Current Financial Mess 22

[cjd97]

I thought that a group of Engineers would be the perfect audiance to ask the question......Is this financial crisis being talked about on TV for real? What do you guys think?

A large part of me doesn't feel sorry for people who bit off more than they could chew with their mortgage. I also don't feel sorry for the banks who wrote the bad mortgage. I personally think we should let the banks fail, let the people lose their houses, and get back to the old times of actually sharing risk when lending/borrowing money, ie having 20% down to buy a home.

Kind of a side note, with everyone supposedly losing their homes and the banks not being able to liquedate them, where does the PMI insurance come into play? I would assume these folks are paying PMI if they are "subprime" loan canidates. Isn't PMI designed for situation such as this?

Just wondering your thoughts.

 

[BigInch]

coal?

"Make everything as simple as possible, but not simpler." - Albert Einstein (1879-1955)
***************

http://virtualpipeline.spaces.live.com/

 

[IRstuff]

There's just the threat of being able to dump oil onto the market to drive down prices, which is basically what we're allegedly doing.

However, any concept of "independence" is purely illusory, since we have less than 2% of the world's reserves, yet we are cranking out 10% of the world's production. Our current reserve life is 1/8th that of almost everyone else, so pretty soon, we are going to need to get on a different horse, regardless.

TTFN

FAQ731-376

 

[stanier]

I can recall reading a book by Asimov on elections in the UK. In the futuristic society elections were so close that they decided that the bureaucracy would select the ultimate "swinging voter". Then they would ask him/her who won and it was all over red rover. The 50.00001% majority.

Sounds more efficient than the college electorate system, achieves roughly the same result, achieves the same voter interest ( who cares?), elects the same imbecile and costs a hell of a lot less. Also leaves the TV with boring shows/sport/evening presenters etc etc interrupted only by intelligent and amusing advertisements.

 

[IRstuff]

"Fannie Mae and Freddie Mac handing out home loans to people that couldn't afford them"

Not true. Fannie Mae does not lend directly to consumers. This is all at the feet of Wall Street and Bank Street. They did this, knowing that that once the loans were signed off, there would be no way to know how bad the loan was, without going back and doing all the loan qualification work that they skipped.

This was compounded by buy credit default swaps (insurance), again, know full well that the most of the paper was bad.

Basically, a lot of people betting on the come, which didn't.

Nonetheless, if all the institutions involved were allowed to collapse, it would completely cripple the economy, since the bulk of regular commercial business is done through the same banks. No car loans, no new refrigerators, etc. Not only would the commercial sector be tanked, so would the consumer sector be tanked. Think about all the credit transactions you do on your credit cards. If every business suddenly reverted to cash and carry, most stores would instantly die, and lots of people would starve.

TTFN

FAQ731-376

 

[BigInch]

"The US is the Saudi Arabia of Negabarrels.
We can use less oil a lot faster than they can conveniently sell us." Amory Lovins -

http://www.oilendgame.com/

"Make everything as simple as possible, but not simpler." - Albert Einstein (1879-1955)
***************

http://virtualpipeline.spaces.live.com/

 

[TheTick]

djlance, you are only half way right. The U.S. and European banking systems could have readily weathered a spate of subprime defaults.

The problem has been compounded many times over by the underhanded trafficking in these loans. The debt was treated as if it was as good as cash and traded at leverage levels several times higher than ever allowed in history.

 

[ewh]

I heard some sobering figures on just how deeply in debt the US currently is... When the country's public debt, the liabilities owed to federal employees and verterans for retirement benefits, Social Security and Medicare benefits are added together, it has reached somewhere between $49,000,000,000,000 and $53,000,000,000,000 (trillion) mark. That adds up to over $186,500.00 per person[/].
That makes the current bailouts seem like a drop in the ocean.

When the people fear their government, there is tyranny; when the government fears the people, there is liberty. - [small]Thomas Jefferson [/small]

 

[BigInch]

Ya. A lot of the "real" numbers can be found here,
Caution, its a scarey website.

http://www.shadowstats.com/

"If stupidity got us into this mess, then why can't it get us out?" - Will Rogers (1879-1935) ***************

http://virtualpipeline.spaces.live.com/

 

[ctopher]

Fed rates:

http://money.cnn.com/2008/10/24/news/economy/fed_outlook/index.htm?postversion=2008102409

Chris
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