Food For Thought

[mickeyd]

Everyone wants a government bail-out when things get dicey.

But there's a second reason that we're probably not ready for Friedman's elegant small government: When people who play with matches burn their houses down, we're generally not pleased if our political leaders pull up lawn chairs and watch the flames. We expect them to do something about it. We want a plan.
Have you heard any presidential candidate from either party explain why the appropriate response to the mortgage debacle is to let the culpable parties pay the price for their mistakes? Nothing teaches you about debt like losing your home to foreclosure. I'm still waiting for that speech. (OK, Ron Paul has probably given it -- which is one reason he'll never get more than 10 percent of the vote.)

http://finance.yahoo.com/expert/article/economist/67468;_ylt=Apt2Xn81qzo7JVmhV3sA3mBO7sMF

 

[DougViages]

Is the age of responsibility really over?

We appear to be walking down the "Road to Serfdom" (See Hayek's book) faster with each passing day. To paraphrase: A Govt big enough to give you everything you want is powerful enough to take away everything that you have. Our founders were deathly afraid of an all powerful central govt. That's why our system is "messy', full of competing interests, and with offsetting bases of power (Executive/Legislative/Judicial). We've also forgotten Lord Acton's advise: Not only does power corrupt, but "there's no such thing as a ruling class, NO class is fit to rule".

To focus on the mortgage "crisis": Only a small percentage (2 -3 %) of all mortgage loans are really in "crisis". The lenders DON'T want the homes back, so they all go to great lengths to try to work out deals with the borrowers to prop up the home owner. I live outside of Detroit, the number one foreclosure spot in the US. One huge contributor to this problem was the high percentage of fraud in valuation and lending within the city. I witnessed some of the fraud first hand, when a firm I worked for sold homes it owned as rentals in Detroit. I would attand a closing, and come away with a reasonable value for the home. Then, there would be a another closing, at a price $20,000 to $30,000 higher. The agent, appraiser, and home owner all "winked" at each other, and pocketed money supplier by a clueless lender.

A word to the wise: let the marketplace sort this out. Are exist a great many avenues for help for a person/household who needs it. My church runs charitable programs of this nature.

Ultimately, we will all be less free, and poorer a few years down the road, all in the name of progressive politics and "social equity".

Be afraid, be very afraid!

 

[Walt34]

My gosh! What a notion - expecting people to take responsibility for themselves.

Sadly, apparently not any more.

 

[Midpack]

I'm no expert on the mortgage crisis, but I gather that it's commonplace these days for people to 100% finance their homes via two mortgages. I was never given that option (and wouldn't have taken it anyway), I think the lowest downpayment I was allowed on even my first house was 20%. I don't feel sorry for anyone, homeowner or lender, that 100% finances a home and then gets into trouble. Not one bit. Wouldn't ending 100% (maybe 80% max) financing go a long way to keep homeowners and lenders out of trouble?

 

[jazz4cash]

One huge contributor to this problem was the high percentage of fraud in valuation and lending within the city. I witnessed some of the fraud first hand, when a firm I worked for sold homes it owned as rentals in Detroit. I would attand a closing, and come away with a reasonable value for the home. Then, there would be a another closing, at a price $20,000 to $30,000 higher. The agent, appraiser, and home owner all "winked" at each other, and pocketed money supplier by a clueless lender.

I don't understand how a competent lender could be clueless in this situation. I've seen comments from appraisers that felt 'pressured' to hit the right number, or lose future work with that lender. I believe the lenders were complicit to the extent that the loans could be securitized and sold off like a child's game of hot potato.

 

[dumpster56]

I don't understand how a competent lender could be clueless in this situation. I've seen comments from appraisers that felt 'pressured' to hit the right number, or lose future work with that lender. I believe the lenders were complicit to the extent that the loans could be securitized and sold off like a child's game of hot potato.

Because its all Greed. It is I want that money NOW and housing will continue to go up up and away!!

Bust alas they are wrong and in deep ...

 

[ladelfina]

Here's a blog for ya, mickeyd:
Mish's Global Economic Trend Analysis: Bank of America Asks Congress for a $739 Billion Bank Bailout

The current post cites the WSJ.. gag:

Countrywide Financial Corp., the nation's largest mortgage lender by loan volume, will host about 30 representatives of smaller mortgage banks for three nights next week at the Ritz-Carlton Bachelor Gulch ski resort in Avon, Colo. At one of the country's most-glamorous skiing spots, a regular room on a weekday starts at $750.

The first items on the agenda for guests arriving Monday evening: Cocktails and ski fittings. Next is dinner at the Spago restaurant, whose menu includes Kobe steak with wasabi potato puree for $105. (For the budget-minded, pan-roasted buffalo filet with Kabocha pumpkin flan is $54.)

The annual event is for bankers at correspondent lenders, which originate loans and then sell them to Countrywide. The Calabasas, Calif., lender is paying for hotel rooms, meals, skiing and tips, according to a program distributed to attendees.

Doug, I love Hayek's book. problem is the so-called "conservatives" from Reagan on have been far worse than the 'liberals" with the handouts and corporate welfare. From the border fence to Blackwater, from Katrina trailers to Neil Bush's "educational" software.. the name of the game is graft. Coordinated looting.

Privatize profits (no/low taxes) and Socialize risks.
That's today's "free market" regime.
The insurers, big pharma, agribiz.. they all do it. We just see the painful results more clearly here & now with the credit crisis.


What the hell is a Kabocha pumpkin?

 

[jazz4cash]

Because its all Greed. It is I want that money NOW and housing will continue to go up up and away!!

Bust alas they are wrong and in deep ...

My point was that calling the lender clueless is giving them a free pass which they are not entitled to. I agree it's more a matter of Greed on the part of lenders, borrowers, and others.

 

[mickeyd]

Countrywide Financial Corp., the nation's largest mortgage lender by loan volume, will host about 30 representatives of smaller mortgage banks for three nights next week at the Ritz-Carlton Bachelor Gulch ski resort in Avon, Colo.

Seems like I recall reading recently that they had cancelled this deal. I was never invited initially, so I have received no official notification of it's cancellation.