Posted on 10/24/2011 6:27:12 PM PDT by Kartographer
Mobs are at the doors of bankers and others in the financial system, screaming to politicians to put these people in jail while the vote-seeking politicians are fanning the flames rather than reminding people that the legal system is the way these people should be judged. Since banks are levered about 15 to 1, it doesn’t take much of a debt problem to cause them solvency problems, and since in deleveragings debt problems are big, there is significant risk banks will run out of equity again and the fury against them will intensify. For these reasons risks to the global banking system are much greater than normal.
While we hope that most people and their leaders will approach these difficult challenges calmly and collectively, we would not be meeting our fiduciary responsibilities if we bet on this happening without clear evidence of it. We are not alone in having and expressing our concerns in what has come to be known as “risk-on” and “risk-off” market movements.
If we calm down and work together to properly manage this difficult situation – for example, if we can properly distribute both the austerity and the increased efforts that are required to manage our debt burdens – we can get through this deleveraging without great pain. If we can’t, we may experience an economic, social and political collapse.
(Excerpt) Read more at zerohedge.com ...
Preppers Ping!
If the US was hit by a large meteor and 1/3 of our economy was destroyed, Americans will come together to find the resources to rebuild and help all. But if a group of Wall Street bankers and politicians created a real estate bubble, liar loans, toxic assets, lie and cheated the economy into a meltdown, that is a different story. Americans got kicked twice, one losing their job as the financial system imploded and forced to pay taxes to bailout Wall Street bankers who immediately gave themselves bonuses and now increased salaries to hide the bonuses. Three years of no recovery while Wall Street bankers party, you can forget about cooperating to solve the problem. The only way Main Street is satisfied, is bankers hanging from every lamp post along with their mansions on fire and their families homeless in the streets.
Be ready!
Who do you think the "liar" is in the liar loans?
Hmmm?
If someone making $50,000 a year applies for $1 million mortgage to buy a house, why is the liar who signed up for the loan considered a victim?
Let's say we have two people, both making $50,000. One buys a $200,000 house he can afford. The other buys the $1 million mortgage house.
Why should the guy who lived within his means be the one punished by having politicians protect the guy who took out the $1 million mortgage? Whatever happened to individual responsibility?
How can someone who considers himself or herself a conservative consider the "liar" who took out the $1 million mortgage a victim? Why isn't he the bad actor, and the rest of us who lived within our means the victims?
Especially when it was the politicians who insisted that the banks make loans to people who couldn't afford it.
Why are the loan recipients victims?
Here’s why?
That $1,000,000 the young couple borrowed to buy the 1100 sf fixer bungalow in San Francisco in 2005 was said to them to be a very good price and that the old house had lots of ‘potential’. And then they were told that the price tag was not important as they could get a 2% 5 year loan and qualify. Then at the end of 5 years they would have equity because of rising prices and they could refinance again at a low rate or else sell for a profit.
Yes those young couples were foolish but they were young and inexperienced and they were being led over the cliff by some smooth talking mortgage brokers who were actually put in every corner of America to peddle million dollar fixers by Wall St. bankers (see below).
What was happening behind the scenes is that loan underwriters were no longer underwriting the borrowers but were instead underwriting the property and its future value. That was insane.
And the reason that the teaser loans existed, that the underwriters were compelled to go lax and mortgage brokers were saturating the streets and businesses of America is because Wall St. Bankers had forward-sold bundles of financial notes called Mortgage backed securities MBS with disguised fake insurance called Credit Default Swaps CDS derivatives, AND THE MOST EGREGIOUS PARTS OF THIS SCHEME WERE THAT:
(1) THE BANKERS ADVERTISED THE FINANCIAL NOTES WERE BACKED BY DEEDS OF TRUST WHEN IN FACT THE DEEDS HAD BEEN DECOUPLED FROM THE NOTES BY PLACING THEM IN ‘TRUST POOLS’ WITHOUT PROPER ASSIGNMENTS AND RECORDINGS LEAVING THE NOTES UNSECURED, AND
(2) THE BANKERS LISTED LOAN HOLDERS ON A SPREADSHEET ATTACHED TO EACH MBS CERTIFICATE WITH NAMES, ADDRESSES. LOAN AMOUNTS AND CREDIT RATINGS AND.........
AND ........GET READY
AND ........
THE LOAN HOLDERS LISTED ON THE ATTACHED MBS SPREADSHEETS HAD FAKE NAMES AND ADDRESSES!!!!!!!!
SO THE BANKERS TOOK INVESTOR’S MONEY FOR THE MBS AND THEN USED THE MONEY TO HIRE AN ARMY OF LOAN BROKERS AND MORTGAGE BROKERS TO COVER THE COUNTRYSIDE TO SIGN UP YOUNG INEXPERIENCED GULLIBLE COUPLES TO BACK UP THE FICTIONAL SPREADSHEETS OF LOAN RECIPIENTS SO THEY COULD LATER CLAIM HARMLESS ERROR OR CHANGE IN OWNERSHIPS ETC.
So on the one hand you have naive ignorant homebuyers who were told the high price of the homes they saw everywhere was normal market trending and that real estate only moved up up up.......
And on the other hand you have bankers who were always aware of their own deceit and misleadings that orchestrated the entire scam.
So if you blame the naive and gullible and ignore the crooks that created the scam, you might do better in certain parts of Mexico.
To recap, you are advocating that the people that need shelter and who want to build up equity in their home nestegg for the future should be blamed when they have no real low cost alternatives in the City where they work....
and that the sales and finance people that say “yes the price is high but....we have a ‘financial’ product for you that will let you get into that home yada yada yada ....”, that these reckless sales and finance people should walk around free without worrying about spending one day in jail ....
People need a roof and people like to get ahead. Should they be blamed for listening to official ‘professional’ people that are roping them into a massive fraud?
Go ahead and blame the so-called victims but try and focus also on the real crooks that are behind the greatest heist in history.
Keepin' It Occupied (from Letterman's Top Ten List)
10. "Hell No! Something, Something, Something!" - David C., Arvada, CO
9. "'Down With The Corporations!' -- Tweeted from my iPhone" - Brad M., Kansas City, MO
8. "Just Like Woodstock, But Without The Music!" - Jan M., Boardman, OH
7. "Will Stop Protesting For A Job!" - Steve P., Antioch, TN 6. "Why Should Libya, Egypt And Syria Have All The Fun?" - Doug F., Cleveland Heights, OH
5. "Just Like The Tea Party, Only Younger, Less Grouchy And We Don't Vote!" - Joe C., Tallahassee, FL
4. "Give Us A Hundred Each And We'll Go Home" - John S., Sacramento, CA
3. "We Aren't Just Occupying Wall Street, We're Also In Line For The New iPhone. Multitasking" - Vincent G., Saddle Brook, NJ
2. "Who Better To Tell Us How To Run Our Country Than Those With So Few Personal Responsibilities That They Can Sleep In A Park For A Month?" - Charles C., Ogden, UT
1. "What Do We Want? We Don't Know! When Do We Want It? Now!" - Wade M., Chester, VA
The "young couple" are just as big crooks as anyone else in the scheme.
They borrowed money that was way beyond what they could afford. It's not rocket science to know they couldn't afford it, it was just greed.
If people are greedy and get burned, they should bear that cost. If they got the $1 million mortgage and bet on housing prices always going up, up, up, and made a bunch of money, are they going to share some of that money with folks like me who pay taxes and live within our means? No.
And now they are saying "Obama you need to give me some of your stash" from wherever he gets that stash (taxpayers like me who live within our means).
Why isn't the person who buys the crack guilty, and not just the "smooth-talking" crack dealer who sold it to them?
The bankers and lawyers who illegally recorded mortgages or who illegally created fictitious borrowers are certainly guilty, but they are NOWHERE NEAR the majority of the problem. What they did is called "fraud" and we have laws on the books against it, and the books should be thrown at them.
But the majority of the housing bubble crisis is not from those subsets, it is from the destruction of sound underwriting standards that served the market well for many decades (high down payments and limiting monthly loan service to a reasonable % of income) by ACORN, Fannie, Freddie, Dodd, Frank and the usual suspects of social engineers combined with an environment of easy money and rising home prices that allowed the phenomenon to continue and continue and continue without a correction until it had grown into a giant bubble.
The rating agencies that gave mortgage-backed securities high ratings were for the most part not engaging in fraud, but stupidity. This has been dissected in detail in the financial press and the stupidity of the diversification they thought were achieving in these portfolios because of ignorance of true correlation factors.
But it all starts with the creation of the crap in the first place.
The "young couple" who took out the liar loan with their eyes full of greed created the crap, and after that point it was just a question of who would end up holding the bag with the crap in it.
“They borrowed money that was way beyond what they could afford. It’s not rocket science to know they couldn’t afford it, it was just greed.”
Oh really?
And how much did you borrow for your home? In what year?
“Why isn’t the person who buys the crack guilty, and not just the “smooth-talking” crack dealer who sold it to them?”
Because the smooth talking crack dealer is not going to jail or is too big to fail. So why aren’t you upset about that? Why are you only focused on the foolish homebuyers?
When I buy a car I don't ask the car dealer if I can afford it.
When I buy a boat I don't ask the boat dealer if I can afford it.
It is up to every family to act responsibly and live within their means.
One of the root causes of our economic crisis is an irresponsible and frivolous generation that has spent and spent and spent what prior generations have worked and saved for without a thought for saving for the future, and who are always quick to blame someone else for their own irresponsibility.
The storm coming is one of our own making. Common sense would tell you that you cannot afford to buy a house that is 5,10, 20 times what you make. Common sense would tell you that if it sounds too good to be true, it is.
Unfortunatly, common sense is dead and we killed it.
Sounds like you should be with OWS camping out.
The borrower is guilty of lying and in many states can be prosecuted and the banks can sue for damages.
Banks are suppose to verify the info. Mortgage originator is suppose to do a credit check before providing the application to borrower. Investigation are showing none of this is done by the bank because they do not care. The mortgage would be sold within six months to Freddie and Fannie (this is where the Fed Gov screwed up). All the banks did was instruct their loan officers to sign up as many loans possible so they can make the most points and fees within six months. Anyone in the underwriter departments who actually verify the info and held up an application was berated by his/her supervisors for preventing his/her ability to meet the quotas (thus jeopardize his/her bonus). I recommend you to youtube William Black the last fed regulator who closed the Savings and Loans during the 1980’s. Many of the pump and dump bubble scams are being repeated today as bankers and loan officers find a gap in fed regs or policies that invite this cheating and greed. The sad part of this is the scheming bankers knew that in the long run this can destroy the bank they work for, but they do not care because by the time the system is ready to implode they would retire and made tons of money. Once gone the people left behind are left holding the bag. In this case the low level workers in the bank facing unemployment and the taxpayer.
“When I buy a home I don’t ask the mortgage bank if I can afford it.”
I see, so you know if you can afford a home? You are one of those people that don’t need a mortgage?
There's enough blame to go around but the victims here are the rest of us who aren't easily swayed by slimy used car salesmen, Hussein, and lying mortgage brokers. If the home owners were old enough to sign the papers, they're old enough to know to read the thing before they sign and old enough to take responsibility for their stupidity. Sorry, no sympathy for them. Plenty of sympathy for the rest of us who are having to take food out of our children's mouths to pay for everyone else's mistakes.
So let me get this clear.....using a different setting.
Nearly 12 years ago a good friend of mine and his wife and children were killed on Alaska Flight 261 from Puerto Vallarta back to Seattle.
At their memorial funeral service should I have told the family that he and his wife were old enough to know that air travel was risky and that they were to blame for their deaths and the deaths of their children for taking such a risk?
And even if I knew that the Chinese manufactured Lead Screw of the Rudder Flight Control System was made of defectively Tempered Steel Metal, and that McDonnell-Douglas failed in its QA procedures to catch the Chinese cutting corners as Mac-Dac sought to outsource and cut costs on labor, should I not still launch a verbal epitaph out loud at the funeral service on those that lost their lives due to their own risky decisions?
http://en.wikipedia.org/wiki/Alaska_Airlines_Flight_261
And should I also ignore that our own FAA during the time of ‘Blame America First’ under the Clintons chose to not blame the Chinese and its Mac-Dac benefactor but instead chose to blame Alaska Airlines for not greasing the Lead Screw properly? Does it matter? According to them, Alaska was the easy target as they had the easy pickings in insurance backing to settle the mess, while my friends and their beautiful children were ripped into shreds of flesh, bone and muscle.
Yeah, let’s go blame that family, let’s blame those parents.
People can act prudently and still get burned. People can take all the precautions in life they want to and might still get struck by lightning walking down the street.
People acting prudently were NOT the ones who caused the housing bubble and the economic crisis.
Sometimes people who save up in order to make a strong down payment and only buy a smaller house instead of a bigger house because that is what their monthly income can reasonably support, still lose their house because of a tragedy or unusual change in circumstances.
BUT THAT HAS NOTHING TO DO WITH THE MASSIVE HOUSING BUBBLE.
That situation of people who saved up and bought a smaller house instead of bigger house has nothing to do with liars' loans, subprime mortgages, flippers, greedy "young couples" who bought a much bigger house than they could afford because they expect Big Government to take care of them if they guessed wrong on the future direction of the housing market and don't make a bundle of money, 5% down payments, stupid people who don't save any of their paycheck but spend it all, thinking that the government will always be there to save them, etc.
The root cause of the economic crisis is stupid, irresponsible, selfish, greedy people who believe the lies in the popular culture and from the Democrats that they are "entitled" to various things, including a big expensive house that they could not reasonably afford.
Yeah, you’re so wise and good, and you know everything.
So what do you say to this:
My sister lives in Southern California with her husband and 8 year old daughter. Her husband is a pilot for a major airline and she runs a wedding video business.
They bought their home in 2005, a 3 bedroom 2.5 bath ranch home in the suburbs, nothing palatial but clean, safe and pretty. They paid $560,000 and put down 15%. The price was beneath the market average because the sellers had to sell quick. So they thought they got a good deal.
The home value climbed to about $750,000 by 2007 and today it has a market value of about $410,000. They lost all of their hard earned down payment.
Luckily for them they did not need a designer loan to get into the home, but many of their friends and neighbors did. And some of those friends and neighbors walked away from their mortgages.
So now my sister’s wedding video business has fallen on very hard times and the family budget is strained. Her husband has an opportunity to transfer out of California to secure his position but they can’t sell their home. They are thinking of walking away from their mortgage.
Should I telephone them and rant about how irresponsible they are, how foolish they were for ‘buying too much home’?
Now back to you Mr. Boss, can you please lecture us again on how you are so good and wise?
The home value climbed to about $750,000 by 2007 and today it has a market value of about $410,000.
Should I telephone them and rant about how irresponsible they are, how foolish they were for ‘buying too much home’?
A lot of families go through hard times at some point in their lives. That is why in the old days, people used to take a portion of their paycheck and put it into savings. People would make do with a 2-bedroom house instead of a 3-bedroom house in order to save for unforeseeable trouble ahead.
Do you see the graph above? This is what it looks like when an entire generation decides to stop saving and instead buy the big house and not pony up 20% down payment and not limit their mortgage payments to a reasonable percentage of their paycheck and they spend all of their paycheck every week.
And when the time comes when a family needs those savings in order to get through a time when someone loses a job or the housing market turns soft or there are medical expenses, they don't have any savings. So it's time to play the victim card and get the politicians to bail them out.
No doubt if your sister has the same attitude you do, they think they are the biggest victims in the world, and probably think they are entitled to fish into my wallet because the current market value of their house isn't what it was when they decided to buy it.
When was the Constitution rewritten so that there is a "right" that house prices should always increase and that if they don't, the rest of us should pony up to keep them from ever having to endure the consequences of decisions they make?
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