Comments on: Links 11/8/08 http://www.nakedcapitalism.com/2008/11/links-11808.html Sun, 22 Nov 2009 00:33:30 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: River http://www.nakedcapitalism.com/2008/11/links-11808.html#comment-24849 River Sun, 09 Nov 2008 01:03:00 +0000 http://www.nakedcapitalism.com/2008/11/links-11808-2/#comment-24849 Don, thanks for your reply. The biggest problem with the deleveraging process is the speed at which it is occuring. Gearing up happened over many years, deleveraging is happening fast because everyone is rushing for the exits at once. I see no way to slow the process that is fair to those holding the homes and those holding the paper on the homes. <br/><br/>To award 'homeowners' more time to pay and/or lower their interest rates would be unfair to those holding the paper. If the government intervenes and backs the mortgages it will be unfair to all that didn't buy homes that they couldnt afford. In addition, to find in favor of home owners at the expense of taxpayers or those holding paper sets a poor example for future would-be home owners. <br/><br/>The government cannot continue to intervene in all facets of financial markets without total failure of those markets. Markets are supposed to be price finding mechanisims and setters of interest rates. The government has replaced the 'invisible hand' with it's own. Sooner or later the pool of available fools will be used up and insiders will be trading against other insiders. In other words, no market at all. Will we then return to the barter system? <br/><br/>The safeguards that were in the system and were removed should be replaced. Permanently. The financial sector needs to be relegated to it's traditional role of providing finance for goods and services. The financial system should not be the center of the economy of any country.<br/><br/>Of course, these are my opinions and you know what they say about opinions... :) Don, thanks for your reply. The biggest problem with the deleveraging process is the speed at which it is occuring. Gearing up happened over many years, deleveraging is happening fast because everyone is rushing for the exits at once. I see no way to slow the process that is fair to those holding the homes and those holding the paper on the homes.

To award ‘homeowners’ more time to pay and/or lower their interest rates would be unfair to those holding the paper. If the government intervenes and backs the mortgages it will be unfair to all that didn’t buy homes that they couldnt afford. In addition, to find in favor of home owners at the expense of taxpayers or those holding paper sets a poor example for future would-be home owners.

The government cannot continue to intervene in all facets of financial markets without total failure of those markets. Markets are supposed to be price finding mechanisims and setters of interest rates. The government has replaced the ‘invisible hand’ with it’s own. Sooner or later the pool of available fools will be used up and insiders will be trading against other insiders. In other words, no market at all. Will we then return to the barter system?

The safeguards that were in the system and were removed should be replaced. Permanently. The financial sector needs to be relegated to it’s traditional role of providing finance for goods and services. The financial system should not be the center of the economy of any country.

Of course, these are my opinions and you know what they say about opinions… :)

]]> By: Anonymous http://www.nakedcapitalism.com/2008/11/links-11808.html#comment-24841 Anonymous Sat, 08 Nov 2008 23:25:00 +0000 http://www.nakedcapitalism.com/2008/11/links-11808-2/#comment-24841 gladwell's conclusions are pretty unsurprising, don't you think?<br/><br/>only thing is, the ivy league schools gave up their legacy programs a long time ago and the folks who went on that dizzying trip of greed indifferent to their actions were weinbergs more than caldwills. gladwell’s conclusions are pretty unsurprising, don’t you think?

only thing is, the ivy league schools gave up their legacy programs a long time ago and the folks who went on that dizzying trip of greed indifferent to their actions were weinbergs more than caldwills.

]]> By: Finance Guy http://www.nakedcapitalism.com/2008/11/links-11808.html#comment-24839 Finance Guy Sat, 08 Nov 2008 22:57:00 +0000 http://www.nakedcapitalism.com/2008/11/links-11808-2/#comment-24839 "Lack of clarity undermines TARP"<br/>There is an element of spin here. 91% are reluctant to participate. Sounds dire? Below it then says 70% of large, 50% of small, plan to participate. So it looks like 41 to 61 percentage points of reluctees aren't all THAT reluctant to dump their junk on U.S. taxpayer. “Lack of clarity undermines TARP”
There is an element of spin here. 91% are reluctant to participate. Sounds dire? Below it then says 70% of large, 50% of small, plan to participate. So it looks like 41 to 61 percentage points of reluctees aren’t all THAT reluctant to dump their junk on U.S. taxpayer.

]]> By: Don http://www.nakedcapitalism.com/2008/11/links-11808.html#comment-24808 Don Sat, 08 Nov 2008 16:37:00 +0000 http://www.nakedcapitalism.com/2008/11/links-11808-2/#comment-24808 River, By the way, your comment taught me a lesson. In trying to be a little provocative to get a few comments, I didn't clearly express myself. Thanks, Take care, Don River, By the way, your comment taught me a lesson. In trying to be a little provocative to get a few comments, I didn’t clearly express myself. Thanks, Take care, Don

]]> By: Anonymous http://www.nakedcapitalism.com/2008/11/links-11808.html#comment-24807 Anonymous Sat, 08 Nov 2008 16:31:00 +0000 http://www.nakedcapitalism.com/2008/11/links-11808-2/#comment-24807 Can anyone explain to me why Ford has lower short-term debt ratings than GM? Can anyone explain to me why Ford has lower short-term debt ratings than GM?

]]> By: Don http://www.nakedcapitalism.com/2008/11/links-11808.html#comment-24803 Don Sat, 08 Nov 2008 16:23:00 +0000 http://www.nakedcapitalism.com/2008/11/links-11808-2/#comment-24803 River,Thanks for your comment. What got me thinking about this was a better way of deleveraging. I'm not suggesting mandating anything, by the way. Some people will definitely default. Obviously, also, many loans shouldn't have been made. I'm trying to suggest a process that will ease the misallocation of housing by saving as many borrowers as possible. Where mortgages are bundled, having a system of possible solutions already in place might overcome the problem of how to deal with such foreclosures. The reason a lender would want to do such a thing would be to avoid defaults, deeply depressed housing prices, and negative effects on the economy.<br/><br/>But, again, thanks for the comments. I'll consider them.<br/><br/>Take care,<br/><br/>Don the libertarian Democrat River,Thanks for your comment. What got me thinking about this was a better way of deleveraging. I’m not suggesting mandating anything, by the way. Some people will definitely default. Obviously, also, many loans shouldn’t have been made. I’m trying to suggest a process that will ease the misallocation of housing by saving as many borrowers as possible. Where mortgages are bundled, having a system of possible solutions already in place might overcome the problem of how to deal with such foreclosures. The reason a lender would want to do such a thing would be to avoid defaults, deeply depressed housing prices, and negative effects on the economy.

But, again, thanks for the comments. I’ll consider them.

Take care,

Don the libertarian Democrat

]]> By: River http://www.nakedcapitalism.com/2008/11/links-11808.html#comment-24793 River Sat, 08 Nov 2008 15:19:00 +0000 http://www.nakedcapitalism.com/2008/11/links-11808-2/#comment-24793 'The cause of the crisis was a misallocation of resources by the homeowners.' Not!<br/><br/>The cause of the crisis was too low interest rates for too long which always causes economic bubbles to form. In addition, loans were being made to anyone that could fog a mirror because mortgage originators could bundle the mortgages and move them off their books. The people originating the loans have far more financial saavy than the home buyers...So, why again is it all the homeowners fault?<br/><br/>Just as there is no reason to believe that there will be high earnings for equities going forward, there is no reason to believe that in a depression that homeowners can pay mortgages that are extended. For one reason, interest rates will be increasing going forward, not decreasing. If you are the holder of some of these mortgages why would you want to offer extended terms to the homeowners? Your solution sounds more socialistic than any I have heard so far.<br/><br/>Once again...There are two ways to fix this mess. Increase wages or decrease home prices. There is no third way.<br/><br/>How would lengthening the time frame of a mortgage help if interest rates will be rising and homeowners are worried about losing their jobs (rightly so) and taxes will be increasing? ‘The cause of the crisis was a misallocation of resources by the homeowners.’ Not!

The cause of the crisis was too low interest rates for too long which always causes economic bubbles to form. In addition, loans were being made to anyone that could fog a mirror because mortgage originators could bundle the mortgages and move them off their books. The people originating the loans have far more financial saavy than the home buyers…So, why again is it all the homeowners fault?

Just as there is no reason to believe that there will be high earnings for equities going forward, there is no reason to believe that in a depression that homeowners can pay mortgages that are extended. For one reason, interest rates will be increasing going forward, not decreasing. If you are the holder of some of these mortgages why would you want to offer extended terms to the homeowners? Your solution sounds more socialistic than any I have heard so far.

Once again…There are two ways to fix this mess. Increase wages or decrease home prices. There is no third way.

How would lengthening the time frame of a mortgage help if interest rates will be rising and homeowners are worried about losing their jobs (rightly so) and taxes will be increasing?

]]> By: Don http://www.nakedcapitalism.com/2008/11/links-11808.html#comment-24790 Don Sat, 08 Nov 2008 14:59:00 +0000 http://www.nakedcapitalism.com/2008/11/links-11808-2/#comment-24790 We Should Move Away From Foreclosure System<br/>I want to propose a thesis. The cause of this crisis was the foreclosure system itself. The crisis could have been avoided had a system been set in place that renegotiated mortgages immediately upon delinquent payments.<br/><br/>The cause of the crisis in the housing sector was a misallocation of resources by individual homeowners. The borrowers took mortgages that were eventually too high for them to afford. The loans/mortgages were based upon terms that were much more likely to lead to default/foreclosure.<br/><br/>But what if foreclosure had not been the option? What if the first option had been to renegotiate the mortgage/loan to a payment affordable to the borrower? The level of payment that the borrower could afford would then trigger a set of possible options:<br/><br/>1) Increase the price of the house<br/>2) Increase the length of the mortgage<br/>3) Base payments on percentage of income, so that they will rise as borrower's income rises.<br/><br/>Now, however it would be done, wouldn't this have been a better situation than the one we currently face? The reason to try a mortgage renegotiation plan now is to try and see if we can move away from the foreclosure system and devise one that keeps borrowers in their houses. Isn't that a sensible proposal? <br/><br/>Don the libertarian Democrat We Should Move Away From Foreclosure System
I want to propose a thesis. The cause of this crisis was the foreclosure system itself. The crisis could have been avoided had a system been set in place that renegotiated mortgages immediately upon delinquent payments.

The cause of the crisis in the housing sector was a misallocation of resources by individual homeowners. The borrowers took mortgages that were eventually too high for them to afford. The loans/mortgages were based upon terms that were much more likely to lead to default/foreclosure.

But what if foreclosure had not been the option? What if the first option had been to renegotiate the mortgage/loan to a payment affordable to the borrower? The level of payment that the borrower could afford would then trigger a set of possible options:

1) Increase the price of the house
2) Increase the length of the mortgage
3) Base payments on percentage of income, so that they will rise as borrower’s income rises.

Now, however it would be done, wouldn’t this have been a better situation than the one we currently face? The reason to try a mortgage renegotiation plan now is to try and see if we can move away from the foreclosure system and devise one that keeps borrowers in their houses. Isn’t that a sensible proposal?

Don the libertarian Democrat

]]> By: Anonymous http://www.nakedcapitalism.com/2008/11/links-11808.html#comment-24782 Anonymous Sat, 08 Nov 2008 14:31:00 +0000 http://www.nakedcapitalism.com/2008/11/links-11808-2/#comment-24782 This is not a blog to air your political bias. Therefore I will counter you by airing my political bias. Sorry, not seeing the logic there. This is not a blog to air your political bias. Therefore I will counter you by airing my political bias. Sorry, not seeing the logic there.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/11/links-11808.html#comment-24778 Anonymous Sat, 08 Nov 2008 13:12:00 +0000 http://www.nakedcapitalism.com/2008/11/links-11808-2/#comment-24778 anon of 7:59 AM...<br/><br/>As far as I know this is not a blog to air your political bias.<br/><br/>What does the Obama campaign staff have to do with the possible depression that the world faces?<br/><br/>IMO, Shrub stole two elections outright...Do Shrubs actions compare to anything that Obama has done?<br/><br/>Your time would be better spent figuring out your personal financial situation and what you might do to protect yourself in the current slow motion train wreck...Leave the soap opera for others to ponder. anon of 7:59 AM…

As far as I know this is not a blog to air your political bias.

What does the Obama campaign staff have to do with the possible depression that the world faces?

IMO, Shrub stole two elections outright…Do Shrubs actions compare to anything that Obama has done?

Your time would be better spent figuring out your personal financial situation and what you might do to protect yourself in the current slow motion train wreck…Leave the soap opera for others to ponder.

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