I guess that’s why they and Bush combined have the lowest approval rating in history.
Well the government let the Bank of the United States fail in 1930 and many people feel that this was a significant contributing factor to the Great Depression (and this was a standard bank with mom and pop deposits not highly leveraged derivative contacts). I’m sure that Uncle Ben had this in mind during the Bear Stearns debacle. As for Fannie and Freddie, I don’t think they are as concerned about bailing out irresponsible borrowers as they are protecting the responsible ones. Consider the average American homeowner – not the guy making 50k and living in a 750k mcmansion – the value of his or her house would plummet if the neighborhood became full of empty houses. As a society it is crucial that the values of these assets are maintained – without that we’ll have a massive destruction of wealth across the board.
TJR Wrote: ------------------------------------------------------- > Well the government let the Bank of the United > States fail in 1930 and many people feel that this > was a significant contributing factor to the Great > Depression (and this was a standard bank with mom > and pop deposits not highly leveraged derivative > contacts). I’m sure that Uncle Ben had this in > mind during the Bear Stearns debacle. > > As for Fannie and Freddie, I don’t think they are > as concerned about bailing out irresponsible > borrowers as they are protecting the responsible > ones. Consider the average American homeowner – > not the guy making 50k and living in a 750k > mcmansion – the value of his or her house would > plummet if the neighborhood became full of empty > houses. As a society it is crucial that the > values of these assets are maintained – without > that we’ll have a massive destruction of wealth > across the board. Who cares about liquidity contraction to protect the dollar causing the Great Depression. It was only “rich” investment bankers who lost jobs, had to become Oakies, lost their farms, and couldn’t adequately feed their families. Right? Ohh…wait… Some people here have less analytical depth than Paris Hilton and fewer facets than a sheet of paper.
TJR Wrote: ------------------------------------------------------- > Well the government let the Bank of the United Consider the average American homeowner – > not the guy making 50k and living in a 750k > mcmansion – the value of his or her house would > plummet if the neighborhood became full of empty > houses. They would fall from inefficient inflated figures created by demand from the irresponsible buyers to a proper equilibrium price. >As a society it is crucial that the > values of these assets are maintained – without > that we’ll have a massive destruction of wealth > across the board. You hit it on the nail here- the bailout will destroy wealth by destroying the value of the dollar. Sure, your home might not dip as much in nominal dollars- but home much REAL value will remain?? The policy will be pricey not only in terms of tax dollars charged to everyone but indirectly by the effects of inflation. Unfortunately these consequences will be paid by all, but disproportional more by those who didn’t get themselves in the situation since they won’t get any of the benefits from the bailout.
TJR, no that is wrong. Again, stop using fear of the unknown instead of reasoning. Look at the run up in assets before the great depression, not just the aftermath. In the fear scenario you depicted to defend these silly policies, if there is any value in these mcmansion houses somebody smart will realize it and buy them when the price is right. Uncle Sam shouldn’t be doing it.
akanska Wrote: ------------------------------------------------------- > TJR Wrote: > -------------------------------------------------- > ----- > > Well the government let the Bank of the United > Consider the average American homeowner – > > not the guy making 50k and living in a 750k > > mcmansion – the value of his or her house > would > > plummet if the neighborhood became full of > empty > > houses. > > They would fall from inefficient inflated figures > created by demand from the irresponsible buyers to > a proper equilibrium price. > > >As a society it is crucial that the > > values of these assets are maintained – > without > > that we’ll have a massive destruction of wealth > > across the board. > > You hit it on the nail here- the bailout will > destroy wealth by destroying the value of the > dollar. Sure, your home might not dip as much in > nominal dollars- but home much REAL value will > remain?? The policy will be pricey not only in > terms of tax dollars charged to everyone but > indirectly by the effects of inflation. > Unfortunately these consequences will be paid by > all, but disproportional more by those who didn’t > get themselves in the situation since they won’t > get any of the benefits from the bailout. Yeah, jobs, the lack of economic hardship, reasonable lending rates for responsible borrowers, a viable economy, and a decent means of living have no benefit at all. See above comment about the lack of analysis and facets.
yeah and send me another stimulus check… Walmart awaits. Hello China.
virginCFAhooker Wrote: ------------------------------------------------------- > yeah and send me another stimulus check… > > Walmart awaits. Hello China. Spierce looks at his above posts…does a search on all other posts… “Ohh hey, there’s that post where I said that I love stimulus checks. But, wait? that isn’t me who posted it, it was virginCFAhooker who put the words in my mouth…” Nice strawman though. Too bad it’s one of the oldest internet debate tricks in the book. Try something new next time.
virginCFAhooker Wrote: ------------------------------------------------------- > TJR, no that is wrong. > > Again, stop using fear of the unknown instead of > reasoning. > > Look at the run up in assets before the great > depression, not just the aftermath. > > In the fear scenario you depicted to defend these > silly policies, if there is any value in these > mcmansion houses somebody smart will realize it > and buy them when the price is right. Uncle Sam > shouldn’t be doing it. Homes are not that liquid, it’s not like the paper the MER was able to sell at $0.22 on the dollar. These homes will sit vacant in neighborhoods while people wait for the bottom. This is what should be avoided. Believe me, I’m no proponent of big government bail outs, but I do see some of the reasoning behind some of the recent moves. Is it too reactionary? Not sure, time will tell, but I don’t think sitting around and letting the free market sort it out is the best thing to do – especially when the assets in question are literally peoples homes.
So how does the housing bill help individual homeowners, especially those in financial distress? (Here’s a hint: it really doesn’t).
spierce Wrote: ------------------------------------------------------- > > Yeah, jobs, the lack of economic hardship, > reasonable lending rates for responsible > borrowers, a viable economy, and a decent means of > living have no benefit at all. > > See above comment about the lack of analysis and > facets. Your’s seems to be real deep! Sound grrreat! *Jobs? You are complaining about lack of “big picture analysis”? There are other industries. *reasonable lending rates? I’m not loaning you crap since I have no idea what the real value of your collateral is. *decent means of living? there is no pill thats gonna save us. We can put on as many bandaids as congress comes up with, but until we face the tough issues and resolve them in a responsible manner, the underlying issues will continue to be a burden. OK, so using your reasoning, why not tackle some other’s while we’re at it… 1. Mom and pop farmer cannot seem to compete with cheap foreign imports, how sad… so lets subsidize them and continue to prop up an inefficient market. 2. Detroit seems to be having some issues since the auto industry is in even greater shambles… so why not pump money into Ford and GM and support their great lines of trucks and support the blue collar unions that allow “decent means of living” to all!!
NakedPuts Wrote: ------------------------------------------------------- > So how does the housing bill help individual > homeowners, especially those in financial > distress? (Here’s a hint: it really doesn’t). Good point. I was talking more aong the lines goverment bailouts in general and what Barney Frank and co. are proposing (which will also pass).