Posted on 09/08/2009 7:17:07 PM PDT by Lorianne
One year after the near collapse of the global financial system, this much is clear: The financial world as we knew it is over, and something new is rising from its ashes.
... the easy-money system that financed the boom era from the 1980s until a year ago is smashed. Once-ravenous U.S. consumers are saving money and paying down debt. Banks are building reserves and hoarding cash. And governments are fashioning a new global financial order.
Congress and the Obama administration have lost faith in self-regulated markets. Together, they're writing the most sweeping new regulations over finance since the Great Depression. And in this ever-more-connected global economy, Washington is working with its partners through the G-20 group of nations to develop worldwide rules to govern finance.
"Our objective is to design an economic framework where we're going to have a more balanced pattern of growth globally, less reliant on a buildup of unsustainable borrowing . . . and not just here, but around the world," said Treasury Secretary Timothy Geithner.
(Excerpt) Read more at mcclatchydc.com ...
Thank the Fuhrer and the US Congress for their destruction of America.
"And governments are fashioning a new global financial order.
No, it is the same order. Governments control. Period.
"...Congress and the Obama administration have lost faith in self-regulated markets."
The markets were government controlled markets. There were, nearly, anything but free.
" Together, they're writing the most sweeping new regulations over finance since the Great... "
Meet the new boss, same as the old boss.
Geithner said this??? Is he joking?
Our objective is to design an economic framework where we’re going to have a more balanced pattern of growth globally, less reliant on a buildup of unsustainable borrowing . . . and not just here, but around the world,” said TAX CHEAT Secretary Timothy Geithner.
This is what the Amercian public is pissed off about! Hypocracy, criminals in charge, do as I say not as I do arrogant, pompus, liars.
Bawney yesterday said he wants the government “to get back in the housing business.” Just the Rx the doctor ordered for the economy — more easy money loaned to people who have no way to pay it back.
Why borrow when he can just dole it out in great big, multibillion dollar dollops? It's magical mystery money!
Yea, right Timmy. We're how many trillions in debt and you Jokers keep wanting to borrow more?
Something new is going to arise from this. The key question is, will it be a good new something or a bad new something?
A funny thing has been happening a lot. Stores I have been going in for years, being virtually ignored, I have been getting welcome to x and may I help you. It is almost they like seeing me. It is a bit unnerving.
I got a phone call yesterday (Labor Day) from a store I don’t visit often but who has me on my customer list. They wanted to be sure I knew they were having a Labor Day sale.
If you think credit is hard to come by now, just wait until all the new consumer protection regulations go into effect. Most will have the effect of reducing available credit because you cannot cover the risk at the regulated reduced rate and fee levels, together with the onerous new paper work and disclosures. Rats just don’t understand economics . . . or maybe they are trying to wreck the economy even worse.
Where do the disclosures turn onerous?
Consumerism is false prosperity. You have to make things, build things, and grow things for real prosperity. Enviro-nazis don’t like any of these, one reason why the government pushes us into consumerism by manipulating the tax code to punish productivity. Consumerism also rewards the government with sales tax receipts. That’s why I buy things used from craigslist & ebay. If it’s bad for the government, it’s good for America, so I am going John Galt.
The “Consumer Economy” is indeed dead. But it didn’t just die.
It was never alive to begin with.
The cash infusion principles of Keynesianism are nice equations, but they are not a complete system of economics.
Manufacturing and Agriculture are the base for every sustainable economy, and right now the base has been regulated overseas. The service jobs are therefore following.
This sustained loss in base national income will in turn hold real estate at a value far below even the current depressed market values for some time to come.
When mortgage rates for an individual home mortgage loan goes 3% above prime. Right now, that is 6.25%. Being at the bottom of the rate cycle right now, and given that small community banks often lend to lower quality borrowers funded by short-term interest-bearing deposits, it is going to create some significant net interest margin compression if you cannot price for risk in these borrowers.
The effect will be that we will not offer them credit if we cannot avoid tons of interest rate risk and price to cover the risk. We had been limiting our interest rate risk on mortgage loans to people that we were helping rehab their credit to go to a secondary market loan by making 3 and four year balloon loans. The regs are making that much more difficult now, too. We cannot take the kind of interest rate risk involved in loaning long-term fixed and funding with short term deposits. If we fix loans at an arbitrary government set rate at the bottom of a rate cycle, and rates start rising rapidly as expected, we will lose our shirts. Therefore, we will have to start making those loans on variable rates, or not offer credit to those people at all. So the government, through regulation, is actually reducing credit to a sector of citizens with regulation that, ostensibly, they are claiming to help. It is infuriating.
This does not sound like a “disclosure” problem at all, unless bankers are shy of actually telling potential borrowers things like “there is a chance your loan may negatively amortize.”
Unlike the mortgage brokers who originate and sell loans to the secondary market, banks that keep loans on their books would be stupid to trick someone into signing a deal they could not pay for. If a deal goes bad, the bank is hurt too, not just the borrower. Broker orginations were what polluted the mortgage market, though many banks do have mortgage departments for that purpose. We want our customers to know what they are getting into because what is good for them is good for us.
The point is, the government is dictating a narrow product offering to customers that will restrict the availability of credit and result in alternative means of pricing of bank services to make up for the lost revenue. When the government gets involved, it invariably raises the cost to the consumer. Punish those who abuse, banks and consumers alike, and stop limiting commercial freedom and fascist-like specification of products that businesses can offer. In the end, it hurts us all.
You still haven’t explained what the sinister disclosures actually ARE.
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