Basically we are all going to chip in to bail out people that are under water in their mortgages. Frankly I think it absolutely sucks. Let's reward people that took on irresponsible risk by saving their asses at your expense. Here I though this was Capitalism and for taking a chance at profiting you also accepted the possibility of losing. So as a guy that is just saving his money to maybe, "PUT DOWN A DOWNPAYMENT" I have to watch my tax money go to people that gambled and LOST. I mean if you're a Real Estate Developer and you lost you should not come to me to recoup your losses. The sad part is that's it is criminal what say the Banks have done with people's deposits. Here is a Freaking Fine Example
I seriously want to know what they were smoking when they though of that project. Here is my guess, (1. Real Estate only goes one direction, that is Up 2. We can always write this off 3. There will be some government bailout to help us out, so if the bank goes under FDIC Insurance will cover it.) Seriously the amount of money that is swishing around is just astounding.Now we have people on people calling for serious restrictions on Commodity and Futures trading. This is the blame for the run up in Energy Prices. Look no one really cared for the last 7 years when Housing prices ran up. People were actually cheering when it was going on, "Flip that House, Flip that House, Flip that House" on A & E. There was never a cry for "Win fall Profits Tax" or the People that were banking the dough in Arizona, California, Florida and Nevada were not going to SHARE THE PROFITS WITH YOU WHEN TIMES WERE GOOD! Then again, that's the coutry we live in now Privatize the profits & Socialize the Losses. It's OK to take a chance and lose money, but if you take a chance on a house it's not your fault. After all is it really too much to ask when you BORROWED MONEY & PROMISE TO PAY IT BACK? !?
Just think now in a couple of years as the 'Burbs unwind
the Slumlords that have been sitting on property in the City for decades are going to be rewarded now that people won't be able to afford the white picket fence. Are they going to spread the money around as they start to say Cha-Ching after they can actually sell their stuff to people that are actually going to live there instead of flipping them to some "investor" on Craigslist that just can't pass up a bargin of a $25,000 house? I don't think so. We're just going to throw money down a hole on declining McMansions in the suburbs & exSuburbs as they turn into say Red Cross Offices as the Mansions on Delaware Ave did decades ago as the cost of keeping up those structures up just became too burdensome.
On the surface it seems easy to place the blame with consumers who took out loans that were too big, but we have to understand that Countrywide, for example, was intentionally giving out loans without regard for people's ability to pay them back -
The complaint in the case agains Countrywide execs: link:http://ag.ca.gov/cms_attachments/press/pdfs/n1582_draft_cwide_complaint2.pdf
"Defendants' deceptive scheme had one primary goal -- to supply the secondary market with as many loans as possible, ideally loans that would earn the highest premiums. Over a period of several years, Defendants constantly expanded Countrywide's share of the consumer market for mortgage loans through a wide variety of deceptive practices, undertaken with the direction, authorization, and ratification of defendants Sambol and Mozilo, in order to maximize its profits from the sale of those loan to the secondary market...
In addition, Countrywide directly and indirectly motivated its branch managers, loan officers and brokers to market the loans that would earn the highest premiums on the secondary market without regard to borrower ability to repay. "
I've been through three mortgage processes - As an informed and proactive consumer, there's no way I would have ended up with a subprime loan or one too big for me, but I can certainly see how easy it would be for someone to be talked into this. Most people do not have the skills to analyze loan amortizations. Hell, way too many people do not have the skills to set up an accurate and useful household budget with clear financial goals, so they wouldn't be able to tell what's too big or exploitative.
I'm sort of in the middle. I don't feel badly at all for people who bought more house than they could realistically afford, but on the other hand I think lenders' collective dishonesty is just as much a part of it as buyers' collective irresponsibility. Also, keep in mind that millions of these people are also honest people that probably do need some sort of relief due to market tinkering. I think it will be vetoed anyway, but like any kind of large government bailout, people are bickering about where the money is going to go in petty and greedy ways. That should be a familiar procedure to any local person following our waterfront development and the bridge that will never be built!
With respect to oil, for the first time in my life I think stricter regulations on commodities trading are necessary. As you know I'm no socialist. Specifically I'm talking about buying oil futures on margin, but I suppose you could extend it to corn these days as well. Currently the initial margin requirements for crude oil futures are FAR less strenuous than those required for investment in stock futures. Considering how stagnant the market has been in comparison to oil prices the past few years, it almost seems like a brainless bet - the investment looks more promising and its actually a "cheaper" gamble to make. In this case the rules are allowing speculators to affect artificial increases in the prices of crude irrespective of supply and demand. We all know that market movements like this are based on speculation and to be honest, largely fear. Global supply and demand does not explain how we went from $60 a barrel to $140 in a matter of a year or two.
In my view anyway, right now the rules are allowing large investors to tinker with the system in ways that affect the general populace in too drastic of a manner. Speculators aren't the only problem (weak dollar doesn't help) but at the very least trading futures in the commodities market should be just as expensive as it is in the stock market.
Well done.