Does Anyone Really Think These Guys Are Fixing The Problem?

Fleeced is a good term for what happened and that is about to happen again.  I listened to Hank this AM and his double speak was amazing.  40 some minutes and nothing!   I think we are in for more including bailing out other to big to fail industries. 

MW ... direct answer to your question ..... NO, I do not think they are fixing the problem.  They are postponing the invevitable.  Hang in there to all who can. 

They don't know what's broke...

what I am missing is this: these 'losses' that we keep hearing about are investor losses, on paper, of what they 'could have made had everyone stuck in their mortgage for 30 years at X% interest blah blah blah..' Why are WE paying for investment losses? I am at a loss for that. These guys bought MBS, with the knowledge that it was a 'risk'. Why are we basically saying 'eh, what risk? Here are your 'losses', don't forget to grab a lollipop on the way out dear!'

Why are we paying for investor losses when what we should be doing is re-writing those bad loans, like you said Martin, for the people that actually deserve it. Hey, if the bank is going to lose anyway, they might as well do everything in their power to not lose as MUCH, right?

We are paying because ......

At issue is the amount of MBS and other securities in investment accounts .. 401Ks and other retirement funds.  Very wide spread.   

Courtesy of Clearpoint. This is a snapshot of line of "Extortionistas" that HANK, BEN and NANCY are feeding. Sad part is that even after the bailouts, they will still layoff/fire thousands if not millions of workers.

Someday,,,  Someone will finally say:  NO SOUP FOR YOU!!!!

image courtesy of Clearpoint (he is good!!!)

Sheila Bair is the only one in Washington who appears to know what she is doing and they are ignoring her. She had decent solutions 2 years ago, and they ignored her then. She knew FHA secure and "voluntary" modifications weren't going to fix the problems.

Until the American people notice that we are being screwed, we're screwed.

but wayne- why not just have the lenders re-write the mortgages? Why this 'bailout' money instead? It seems to me like we are just subsidizing the investor losses- and that's it. I understand the whole 401k bit, but unless that money is being used FOR that purpose, I doubt it will help at all.

I am glad one of you brought this up.

Looking to government to fix the problem that the government put us in, is a horrible idea.  American's are being fleeced.  Hank knew when the bill was passsed that trouble asset purchases wouldn't work?  WTF? 

Trickle down economics does not work, pumping money into banks, is not going to accomplish anything.

Modifications are a valiant idea, but they simply do not work.  Defaults are no longer results of bad loan terms, the people who are defaulting now, simply cannot afford to pay.  It is not a matter of terms or will.  Job losses are mounting and will continue to mount, further exacerbating the problem. 

We are just throwing our money into the wind and hoping it lands in the right hands.

Jenn, as MW illustrated above, its about "extortionists" wanting  to receive a handout.

Simply "having the lenders re-write the mortgages' isn't that simple.  IF the lender holds the note, they CAN re-write the terms of the note.  However, IF the lender is only servicing the note, they cannot change the terms of the note.  How many questions have been answered on this forum when a homeowner's note is sold and they are concerned that the new lende will change the terms?  The new holder cannot alter the terms unfavorably as a protection to the homeowner.  Likewise, the servicing lender cannot modify the terms to unfavorably affect the new lender.  The new lender holds the note and expects payment.  Typically several notes are all rolled into a group, and the group is sold to multiple "note-owners" in the form of the MBS.  Sorting out which is good and which is bad and needs to be altered is no small task as the notes are packaged and resold multiple times. 

As Hank mentioned this AM, the "facts" changed so the actions changed.   The bailout money is not being used as was first presented because it could not do what was needed.  It would be like bailing water out of a lifeboat when the life boat has a biffer hole in the bottom. You can use a lot of motion and reason but none of the action prevents water from flowing into the snking boat.  The boat needs to be lifted out, allowed to sink, or run aground.  Hopefully it runs aground soon and there is time to rebuild the boat before it is placed back in the water. 

Socialist .... "Trickle down economics does not work"

Hopefully you don't buy into the line that trickle up economics works.  ????

If I am against entitlements to one class of people (such as these bailouts) what would make you think I am for entitlements to another class?

Life is not black and white, and entitlements to one extreme or the other accomplishes nothing.

wayne- I guess the point is- WHY are we subsidizing investment losses???

Also, if I learn from my mistakes, and live within my means and not put a SINGLE thing on a credit card, and millions of people do the same, what will happen to our over-inflated economy? Take out the 'living beyond their means' crowd, and how many businesses will go under? This should be a very interesting 12-18 months. All of the over-development and gigantic strip malls will be barren, and who knows- maybe corporate America will start living within their means as well???

Good for you!  No, I didn't automatially think you were for a different entitlement .... I asked the question for clarity. 

wayne- what's wrong with 'trickle up'? That's the only thing that can work.

You're right Jenn ...... yes, I forgot how many times a stream flows uphill .... oh wait, some laws simply cannot be broken.   Trickle up economics is another shell game.  

My thoughts are: US owns FNM/FRE..kinda right???  take all their loans (good and bad)... Modify the good   O/O to 3% (lower returns, but returned)...Use the majority of the money to "absorb" the losses from F/C that are coming today and beyond...  Sell them only to qualified people  (1st timers... need edumucation...)  Prices will go to where the local economy can sustain home mortgage payments.. The funny part of the modification proposal was to change rate/term and possibly (restructure principal.. to be repaid when sold) to get to a front-end ratio of 38%!!!  If that does not prove home values have a ways to go... nothing does..  3 step modification to get down to 38%.  Again, you can't save the ones who do not listen, learn or try. That money has not been primarily used to accomplish this and we will chase our tail all the way down until the free market makes a bottom.  I like the thinking and passion.  Keep rockin'.

wayne- what are you suggesting? That's it's better for a few people to have all the money? In this situation, the sooner we can get GOOD paying jobs to millions of Americans the better. I'm not sure what Dennis Kozlowski being able to afford hiring a gardener has to do with sustaining this economy.

Socialist, what do you have to say to that????

Jennifer,

I am all for good paying job's my friend, but how do you purpose we go about it? 

What I'm suggesting is that we recognize that good paying jobs come from solid companies and venture capitalists. Sometimes those jobs ae lost for different reasons .... they are not gauranteed forever.  Smaller government, market driven companies, not bigger government or forced wages.  The best scenarios are where workers have an incentive in the success of the company and work with (not against) management.  Most people are followers not leaders and as such, good company leadership is essential. 

What we have now is the "to big to fail" mentality that suggests that that government and unions must take care of each person.  We are also moving more to an entitlement idea which is very dangeous.  "Bill Gates & Warren Buffet (& others)  have too much money .... they should give it to me!"  Wrong idea.  We are all entitled to opportunity .... not success! Some will do better than others by their God given talents and by their own energy, decisions and determination. 

We have simply had all assets (and classes) move up quite dramatically over the past 15-20 years.  Homes, cars, stocks...  A big push to the reason:  leverage/credit.  Lowered DP for homes.. increased debt ratios in the computer AU systems... buy bigger/better with less skin.. cars.. 0% rates  48 months was the old car notes....  48 months.. who can afford the monthly payments??  60-72-84...  to prop/keep prices/sales up   0% financing.. That rate should have been teh biggest red flag to all.. It makes no sense...  Like seller/builder concessions...  it's artificial.  Credit Cards moving debt around with balance transfers... special rates...  The key word was BALANCE.  Take the leverage and its ability to control more assets with less skin away... and you have issues.  This is going to be more difficult than ridding the end product from the Thanksgiving Dinner upcoming. Living within our means will change the valuation on everything.  We are being mislead again and HANK is either a liar or stupid. He could see this coming like icebergs moving around the Arctic circle..  He is not a fool I would guess.  I could see this coming in early 2007 and I'm just a 44 year old LO in Orlando. As Soc stated as well, simply increasing pay for the same work...accomplishes nothing in reality, just attempts to bury the problem for the next group.  Housing is bad, but we will have similar issues with Soc Security/Retirement benefits as this is a spending too much today with hopes that tomorrow's harvest pays for it.  Some day, tomorrow does not get there in time.  Keep rockin'.

wayne- but their money comes from somewhere, right??? What we are seeing now is a 'global economy' mentality where corporate interests no longer care if American consumers can afford their goods or not- they have other countries to sell to. THAT is what is frightening.

Socialist- I would 'propose' that businesses should have a stake in their communities and therefore would do better, and be more successful by staying 'stateside' and not outsourcing. At some point, greed has to take a back seat to ethical behavior. If anyone disagrees with that, they should just keep handing their paychecks over to these companies who deserve it so much. Just sign it right over.

"Capitalism should not be condemned, since we haven't had capitalism. A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank. It's not capitalism when the system is plagued with incomprehensible rules regarding mergers, acquisitions, and stock sales, along with wage controls, price controls, protectionism, corporate subsidies, international management of trade, complex and punishing corporate taxes, privileged government contracts to the military-industrial complex, and a foreign policy controlled by corporate interests and overseas investments. Add to this centralized federal mismanagement of farming, education, medicine, insurance, banking and welfare. This is not capitalism!"   Ron Paul

Martin- I'm wondering if you have ever looked into the consumer debt v. 'profit' or the big guys... In other words, how much of these companies profits is actually coming off the backs of the treasury in the form of 'credit cards'.I have tried, can't get an actual answer worth noting ;)

For me, there will be no gift-giving for the holidays. If someone wants to give me something, I'd suggest a cash donation to charity. Can you imagine what retail sales would be like if we 'lived within our means'??? It would be insane, but that is where I think we should head if we REALLY want to know what our economy is all about. Smoke and mirrors? paper tiger? House of cards??? which is it???

good point socialist.

Megacallcenter lending centers...  Tech support in India, Made in China, Mexico, Taiwan, etc. America has "cheapened itself" to the point of offloading "lower-class" jobs and their pay to the cheapest source on the planet wherever that may be.  Kathy Lee Gifford and her clothes, Dell and their support.  CITIBANK's BROKER HELOC DEPT (when still alive).  All are handled offsite.  Nobody wanted the jobs at that pay rate, but here we are complaining about it as well.  I remember telling a buddy of mine in mid 2007 that we were "turning Japanese I really think so"..  He said: "No way, their banking system is this or that.. We have similar rates as theirs.. We have not "corrected" as much as their stock market. but they are 18 years since their peak and are at 77% below its peak.  Nothing is a given here, so we all need to be prudent savers and live and teach others to live within their means.  Growth and Global economy are just BUZZ phrases for talking heads.  Nobody starts off conversation with "Global Depression", rather it is the global growth and BRIC and whatever.  We are really seeing that in almost every neck of the woods/world... assets/services were acquired with leverage... Assets fell, leverage still there...kabang.

Jennifer,

"What we are seeing now is a 'global economy' mentality where corporate interests no longer care if American consumers can afford their goods or not- they have other countries to sell to."

Ok, but who is buying?

Now what do you mean a stake in their communities?  All companies must be local and invest in housing? So you cannot be a nationwide company, or a global company?  Foreign companies cannot sell their products here?  I am not sure what you mean by this.

PS- if the MBS market headed the other way today, we would have gotten 4 reprices for the worse... We got one measly reprice for the better so far!!!

Trickle down works when companies are managed or held by strong leadership: Buffet, Gates, Welch; trickle is an absolute disaster without such leadership as we're seeing now.  Even companies that are turning profits can be leveraged into oblivion by poor leadership, see all of the financial sector.  If I were to subscribe to a school of thought, it would be trickle up.  It comes with a simple controlled premise, the people will spend into a healthy economy.

There are only so many Buffets and Gates.  The vast majority are more concerned with their golden parachutes as is human nature.  See Fuld and Lehman Brothers, $300 million bonus while he leveraged the hell out of that company 1 year before its dissolution.  Supply siders have the ability to manipulate markets until the market eats them, their companies and all of their employees alive.  Consumers have no such ability because they are valuable for one purpose, but it's the most important purpose in all of capitalism, their unending desire to consume.  Let them consume!