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it worked so well in Japan, when the government propped up the financial companies. Their housing drop ended in a short 16 years.
ha... see??? what good is this doing? Are the big bank boys just jealous that the government is writing all the loans these days? (FHA, VA, USDA)
What do we need these banks for?
- jvad
- Contributions:10
Good morning Jennifer & Rob,
Good questions and good exmple. It's a case of pay me now or pay me later ....
The problem is we really do not know for sure which is which. During the testimonies have younoticed how many times Bernacke and Paulson (and many in congress) are saying key terms like: maybe, if, could, should ....... none of htem is certain of the outcome whether the $700B is put in place or not.
McCain stated that those funds could rebuild our infrastructure throughout the USA. Perhaps that would actually be a better stimulus than using the bailout method.
- Matthew Brown, "matthewcbrown"
- Contributions:171
Fear of the unknown...
People are scared that we will all be in the soup line if this doesnt happen...
- Martin Wareing, "Martin Wareing"
- Contributions:3772
WHen the demand picks up, let me know and I will dust off my FOR SALE signs and take orders. JAPAN 1990+/- 39,000 NIKKEI... Today, 12,000... I personally can not see a "drive-thru" fix like America wants (and will only listen to the news it wants to hear).
I do not think the banks will "want" to lend out any money. The bailout plan could force some, but I really doubt it and I am planning for tougher times myself. I hope I am wrong, but I have not been so far. I think this is coming from many sides and the waves are getting bigger. BILL HEARD CHEVROLET (touts itself as the #1 Chevy retailer in the world), shut down operations suddenly last night. This is not a 1 location dealer. Yes, GM, but it is 2700 more out of work and so I just haven't seen many loans for unemployed people lately. I am not being sarcastic, I am being realistic. HANK & BEN have missed horribly for over a year... Now they tell us the tsunami is coming, and it always was.. This will prop up some things, but it will not create any buying frenzy at all and those that venture now, need to be able to "hold to maturity" as Ben says and in the long run they may be big winners, but you have to make it through the long run. Keep rockin'.
- Matthew Brown, "matthewcbrown"
- Contributions:171
Employees from the Bill Heard Chevrolet of Sanford say their goodbyes after the dealership closed suddenly Wednesday. (GEORGE SKENE, ORLANDO SENTINEL / September 24, 2008)
HA! Is that a Tundra?
matthew- if we used that $700 billion to create jobs (kind of like the great infrastructure projects of the past), wouldn't that have a greater impact than this 'prop show'? $700 billion can buy some really nice soup.
JV- I only wish they could tell us what will actually happen if we do NOT do this.
- Martin Wareing, "Martin Wareing"
- Contributions:3772
$700bill is $3500 per adult... Most got $1200 earlier in the year... what did that do.. The problem is about leverage and bad leverage and much greater than this. I think the direction should be: "What happens if we just increased the Nat Debt 20% more and this does not work?" If people lose confidence in the MONEY MARKETS and MUTUAL FUNDS (Both $3trill each+/- I read)... 8 X the $700bill package... $50trill +/- CDS (Default Insurance for the BIG BOYS)... Just look at the leverage spread... $700billion.... to $50 trillion... If the CDS market has a CLAIM for 5% loss... that is $2.5 trillion.. Every foreclosure I see,, it is 20-30% ... IF people and companies and municipalities do not pay their bills, nothing will stop this. This is really very simple economics about massive defaults on tremendously overleveraged everything, people, investors, banks, insurance companies, IBanks, counties, cities, etc. DO NOT GO TO THE SUPERDOME AND WAIT FOR HELP! Pray for the best and prepare... just prepare (not for the worst), but prepare.
- Andrew Adams, "203K Specialist"
- Contributions:9349
It's like rates Jenn nobody knows for sure what will happen. I suggest to go at it with Martin's approach, grab a life jacket and hang on...If things settle down you can loosen the grio and take the life jacket off. If (when) it gets worse and you don't have the life jacket on you could drown.
- Andrew Adams, "203K Specialist"
- Contributions:9349
grip
- Tammy Stockdale, "Colorado Mtg Broker"
- Contributions:6995
Jennifer, IMHO, no one has a clue what is going to happen. They are shooting from the hip. Honestly, they have the ability, so why not just print out more money and move from there?!
- Martin Wareing, "Martin Wareing"
- Contributions:3772
Look at it this way: If you sandbag yourself for the storm and it comes... you can ride it out... If you sandbag yourself and it never comes.... you can:
- Build a big sandbox for the kids
- Make a Volleyball court in your backyard
- Melt all the sand down and sell blown-glass beakers for planter-watering systems
- Horseshoe pit for JULY 4th Celebrations
Look Ma, No Waste!!
- Martin Wareing, "Martin Wareing"
- Contributions:3772
T,
Printing money... May make the mortgage industry like an airline attendant on the TARMAC "bu-bye" to the mortgage rates we see today (in my opinion).....inflation leads to higher bond yields to higher rates to no REFI's and further pricing pressures... Drop an 8% FIXED rate market and an 8% unemployment rate and see what the RE market does then. It used to be called the circle of life and it may be the "Circle of Strife". I am not in a bad mood, but I say claims closing in on 500,000 today. Unemployment (according to Bill Gross) expected a little north of 7% in 2009, so I simply try to decipher all the information from the rhetoric and protect my family, that's all. Keep rockin'.
- Tammy Stockdale, "Colorado Mtg Broker"
- Contributions:6995
Morning Martin....that's all I'm saying..... :)
shouldn't these guys that we are trusting with hundreds of billions of dollars have a clue?
No one has said one way or the other what this will accomplish. They keep saying 'crisis will be averted'. Really? Or will it just be pushed off?
Martin brings up good points- without the jobs, wha difference does this make? this country's middle class is about to disappear. Is it not? If 7% are unemployed, another 5% are on welfare, and another 3% are living under bridges not getting counted, doesn't that say something? We already have over 35 million people in 'poverty'. I just don't se how this will help them.
I also keep hearing 'we need to loosen up credit so banks will lend again'. Wow, isn't that what got us ino this mess? They just can't be honest about this. I would say the majority of Americans are spending on credit right now- yeah, if that credit goes away, no more Sunday shopping sprees. Is that a bad thing??? I just don't get it.
and shouldn't we have an idea of what this will do to rates? Shouldn't someone?
- John Paunan, "John Paunan"
- Contributions:1145
You see so much conflicting stuff out there. I don't see how the government taking over the under/non-performing paper is really going to stimulate lending again. Does anyone think guidelines will change if the banks aren't neck-deep in foreclosures, and that's really the thing that will affect us? That inventory is going to continue to affect every other homeowner and their perceive wealth, or lack thereof, until that stuff goes away. Lenders will still simply focus on products and borrowers that they are certain will perform (which I can't blame them), but that means we'll see more of the same. Commercial and business lending will pick up, but residentials will still have the same requirements, so the only way a significant change occurs is if American borrowers as a whole decide there is value in real estate and pick up borrowing again.
The only entity that seems to be doing anything in terms of residential lending and easing requirements is FHA, so yeah, it looks like the government is really going to be taking over the role of the agencies for the vast number of residential borrowers.
Tammy, another irony of the whole situation is the fact that we can pull money out of our butts for a bailout, but not for things like health care. NOT health insurance, but health care. IE, someone goes to the hospital and gets their appendix out, no insurance, someone should help them out. At least I think so. And yet we always say it's too expensive. Why? Why is THAT too expensive, but not a $700 billion Royal Flush...
- Chris Corica, "Chris Corica"
- Contributions:1075
It all comes back to basic economics, Supply & Demand. We have had an artificial demand for so long due to lax bank UW guidelines by allowing anyone with a heartbeat and pulse to qualify that now that we are back to normal qualifying, the demand (true demand, people who actually qualify)has been minimized. Im not sure the $700 bill is going to do anything to the demand but it should help stabilize the abudance of supply taking the big losses right now. I dont think there is a quick fix to this problem and anything that is done now is just a temporary levee built to handle a category 3 storm when we are already at a 3 and just getting started. We know how this story ends. Uncle Sam and all his American Express "Black" Cards are not going to be able to charge their way out of this. Sometimes nature/the market just have to take course and then we can build from there. We will see.
- John Paunan, "John Paunan"
- Contributions:1145
Chris and Martin,
As a part-time professor of literature, I can't help but appreciate the hurricane metaphor that seems to have taken hold of our politics, our economics, well, everything. From 9/11 to Katrina, to this, we seem to be caught in one endless string of natural/unnatural disasters. I see a history book title, Season of Hurricanes, or something like that being written in the near future.
- John Paunan, "John Paunan"
- Contributions:1145
You
- John Paunan, "John Paunan"
- Contributions:1145
you guys can write the foreword.
- Matthew Brown, "matthewcbrown"
- Contributions:171
On my way into the office I heard a news story that congress is already talking about a economic stimulus plan part 2 which would include a ramp up in contruction spending. I thought that sounded like a better idea than sending everyone a $500.00 check...
- Tammy Stockdale, "Colorado Mtg Broker"
- Contributions:6995
Construction spending? No new construction needs to be added, we need to get rid of the inventory first.
- Andrew Adams, "203K Specialist"
- Contributions:9349
Living through the big dig in boston....ramping up construction spending doesn't seem like a great idea to me!
- John Paunan, "John Paunan"
- Contributions:1145
What the hell is the big dig? I've heard of that since I was in college (15 years ago). Are they catacombs being built under Boston?
- Ken Kopper
- Contributions:1578
The $700 billion doesn't scare me as much as the 'reverse auction'. There has to be a way to perform a spread on the bonds that the banks are unloading to determine the fine line between what the bank is willing to unload them for and the actual value of the underlying collateral and from the determine the discounted rate that will be paid. Granted this needs to be done fast but I firmly believe the knowledge that the calvary in on their way with a firmly spelled out plan that should be enough in the short term. Isnt buying debt at a steep discount the same model as collection companies use?
- Matthew Brown, "matthewcbrown"
- Contributions:171
It was for bridges and roads, not housing.
- Martin Wareing, "Martin Wareing"
- Contributions:3772
I wrote an editorial about my views (no I am not plugging it), but they need to flood the city gently.. We can wade around in floating sewerage, but will not drown. YICKY yes, damaged YES, but not dead and destroyed. According to the boys, if this is not done, it will all come at once like a financial TSUNAMI and unless you are Laird Hamilton and can surf like him, you might not make it. 
- Tammy Stockdale, "Colorado Mtg Broker"
- Contributions:6995
Oh, well Matt you could have specified that!
- John Paunan, "John Paunan"
- Contributions:1145
Yeah, but don't collection companies put a value on those debts before they go and actually buy them. From my understanding no one has actually put a value on those illiquid assets, so it's like we're buying a one of those unopened crates of stuff at a flee market. There maybe something valuable in there, or it may be a crate of rotting fish.
The big what if.....
Let's say this bailout happens, and banks are given their 'liquidity' back. Is this a good thing for mortgage rates?
My gut feeling is that this may spark a huge buying frenzy of our friend and foe, MBS. That buying frenzy may have prices shooting up- and that is a 'good thing', correct?
I don't want the bailout to happen, but is this going to save our industry? Or just prolong the inevitable? (tighter lending standards, banks only- no brokers, higher rates)
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