Cramer: 'Dysfunctional' Banking System Puts U.S. 'Totally' at Risk of 'Great Depression No. 2'

businessandmedia.org ^ | September 11, 2008 | Jeff Poor

[M. Espinola]

Alt-A Mortgages Next Risk for Housing Market as Defaults Surge

[hiredhand]

I’m not so sure it was in that PDF. It’s possibly in the material that we have from attending the classes. I’ll look through it and see if I can find it. I’m “fairly” certain that the numbers are right.

[Toddsterpatriot]

Should we change the independence of the Fed? It sure seems that they are starting to abuse that independence.

What does the Fed have to do with the takeover of Fannie and Freddie?

[Toddsterpatriot]

I’ll look through it and see if I can find it.

Thanks. Those numbers sounded way too high.

[durasell]

They ain’t making any more land. Real estate has never gone down in value. The best investment you can make — at any price!

(just thought that maybe you missed those folks who used to bad mouth you)

[JerseyHighlander]

http://calculatedrisk.blogspot.com/2008/09/freddie-mac-and-two-year-rule.html

That blog post is a clearly defined explanation of what is happening, the MSM finance/business/Wall st beat reporters have been blatantly following their editorial biases, especially the NYTimes Norris and the Washington Posts’ Gretchen Morgenson.

A few days ago Charlie Rose had Norris, Morgenson, Prof. Nouriel Roubini of NYU Stern, and Mohamed El-Erian CEO of PIMCO on as guests. Norris and Morgensen, when having to talk off the cuff with their demagogic talking points being challenged by Roubini and El-Erian, showed just how out of their depth their are in comprehending let alone reporting the Freddie and Fannie Mac situation.

And Norris and Morgensen have been around a while, neither are greehorns, so when some young nub reporter for other publications try to report this stuff it’s just a travesty of a joke.

[CutePuppy]

Are you sure it's under $4,000, not under $40,000? And that's counting all, including toddlers and teenagers who don't yet have accumulated the "consumer" debt themselves, but nonetheless likely have contributed to their parents doing it.

Numbers are all over on this, but I thought that total US "consumer" debt, including about $1T in total credit card debt but not including mortgages, was approximately $2.5T (according to www.creditcards.com) which on average would make it under $9K per person?

[JerseyHighlander]

http://video.google.com/videosearch?hl=en&safe=off&client=firefox-a&rls=org.mozilla:en-US:official&hs=znv&q=roubini%20charlie%20rose&um=1&ie=UTF-8&sa=N&tab=wv#

The first 35 minutes are regarding the Freddie Fannie situation, with the four guests I mentioned in the above post.

It’s NOT “must watch TV” but it is enlightening to hear Roubini’s comments, he’s been dead on and ahead of the curve for the last 36 months.

[JerseyHighlander]

http://www.smartmoney.com/mag/index.cfm?story=august2007-debt&afl=myyahoo

I found one section of the article particularly troubling ...
“According to the Federal Reserve, U.S. consumer debt has reached $2.43 trillion, or about $21,900 per household, a number that has nearly doubled over the past decade — and doesn’t include $10 trillion in mortgage debt. Looked at another way, consumer debt today equals 132% of the average household’s annual disposable income.”

I am under 30, grew up in a household where outside of using credit cards for big purchases for the added credit card consumer protection security, there was rarely any CC debt outside a short period of the Bush the elder mini-recession.

I have almost no debt now, I can’t comprehend the numbers being reported.

[Toddsterpatriot]

Are you sure it's under $4,000, not under $40,000?

You're right.

His claim is way off. According to the Fed, consumer debt is less than $2.6 trillion.

which on average would make it under $9K per person?

Exactly.

[Toddsterpatriot]

“According to the Federal Reserve, U.S. consumer debt has reached $2.43 trillion, or about $21,900 per household, a number that has nearly doubled over the past decade — and doesn’t include $10 trillion in mortgage debt. Looked at another way, consumer debt today equals 132% of the average household’s annual disposable income.”

Doesn't add up.

[CutePuppy]

Here is a possibility... He may have meant $20+K of debt per household (based on post #89 by JerseyHighlander...) which could just about make sense, instead of sounding like it was per person?

[redgolum]

So just who is this guy working for?

[ex-Texan]

Miss them ? ! What's to miss ? ! They were mostly flaming idiots or lenders and/or realtors and/or greedy Wall Street crooks. I got pretty sick of the intense hacking attacks that went on for nearly nine months. Hundreds were launched from corporate web sites. Like leaving foot prints in the snow.

My tag line is my message . . .

[durasell]

People tried to hack your system?

[EVO X]

http://www.federalreserve.gov/releases/G19/Current/

[ex-Texan]

Americans are simply too trusting. Most people believe that when they meet with people wearing suits in big offices, that they will be treated honestly. The truth is that ten years ago greedy crooks rewrote all the rules.

Mortgages were designed with the goal to cheat the public in many complex ways.

The Alt-A classification was abused more than any other. People with A+ credit were illegally put into Alt-A loans, guaranteeing higher origination fees, interest charges, late fees and penalties.

Loans were often written by company A, assigned to loan servicing company B for collection, then the loan paper was sold to company C. Then the mortgage was repackaged with dozens of other loans. This debt paper was sold to other companies or handed off to Wall Street bankers for exotic CDO treatment.

Mortgage servicing companies sprang up to devise ways to classify loans as 'late' or 'delinquent.' The greed got so bad that loan servicing companies made more money by shredding mail than opening it for correct processing. People with AAA credit were screwed by greedy crooks who never planned to play by the rules.

Suddenly victims would discover they have been logged as 30 + days behind. Once that happened they would learn they no longer had decent credit. Then they start getting late fees and then formal collection notices. Once you have been listed as 'delinquent' the real fun begins. Your chances of finding a new lender quickly evaporate.

The whole system is broken now. Welcome to the New World Order.

[Toddsterpatriot]

Ask him if it was the Russian mob.

[Travis McGee]

I bought all my silver under $8, but I’ll be happy to buy yours for a buck over spot price, and I’ll pay shipping.

That is, if you have any. Physical, that is. Not paper make-believe.

[durasell]

I never agreed with all his conclusions, but when he’s right, then he’s right.