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Donald Miller
Byrne Robotics Member
Joined: 03 February 2005
Location: United States
Posts: 3597
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| Posted: 01 October 2008 at 9:14am | IP Logged | 1
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D'oh I knew that math sounded odd...guess I should have checked it.
Well, thanks anyway for holding the ridicule I could have gotten.
D-
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Emery Calame
Byrne Robotics Member
Joined: 16 April 2004
Location: United States
Posts: 5773
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| Posted: 01 October 2008 at 9:20am | IP Logged | 2
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Joel, I doubt that we are dealing with 200 million upside down mortgage
holders. The divisior should be the number of bad mortgage holders (who
can show some proof that they can't pay) and are in danger of
foreclosure..
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Todd Douglas
Byrne Robotics Member
Joined: 14 July 2004
Posts: 4101
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| Posted: 01 October 2008 at 9:39am | IP Logged | 3
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Joel's just workin' with the parameters set forth in the (admittedly tongue-in-cheek) proposal from the e-mail.
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Mike O'Brien
Byrne Robotics Member
Official JB Historian
Joined: 18 April 2004
Location: United States
Posts: 10927
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| Posted: 01 October 2008 at 9:46am | IP Logged | 4
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Woah. I have to say - it feels good when Meyers agrees with you...
Hm!
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Emery Calame
Byrne Robotics Member
Joined: 16 April 2004
Location: United States
Posts: 5773
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| Posted: 01 October 2008 at 9:49am | IP Logged | 5
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Yeah but those parameters are about giving anyone over 18 who is a US
citizen an equal chunk of $700,000,000,000 or the AIG bailot loans, or
whatever.
The problem though is people stuck with bad mortgages that they can't
pay and institutions that have collected those debts and are now facing
a huge loss because of them.
So I'm thinking about the benefits and consedquences of a serious solution in terms of a "borrower bailout".
Seems to me that if you pay off the trouble debts or at least service them a
good deal you would diminish the credit problem in the short term and
knowing that the debt will be serviced should lead to less nervous
lenders. .
How many mortgages is it anyway? 20,000,000 ? 40,000,000 ? And how many
of those are in serious danger of foreclosure? And what is the average
amount left to pay on those mortgages? Are they hopeless "no-equity/no
collateral" situations or could they benefit from refiinancing on the
unpayed remainder?
Edited by Emery Calame on 01 October 2008 at 9:51am
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Bruce Buchanan
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Joined: 14 June 2006
Location: United States
Posts: 4797
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| Posted: 01 October 2008 at 10:18am | IP Logged | 6
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Here's the issue I have with that, Emery: Most of those bad mortgages are a result of bad decision-making. Too many people bought more house than they could truly afford. Or they entered into mortgages (usually adjustable rate loans) that were simply unwise.
Bailing these people out is rewarding irresponsible behavior. Plenty of folks who have no more money than those now defaulting on their mortgages are able to make their monthly house payments because they made reasonable, frugal decisions when buying a house.
Those people who made responsible decisions with their mortgages and their money shouldn't have to bail out those who didn't. It's the same way I felt about bailing out irresponsible financial institutions.
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Al Cook
Byrne Robotics Member
Joined: 21 December 2004
Posts: 12734
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| Posted: 01 October 2008 at 10:22am | IP Logged | 7
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But surely many of these people were convinced that they weren't being
irresponsible. The mortgage market went after them voraciously. What was
the sales pitch? It surely wasn't "look, this is actually a pretty irresponsible
thing to do with your money, but we can make it work for you..."
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Joe Zhang
Byrne Robotics Member
Joined: 16 April 2004
Location: United States
Posts: 12842
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| Posted: 01 October 2008 at 10:46am | IP Logged | 8
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"Those people who made responsible decisions with their mortgages and
their money shouldn't have to bail out those who didn't. It's the same
way I felt about bailing out irresponsible financial institutions."
I would agree, except there is the issue of the resulting damage to the financial system. In the same way if an irresponsible coal mine or chemical plant leaves a toxic mess, they should be the only ones paying for the cleanup. But if the company paid, they would go bankrupt (after the owners and top management have gotten rich, of course.) And the nearby town which wholly depended on the company for its economy would collapse. But the pollution has to be dealt with ASAP because its contaminating the water table, which everyone has to drink out of. So the local government has to pay now while they drag the company through the courts for compensation later.
In economics, this is called an "externality". It's a fancy term for when businesses make people other than their customers bear the burden of their mistakes. Deregulation and free-market principles tend to let businesses get away with externalities and reap even greater profits. Except in this case, where the investment banks inadvertently brought the entire system crashing down.
Edited by Joe Zhang on 01 October 2008 at 10:51am
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Mike O'Brien
Byrne Robotics Member
Official JB Historian
Joined: 18 April 2004
Location: United States
Posts: 10927
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| Posted: 01 October 2008 at 10:47am | IP Logged | 9
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This link is har har har.. http://patriotboy.blogspot.com/2008/10/world-according-to-pa lin-mccain.html
Al - to your point - I had a cousin - a blood relative - who used to sell those sort of things - and he was CONSTANTLY - for the last few years, pestering everyone in the family - "You can own a home! It's cheap! Don't worry about the payments! The thing pays for itself!"
My father and I were both dubious about the whole affair - not just because said cousin is frequently involved in various pyramid schemes, but because it just didn't make sense.
Now, said cousin has moved into other pyramid schemes - I didn't take the bait - but here's the thing - home ownership - something I've never been interested in - was WILD in the last decade - everyone wanted to own a home (for reasons I'll never understand) - and these guys selling these crappy loans were just taking advantage of stupid desperate people.
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Donald Miller
Byrne Robotics Member
Joined: 03 February 2005
Location: United States
Posts: 3597
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| Posted: 01 October 2008 at 10:51am | IP Logged | 10
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Bruce said:
Bailing these people out is rewarding irresponsible behavior. Plenty
of folks who have no more money than those now defaulting on their
mortgages are able to make their monthly house payments because they
made reasonable, frugal decisions when buying a house.
Those people who made responsible decisions with their mortgages and
their money shouldn't have to bail out those who didn't. It's the same
way I felt about bailing out irresponsible financial institutions. I hear where you're coming from on this, and kind of agree...but, There were predatory lending practices involved...straight up shinanigans to get people who would never have qualified to do so....There is plenty of blame to go around...but when you only give money to the lenders the borrowers still owe...and that seems a little crappy to me.
there should be a middle ground here somewhere.
Don
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Michael Myers
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Joined: 28 December 2004
Posts: 831
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| Posted: 01 October 2008 at 11:04am | IP Logged | 11
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"Except in this case, where the investment banks inadvertently brought the entire system crashing down"
The entire system crashing down?
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Greg Reeves
Byrne Robotics Member
Joined: 06 February 2006
Location: United States
Posts: 1396
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| Posted: 01 October 2008 at 11:05am | IP Logged | 12
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QUOTE:
| There were predatory lending practices involved...straight up shinanigans to get people who would never have qualified to do so.... |
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This is probably where the greatest blame lies. The lack of regulation meant that risky people were able to get loans that regulated organizations in the past would not give.
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