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Old 11-25-2008, 12:35 PM   #21
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Mongolian empire made it a hundred years that way!

Seriously, I'm not ready to start hammering nails into the coffin lid just yet. In the long run I see a diminished U.S., but one that will be o.k. The Roman empire suffered from civil wars, looting and sacking of Rome multiple times, food shortages etc. and still at least staggered along for a couple hundred years. If you turn on the news and Washington is in flames, that may signal the beginning of the end, but it could take centuries from there. When everybody sees D.C. in flames for the third time and just shrugs, then we may be through.
Didn't the Mongols have the brains to steal enough from their defeated foes to make their wars pay-as-you-go? In contrast, our wars seem to be largely a mechanism to bleed us, rather than those we target.

I am not talking about military defeat. Only large loss of world influence, possibly loss of the $ standard. Loss of the ability to consume much more of the world's natural resources and tradeable goods than we produce. This of course will also mean that USA will have less military influence. Face it, by any rational accounting we have lost bigtime in Iraq already, if there was any goal other than to kill more Iraqis than they were able to kill of us.

I think this loss of empire is already a wrap. The Bush wars have likely advanced the timeline 10 or 20 years.

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Old 11-25-2008, 12:41 PM   #22
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Hmm, DC in flames.....would that empty out the place and allow new people to then rebuild and occupy it? That would bring about a term limit mechanism, perhaps......I'm thinking more about Congress...
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Old 11-25-2008, 12:41 PM   #23
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Oh, my bad, it's $800 billion, but what's $200b among friends? Paulson said this was to free up the frozen credit markets because consumers can't get loans for basics. Bull#*(%! I went and bought couches last week and took advantage of their 6 months same as cash. They approved me for 3 times the cost of the couches. What he's really saying is people who's credit isn't worth $%#@ can't get loans, and we depend on a busy loan sharking market to keep the economy going. I'm so pissed off, what a bunch of liars.
I think that the Treasury has doon a generally poor job of administering the TARP program and I look forward to fresh blood arriving in January. Having said that...

The program announced today appears to be very specifically targeted and well thought out. Agency MBS and bonds are priced at historically wide spreads to treasuries. This directly affects the cost of conforming mortgages (the kind that actually require you to put down a decent deposit, document your income, etc.), which is a huge roadblock in the way of the housing market bottoming, let alone recovering. So having the Fed go out and buy a bunch of these securities quite directly communicates to the market that there is a strong bid for these assets, which encourages others to step in. Since these securities are backed bythe feddle gummint anyway, its not like the Fed is taking any incremental risk.

The asset backed thing they announced is similarly targeted and well thought out. The Fed will lend on AAA rated bonds backed by car loans, credit cards, etc. These are squeaky clean securities but the market has shut down and spreads are at historical levels. Again, this directly affects the cost and availability of consumer credit, the revival of which will be key to reviving the economy. Because of the structure of what the Fed is doing, I believe they essentially are taking no risk.

So I think there was basically no incremental risk being assumed by the Fed (although the treasury put up $20 billion in TARP funds). I believe it is just a way to inject liquidity into very specific, targeted sectors that will help revive the economy. I would prefer they did not have to do this, but stuff like this is a lot les costly than massive stimulus spending that would otherwise be required.
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Old 11-25-2008, 12:52 PM   #24
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I think that the Treasury has doon a generally poor job of administering the TARP program and I look forward to fresh blood arriving in January. Having said that...
You are being kind to say poor.....ABYSMAL is a better word. Congress gave money out like it was confetti until the carmakers wanted some, now we need business plans and such.........

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The program announced today appears to be very specifically targeted and well thought out. Agency MBS and bonds are priced at historically wide spreads to treasuries. This directly affects the cost of conforming mortgages (the kind that actually require you to put down a decent deposit, document your income, etc.), which is a huge roadblock in the way of the housing market bottoming, let alone recovering. So having the Fed go out and buy a bunch of these securities quite directly communicates to the market that there is a strong bid for these assets, which encourages others to step in. Since these securities are backed bythe feddle gummint anyway, its not like the Fed is taking any incremental risk.
Does that mean that the banks can no longer us their TARP funds to buy smaller banks at fire sale prices? Because that's all a lot of them have done, while keeping underwriting so strict noone can get a loan. We went from NIV loans to now where even folks with good credit have to jump through hoops........
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Old 11-25-2008, 12:56 PM   #25
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Does that mean that the banks can no longer us their TARP funds to buy smaller banks at fire sale prices? Because that's all a lot of them have done, while keeping underwriting so strict noone can get a loan. We went from NIV loans to now where even folks with good credit have to jump through hoops........
I think taking in capital in order to resolve issues with sick banks in a way that reduces the cost to the FDIC is a perfectly reasonable thing to do with some of the TARP money, for the record. But of course we need lenders to lend to get out of this mess.

I don't really have any idea how hard it isto get a loan these days. Anyone tried? I was on the phone with Pen Fed earlier today to make sure they got the ACH information I put in on line and they wanted to increase my credit card limit, but that is hardly representative.
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Old 11-25-2008, 01:13 PM   #26
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I don't really have any idea how hard it isto get a loan these days. Anyone tried? I was on the phone with Pen Fed earlier today to make sure they got the ACH information I put in on line and they wanted to increase my credit card limit, but that is hardly representative.
USAA FSB threw at me an AMEX rewards card with 0% interest for 12 months, zero fee for balance transfers/convenience checks for 60 days, no annual fee, $25,000 limit, double points for 12 months, 2500 point bonus. How could I resist?

I'm sure I've got stellar credit (I've never bothered to pay for a credit score), and I haven't incurred a finance charge in almost 20 yrs, always paying it off monthly. So it's not necessarily representative, but it's interesting.
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Old 11-25-2008, 01:18 PM   #27
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I have a client with excellent credit who was turned down for a loan because he only wanted to put 10% down on an investment property, and get a mortgage for the rest. Needless to say he's not happy.
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Old 11-25-2008, 01:20 PM   #28
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USAA FSB threw at me an AMEX rewards card with 0% interest for 12 months, zero fee for balance transfers/convenience checks for 60 days, no annual fee, $25,000 limit, double points for 12 months, 2500 point bonus. How could I resist?
Same here, a couple years ago. And even now, if I carried a balance from month to month (I don't), the interest rate is set at prime (now 4.5%).
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Old 11-25-2008, 01:37 PM   #29
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Brewer, if I was the lynch mob you were the sheriff that talked me down, but you better keep that guy under lock and key just in case. I will shut up about it, except to say I think the initial thought was the subprime crisis wouldn't spread to Alt-A, so I worry that these purportedly squeaky clean loans may only look that way on the surface.

As far as credit, I could still plant a forest with the weekly offerings, and Home Depot and Lane furniture both gave me huge lines to buy stuff. But DW and I are both at or above 800, so I really think they are tying to get credit moving again for the high 600's crowd. Knew someone who was turned down for a car loan with a ~670 credit score - not really turned down, they just wanted 10% up front which he didn't have (I know, there's your problem).
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Old 11-25-2008, 01:40 PM   #30
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My wife just got a 12 month 0% interest no balance transfer offer for a US Bank credit card. I haven't seen one of those for a long time.

Everyone keeps talking about credit markets being frozen, but I don't see it, and I'm not sure that there is a good way to judge that, short of waiting to see the bank 10k's next year.

My personal suspicion is that it is bunk, and that credit is still widely available, just somewhat less available than it was in bubble times.

Having credit availability reduced from "stupid crazy here's a loan if you can fog a mirror" levels is not a "freeze".


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I don't really have any idea how hard it isto get a loan these days. Anyone tried? I was on the phone with Pen Fed earlier today to make sure they got the ACH information I put in on line and they wanted to increase my credit card limit, but that is hardly representative.
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Old 11-25-2008, 02:18 PM   #31
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My wife just got a 12 month 0% interest no balance transfer offer for a US Bank credit card. I haven't seen one of those for a long time.

Everyone keeps talking about credit markets being frozen, but I don't see it, and I'm not sure that there is a good way to judge that, short of waiting to see the bank 10k's next year.

My personal suspicion is that it is bunk, and that credit is still widely available, just somewhat less available than it was in bubble times.

Having credit availability reduced from "stupid crazy here's a loan if you can fog a mirror" levels is not a "freeze".
I think most of us here are not a good representative sample. I suspect that the nature of most of us here is that we are careful and generally responsible about money (who else could be targeting early retirement in most cases?), so we may not be feeling what the typical consumer is feeling. I would wager that the average FICO score of the contributors on this board would be a lot higher than the population at large.
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Old 11-25-2008, 02:57 PM   #32
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The latest from USBank is the "platinum" checking account. Lots of pretty goodies like free money orders and travelers checks, one free overdraft charge, special services on cash advances that I never use. Capital One keeps sending me letters letting me know I am eligible for "special services" if call them up (so they can try to get me to buy more services).

I think that the banks are luring the customers who have excellent FICOs hoping to get them into (more) debt. That's a losing proposition for the banks because this segment has great credit because they are not in debt and manage their money.

I'm wondering if the entire financial industry is undergoing a VERY much needed deleveraging. Do we really need all these banks and credit card companies?

A relative works at a small bank in Calif that is in good shape not having made any "creative" mortgages during the boom. But the bank is still getting a 25 million advance from the government!!!
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Old 11-25-2008, 03:36 PM   #33
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I think most of us here are not a good representative sample. I suspect that the nature of most of us here is that we are careful and generally responsible about money (who else could be targeting early retirement in most cases?), so we may not be feeling what the typical consumer is feeling. I would wager that the average FICO score of the contributors on this board would be a lot higher than the population at large.

IIRC the average FICO for the US population is in the high 600s, so we are talking about tons of people affected in the general population. Investment property I am not particularly concerned about: I am thinking more about residential mortgages, auto loans and similarthat underpin much consumer spending.
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Old 11-25-2008, 03:49 PM   #34
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IIRC the average FICO for the US population is in the high 600s, so we are talking about tons of people affected in the general population. Investment property I am not particularly concerned about: I am thinking more about residential mortgages, auto loans and similarthat underpin much consumer spending.
So, is it fair that those of us with FICO scores in the low to mid 800's should bail out the folks that have the 500-600 FICOs, because that's what we're doing.........
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Old 11-25-2008, 04:06 PM   #35
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It wasn't long ago the pundits predicted that Canada would break up with the west-central provinces joining the USA. Why would northern USA want Canada and why would Canada want them?
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Old 11-25-2008, 04:17 PM   #36
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I am trying to figure out what 'back to work' program Obama's folks will come up with that both targets the skills of the unemployed and invests in infrastructure.

While repair of roads and bridges is badly needed I don't see that addressing un or under employment because a lot of the unemployed are white collar or hammer & nail gun construction workers. However, odds are asphalt is cheaper right now than it has been for a couple years.

Manufacturing solar and windmill electrical generation would create/maintain manufacturing jobs... something like the BPA or TVA for green energy would be a model.

Some white collar workers could be useful to help in schools, our children are our human infastructure.

Now, what to do with all those unemployed Wall Street financiers...

Thoughts folks
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Old 11-25-2008, 04:25 PM   #37
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I don't really have any idea how hard it isto get a loan these days. Anyone tried? .
For the first time ever, I received a direct marketing letter from my credit union telling me that they were still "offering great rates on" car loans, personal loans, etc. Evidently they felt a need to proactively solicit new loan business.
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Old 11-25-2008, 04:27 PM   #38
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So, is it fair that those of us with FICO scores in the low to mid 800's should bail out the folks that have the 500-600 FICOs, because that's what we're doing.........
It's a cafeteria of bad choices. We ragged on people who got in over their head in houses they couldn't afford here in my neighborhood. We told them to eat cake. Now I have a house behind me empty, a house across the street, a house around the corner, and they all look like crap. My property values are in free fall, and crime is up. Neighborhood is quiter, though. So while it may annoy me that my neighbor gets debt forgiven and a 3% mortgage, it's better than wondering what the sound from the empty house was and if you have a crack head squatting 20 feet from your kid.

Same with this credit issue, we'll be hurt a lot more by having the wheels fall off just to spite them. The real problem is we haven't found something that works yet. If we had a crystal ball and knew that $1 Trillion spent on X and Y would make the problems go away, I'd sign up for that. But this shotgun ADHS Bipolar approach is killing us.
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Old 11-25-2008, 04:58 PM   #39
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I am trying to figure out what 'back to work' program Obama's folks will come up with that both targets the skills of the unemployed and invests in infrastructure.

While repair of roads and bridges is badly needed I don't see that addressing un or under employment because a lot of the unemployed are white collar or hammer & nail gun construction workers. However, odds are asphalt is cheaper right now than it has been for a couple years.

Manufacturing solar and windmill electrical generation would create/maintain manufacturing jobs... something like the BPA or TVA for green energy would be a model.

Some white collar workers could be useful to help in schools, our children are our human infastructure.

Now, what to do with all those unemployed Wall Street financiers...

Thoughts folks
I think you will see some of all the above. For sure any package will include roads, bridges, dams, levies, etc. simply because so much of this stuff is in terrible shape and the municipalities definately cannot fund it in this environment. I would expect that we will also see energy infrastructure, exploration and research investments. Would also expect investment in education (perhaps some new schools as well as more teachers). Not sure beyond that.

Interesting you should mention asphalt. I actually have bought a piece of a company that produces asphalt because the supply picture has been tightening for the past several years as refiners install equipment that allows them to squeeze every last drop of the "good stuff" from crude, leaving less behind to make asphalt with. It looks to me like the supply side is in no way prepared to cheaply supply a lot more asphalt if we embark on a big program of road building.
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Old 11-25-2008, 05:10 PM   #40
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It's a cafeteria of bad choices. We ragged on people who got in over their head in houses they couldn't afford here in my neighborhood. We told them to eat cake. Now I have a house behind me empty, a house across the street, a house around the corner, and they all look like crap. My property values are in free fall, and crime is up. Neighborhood is quiter, though. So while it may annoy me that my neighbor gets debt forgiven and a 3% mortgage, it's better than wondering what the sound from the empty house was and if you have a crack head squatting 20 feet from your kid.

Same with this credit issue, we'll be hurt a lot more by having the wheels fall off just to spite them. The real problem is we haven't found something that works yet. If we had a crystal ball and knew that $1 Trillion spent on X and Y would make the problems go away, I'd sign up for that. But this shotgun ADHS Bipolar approach is killing us.
A nice summary of my thoughts on the subject. Another way of putting it is that I don't particularly care about the people who foolishly get caught up in meth, but if my tax dollars paying for them to get treatment keeps them off the streets and reduces crime I can live with that. It is enlightened self interest.
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