“You think we would have a mortgage crisis if it wasn’t for the Feds?”
Absolutely. I sat in my office and watched it happen, not with small local banks or credit unions, but with “mortgage brokers” and “mortgage companies”. It was all, every bit of it, driven by fraud, mostly in the area of appraisals, greed to a level I found astounding and a sense that people “deserved” their huge houses with the granite counter tops at 29 years old. Everybody was getting a cut along the way to the big banks, HSBC and Deutsche Bank spring to mind, but BOA and Chase and Citi were there too, which then packed these lousy loans up into trusts and sold off units as investments, mostly to each other. The Feds were off napping while it was going. Its simply untrue that those Clinton era regs which all but forced banks to make loans to “minorities” who otherwise wouldn’t qualify caused this. There weren’t enough of them, A. And now, in order to salvage something for the bankers and their stockholders, you and I, people who never missed a mortgage payment over decades, will get handed the bill for the bailout of the imprudent debtors (who will get the ultimate in sweet heart mortgage rates; I know, I reviewed papaers for one such workout yesterday) and the greedy lenders.
That makes it pretty plain.
This crisis is summed up by one word, “trust.”
You cannot have a market without trust. What is credit? It is trust that you will get the money back from the person you lent it to.
With Credit Default Swaps, what happens to trust? It became irrelevant. Who cares if the person defaults, I’ve pawned that risk off to some other poor sucker, who cares, I got mine. And then the next person pawns it off, and so on..until inevitably, somebody ends up holding the bag.
But the problem is, that in this case, inevitably everybody wound up holding the bag, because the assessment of risk got so darned tangled. Remember the Russian quote, that Reagan used to say, “Trust, but verify.” How now can you verify? So if you cannot verify, you cannot trust, and then markets break down. Re-establishing trust is the only thing that will get us out of this mess, not government stimulus plans and bailouts, and pumping even more fiat money into the system. As Seinfeld would say, “Good luck with all that.”
I saw a lot of granite moving at Home Depot
I saw kitchens where I live gutted
And the new younger owners put in granite and the other fine stuff
I saw one house that did this go into foreclosure
They also put a new roof on when they could waited
There must be new hi-tech ways of cutting granite that makes it less expensive plus maybe lots of it is imported
We prefer Formica in the kitchen/baths and it was put in, in 1975.
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