Anybody still paying their mortgage at this point is officially an idiot. You are playing by the old rules, and are at a competitive disadvantage in today's America.
"Under the program being discussed, the lender would agree to reduce borrowers monthly payments, for example by lowering the interest rate or principal of a mortgage loan, based on the homeowners ability to pay. ... the government would then guarantee to repay the lender for a portion of its loss if the borrower defaulted on the reconfigured loan"
Ability to pay....
I'm taking a 2 month vacation so my income goes to zero and my "ability to pay" is zero. That should save me a few hundred thousand.
Sheila Bair and her comrades are also planning on sharing the pain on second mortages and HELOCs per Bloomberg.
I agree with nullpointer, the fiscally prudent get screwed again. I bet Uncle Sam will not even punish defaulting debtors with a sullied credit rating because to do so would seem too mean spirited in this down economy.
Well, we saved and didn't buy in Los Angeles with a crazy loan so that we could sit by and see our tax dollars used to help the idiots that did. Super.
I think this sounds a great deal like plans that were discussed here months ago. At some point we are going to have to accept that the value is not there, try to recoup what we can and move on. Better to accept reality and try to deal with it than continue to try to squeeze blood out of these turnips.
Wow - Watching the last 10 minutes of a trading day is like watching a high stakes craps game. The roller is kicking butt and people keep pressing their bets, money is everywhere on the table and POOF 7 rolls. Bye bye. Absolutely insane.
Bloomberg:U.S. Treasury Program Shuns Banks That Need Cash Most
Wheel of Fortune gameshow host Paulson turns away contestants. He states "I make the game rules and the money is mine, go take a hike."
Game show producers Pelosi and Reid asked Paulson if he would consider restricting the bonuses of the bank executives that are billions of dollars,'' Pelosi stated, "the little people are getting angry at me."
Treasury spokeswoman Brookly McLaughlin said the Treasury has received the letter and is laughing her ass off....
By Chad Bray Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- New York Attorney General Andrew Cuomo on Wednesday asked nine banks that are receiving federal funds as part of the government's financial rescue plan to provide his office with information about expected bonuses and compensation to be paid their top executives.
In separate letters Wednesday, Cuomo's office requested a "detailed accounting" of expected payments to top management in the upcoming bonus season. He is looking for information from banks that have received or are expected to receive funds under the Treasury Department's Troubled Asset Relief Program, or TARP.
The banks are: Bank of America Corp. (BAC), Bank of New York Mellon Corp. (BK), Citigroup Inc. (C), Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM), Merrill Lynch & Co. (MER), Morgan Stanley Inc. (MS), State Street Corp. (STT) and Wells Fargo & Co. (WFC).
I agree. i played it safe and by the old rules for 20 yrs as I watched so many friends and family (making under $75k) buy huge $500k homes, boats, jet ski's, vacations to the Bahama's, plasma TVs, SUVs, etc, etc while I lived in a humble abode, drove an old car, and squirreled away my cash to start a business. Maybe i'm the sucker. who knows anymore, the rules change daily.
Last summer we bailed out Fannie and Freddie and woke up in socialist France.
A month ago (or was it less? sheesh) we got TARP-edoed by Congress and entered Fascist Italy, land of government-run "capitalism".
Now I see we've finally made it to Communist Russia, where folks pay taxes "according to their ability" and other folks receive handouts "according to their need".
While Treasury and FDIC officials have reached an agreement on the principles of the program, the White House is resisting, according to the sources, who declined to be identified because the negotiations are ongoing.
No matter how you try to spin it from +250 to -100 in the last 5 minutes of a day when the market got it's puff on the crack pipe ain't positive.
Not spinning anything. Just stating the facts, the rate cut move was made yesterday and today of course there would be a pull back, still expect more rallies.
What else can be expected when more liquidity is released everywhere. Surely no one expects the markets to crash, the money has to go somewhere.
"We lost 2 billion dollars and like any other business we have to stay afloat." And to keep from sinking, the United States Postal Service is considering cutting thousands of jobs nationwide.
We can give the automakers and banks hundreds of billions but we can't subsidize 40,000 jobs for a measly 2 billion?
Wow - Watching the last 10 minutes of a trading day is like watching a high stakes craps game. The roller is kicking butt and people keep pressing their bets, money is everywhere on the table and POOF 7 rolls. Bye bye. Absolutely insane.
I always play the darkside at craps.
Much more fun that way. I think that's why I enjoy shorting stocks.
And the idiots are about to elect Obama, Pelosi and Reid.
Thanks for calling me an idiot but can you read?
"Officials with the Treasury and the Federal Deposit Insurance Corp. are crafting a plan under which the government would guarantee the mortgages of as many as 3 million homeowners now struggling to avoid foreclosure"
The government is unleashing a disaster. Everybody that is underwater on the mortgage will now game the system. Also, remember that in many households the second income is only marginally beneficial vs. childcare costs, etc. Now there is an additional "cost" to having a second income in the form of a forgone mortgage reduction. So you will see people voluntarily come out of the workforce to qualify. Many will commit outright fraud.
Wonder if that end-of-day market implosion had anything to do with a leaky GDP number? Market expectations are all over the map on that one, but a negative number wouldn't be unexpected...
I don't think Initial Claims has that much market pull, unless it suddenly ramps to 550K or something...
I am dead serious about this. How many people are going to put pencil to paper and make the decision as to how much a 100 point hit on their credit is worth. If the govt were to cut $200,000 off my mortgage debt, I may consider it.
The prudent saver buys a $500k house after saving for years with 10% down, makes payments on time, lives frugally to afford it.
Next door and 2 yrs later, the same house sells to an irresponsible deadbeat for $750k to someone with no money down, little income, and poor credit.
Now, the deadbeat will get to keep the house that is revalued at $300k and make half the monthly payments of the prudent saver, who still owes $400k on the mortgage.
The only solution is to bulldoze housing, then give everyone a government mortgage on a new, government issue house, with the mortgage payments based on ability to pay. That'll be the great equalizer.
This will do like all government market interventions--the exact opposite of its intent.
The housing market will crash even further as the deadbeats stay deadbeats and don't even pay back the restructured loan.
Price discovery for housing will be impossible, as every time someone thinks a house is reasonably priced and wants to buy, they'll have a nagging feeling that maybe they ought to wait on the next economic policy du jour to be announced. Never know, the government may start giving away houses, so why buy now?
"Palin spoke after touring Xunlight Corp., one of a handful of solar technology startup companies in Toledo, a struggling industrial city in this swing state. The city's leaders are hoping that the solar companies will create jobs to replace some of those lost by downsizing in the auto industry.
But Palin made only a passing reference to solar power in her speech and instead renewed her call for more drilling in U.S. coastal waters. She repeated her signature anthem, "drill, baby, drill," which seemed to fall a bit flat on the audience at the plant even as it's become a popular chant at her rallies."
Posted this for the laugh not to start a political discussion.
this is stupid. market is self correcting while they keep coming up with crazy ideas to disrupt the process. why dont they just run out to those ghost neighborhoods and burn down the inventories to skew the stats? that's a solution too.
Sure to be buried in the hundreds of comments but this is deadly serious business. Our system of governance is largely voluntary and self policing. The Federal government through the entire series of crises has strained that agreement to the breaking point. If there seriously is a program to bailout the least deserving with the treasure of the rest there exists the distinct possibility of losing the "consent of the governed." That's not strongly worded faxes, that's armed guards at congressional district offices. Paulson is making a fatal mistake in thinking the general public will act in their ultimate best interest and pay up. The possibility of a general tax strike is something the system cannot survive and short of violence that appears to be the only tool left to taxpayers to get their attention.
Only die-hard capitalists could fuck up socialism this badly. How about giving free money to some of us who are actually deserving as well? Instead of to just the fuck-ups.
If the US Treasury starts guaranteeing mortgage given based on fraudulent no doc loans and other ARMs, I will be very disappointed. And, if they want to change the rules, they need to take back all homebuilder and IB bonuses over the last 7 years. And profits on stock options. Good god, what a horrible plan by an evil, evil man.
ChangeYourDogCanRollIn "And the idiots are about to elect Obama, Pelosi and Reid."
I assume you would rather keep the idiots who created this mess in charge for another 8 years? I believe you suffer from "battered wife syndrome." More of same please......
I managed a large 'well known' indirect lender for a few years. I cannot count the number of times I wanted to turn down loan apps that were beyond sketchy- with multiple repo's, foreclosures, etc. I had to fight to NOT approve the loans.
Low and behold a year or so later, the non performings go through the roof, and upper management acts as if they never saw it coming. Of course, they lay off 1/2 the work force and close 1/2 the offices nationwide, displacing thousands.
Will the president-elect please demand the immediate resignation of Secretary Paulson? Let Neel call the shots between Nov 5 and Jan 20th. He couldn't possibly do worse.
There is no reason to even invest anymore. I should take my money and put it on black or red and I will feel better about what I work my ass off for. I paid my house off and wish now I had a mortgage so I can beg like the bums I pass everyday to work. This should be criminal.
Could someone explain why some people are suggesting the GDP report tomorrow (which will likely be negative) will be positive for the markets? Doesn't make sense to me.
Or how bout this: A young couple "A" makes $100 grand a year. They refuse to speculate and buy a conda they can afford at 3x income for $300,000.
At the same time, Another young couple "B" making the same $100,000 a year goes for the house they want now and buys that 6x income 2500 sqft house with a yard for $600,000.
After the bubble bursts, young couple A are in a conda that is worth $150,000. They get no relief since they can afford their original loan. They have increased their income and now can afford a house (as now they have two kids). They are stuck though.
The other couple, who have now also increased income and had two kids are in the bigger house. The get a govt bailout rework and get their principle written down to say about $300,000.
Responsible Couple A is stuck in a condo and lost $150,000.
Speculative Couple B is in the house they always wanted, worth twice as much as the condo, at with the same house payment as Couple A, and aside from a temporary hit to their credit, have not lost a dime.
Now that a moral hazard of almost unlimited size has been created for the nation's CEOs, COOs, CFOs, etc., its only fair to create one for everybody else.
A general tax strike is sounding real good. But it will never happen. We are sheep...here for the shearing.
The think tanks will spew out reasonable sounding opinion pieces on why this is actually the American thing to do and the sheeple will go right along with it....there will be a bit of grumbling sure....but nothing more will come of it.
They can do whatever they want until the entire system collapses and then, and only then, will anything of any signifigance get done.
Some of the details missing in this article are the types of penalties in case of default. For example, is the government going to modify the Bankruptcy Code to make these offsets non-dischargeable or capable of being garnished? If not, then the program is basically a boon to the lenders and the homebuilders, but masquerading as help to the average joe.
Divide and conquer. Bad credit citizens against good credit citizens. Piss off the people with money and jobs and you give the politicians the support necessary to ensure payment from the deadbeats. All debt will be recourse and non dischargeable. Wait and see...
My country for whom I weep. If there were a revolution to join at this point I would kiss my wife, tell her I love her but tell there was something I needed to do.
Dawg: Do you think that is already starting to some degree and just hasn't reached mass yet? It doesn't seem like a total 'what if' to me.
Currently Smoking Cannabis
Absolutely. Critical mass takes time to pressurize and then a trigger event. 3 million free passes is a trigger event especially since it will clearly become an attractive nuisance and balloon to 6 million plus.
An we already see "tax reluctance" in California. Revenues to the State are way down, far lower than economic indicators would suggest.
"If not, then the program is basically a boon to the lenders and the homebuilders, but masquerading as help to the average joe."
This doesn't help the homebuilders. The only thing that would help the homebuilders is if the gov't bulldozed all the oversupply and 10% more. The homebuilders are dead, because there is no need or demand for new homes (at least on a profitable scale) for many years.
Rich, thanks for the EEV suggestion. I've been in the SKF and looking at SRS, but great idea. Any good EM blogs/websites you recommend?
I have definitely lightened up on the ultrashort ETFs lately so I can put more of my money into commodities and PMs. So, I'm not going whole hog back into ultrashorts right now. Just dabbling and buying on big dips like last two days in EEV.
I do not have any special expertise in emerging markets. I just keep CNBC Asia on while I am sleeping and certain stuff gets into my head by osmosis. Or maybe not.
All I know is...I dream about swimming in big pools full of yen.
"Never know, the government may start giving away houses, so why buy now?"
My family is renting after selling our home in January. I think it's likely that there will be government incentives to home buyers - much richer than the tax credit for first time buyers that had to be repaid.
In a local restaurant my server had on a "Obama 08" tie, again I laughed
as he had given away his political preference-just imagine the
coincidence.
When the bill came I decided not to tip the server and explained to him
that I was exploring the Obama redistribution of wealth concept. He
stood there in disbelief while I told him that I was going to redistribute his
tip to someone who I deemed more in need-the homeless guy outside.
The server angrily stormed from my sight. I went outside, gave the
homeless guy $10 and told him to thank the server inside as I've decided he could use the
money more. The homeless guy was grateful.
At the end of my rather unscientific redistribution experiment I realized
the homeless guy was grateful for the money he did not earn, but the waiter was pretty angry that I gave
away the money he did earn even though the actual recipient needed money
more.
I guess redistribution of wealth is an easier thing to swallow in
concept than in practical application.?
wife worked for a broker for over 5 years....he stopped paying her in June...I didn't find out about it until middle of August. Third day after she walked out he sends her half her earnings saying that some partner of his was responsible for the rest retro to early May. It's a bit longer than that but suffice to say there was no moral code present at all.
Ethics are and have been history for a very long time.
"4T in liquidity in 30 days and the market drops 25% isn't a crash?"
Well let's see. Off the top of my head.
700B Tarp plan.
FNM/FRE back-stopped for a couple hundred billion.
500B to backstop MM funds.
Between 15B to 30B currency swap lines for atleast 7 foreign countries.
I may be off on my math by about 1 trillion, but what's a trillion between friends.
Then you need to add in the 3T ++ that the Eurozone has pushed out as liquidity.
You can google for the exact amounts, it's all out there.
Like I said not very much bang for the buck if you ask me.
EVERYTHING that has been going on the last few months makes me think of the movie Stalig XVII. A prisoner named Animal who had been held for 2 or 3 years gets a letter from his wife in the states.The letter says "Honey,I know you're not going to believe this,but WE just had a beautiful baby boy".Animal looks shocked for a minute and then starts walking around with a glazed look on his face saying over and over"I believe it. I believe it".Sadly we all have to be Animal now!
Fox Business has poll going on who is the least deserving on bailout...Banks,Insurance or Morgage Holders...so for The Tide is against Morgage Holders...so it an't gonna happen.
You neglect to mention that Couple A will have to pay artificially inflated prices for a larger house when they want to move up, thanks to the bailouts, and they will pay higher taxes to pay for the bailout, compounding the delay in their ability to afford that new house. Otherwise, I agree with your great post.
For the first time in my life, I am ashamed to be an American and am giving serious thought to moving my family to another country. A large percentage of every d&^n cent of taxes I pay for the rest of my life in the USA is going to pay for lazy, stupid or speculative people who feel it is their right to have me take care of them. This disincentive to work, and incentive to speculate and take excessive risks, can only bode very ill for the future of our country and of my children as long as we stay here.
Exactly...still renting with an eye towards the incentives. Looking to take IRA gains banked from the downturn and roll into a house without penalty before the inflationary measures overtake the credit collapsar (my WAG that comes before they make a pension grab but WTF knows)
The possibility of a general tax strike is something the system cannot survive and short of violence that appears to be the only tool left to taxpayers to get their attention
It's not a what-if for me. That's why I quit my current job and decided to move back. If I can get something decent and un-creepy in Seattle for a decent salary, I'll stick around but I already know it's very unlikely. H1Bs have destroyed contract rates.
I'm debating about going 1099 and not paying any taxes at all anymore and screw the consequences. At fifty, I'm not seeing much of a future anymore, especially in these circumstances.
So the short end (3 month T-bills) moved down .77 to .57 as you'd expect with a rate cut. But the long end (30 year) moved UP from 4.19 to 4.23.
Maybe not a big thing, but it seems that the curve is steepening. I think the treasury announcement of planned auctions next Wednesday could be very interesting.
And this action certainly isn't helping the mortgage rates.
your probably right but I would love to see the total worlwide of this carnage. including all the "windows" and programs that have been opened. I am confused. Maybe thats the goal.
GE, V, all up after hours no HIG fallout? This rally may have some legs...Or not we still haven't broke out of a downward trend.
I still think we break towards 10000 before heading down again.
Its simple.. Just stop paying your mortgage and credit cards. Max out what you have left of credit cards and try to get a home equity loan if at all still possible.
I just don't see how this country expects me to stay sane with this type of talk of bailing out the overextended homeowners after I have spent the last 3 years in a 1000 sq ft house..
annon writes:
Its simple.. Just stop paying your mortgage and credit cards. Max out what you have left of credit cards and try to get a home equity loan if at all still possible.
I'd be concerned about ex post facto laws impacting this strategy. The've thrown out whole sections of the Constitution, why not this minor proviso. In fact, some precedent exists for them to do so, check recent (last ten years or so) tax laws.
IS Obamas tax cutoff 200k or 250k he just changed it last week
AMT you might have found a friend...
Tim | 10.29.08 - 4:45 pm | #
Tim, Joe " I gotta million of 'em" Biden stated yesterday that number is now $150,000. Check the NY POST. I got a bridge to sell ya if you believe that number too.
No Palin fan to be fair McCain's plan is very much like Sheila Bairs. I'd rather have people in my neighborhood get a bailout than Wall Street at least they will support local business...
You guys might want to save your outrage til some of the details come out.
I would assume (or hope) that there is more to this.
For starters, there'd better be some reward to taxpayers for taking the risk - namely, some kind of SAM. My guess is that any homeowner accepting this deal will have to forfeit some or all future equity gains - prolly via a Shared Appreciation Mortgage (SAM), see today's WSJ op/ed for more on those.
I say everyone stop paying their mortgage, credit cards, car loans, etc... and then lets see what happens...George and Hank are the dumbest leaders we have ever had
Obama is for offshore drilling; McCain is for offshore drilling
Obama voted for the bailout; McCain voted for the bailout
Obama is in favor of military interventions; McCain is in favor of military interventions
Obama is for free trade; McCain is for free trade
The differences are so minor. Vote for a third party.
Yes he did...already been to the DLSE hearing where he "promised to pay by Nov. 7th" Just so happens that we also have a small claims court date set for the same day.......
We may only get tax liens but my job is to make it difficult for him to do anything from here on out.
for example by lowering the interest rate or principal of a mortgage loan, based on the homeowners ability to pay
I hope the Treasury,FDIC have access to a super tonload of extra dollars, because with unemployment threatening to grow, there's gonna be a whole lotta folks whose ability to pay falls well short of their mortgage obligations.
Shnaps writes:
You guys might want to save your outrage til some of the details come out.
I would assume (or hope) that there is more to this.
For starters, there'd better be some reward to taxpayers for taking the risk - namely, some kind of SAM. My guess is that any homeowner accepting this deal will have to forfeit some or all future equity gains - prolly via a Shared Appreciation Mortgage (SAM), see today's WSJ op/ed for more on those.
Shnaps | Homepage | 10.29.08 - 4:50 pm | #
Don't count on it! Just like the executive compensation provisions in the CRAP, er... TARP.
I'm sure they'll also take a personal notarized no-doc " struggling to avoid foreclosure ... " statement to get the ball rolling. Looks like we'll all fit in this new program.
Someone posted this quote a couple days ago, I think it fits here good ...
"Insist any new cram downs on these amounts MUST be recorded in the local MLS as new sales and the previous sale of these homes MUST be removed from comps."
I understand but there are fairness issues. As I have stated many times here, there will be huge amounts thrown at this thing to rescue the system. It really has very little to do with the individual.
It should be quite obvious who has the biggest incentive to preserve the "system".
But to get back to the fairness issue, here is McCain's quote and it seems rather in favor of the less than frugal:
The Republican presidential candidate announced during Tuesday's debate that he would order the federal government to spend $300 billion in federal funds to buy the mortgages and allow financially troubled homeowners to keep their houses.
But saving the less than frugal will increase the chances to preserve the "system". I am investing accordingly.
"Obama is for offshore drilling; McCain is for offshore drilling
Obama voted for the bailout; McCain voted for the bailout
Obama is in favor of military interventions; McCain is in favor of military interventions
Obama is for free trade; McCain is for free trade
The differences are so minor."
The candidate from which party is more likely to uphold the Bill of Rights, even by a little?
If you have to choose who to watch the sheep, you're better off choosing the obvious wolf, as at least the sheep will have a heads up at who they are being led by.
McCain will mean Republicans will continue to get the blame for the problems of this country. Just like Greenspan has ironically blamed a flaw in "free market" capitalism, for today's problems....he has done more damage for the cause he most believed in than any enemy could have.
If you believe in America then vote for Obama. If he is wrong, then the proper political/financial philosophies will get the blame.
"the lender would agree to reduce borrowers monthly payments, for example by lowering the interest rate or principal of a mortgage loan, based on the homeowners ability to pay. ..."
So FB in house purchase in '05 can afford $4000/mo. new payment $4000.
His neighbor in the exact sme model purchased in '05 can afford only $2500. New payment.
Neighborhood comp for model--$2500/mo.
This is SOOOOOO going to work. But hey, the gov't can't let the markets and courts do there thing. No that would never work.
Broward Horne writes:
I'm debating about going 1099 and not paying any taxes at all anymore and screw the consequences. At fifty, I'm not seeing much of a future anymore, especially in these circumstances.
This really isn't unrealistic. The first thing to remember is that the IRS only knows about 1099 income if you tell them (ie, declare the income) or if the person/company paying you files a corresponding 1098. Many companies do file it, and many don't. I have paid contractors thousands of dollars over the years, and I have never filed a 1098 for any of them. Maybe they're declaring it, maybe not.
In the late 1980s I knew a small-business owner with a terminal illness who simply stopped paying his taxes. It took him years to die, and they never did catch up with him.
Small-business ownership provides many excellent opportunites to avoid taxes. Good luck.
What is there to stop the homeowner to sell his house immediately after his mortgage has been reduced to a "market price", pay off the reduced mortgage, and go out and buy a new house with a new mortgage, where he does not have that nasty little "shared appreciation" thingy hanging around his or her neck?
Will be great for the volume of transactions though, a new bonanza for our "house prices only go up", undeserving realtors
Obama is talking about raising the ceiling on the AMT, not lowering it. And, even if you make over 250k, your taxes will not see a significant increase (couple hundred bucks, tops) unless you are making closer to a million a year - at which point it's an extra few thousand. Totally worth it in my opinion.
The possibility of a general tax strike is something the system cannot survive and short of violence that appears to be the only tool left to taxpayers to get their attention.
Don't give up quite yet. Several Republicans in safe seats who voted for the failout are in unexpectedly tight races, like Souder of Indiana and Brown of South Carolina. I'm going to do an analysis of failout voting and losing elections once the votes have been counted. Sadly, the wheels have come off the NRCC to such an extent that it seems few if any Dems will lose their seats due to the failout vote but I'm still hoping for at least one spectacular show like Pelosi losing to Sheehan.
Imagine if a BK cram-down was included in the $700b TARP? I'd be 1st in line to BK my way to prosperity with a new, lower house payment.
You can thank the Boomer Generation and Political Correctness that gave to us no moral boundaries ("if it feels good, do it...") and zero critical thinking ("Don't judge me. I was born this way" or that old canard - it's a disease or an additiction. That's why I couldn't help myself)
"The candidate from which party is more likely to uphold the Bill of Rights, even by a little?"
Well I don't think Obama will uphold the 2nd or 10th amendment, but then again, I am worried about McCain quartering troops in my home
Yes, that's what I see. I've also discovered that over the past couple of years that, in general, the System cares nothing about you unless you've killed somebody or you own something worth looting.
Tax increases will hit homeowners (particularly ones with equity), pension funds, etc. Anybody who is tied down in anyway will get hit. Kids, property, existing cash buyin, etc.
I doubt if I'll ever buy another house in this country or bother with any investments or pension plans. My time horizon is too short and this mess will last too long.
"based on the homeowners ability to pay" -does that mean that a person who has unwisely taken out a loan that is way too big, ould simply claim assistance under this program? Isn't this known, in situations between parents and kids, as "rewarding irresposible behaviour"?
How long would I have to work at Starbucks for that to qualify as my ability to pay? Might be an interesting way to spend a year making a few hundred thousand serving lattes.
you ask:What is there to stop the homeowner to sell his house immediately after his mortgage has been reduced to a "market price", pay off the reduced mortgage, and go out and buy a new house with a new mortgage?
I've suggested lowering all mortgage loans (HELOCS, 1sts, Commercial) to 4.5% and cap all new loans at 2.5% over Fed Funds rate. That eliminates all of the hoo ha about modifications, and standardizes loans so that you get rid of all of the bad actors in the mortgage biz.
A National forebearance or universal rate/cram down is coming with a Dem Supermajority.
you ask:What is there to stop the homeowner to sell his house immediately after his mortgage has been reduced to a "market price", pay off the reduced mortgage, and go out and buy a new house with a new mortgage?
A. Her current FICO
Again I say, it may be very tempting to a lot of folks to trade their FICO score for 200-300k. Just sayin.
All you guts are worried about Obama...WTF? George and Hank are screwing you right now and will do so until 1/20/2009, by then Glodman Sachs should have the keys to the printing presses...good night America!
The first thing to remember is that the IRS only knows about 1099 income if you tell them
It took me a couple of years but I finally discovered that this is partly how the H1Bs are beating me out.
They're filing 1099s and paying no income as they have no expectation of staying here long enough to matter. Likewise, most of them are in their late 20s and 30s, so they care no health insurance.
Also, they're often living 3-4 to an apartment. I figure I can live in my parent's house indefinitely for free so I can beat them on that score.
But then again, a lot of software is no longer real, it's about empire building in large companies so the illusion of cost savings is important, not the reality.
I am shocked at what large companies are paying out. I'd say they're paying at least double-price to offshore but it's about political connections now and they can show a bigger headcount.
It's very sad. I used to enjoy software but the industry has gotten so alien to me in the past few years.
I'd rather play pool now, which says a lot since I was a workaholic for almost 30 years.
"GM Chairman and Chief Executive Rick Wagoner is considering visiting Japan soon and meeting with Toyota's leadership to discuss the plan, Kyodo said, citing sources.
A GM spokesman was not immediately available for comment.
The Kyodo news report said Toyota was expected to consider quick fixes for the cash-strapped GM, including buying up its assets and helping it secure sufficient business funds.
The executives of the world's two biggest automakers may also discuss an expanded business partnership, including Toyota making fuel-efficient compact cars for GM and providing hybrid-car technologies to the U.S. carmaker, Kyodo said, citing sources."...Reuters
This is absurd...GM has nothing that Toyota would want, except perhaps the capital equipment inside GM's plants.
This is absurd...GM has nothing that Toyota would want, except perhaps the capital equipment inside GM's plants.
Kung Fu Panda | Homepage | 10.29.08 - 5:15 pm | #
Think again...GM has access to the FEd and Treasury and the keys to the prinintg press...Free ponies will be roaming the streets of Tokyo before too long
crispy&cole writes:
All you guts are worried about Obama...WTF?
No kidding. At this point the only thing I car about in a president is a moral compass. I'm an anarcho-capitalist, but even I can recognize that Obama is a better person than McCain. He will be the most decent person to hold the office since Carter. Given that we're screwed economically no matter who wins, I'll take honesty and morality or policy.
"It took me a couple of years but I finally discovered that this is partly how the H1Bs are beating me out.
They're filing 1099s and paying no income as they have no expectation of staying here long enough to matter. Likewise, most of them are in their late 20s and 30s, so they care no health insurance.
Also, they're often living 3-4 to an apartment. I figure I can live in my parent's house indefinitely for free so I can beat them on that score."
You REALLY have no idea how H1Bs work. I was on an H1B for a few years. You are a W2 employee of a company, thus you file regular taxes just like anyone else.
And given that you need to leave the country within 30 days if you leave your job you tend not to like screwing around with the IRS/INS.
Trust me, I don't know any H1B holders that were doing 1099.
No polling on Sheehan vs. Pelosi. Pelosi has become rather unpopular in California, even before the failout. A good campaign might have knocked her out, or at least put the fear of Glod in her, but time is awfully short.
What could really make a difference is to set up some kind of grassroots movement in her district to replace her. She's too moderate for her district and that in combination with the failout arrangement could get her thumped. She didn't just vote for the failout, more than anybody, she WROTE it - she was the one that crafted the compromises to get everybody together on it.
The government must not stop at merely guaranteeing mortgages for those in default. The government must also do the following:
1. Guarantee the credit card and auto loan debt of those in default;
2. Legislate that credit reporting agencies may not lower the credit scores of those in default. Better yet, credit reporting agencies should be required to increase the credit scores of those in default, thereby enabling those consumers to borrower even more, and at lower rates to boot.
3. Create further tax breaks for those in default. Those breaks already put in place, such as not taxing those who have sold via a short sale, are wholly inadequate. For every dollar in default, the consumer should receive a tax credit from the government. Better yet, the government should send to the consumer a check in such an amount.
4. Given that auto sales are in the toilet, the government should buy a vehicle (but only from the Big Three) for each consumer who has defaulted.
5. Finally, as we all know, or at least can assume, defaulting has to be terrible on one's self esteem. Therefore, to help each consumer in default save face, the government should pay for a face lift (or perhaps rhinoplasty) for those individuals. Or, at a minimum, liposuction or breast enhancement. People who look better will feel better, and therefore be more likely to work hard to land a job. However, regardless of how much income those individuals might later earn, they should not be required to repay to the government any of the benefits they will have received. To do otherwise would penalize those individuals. The key is that defaulting should not result in a penalty; instead, such behavior should be rewarded. And thus constitutes the FDIC's rock-solid rationale.
Ca 8th District Congressional Candidate Trivia Challenge
Here is a political trivia challenge for you:
Question One: Which Candidate has only one visible window sign up in the district and rents a "campaign office" from her millionaire-real estate developer husband; sends most of the money she raises to other candidates to consolidate her power; and refuses to debate her opponents or even hold a town hall meeting in the district?
Question Two: Which Candidate had to collect 10,198 signatures to historically gain ballot status; has 4000 window signs all over the district; 12 staffers; hundreds of print, radio, and television ads; 75,000 mailers; has made 250,000 phone calls (robo and personal), thousands of flyers handed out; 40,000 door hangers hung; dozens of committed volunteers and the endorsement of the SF Bay Guardian, SF Bay View, League of Pissed off Voters, League of Young Voters, the SF Green Party, the SF and California Peace and Freedom Party among many others; and has spent well over a half a million dollars campaigning in the district?
If you guessed Nancy Pelosi and Cindy Sheehan, in that order, you get a perfect score.
crispy,
Good point, forgot about that. Since our govt is implementing Japanese monetary and fiscal policy, linking automakers may not be such a bad idea. If Toyota owns GM, the BoJ can issue bonds to cover GM pension obligations. First smart thing Wagoner has done. Actually, it's brilliant...unload our lemon car company on foreigners.
I've suggested lowering all mortgage loans (HELOCS, 1sts, Commercial) to 4.5%
i also have posed the question multiple times: why, if the fed backstops all notes, why does'nt everyone qualify for exactly the same rate, regardless of fico scores or location. at this point, income only matters.
the answer is price.
This is absurd...GM has nothing that Toyota would want
Well, almost.
If I'm Toyota, what I want is Rick Wagoner in the captain's mast as long as humanly possible. Ideally until he rides the GM(-slash-Chrysler) ship all the way down to the waterline.
It's certainly worth "exploring an expanded business partnership" with my competitor if it means they'll keep looking past that level of incompetence.
Your government's ability to fund its operating debt through taxing you has now been co-opted by The Federal Reserve without a vote and without affirmation of Congress to prop up foreign banking interests.
This is unconstitutional. You can't just make up programs like this. Legislative power is vested in Congress and they cannot delegate that power to the executive branch.
The moral hazard in this is huge, both the banks and the borrowers will be gaming the system in order to maximize the payouts by the government. It could take some pressure off of prices giving the Fed time to let inflation takeover from deflation but its effect on real prices will be nil.
Didn't they pass a voluntary plan to do this months ago?
Yes. Congress voted $4 million for mortgage servicers to work out loans. Almost no one took them up of it. Servicers just aren't geared for work outs. It'd be interesting to see how this would be implemented.
This is unconstitutional. You can't just make up programs like this. Legislative power is vested in Congress and they cannot delegate that power to the executive branch.
crispy&cole writes:
This is absurd...GM has nothing that Toyota would want, except perhaps the capital equipment inside GM's plants.
Not even that. Toyota buys machines that can change products far faster than GM. GM sets up a factory to make one car for years. Toyota often switches which car they make mid-shift (it helps improve quality as the workers get less bored).
Wow! Look at that closing. The PPT hit the bars 15 minutes too early...
"the lender would agree to reduce borrowers monthly payments, for example by lowering the interest rate or principal of a mortgage loan, based on the homeowners ability to pay. ..."
from each according to his ability, to each according to his need.
Looking at the slight information available for this plan, it looks to me like a move to make ex-judicial cramdowns.
FDIC is not ignorant of where the logjams are in workouts. And Treasury is getting some feedback from lenders - and particularly from MBS issuers - about the macro effects of the current disorderly unwind in RE.
I'm not expecting miracles, but I think it's too early on this to hit the wailing wall.
Brian in Boise writes:
2. Legislate that credit reporting agencies may not lower the credit scores of those in default.
I believe this is coming, sort of. There are going to be so many people with the stain of foreclosure on their credit reports, that some sort of future legislation is inevitable. They are going to need to pull buyers into the housing market any way they can in the futile effort to re-float it. So at some point there will be laws or regulations put into place that remove foreclosures from credit reports, or prevent mortgage companies from denying loans based on a past foreclosure. This is one more reason to not be so concerned about the negative credit implications of voluntary default.
It is quite predictable - and I think was probably noted on this board - that once Congress gives away money to 'rescue the financial system' that opens the door to do anything and everything that can be done with money. Helping friends, the place you used to work, buying paper, paying dividends, paying bonuses, acquiring other companies... and lots more I can't even imagine right now but that will come in a year or so as a 'scandal'...
As soon as the financial institutions and the wealthy secure their bailouts, any proposed government spending on Joe Six Pack will be met with shockingly high interest rates.
Was there money for social security, health care, education or infrastructure - NFW! But there was immediately > $trillion available for bailouts of the wealthy. What a sham.
Joe Six Pack can expect the same as always - DIDLEY SQUAT.
One way for mortgages to be worked out is to focus on areas with clusters of foreclosures. Essentially helping people who are being screwed by their neighbors' predicaments. I don't know whether it's be politically viable or systemically helpful.
Do you honestly believe that the more prudent, paid-current borrowers with good credit scores are going to suddenly decide to default just to become eligible for this? What!?
Let's say you owe $400k on a house now worth $300k. So you stop making payments, take this deal, then sell your house, walking away with nothing at the closing table. You spend $10k to move all your shit, and become a renter - at one of the lovely types of pads that are let to people with poor credit - for several years. By the time you again qualify for a mortgage, the home you left is again worth $400k, and to repurchase it you now must put another $40k down.
Oh. Well, that will certainly put a stop to the idea, then. You'll recall how it's figured so prominently in the plans rolled out to date.
I feel like a poker player who's put all his chips in the middle with top set and watched as my opponent hit a 3-outer straight to scoop the pot. Over and over and over again, for about 14 months and counting.
I've made all the right decisions about debt, for all the right reasons, and yet with every hand that plays out, I wind up poorer.
Angry Saver - Joe Mama, Joe 6P, Joe the plumber and all the other sheeple joe's out there are too dumb to realize what is going on...when the DEEEEEEEEP recession of 2009-2010 hits they will blame it all on Obama and the Dem's
"Do you honestly believe that the more prudent, paid-current borrowers with good credit scores are going to suddenly decide to default just to become eligible for this? What!?"
Guy in my office making 6 figures is already talking about this.
I believe his cousin already got a new car, ramped up the credit cards and did the same thing as well.
No kidding. At this point the only thing I car about in a president is a moral compass. I'm an anarcho-capitalist, but even I can recognize that Obama is a better person than McCain. He will be the most decent person to hold the office since Carter. Given that we're screwed economically no matter who wins, I'll take honesty and morality or policy.
TCA | 10.29.08 - 5:19 pm | #
That is so foolish to say either way. I am sure you do not know either of these men. That sounds like something a teenager would say.
When even Bloomberg news calls it 500 Million and then 500 Billion in the same story about this mortgage bailout, then you realize the exact nature of this problem. We are dealing with fictional money units that are beyond the understanding of all of us.
Wall Street bonuses this year are reported to be around 100 Billion...many going to those companies that received funds under TARP. They get paid that kind of money for being able to conceive this cloud of fictional money.
I believe his cousin already got a new car, ramped up the credit cards and did the same thing as well.
He's a patriotic American, stimulating the economy!
Seriously though, it's like we're starting to eat the seed corn and burn the furniture for firewood. Making fart jokes as a plague decimates the population.
Schnaps, if you care to change the premise to fit your argument, go for it. That is not what I said and that is not what is being proposed.
If the govt is willing to do workouts to keep you in your existing home based upon some unkown ability to pay and it knocked 200k off your mortgage balance and you got to live there without paying the mortgage for a year or so while they figured all this out, your saying people with good credit, like myself, are not going to even consider it as an option?
As of the beginning of LAST week, not taking into account GM/Chrysler, the new swap lines, the purchase of CP and assorted Hankie's small change outflows...
$700 Billion Treasury to purchase toxic mortgages and other non-performing assets from financial institutions.
$50 Billion To guarantee principal in money market mutual funds.
$10 Billion+ Treasury purchases of mortgage-backed securities (MBS) in September. More to come.
$144 Billion In additional MBS purchases by FNM and FRE. Limit $850 billion. FNMs portfolio currently holds $758.1 billion and FRE holds $798.2 billion.
$85 Billion AIG bridge loan giving the Fed a 79.9% controlling stake in the firm.
$87 Billion Repayments to JP Morgan (JPM) for providing financing to underpin trades with the now bankrupt Lehman Brothers. In response to the Fed & Treasurys stand against providing public funds to consummate a deal.
$200 Billion $100 billion capital infusion for FNM and FRE by the Treasury.
$300 Billion Provided to the FHA to refinance failing mortgages into new, reduced principal loans with a federal guarantee as part of the housing bill.
$4 Billion Provided to local communities to purchase and repair abandoned homes due to foreclosure.
$29 Billion Financing for JPMs takeover of Bear Sterns. The Fed takes $30 billion in non-performing assets as collateral.
$200 Billion Currently outstanding loans to banks through the Feds Term Auction Facility. Recently updated to allow loans of 84 days in addition to the original 28-day!
$150 billion stimulus checks
Someone here posted this a week or so ago (?). I was so stunned I saved it so I could reference it again. Stunning.
"That is so foolish to say either way. I am sure you do not know either of these men. That sounds like something a teenager would say."
So undergrad-level cynicism is better? We all make judgment calls all the time about people we don't know. You'd have to be pretty blind not to see that Obama has miles more integrity.
That is so foolish to say either way. I am sure you do not know either of these men. That sounds like something a teenager would say.
We know this: if you look at the country as Clinton left it or as W left it and conclude that Republicans in power are a good thing, then all reason has left you and you are little more than a brainwashed zombie.
There will be more 'voluntary defaults,' no doubt.
There will be more dudes like Broward who say "F You" and take their ball of cash into an early retirement instead of slaving to produce. The smart ones know their price.
Most government action will be blown into the wind, with a cost we cannot imagine.
So we're screwed. Give up. It's a game you can't win.
But don't go jumping in front of a train. Buy a little bait shop near a lake, do cash transactions, and chill. Leave MadMax at WalMart.
In one sense, I understand looking at whatever comes of this plan.
As we're all going to receive the bill for this, we probably ought to put a sharp pencil to it and see if there's any benefit to be had from participating.
This is the political sop of crumbs for the little guy, so that the feast at the high table can continue unabated. More evidence that the crony communists in China are doing about as much justice to capitalism as the crony capitalists in Washington are doing justice to socialism. The Europeans have better ideas about how government should intervene, witness the about face on how the TARP works, because they have much more practice. Amerika now has socialism without any real socialists in charge, which with a healthy dose of what's generally recognized as moral hazard.
Pissed Off In California writes:
You REALLY have no idea how H1Bs work. I was on an H1B for a few years. You are a W2 employee of a company, thus you file regular taxes just like anyone else.
Can confirm that :
I also was on an H1B1 (ca. 4 years assignment in the US, working for a US multinational company).
It's exactly as you write :
Was a W2 employee of that company, payed and filed regular taxes, social security and that anual (semi-voluntary) contribution to United Way, Red Cross or similar) just like anyone else.
My other assignee colleges did the same. No 1099.
About the only way to survive(that's being able to eat)is to go underbelly with all forms of employment bypassing the Goverment(no more taxes.) At my age it certainly wouldn't matter, the younger generations will just have to figure it out.
The Goverment is blowing up, and if you've ever been in a business and seen it going south as if it was on speed, we are seeing this daily with this goverment.
Waiiit.... so if a lender agrees to lower a borrower's interest rate by 1% (lenders ARE restructuring interest rates right now, they just aren't reducing the amount of hte loan itself) and then the borrower goes "wait a sec, I'm 300k under water here" and walks away, and the lender foreclosees on a 1million dollar loan for ah ouse that's now only worth 700k, the government is on the hook for that 300k?
I don't understand this, it doesn't even sound anything close to logical. I think its a good thing for the government to encourage lenders to try and work things out rather than foreclosing but it should be in lenders best interests to foreclose on the ones that deserve it and modify the ones that look like they will be repayed if only the rate is locked at a certain rate or something along those lines. I mean if the government guarantees modified loans, then the lender has incentive to modify BAD loans too, because it'll still get something back. Right? I mean, am I understanding this right? It sounds just ....bizarre.
Many financial institutions have invested in Fannie Mae and Freddie Mac preferred stock indirectly through certain adjustable rate preferred programs and other vehicles. Pursuant to the authority granted in EESA, the revenue procedure includes guidance describing when these financial institutions receive ordinary treatment on:
· gains and losses on this stock recognized by a trust or other entity taxed as a partnership in which the financial institution is a partner;
· gains and losses on the sale of an interest in a partnership that owns this stock;
· gains and losses on the sale of this stock that the financial institution received in a distribution from a partnership;
· gains and losses on this stock recognized by certain subsidiaries of financial institutions; and
· gains and losses on the sale of this stock that the financial institution received in certain "transferred basis" transactions.
One thing I have noticed over the years is if you pay a small amout of tax the IRS will leave you be. Pay off the house/car before dropping out. Then like you said,cash is king.
In each of my 4 house purchases over the last 40 years -- never more than one at a time -- I never paid more than 3 times my anua income, I put between 20% and 40% down, and I paid the monthly payment on time even when I was out of work and had to take it out of savings -- including 401(k) with penalty.
Then when I got laid off of the last time and couldn't get a job because of my age, I sold my last house and started renting again.
I think any "reporting" we hear from the media is only designed to get us worked up, as seen here. The future is never what you think it's gonna be, so let's just wait and see. As far as all these "irresponsibles" are concerned, do you really want them on the street? I mean, what about the children? The social costs would be far more onerous than keeping them in their homes. Listen to yourselves. Geez. Or is it that you just can't bear to be "worth" only so much, while some poor schlub gets a break for once. I agree, they shouldn't have bought houses they couldn't afford. But who PUT them in those houses? All the true law-breakers WILL be punished. I guarranty it. Nobody gets away with anything in this country. Sooner or later, everything comes full circle, so relax, and don't do anything stupid. Peace out.
Just so you know, my own personal opinion is that there simply needs to be a shit-ton of foreclosures.
But that ain't gonna happen.
There is no political will to allow the market to run its course here, and I think we all know that. So, given the fact that the gov't will be doing something, we'd be better to consider the details of the plan than to bemoan its very existence.
I remember how scared I was when I signed my loan agreement. I had never been so scared in my life as when they forced the pen into my hand and put the gun to my head.
WHERE THE HELL IS MY REWARD ??? !!!
Ethan | 10.29.08 - 5:45 pm | #
There are a lot of people I work with who did the same who are also asking this question...Its gonna get ugly. Heck we have some new cars/trucks in the lot at work and everybody paid cash. NOBODY is borrowing right now.
It is DEMAND & SUPPLY in the housing market. Even if we try to artificially fight the balnace, the real market will not settle until DEMAND and SUPPLY balance each other.
It is very simple...like gravity.
In the meantime, I am going back to the casino tonight.
I'd be concerned about ex post facto laws impacting this strategy. The've thrown out whole sections of the Constitution, why not this minor proviso. In fact, some precedent exists for them to do so, check recent (last ten years or so) tax laws.
I would love to go to court for tax evasion in front of my peers and paint the story of the saver, not bubble participant, tax payer with daughter who made the decision based off helping my family not someone that I don't know......what are they going to do send u to an overcrowded prison. You could start a revolution just off that...
Why not just declare mortgage rates of more than some index value (10 year treasury rate plus 2-3%?) usury and tax the interest above that amount at 105%? Voila, modifications overnight.
"Do you honestly believe that the more prudent, paid-current borrowers with good credit scores are going to suddenly decide to default just to become eligible for this? What!?"
Sure.. when they bought a $650,000 with a 10 yr. interest only loan and now the house is worth only 325,000. Because of the write off currently it is the same as rent.. As soon as rent drops you betcha they will walk..
My views aren't determined by who sits in the pulpit, though in my case they've been pretty good sorts, mostly. Rev. Wright can say "god damn America" simply because this is more or less still America.
I'm not sure what sort of mind considers a paid political ad a reasoned source or citation. PPAs like that are crafted to solidify pre-existing hatred for an opponent. They don't change minds.
In theory couldn't this just accelerate the rate of deflation? What would prevent these people from just dumping them on the market right after receiving a loan mod?
Markar writes:
A company would have to be nuts not to issue a 1099 to a contractor and report it. It's a deductible business expense.
To reiterate my point, I have paid numerous contractors over the years and I always issue 1099 forms to them. The employer does not send the 1099 to the IRS. The employer is supposed to send a corresponding 1098 to the IRS, but I have never done so. Nevertheless, I still write off the contractor pay as a legitimate business expense (which it is). Don't confuse 1098 reporting with deductions for expenses on the employer side.
To summarize:
If you are a 1099 employee and your employer does not send 1098 forms to the IRS, the only way the IRS will know about that income is if you declare it. Or if they decide to snoop into your bank account, I suppose.
If you are an employer who pays an employee on a 1099 basis, don't file the corresponding 1098.
bearly wrote:
...
At the end of my rather unscientific redistribution experiment I realized
the homeless guy was grateful for the money he did not earn, but the waiter was pretty angry that I gave
away the money he did earn even though the actual recipient needed money
more.
I guess redistribution of wealth is an easier thing to swallow in
concept than in practical application.?
bearly
The key is to tax the minority to finance the free money to the majority. But the 250k number being floated isn't even close to the level it will end up at, what with the Gov't burning trillions on the various bailouts. Uncle Joe gave us the first freudian slip on that fabrication. (150K) The real number will end up like 100k by the end.
100k is middle class in most metro areas. But if O can keep the "majority" happy, he'll be good with that.
Hey, I've got an idea. Congress can draft every homeowner and put them on active orders to defend their homes from terrorists. Then under current law all of their interest obligations will be capped at 6%.
[PPAs like that are crafted to solidify pre-existing hatred for an opponent. They don't change minds.
burnside]
Would you feel the same way if McSame were a 20 YEAR MEMBER OF THE KKK ?
Look, this is a disgrace on a national scale and somehow it's off limits? None of that material is fake. It's real, and everyone needs to come to terms with it before Nov 4th.
bearly writes: It's 109K until he lowers it. See, he's pretty adaptive. The 109k is the SS Taxable income ceiling that will get eliminated.
HUGE TAX INCREASE ON THE MIDDLE CLASS.
The median American household income (50% make more and 50% make less) is about $45K. The 80/20 line is about $90K. You're talking top 5% money, and you have the gall to claim that that is middle class? Even with the later restriction of W2 income at this level, I don't buy it.
First?
emo?
Bang. Zoom. To the moon Alice
Didn't they pass a voluntary plan to do this months ago?
Anybody still paying their mortgage at this point is officially an idiot. You are playing by the old rules, and are at a competitive disadvantage in today's America.
"Under the program being discussed, the lender would agree to reduce borrowers monthly payments, for example by lowering the interest rate or principal of a mortgage loan, based on the homeowners ability to pay. ... the government would then guarantee to repay the lender for a portion of its loss if the borrower defaulted on the reconfigured loan"
Ability to pay....
I'm taking a 2 month vacation so my income goes to zero and my "ability to pay" is zero. That should save me a few hundred thousand.
Where's Rod Serling?
God damn, Dow. From +150 to +35 in--literally--30 seconds. I just dont understand how it's possible to move this much this fast.
Dear Treasury:
Please order assistance for my auto loan.
Thanks in advance.
P.S.: I don't have a subprime mortgage.
I will accept offers from Russian banking system.
Communistically yours,
Kilgore Trout
once again, as a prudent and responsible american, i get screwed.
words fail for how pissed i am.
words fail for how pissed i am.
nullpointer
You must be a middle child.
Somebody get to Paulson's office and push the Big Green BUY button on his desk.
Right now!
Well, I lost more money in the markets today, but at least I can stop paying my mortgage now.
They can't help themselves......too funny. +225 when I walked out and went to the bathroom.....-120 close.
Ciao
MS
The overseas hedgies must need beacoupe dollars to unwind their trades.
And the idiots are about to elect Obama, Pelosi and Reid.
Good to be old.
This is a slap in the face to all of us who lived within our means for the past 5 years.
Sheila Bair and her comrades are also planning on sharing the pain on second mortages and HELOCs per Bloomberg.
I agree with nullpointer, the fiscally prudent get screwed again. I bet Uncle Sam will not even punish defaulting debtors with a sullied credit rating because to do so would seem too mean spirited in this down economy.
Well, we saved and didn't buy in Los Angeles with a crazy loan so that we could sit by and see our tax dollars used to help the idiots that did. Super.
I think this sounds a great deal like plans that were discussed here months ago. At some point we are going to have to accept that the value is not there, try to recoup what we can and move on. Better to accept reality and try to deal with it than continue to try to squeeze blood out of these turnips.
"Harley-Davidson Fincl Unit Taps Fed Commercial Paper Program"
I guess we all can apply now.
Gotta keep paying that dividend!!
Covered my short in low 19's yesterday.
Ciao
MS
Wow - Watching the last 10 minutes of a trading day is like watching a high stakes craps game. The roller is kicking butt and people keep pressing their bets, money is everywhere on the table and POOF 7 rolls. Bye bye. Absolutely insane.
Where are those Nigerian riches when you need them?
Captain of the U.S. Titanic:
All women, children and able-bodied men on the U.S. Titanic must report to the icewater now.
Lifeboats have been given to the elderly and those unable or unwilling to meet their financial commitments.
The captain and crew have chartered a helicopter for themselves.
Looks like the PPT has morphed into the RPT - Rally Prevention Team!
Bloomberg:U.S. Treasury Program Shuns Banks That Need Cash Most
Wheel of Fortune gameshow host Paulson turns away contestants. He states "I make the game rules and the money is mine, go take a hike."
Game show producers Pelosi and Reid asked Paulson if he would consider restricting the bonuses of the bank executives that are billions of dollars,'' Pelosi stated, "the little people are getting angry at me."
Treasury spokeswoman Brookly McLaughlin said the Treasury has received the letter and is laughing her ass off....
We're up 800 in two days.. not too bad.
I think taxes should be based on credit scores from now on is they keep pushing this junk.
It would cost between $40 billion and $50 billion, sources said.
Window dressing. Not even as much as Wall Street will hand out in bonuses this year.
By Chad Bray Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- New York Attorney General Andrew Cuomo on Wednesday asked nine banks that are receiving federal funds as part of the government's financial rescue plan to provide his office with information about expected bonuses and compensation to be paid their top executives.
In separate letters Wednesday, Cuomo's office requested a "detailed accounting" of expected payments to top management in the upcoming bonus season. He is looking for information from banks that have received or are expected to receive funds under the Treasury Department's Troubled Asset Relief Program, or TARP.
The banks are: Bank of America Corp. (BAC), Bank of New York Mellon Corp. (BK), Citigroup Inc. (C), Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM), Merrill Lynch & Co. (MER), Morgan Stanley Inc. (MS), State Street Corp. (STT) and Wells Fargo & Co. (WFC).
http://www.easybourse.com/bourse-actualite/american-internation/ny-ag-cuomo-seeks-information-about-bonuses-from-banks-US0268741073-551617?PHPSESSID=74f87902cfe633a30a68ad8f3502bb51
Out til 2010: Interesting thought.
An almost 400 point drop in ~12 minutes. Cant get jaw off floor
To: nullpointer
I agree. i played it safe and by the old rules for 20 yrs as I watched so many friends and family (making under $75k) buy huge $500k homes, boats, jet ski's, vacations to the Bahama's, plasma TVs, SUVs, etc, etc while I lived in a humble abode, drove an old car, and squirreled away my cash to start a business. Maybe i'm the sucker. who knows anymore, the rules change daily.
Anonymous,
No matter how you try to spin it from +250 to -100 in the last 5 minutes of a day when the market got it's puff on the crack pipe ain't positive.
A year ago we lived in the United States.
Last summer we bailed out Fannie and Freddie and woke up in socialist France.
A month ago (or was it less? sheesh) we got TARP-edoed by Congress and entered Fascist Italy, land of government-run "capitalism".
Now I see we've finally made it to Communist Russia, where folks pay taxes "according to their ability" and other folks receive handouts "according to their need".
Sigh.
dd writes:
Wow - Watching the last 10 minutes of a trading day
Hahaha, I see that you can't stay away;-) How's the vacation?
Do you realize EEV has gone from about 100 to 180 and back TWICE IN ONE MONTH?
I put in an order to buy it today at around 100. I'm selling at 180.
How can you turn down this kind of action?
How much more can we give to the stupid and reckless before the smart and prudent walk?
While Treasury and FDIC officials have reached an agreement on the principles of the program, the White House is resisting, according to the sources, who declined to be identified because the negotiations are ongoing.
Please replace "if" they default to "when" and recalculate...hmmmm. I say NFW!
Casey Serin is a Freakin GENIUS. I thought working hard, saving money, and playing by the rules was the right thing to do.
I didn't even get dinner first.
This is why they call it "playing" the stock market. No damn rhyme or reason. Comedy...
Pissed Off In California writes:
Anonymous,
No matter how you try to spin it from +250 to -100 in the last 5 minutes of a day when the market got it's puff on the crack pipe ain't positive.
Tell me about it. I bought SDS, lost $300 in a sec, turned aroung and was up $300 at close.
What's the next bottom that needs to be teste, 7950?
No matter how you try to spin it from +250 to -100 in the last 5 minutes of a day when the market got it's puff on the crack pipe ain't positive.
Not spinning anything. Just stating the facts, the rate cut move was made yesterday and today of course there would be a pull back, still expect more rallies.
What else can be expected when more liquidity is released everywhere. Surely no one expects the markets to crash, the money has to go somewhere.
They give this option to 3mil mortgage holders and ignore the rest? Hmmm, gonna be some words said about that move.
Issues like this everyone does understand.
"We lost 2 billion dollars and like any other business we have to stay afloat." And to keep from sinking, the United States Postal Service is considering cutting thousands of jobs nationwide.
We can give the automakers and banks hundreds of billions but we can't subsidize 40,000 jobs for a measly 2 billion?
U.S. Postal Service Searching for Ways to Cut Costs - KSLA News 12 Shreveport, Louisiana |
Wow - Watching the last 10 minutes of a trading day is like watching a high stakes craps game. The roller is kicking butt and people keep pressing their bets, money is everywhere on the table and POOF 7 rolls. Bye bye. Absolutely insane.
I always play the darkside at craps.
Much more fun that way. I think that's why I enjoy shorting stocks.
Anonymous:
What else can be expected when more liquidity is released everywhere. Surely no one expects the markets to crash, the money has to go somewhere.
I expect markets to crash.
Just on the stairmaster from hell going down.
Just another reason that Hank Satanson is the evilest man in the world.
And the idiots are about to elect Obama, Pelosi and Reid.
Thanks for calling me an idiot but can you read?
"Officials with the Treasury and the Federal Deposit Insurance Corp. are crafting a plan under which the government would guarantee the mortgages of as many as 3 million homeowners now struggling to avoid foreclosure"
I expect markets to crash.
Well the markets are sadly not living up to your high expectations.
The government is unleashing a disaster. Everybody that is underwater on the mortgage will now game the system. Also, remember that in many households the second income is only marginally beneficial vs. childcare costs, etc. Now there is an additional "cost" to having a second income in the form of a forgone mortgage reduction. So you will see people voluntarily come out of the workforce to qualify. Many will commit outright fraud.
Wonder if that end-of-day market implosion had anything to do with a leaky GDP number? Market expectations are all over the map on that one, but a negative number wouldn't be unexpected...
I don't think Initial Claims has that much market pull, unless it suddenly ramps to 550K or something...
I am dead serious about this. How many people are going to put pencil to paper and make the decision as to how much a 100 point hit on their credit is worth. If the govt were to cut $200,000 off my mortgage debt, I may consider it.
once again, as a prudent and responsible american, i get screwed.
words fail for how pissed i am.
Not to worry -- in the New U.S., words won't be ALLOWED to fail!
Rich, thanks for the EEV suggestion. I've been in the SKF and looking at SRS, but great idea. Any good EM blogs/websites you recommend?
The prudent saver buys a $500k house after saving for years with 10% down, makes payments on time, lives frugally to afford it.
Next door and 2 yrs later, the same house sells to an irresponsible deadbeat for $750k to someone with no money down, little income, and poor credit.
Now, the deadbeat will get to keep the house that is revalued at $300k and make half the monthly payments of the prudent saver, who still owes $400k on the mortgage.
We need new leadership.
The only solution is to bulldoze housing, then give everyone a government mortgage on a new, government issue house, with the mortgage payments based on ability to pay. That'll be the great equalizer.
Speed
This prudent saver sounds like someone very close to you...
baron-
credit scores will be largely irrelevant going forward as most will have some sort of intentional default that can explained....
Not that it's right but the system will make a choice...keep crappy biz model afloat or remodel.
Remodeling is so last year...
Ciao
MS
Stop. We can defeat Pelosi. Cindy Sheehan is making a strong run in San Fran. She is against the bailout. Conservatives have nothing to fear.
I sent her $500 and will make phone calls.
Pass it on.
This will do like all government market interventions--the exact opposite of its intent.
The housing market will crash even further as the deadbeats stay deadbeats and don't even pay back the restructured loan.
Price discovery for housing will be impossible, as every time someone thinks a house is reasonably priced and wants to buy, they'll have a nagging feeling that maybe they ought to wait on the next economic policy du jour to be announced. Never know, the government may start giving away houses, so why buy now?
"Palin spoke after touring Xunlight Corp., one of a handful of solar technology startup companies in Toledo, a struggling industrial city in this swing state. The city's leaders are hoping that the solar companies will create jobs to replace some of those lost by downsizing in the auto industry.
But Palin made only a passing reference to solar power in her speech and instead renewed her call for more drilling in U.S. coastal waters. She repeated her signature anthem, "drill, baby, drill," which seemed to fall a bit flat on the audience at the plant even as it's become a popular chant at her rallies."
Posted this for the laugh not to start a political discussion.
Yahoo! 404 - Page Not Found
@ Kilgore Trout:
Nice Vonnegut Reference!!!!!!!!!!!
Great Character. Simply perfect for all hell breaking loose.
MS, any thoughts on insurer earnings?? Look pretty fugly, especially for PRU.
MS
Lending will be confined to personal relationships. too bad I don't have any rich friends. Loan will be available at a mere 25% interest.
this is stupid. market is self correcting while they keep coming up with crazy ideas to disrupt the process. why dont they just run out to those ghost neighborhoods and burn down the inventories to skew the stats? that's a solution too.
"I expect markets to crash.
Well the markets are sadly not living up to your high expectations."
4T in liquidity in 30 days and the market drops 25% isn't a crash?
Not sure what your definition of a crash is then.
Sure to be buried in the hundreds of comments but this is deadly serious business. Our system of governance is largely voluntary and self policing. The Federal government through the entire series of crises has strained that agreement to the breaking point. If there seriously is a program to bailout the least deserving with the treasure of the rest there exists the distinct possibility of losing the "consent of the governed." That's not strongly worded faxes, that's armed guards at congressional district offices. Paulson is making a fatal mistake in thinking the general public will act in their ultimate best interest and pay up. The possibility of a general tax strike is something the system cannot survive and short of violence that appears to be the only tool left to taxpayers to get their attention.
Much of this is "insiders (millions of them) gaming the last suckers on 15 minute delay.
Next step is to help those with HELOCs. Imagine, a rework on both the mortgage and the HELOC.
Gavshire Hathaway
See CNA. They were supposed to be conservative
Only die-hard capitalists could fuck up socialism this badly. How about giving free money to some of us who are actually deserving as well? Instead of to just the fuck-ups.
What an American clusterfuck.
If the US Treasury starts guaranteeing mortgage given based on fraudulent no doc loans and other ARMs, I will be very disappointed. And, if they want to change the rules, they need to take back all homebuilder and IB bonuses over the last 7 years. And profits on stock options. Good god, what a horrible plan by an evil, evil man.
Market should respond well tomorrow to Obama's 1/2hr infomercial and the GDP report.
Double-Whammy.
insurer earnings??
surely you jest....
Ciao
MS
ChangeYourDogCanRollIn "And the idiots are about to elect Obama, Pelosi and Reid."
I assume you would rather keep the idiots who created this mess in charge for another 8 years? I believe you suffer from "battered wife syndrome." More of same please......
Again with the mad volume spike in the last 10 minutes today.
Hey! Where did my rate cut go?
What? I can't even go to the bathroom til the closing bell?
tim-
need I loan? I only charge 20%.....
Ciao
MS
MS,
I managed a large 'well known' indirect lender for a few years. I cannot count the number of times I wanted to turn down loan apps that were beyond sketchy- with multiple repo's, foreclosures, etc. I had to fight to NOT approve the loans.
Low and behold a year or so later, the non performings go through the roof, and upper management acts as if they never saw it coming. Of course, they lay off 1/2 the work force and close 1/2 the offices nationwide, displacing thousands.
So much for having ethics.
Will the president-elect please demand the immediate resignation of Secretary Paulson? Let Neel call the shots between Nov 5 and Jan 20th. He couldn't possibly do worse.
Tim & MS,
They don't seem to be selling off much in After Hours. So far?
Wells Fargo is showing conforming @ 6.5% and jumbo @ 10%.
Rate cuts sure aren't helping the California housing market.
3 million?
What about the other 9 million who are underwater and the other 8 million who soon will be?
Faster Printing Press, Kill! Kill!
There is no reason to even invest anymore. I should take my money and put it on black or red and I will feel better about what I work my ass off for. I paid my house off and wish now I had a mortgage so I can beg like the bums I pass everyday to work. This should be criminal.
Could someone explain why some people are suggesting the GDP report tomorrow (which will likely be negative) will be positive for the markets? Doesn't make sense to me.
Dawg: Do you think that is already starting to some degree and just hasn't reached mass yet? It doesn't seem like a total 'what if' to me.
Speed,
Or how bout this: A young couple "A" makes $100 grand a year. They refuse to speculate and buy a conda they can afford at 3x income for $300,000.
At the same time, Another young couple "B" making the same $100,000 a year goes for the house they want now and buys that 6x income 2500 sqft house with a yard for $600,000.
After the bubble bursts, young couple A are in a conda that is worth $150,000. They get no relief since they can afford their original loan. They have increased their income and now can afford a house (as now they have two kids). They are stuck though.
The other couple, who have now also increased income and had two kids are in the bigger house. The get a govt bailout rework and get their principle written down to say about $300,000.
Responsible Couple A is stuck in a condo and lost $150,000.
Speculative Couple B is in the house they always wanted, worth twice as much as the condo, at with the same house payment as Couple A, and aside from a temporary hit to their credit, have not lost a dime.
Nice.
Let Neel call the shots between Nov 5 and Jan 20th. He couldn't possibly do worse
Oh, yee of too much faith.
Mu-ha-ha-ha-ha.
I guarantee they can do more, even without Paulson. We're just getting started. Pensions & 401Ks will be stripped to the bone, baby!
"Officials with the Treasury and the Federal Deposit Insurance Corp."
All I can see is Curly going woowoowoo while Moe chases him around the conference table and Larry is about to set the place on fire.
Nostrovia,
I think HIG was halted.....
Ciao
MS
Now that a moral hazard of almost unlimited size has been created for the nation's CEOs, COOs, CFOs, etc., its only fair to create one for everybody else.
@ Rob Dawg
A general tax strike is sounding real good. But it will never happen. We are sheep...here for the shearing.
The think tanks will spew out reasonable sounding opinion pieces on why this is actually the American thing to do and the sheeple will go right along with it....there will be a bit of grumbling sure....but nothing more will come of it.
They can do whatever they want until the entire system collapses and then, and only then, will anything of any signifigance get done.
A substantial portion of mortgages are not re-workable without a Heloc workout.
Some of the details missing in this article are the types of penalties in case of default. For example, is the government going to modify the Bankruptcy Code to make these offsets non-dischargeable or capable of being garnished? If not, then the program is basically a boon to the lenders and the homebuilders, but masquerading as help to the average joe.
Rob Dawg,
Divide and conquer. Bad credit citizens against good credit citizens. Piss off the people with money and jobs and you give the politicians the support necessary to ensure payment from the deadbeats. All debt will be recourse and non dischargeable. Wait and see...
mykillk-
I'm sure they will spin as "we could have sucked a whole lot more"....
All this action is for YE mutual funds...gotta make those statements look good since they start going out on monday....
Ciao
MS
4T in liquidity in 30 days and the market drops 25% isn't a crash?
Kindly break down that 4T and list them if you will.
HIG ahhhhaaa 2 billion in losses ouch. Triple the expected losses.
My country for whom I weep. If there were a revolution to join at this point I would kiss my wife, tell her I love her but tell there was something I needed to do.
Dawg: Do you think that is already starting to some degree and just hasn't reached mass yet? It doesn't seem like a total 'what if' to me.
Currently Smoking Cannabis
Absolutely. Critical mass takes time to pressurize and then a trigger event. 3 million free passes is a trigger event especially since it will clearly become an attractive nuisance and balloon to 6 million plus.
An we already see "tax reluctance" in California. Revenues to the State are way down, far lower than economic indicators would suggest.
"If not, then the program is basically a boon to the lenders and the homebuilders, but masquerading as help to the average joe."
This doesn't help the homebuilders. The only thing that would help the homebuilders is if the gov't bulldozed all the oversupply and 10% more. The homebuilders are dead, because there is no need or demand for new homes (at least on a profitable scale) for many years.
HIG lost half their market cap. I guess they will ask for TARP funds soon if they havent already
Whats the answer then? If they proceed with this insanity they'll have to take HELOCs into account.
I get offers every day of the week, maybe I should take out $100k or so, then apply for this new government program.
Hmmm, works for me.
Dave,
I have definitely lightened up on the ultrashort ETFs lately so I can put more of my money into commodities and PMs. So, I'm not going whole hog back into ultrashorts right now. Just dabbling and buying on big dips like last two days in EEV.
I do not have any special expertise in emerging markets. I just keep CNBC Asia on while I am sleeping and certain stuff gets into my head by osmosis. Or maybe not.
All I know is...I dream about swimming in big pools full of yen.
"Never know, the government may start giving away houses, so why buy now?"
My family is renting after selling our home in January. I think it's likely that there will be government incentives to home buyers - much richer than the tax credit for first time buyers that had to be repaid.
Patience is the key. It will get worse.
AIG=HIG everywhere I go people wanna know...
"Without the confidence factor, many believe a paper money system is liable to collapse eventually." Federal Reserve Bank of Philadelphia, Gold p.10
Silly Obamanomics email chain letter...
In a local restaurant my server had on a "Obama 08" tie, again I laughed
as he had given away his political preference-just imagine the
coincidence.
When the bill came I decided not to tip the server and explained to him
that I was exploring the Obama redistribution of wealth concept. He
stood there in disbelief while I told him that I was going to redistribute his
tip to someone who I deemed more in need-the homeless guy outside.
The server angrily stormed from my sight. I went outside, gave the
homeless guy $10 and told him to thank the server inside as I've decided he could use the
money more. The homeless guy was grateful.
At the end of my rather unscientific redistribution experiment I realized
the homeless guy was grateful for the money he did not earn, but the waiter was pretty angry that I gave
away the money he did earn even though the actual recipient needed money
more.
I guess redistribution of wealth is an easier thing to swallow in
concept than in practical application.?
This sounds a lot like the Price Guarantee I have with my American Express.
When do they create a bailout program for people who own their home free and clear? That's what I want to know.
Alex
Where do you see that???
Baron-
wife worked for a broker for over 5 years....he stopped paying her in June...I didn't find out about it until middle of August. Third day after she walked out he sends her half her earnings saying that some partner of his was responsible for the rest retro to early May. It's a bit longer than that but suffice to say there was no moral code present at all.
Ethics are and have been history for a very long time.
Ciao
MS
"4T in liquidity in 30 days and the market drops 25% isn't a crash?"
Well let's see. Off the top of my head.
700B Tarp plan.
FNM/FRE back-stopped for a couple hundred billion.
500B to backstop MM funds.
Between 15B to 30B currency swap lines for atleast 7 foreign countries.
I may be off on my math by about 1 trillion, but what's a trillion between friends.
Then you need to add in the 3T ++ that the Eurozone has pushed out as liquidity.
You can google for the exact amounts, it's all out there.
Like I said not very much bang for the buck if you ask me.
EVERYTHING that has been going on the last few months makes me think of the movie Stalig XVII. A prisoner named Animal who had been held for 2 or 3 years gets a letter from his wife in the states.The letter says "Honey,I know you're not going to believe this,but WE just had a beautiful baby boy".Animal looks shocked for a minute and then starts walking around with a glazed look on his face saying over and over"I believe it. I believe it".Sadly we all have to be Animal now!
Fox Business has poll going on who is the least deserving on bailout...Banks,Insurance or Morgage Holders...so for The Tide is against Morgage Holders...so it an't gonna happen.
Average Joe,
You neglect to mention that Couple A will have to pay artificially inflated prices for a larger house when they want to move up, thanks to the bailouts, and they will pay higher taxes to pay for the bailout, compounding the delay in their ability to afford that new house. Otherwise, I agree with your great post.
For the first time in my life, I am ashamed to be an American and am giving serious thought to moving my family to another country. A large percentage of every d&^n cent of taxes I pay for the rest of my life in the USA is going to pay for lazy, stupid or speculative people who feel it is their right to have me take care of them. This disincentive to work, and incentive to speculate and take excessive risks, can only bode very ill for the future of our country and of my children as long as we stay here.
Chainsaw,
Exactly...still renting with an eye towards the incentives. Looking to take IRA gains banked from the downturn and roll into a house without penalty before the inflationary measures overtake the credit collapsar (my WAG that comes before they make a pension grab but WTF knows)
Last one in a bailout is a rotten egg.
they lost 2.6 billion this qtr their market cap in 5.9 billio
The possibility of a general tax strike is something the system cannot survive and short of violence that appears to be the only tool left to taxpayers to get their attention
It's not a what-if for me. That's why I quit my current job and decided to move back. If I can get something decent and un-creepy in Seattle for a decent salary, I'll stick around but I already know it's very unlikely. H1Bs have destroyed contract rates.
I'm debating about going 1099 and not paying any taxes at all anymore and screw the consequences. At fifty, I'm not seeing much of a future anymore, especially in these circumstances.
A little thread music for Hanky P, Benny B, and all my dominant daddy's on Wall Street.
YouTube - Tenacious D- Fuck Her Gently
HIG declined the TARP money on Monday...
Ciao
MS
Rate Curve??
So the short end (3 month T-bills) moved down .77 to .57 as you'd expect with a rate cut. But the long end (30 year) moved UP from 4.19 to 4.23.
Maybe not a big thing, but it seems that the curve is steepening. I think the treasury announcement of planned auctions next Wednesday could be very interesting.
And this action certainly isn't helping the mortgage rates.
Any bets on W hitting 11 trillion? Seems a no-brainer.
We need new leadership.
Speed
You might want to check the news on Nov 5th. Your wish and all that is on the way.
Pissed Off In California
your probably right but I would love to see the total worlwide of this carnage. including all the "windows" and programs that have been opened. I am confused. Maybe thats the goal.
Meet the new boss....same as the old boss.
Goes the song....
Ciao
MS
GE, V, all up after hours no HIG fallout? This rally may have some legs...Or not we still haven't broke out of a downward trend.
I still think we break towards 10000 before heading down again.
Thank glod Bush is resisting. I can see Obama being all over this--McCain, not so much.
Its simple.. Just stop paying your mortgage and credit cards. Max out what you have left of credit cards and try to get a home equity loan if at all still possible.
I just don't see how this country expects me to stay sane with this type of talk of bailing out the overextended homeowners after I have spent the last 3 years in a 1000 sq ft house..
Question for all. Will UBS survive this???
Mr. T. writes:
How much more can we give to the stupid and reckless before the smart and prudent walk?
Vote Obama and find out.
HIG up AH..
"Mccain not so much".. He is the one talking about buying 300 billion worth of mortgages for the "good of the country"..
Trust me.. I am a far far leaning to the right conservative but I will not vote for Mccain for this one reason.
Tim, does this surprise you anymore?
annon writes:
Its simple.. Just stop paying your mortgage and credit cards. Max out what you have left of credit cards and try to get a home equity loan if at all still possible.
I'd be concerned about ex post facto laws impacting this strategy. The've thrown out whole sections of the Constitution, why not this minor proviso. In fact, some precedent exists for them to do so, check recent (last ten years or so) tax laws.
ChangeYourDogCanRollIn
IS Obamas tax cutoff 200k or 250k he just changed it last week
AMT you might have found a friend...
MS,I would wager to bet he violated a few labor laws by not paying her wages earned, but you know that already.
Good luck collecting.
Anyone feel that? I think it's Atlas shrugging....
@ ChangeYourDogCanRollIn
You are clueless dude. There is no difference between the parties. We have one political party in this country with two marketing departments.
And I will not be voting for either the D or the R factions of the corporatist party.
Average Joe - I like your scenario better.
I fear that things won't change until people get pissed off - pissed off more than just sending FAXes to a black hole in their Congressman's office.
ullpointer writes:
once again, as a prudent and responsible american, i get screwed.
words fail for how pissed i am.
nullpointer | 10.29.08 - 4:03 pm | #
Ditto
America is sooooo f***ed up its mind-boggling!
I really wish this were just a long bad dream.
Alex I never saw that HIG drop. A blip? like Lanty Smith?
Whatev,
I can see Obama being all over this--McCain, not so much.
Remember this? It was only three weeks ago...
McCain would buy bad homeowner mortgages
He proposes $300 billion program to allow people to stay in homes
McCain would buy bad mortgages - John McCain News- msnbc.com
for example by lowering the interest rate or principal of a mortgage loan, based on the homeowners ability to pay
You know what they say. If Muhummad won't come to the mountain, move the mountain to Muhammad. Or something like that.
So the one-hand-washes-the-other system of bad appraisals is given the A-OK by the federal government.
Tim writes:
ChangeYourDogCanRollIn
IS Obamas tax cutoff 200k or 250k he just changed it last week
AMT you might have found a friend...
Tim | 10.29.08 - 4:45 pm | #
Tim, Joe " I gotta million of 'em" Biden stated yesterday that number is now $150,000. Check the NY POST. I got a bridge to sell ya if you believe that number too.
annon writes:
"Mccain not so much".. He is the one talking about buying 300 billion worth of mortgages for the "good of the country"..
Trust me.. I am a far far leaning to the right conservative but I will not vote for Mccain for this one reason.
Annon--Do you really think he will do it--No way! He is just trying to get elected.
Sometimes campaign promises can't be kept.
RE
No Palin fan to be fair McCain's plan is very much like Sheila Bairs. I'd rather have people in my neighborhood get a bailout than Wall Street at least they will support local business...
You guys might want to save your outrage til some of the details come out.
I would assume (or hope) that there is more to this.
For starters, there'd better be some reward to taxpayers for taking the risk - namely, some kind of SAM. My guess is that any homeowner accepting this deal will have to forfeit some or all future equity gains - prolly via a Shared Appreciation Mortgage (SAM), see today's WSJ op/ed for more on those.
for example by lowering the interest rate or principal of a mortgage loan, based on the homeowners ability to pay
My ability to pay now is zero!
I get a free ride!
YES! I KNEW IT! I ROLLED BIG AND WON!
I got a bridge to sell ya if you believe that number too.
Ooohhhhh is it in Alasaka?
I say everyone stop paying their mortgage, credit cards, car loans, etc... and then lets see what happens...George and Hank are the dumbest leaders we have ever had
Mr. T. writes:
How much more can we give to the stupid and reckless before the smart and prudent walk?
It's already happening here in FL.
Really started to accelerate after the big bailouts began over the last month.
Obama is for offshore drilling; McCain is for offshore drilling
Obama voted for the bailout; McCain voted for the bailout
Obama is in favor of military interventions; McCain is in favor of military interventions
Obama is for free trade; McCain is for free trade
The differences are so minor. Vote for a third party.
baron-
Yes he did...already been to the DLSE hearing where he "promised to pay by Nov. 7th" Just so happens that we also have a small claims court date set for the same day.......
We may only get tax liens but my job is to make it difficult for him to do anything from here on out.
Ciao
MS
Seriously 150k. Just let the existing AMT do its damage. Please don't write a new tax on top of that.
for example by lowering the interest rate or principal of a mortgage loan, based on the homeowners ability to pay
I hope the Treasury,FDIC have access to a super tonload of extra dollars, because with unemployment threatening to grow, there's gonna be a whole lotta folks whose ability to pay falls well short of their mortgage obligations.
Shnaps writes:
You guys might want to save your outrage til some of the details come out.
I would assume (or hope) that there is more to this.
For starters, there'd better be some reward to taxpayers for taking the risk - namely, some kind of SAM. My guess is that any homeowner accepting this deal will have to forfeit some or all future equity gains - prolly via a Shared Appreciation Mortgage (SAM), see today's WSJ op/ed for more on those.
Shnaps | Homepage | 10.29.08 - 4:50 pm | #
Don't count on it! Just like the executive compensation provisions in the CRAP, er... TARP.
I'm sure they'll also take a personal notarized no-doc " struggling to avoid foreclosure ... " statement to get the ball rolling. Looks like we'll all fit in this new program.
Obama is for free trade;
McCain voted for the bailout
They do so reluctantly IMO...
Someone posted this quote a couple days ago, I think it fits here good ...
"Insist any new cram downs on these amounts MUST be recorded in the local MLS as new sales and the previous sale of these homes MUST be removed from comps."
details.....go back to TBP schnaps I'm sure BR has some details for you over there.
Like it would make one bit of difference....
Ciao
MS
In this game of musical chairs, the music has stopped. Whatever home you are in at this moment is the one you are likely to stay in.
Back OT 3 million mortgages. Assuming 200k underwater... 600 billion?
Wow. More Hot Cash injections!
404 Not Found
Money for everybody except the people who used to work.
I was born in Czechoslovakia when it was a satellite of the Union of Soviet Socialist Republics.
Now I live in Canada, which has become a satellite of the United Socialist States of Americas.
Do I have to frikin' emigrate to Mars! to get away from Communism!?!?!?!
Tim,
I understand but there are fairness issues. As I have stated many times here, there will be huge amounts thrown at this thing to rescue the system. It really has very little to do with the individual.
It should be quite obvious who has the biggest incentive to preserve the "system".
But to get back to the fairness issue, here is McCain's quote and it seems rather in favor of the less than frugal:
The Republican presidential candidate announced during Tuesday's debate that he would order the federal government to spend $300 billion in federal funds to buy the mortgages and allow financially troubled homeowners to keep their houses.
But saving the less than frugal will increase the chances to preserve the "system". I am investing accordingly.
"Obama is for offshore drilling; McCain is for offshore drilling
Obama voted for the bailout; McCain voted for the bailout
Obama is in favor of military interventions; McCain is in favor of military interventions
Obama is for free trade; McCain is for free trade
The differences are so minor."
The candidate from which party is more likely to uphold the Bill of Rights, even by a little?
Game over.
[ChangeYourDogCanRollIn
IS Obamas tax cutoff 200k or 250k he just changed it last week ]
It's 109K until he lowers it. See, he's pretty adaptive. The 109k is the SS Taxable income ceiling that will get eliminated.
HUGE TAX INCREASE ON THE MIDDLE CLASS.
Can we have another thread please? This one has gone stupid.
bearly, do you mean that those who make more than 109k are all middle class?
Obama is a Wolf in Wolf's clothing.
McCain is a Wolf in sheep's clothing.
If you have to choose who to watch the sheep, you're better off choosing the obvious wolf, as at least the sheep will have a heads up at who they are being led by.
McCain will mean Republicans will continue to get the blame for the problems of this country. Just like Greenspan has ironically blamed a flaw in "free market" capitalism, for today's problems....he has done more damage for the cause he most believed in than any enemy could have.
If you believe in America then vote for Obama. If he is wrong, then the proper political/financial philosophies will get the blame.
So like:
"the lender would agree to reduce borrowers monthly payments, for example by lowering the interest rate or principal of a mortgage loan, based on the homeowners ability to pay. ..."
So FB in house purchase in '05 can afford $4000/mo. new payment $4000.
His neighbor in the exact sme model purchased in '05 can afford only $2500. New payment.
Neighborhood comp for model--$2500/mo.
This is SOOOOOO going to work. But hey, the gov't can't let the markets and courts do there thing. No that would never work.
Nostrovia,
UAW using the VEBA to block a GM + Chrysler merger, until they get a piece of the bailout pie to offset the inevitable job losses
Broward Horne writes:
I'm debating about going 1099 and not paying any taxes at all anymore and screw the consequences. At fifty, I'm not seeing much of a future anymore, especially in these circumstances.
This really isn't unrealistic. The first thing to remember is that the IRS only knows about 1099 income if you tell them (ie, declare the income) or if the person/company paying you files a corresponding 1098. Many companies do file it, and many don't. I have paid contractors thousands of dollars over the years, and I have never filed a 1098 for any of them. Maybe they're declaring it, maybe not.
In the late 1980s I knew a small-business owner with a terminal illness who simply stopped paying his taxes. It took him years to die, and they never did catch up with him.
Small-business ownership provides many excellent opportunites to avoid taxes. Good luck.
Hello Schnaps,
A shared appreciation program does not work.
What is there to stop the homeowner to sell his house immediately after his mortgage has been reduced to a "market price", pay off the reduced mortgage, and go out and buy a new house with a new mortgage, where he does not have that nasty little "shared appreciation" thingy hanging around his or her neck?
Will be great for the volume of transactions though, a new bonanza for our "house prices only go up", undeserving realtors
Tim, Biden defined the 'middle class' as those making $150k a year.
BIDEN BLOWS FUZZY TAX MATH - NYPOST.com
"What we're saying is, that $87 billion tax break doesn't need to go to people making an average of $1.4 million," Biden said.
"It should go to middle-class people, people who make $150,000 a year."
So is it 150, 200, or 250? My point is, this ain't my first rodeo. If you believe that 150 is the bottom line, more power to ya.
Obama is talking about raising the ceiling on the AMT, not lowering it. And, even if you make over 250k, your taxes will not see a significant increase (couple hundred bucks, tops) unless you are making closer to a million a year - at which point it's an extra few thousand. Totally worth it in my opinion.
[bearly, do you mean that those who make more than 109k are all middle class?
merciless ]
Those that pay SS, YES.
FDIC: I have better, more fair plan. It sounds crazy... but crazy is relative these days.
Just cut every taxpayer a $50,000 credit toward a new or existing mortgage.
Inflationary... sure. It would free up capitol from banks, pay down mortages, and turn bad morgages good.
The possibility of a general tax strike is something the system cannot survive and short of violence that appears to be the only tool left to taxpayers to get their attention.
Don't give up quite yet. Several Republicans in safe seats who voted for the failout are in unexpectedly tight races, like Souder of Indiana and Brown of South Carolina. I'm going to do an analysis of failout voting and losing elections once the votes have been counted. Sadly, the wheels have come off the NRCC to such an extent that it seems few if any Dems will lose their seats due to the failout vote but I'm still hoping for at least one spectacular show like Pelosi losing to Sheehan.
RE I know it all sucks...
Bearly Scary stuff... I hold out hope that the next president will play up to the voters so they will simply spend gov't money w/o increasing taxes.
Imagine if a BK cram-down was included in the $700b TARP? I'd be 1st in line to BK my way to prosperity with a new, lower house payment.
You can thank the Boomer Generation and Political Correctness that gave to us no moral boundaries ("if it feels good, do it...") and zero critical thinking ("Don't judge me. I was born this way" or that old canard - it's a disease or an additiction. That's why I couldn't help myself)
You see? Where's that Fakepaycheck clown? To hell with credit, I need a low W2.
"The candidate from which party is more likely to uphold the Bill of Rights, even by a little?"
Well I don't think Obama will uphold the 2nd or 10th amendment, but then again, I am worried about McCain quartering troops in my home
F E. Send her $100. Make a few phone calls. I know it can be done.
HUGE TAX INCREASE ON THE MIDDLE CLASS
Yes, that's what I see. I've also discovered that over the past couple of years that, in general, the System cares nothing about you unless you've killed somebody or you own something worth looting.
Tax increases will hit homeowners (particularly ones with equity), pension funds, etc. Anybody who is tied down in anyway will get hit. Kids, property, existing cash buyin, etc.
I doubt if I'll ever buy another house in this country or bother with any investments or pension plans. My time horizon is too short and this mess will last too long.
"based on the homeowners ability to pay" -does that mean that a person who has unwisely taken out a loan that is way too big, ould simply claim assistance under this program? Isn't this known, in situations between parents and kids, as "rewarding irresposible behaviour"?
Pelosi losing to Sheehan?
I haven't been following that race. How close is it? That would be interesting to see Pelosi lose!
Coming soon to a congress near you - the Great Forbearance
Will do good things for mortgage rates and home prices.
How long would I have to work at Starbucks for that to qualify as my ability to pay? Might be an interesting way to spend a year making a few hundred thousand serving lattes.
Hello RD0,
you ask:What is there to stop the homeowner to sell his house immediately after his mortgage has been reduced to a "market price", pay off the reduced mortgage, and go out and buy a new house with a new mortgage?
A. Her current FICO.
"How much more can we give to the stupid and reckless before the smart and prudent walk?"
Taxes?.....They must not need my income taxes anymore...I'm withholding them in direct correlation with my ability to pay!
Mike In Long Island is on to something.
I've suggested lowering all mortgage loans (HELOCS, 1sts, Commercial) to 4.5% and cap all new loans at 2.5% over Fed Funds rate. That eliminates all of the hoo ha about modifications, and standardizes loans so that you get rid of all of the bad actors in the mortgage biz.
A National forebearance or universal rate/cram down is coming with a Dem Supermajority.
Shnaps writes:
Hello RD0,
you ask:What is there to stop the homeowner to sell his house immediately after his mortgage has been reduced to a "market price", pay off the reduced mortgage, and go out and buy a new house with a new mortgage?
A. Her current FICO
Again I say, it may be very tempting to a lot of folks to trade their FICO score for 200-300k. Just sayin.
All you guts are worried about Obama...WTF? George and Hank are screwing you right now and will do so until 1/20/2009, by then Glodman Sachs should have the keys to the printing presses...good night America!
The first thing to remember is that the IRS only knows about 1099 income if you tell them
It took me a couple of years but I finally discovered that this is partly how the H1Bs are beating me out.
They're filing 1099s and paying no income as they have no expectation of staying here long enough to matter. Likewise, most of them are in their late 20s and 30s, so they care no health insurance.
Also, they're often living 3-4 to an apartment. I figure I can live in my parent's house indefinitely for free so I can beat them on that score.
But then again, a lot of software is no longer real, it's about empire building in large companies so the illusion of cost savings is important, not the reality.
I am shocked at what large companies are paying out. I'd say they're paying at least double-price to offshore but it's about political connections now and they can show a bigger headcount.
It's very sad. I used to enjoy software but the industry has gotten so alien to me in the past few years.
I'd rather play pool now, which says a lot since I was a workaholic for almost 30 years.
It's all annoyance with no payoff.
"GM Chairman and Chief Executive Rick Wagoner is considering visiting Japan soon and meeting with Toyota's leadership to discuss the plan, Kyodo said, citing sources.
A GM spokesman was not immediately available for comment.
The Kyodo news report said Toyota was expected to consider quick fixes for the cash-strapped GM, including buying up its assets and helping it secure sufficient business funds.
The executives of the world's two biggest automakers may also discuss an expanded business partnership, including Toyota making fuel-efficient compact cars for GM and providing hybrid-car technologies to the U.S. carmaker, Kyodo said, citing sources."...Reuters
This is absurd...GM has nothing that Toyota would want, except perhaps the capital equipment inside GM's plants.
crispy&cole
Silence they are working on another plan to save our 401k's
This is absurd...GM has nothing that Toyota would want, except perhaps the capital equipment inside GM's plants.
Kung Fu Panda | Homepage | 10.29.08 - 5:15 pm | #
Think again...GM has access to the FEd and Treasury and the keys to the prinintg press...Free ponies will be roaming the streets of Tokyo before too long
crispy&cole writes:
All you guts are worried about Obama...WTF?
No kidding. At this point the only thing I car about in a president is a moral compass. I'm an anarcho-capitalist, but even I can recognize that Obama is a better person than McCain. He will be the most decent person to hold the office since Carter. Given that we're screwed economically no matter who wins, I'll take honesty and morality or policy.
"It took me a couple of years but I finally discovered that this is partly how the H1Bs are beating me out.
They're filing 1099s and paying no income as they have no expectation of staying here long enough to matter. Likewise, most of them are in their late 20s and 30s, so they care no health insurance.
Also, they're often living 3-4 to an apartment. I figure I can live in my parent's house indefinitely for free so I can beat them on that score."
You REALLY have no idea how H1Bs work. I was on an H1B for a few years. You are a W2 employee of a company, thus you file regular taxes just like anyone else.
And given that you need to leave the country within 30 days if you leave your job you tend not to like screwing around with the IRS/INS.
Trust me, I don't know any H1B holders that were doing 1099.
crispy&cole writes:
This is absurd...GM has nothing that Toyota would want, except perhaps the capital equipment inside GM's plants.
Volt, composites, ceramics, diesel tech and yes access to Uncle Sugar.
No polling on Sheehan vs. Pelosi. Pelosi has become rather unpopular in California, even before the failout. A good campaign might have knocked her out, or at least put the fear of Glod in her, but time is awfully short.
What could really make a difference is to set up some kind of grassroots movement in her district to replace her. She's too moderate for her district and that in combination with the failout arrangement could get her thumped. She didn't just vote for the failout, more than anybody, she WROTE it - she was the one that crafted the compromises to get everybody together on it.
The government must not stop at merely guaranteeing mortgages for those in default. The government must also do the following:
1. Guarantee the credit card and auto loan debt of those in default;
2. Legislate that credit reporting agencies may not lower the credit scores of those in default. Better yet, credit reporting agencies should be required to increase the credit scores of those in default, thereby enabling those consumers to borrower even more, and at lower rates to boot.
3. Create further tax breaks for those in default. Those breaks already put in place, such as not taxing those who have sold via a short sale, are wholly inadequate. For every dollar in default, the consumer should receive a tax credit from the government. Better yet, the government should send to the consumer a check in such an amount.
4. Given that auto sales are in the toilet, the government should buy a vehicle (but only from the Big Three) for each consumer who has defaulted.
5. Finally, as we all know, or at least can assume, defaulting has to be terrible on one's self esteem. Therefore, to help each consumer in default save face, the government should pay for a face lift (or perhaps rhinoplasty) for those individuals. Or, at a minimum, liposuction or breast enhancement. People who look better will feel better, and therefore be more likely to work hard to land a job. However, regardless of how much income those individuals might later earn, they should not be required to repay to the government any of the benefits they will have received. To do otherwise would penalize those individuals. The key is that defaulting should not result in a penalty; instead, such behavior should be rewarded. And thus constitutes the FDIC's rock-solid rationale.
Ca 8th District Congressional Candidate Trivia Challenge
Here is a political trivia challenge for you:
Question One: Which Candidate has only one visible window sign up in the district and rents a "campaign office" from her millionaire-real estate developer husband; sends most of the money she raises to other candidates to consolidate her power; and refuses to debate her opponents or even hold a town hall meeting in the district?
Question Two: Which Candidate had to collect 10,198 signatures to historically gain ballot status; has 4000 window signs all over the district; 12 staffers; hundreds of print, radio, and television ads; 75,000 mailers; has made 250,000 phone calls (robo and personal), thousands of flyers handed out; 40,000 door hangers hung; dozens of committed volunteers and the endorsement of the SF Bay Guardian, SF Bay View, League of Pissed off Voters, League of Young Voters, the SF Green Party, the SF and California Peace and Freedom Party among many others; and has spent well over a half a million dollars campaigning in the district?
If you guessed Nancy Pelosi and Cindy Sheehan, in that order, you get a perfect score.
(From Sheehan for Congress) google it.
"Volt, composites, ceramics, diesel tech and yes access to Uncle Sugar."
It's also helpful to own part of GM once protectionism starts in full earnest.
crispy,
Good point, forgot about that. Since our govt is implementing Japanese monetary and fiscal policy, linking automakers may not be such a bad idea. If Toyota owns GM, the BoJ can issue bonds to cover GM pension obligations. First smart thing Wagoner has done. Actually, it's brilliant...unload our lemon car company on foreigners.
I've suggested lowering all mortgage loans (HELOCS, 1sts, Commercial) to 4.5%
i also have posed the question multiple times: why, if the fed backstops all notes, why does'nt everyone qualify for exactly the same rate, regardless of fico scores or location. at this point, income only matters.
the answer is price.
TCA, Moral compass ? Really ?
YouTube - Obama and Wright: He Never Complained Once
This is absurd...GM has nothing that Toyota would want
Well, almost.
If I'm Toyota, what I want is Rick Wagoner in the captain's mast as long as humanly possible. Ideally until he rides the GM(-slash-Chrysler) ship all the way down to the waterline.
It's certainly worth "exploring an expanded business partnership" with my competitor if it means they'll keep looking past that level of incompetence.
Food for thought.
How can "The League of Pissed Off Voters" be wrong?
That was last weeks number according to Joe Biden it's now 150K and rollin straight for us...
BIDEN BLOWS FUZZY TAX MATH - NYPOST.com
Could Toyota ownership lead to canceling union contracts?
If that's not too far-fetched, that would trim some fat.
Brian in Boise - Yes!!! Give all women a mininmum of DDD's why should I be forced to walk down the street and see anything less...this is America!
Your government's ability to fund its operating debt through taxing you has now been co-opted by The Federal Reserve without a vote and without affirmation of Congress to prop up foreign banking interests.
This is unconstitutional. You can't just make up programs like this. Legislative power is vested in Congress and they cannot delegate that power to the executive branch.
The moral hazard in this is huge, both the banks and the borrowers will be gaming the system in order to maximize the payouts by the government. It could take some pressure off of prices giving the Fed time to let inflation takeover from deflation but its effect on real prices will be nil.
Goldman was the best house,
but it was in a really bad neighbourhood. It did better than everybody else,
but was hit by a business model problem."
Didn't they pass a voluntary plan to do this months ago?
Yes. Congress voted $4 million for mortgage servicers to work out loans. Almost no one took them up of it. Servicers just aren't geared for work outs. It'd be interesting to see how this would be implemented.
This is unconstitutional. You can't just make up programs like this. Legislative power is vested in Congress and they cannot delegate that power to the executive branch.
Awww.... quoting the Constitution.... how quaint.
crispy&cole writes:
This is absurd...GM has nothing that Toyota would want, except perhaps the capital equipment inside GM's plants.
Not even that. Toyota buys machines that can change products far faster than GM. GM sets up a factory to make one car for years. Toyota often switches which car they make mid-shift (it helps improve quality as the workers get less bored).
Wow! Look at that closing. The PPT hit the bars 15 minutes too early...
Got Popcorn?
Neil
"the lender would agree to reduce borrowers monthly payments, for example by lowering the interest rate or principal of a mortgage loan, based on the homeowners ability to pay. ..."
from each according to his ability, to each according to his need.
And here I thought they were fascists.
Looking at the slight information available for this plan, it looks to me like a move to make ex-judicial cramdowns.
FDIC is not ignorant of where the logjams are in workouts. And Treasury is getting some feedback from lenders - and particularly from MBS issuers - about the macro effects of the current disorderly unwind in RE.
I'm not expecting miracles, but I think it's too early on this to hit the wailing wall.
Brian in Boise writes:
2. Legislate that credit reporting agencies may not lower the credit scores of those in default.
I believe this is coming, sort of. There are going to be so many people with the stain of foreclosure on their credit reports, that some sort of future legislation is inevitable. They are going to need to pull buyers into the housing market any way they can in the futile effort to re-float it. So at some point there will be laws or regulations put into place that remove foreclosures from credit reports, or prevent mortgage companies from denying loans based on a past foreclosure. This is one more reason to not be so concerned about the negative credit implications of voluntary default.
It is quite predictable - and I think was probably noted on this board - that once Congress gives away money to 'rescue the financial system' that opens the door to do anything and everything that can be done with money. Helping friends, the place you used to work, buying paper, paying dividends, paying bonuses, acquiring other companies... and lots more I can't even imagine right now but that will come in a year or so as a 'scandal'...
Where's the end of the line - I want a piece of this
The executive branch and its agencies have rule-making authority. The rules can not be arbitrary or capricious.
How about a broad reading of equal protection? Worked for W (v. Gore)
I'll repeat what I said after the TARP passed:
As soon as the financial institutions and the wealthy secure their bailouts, any proposed government spending on Joe Six Pack will be met with shockingly high interest rates.
Was there money for social security, health care, education or infrastructure - NFW! But there was immediately > $trillion available for bailouts of the wealthy. What a sham.
Joe Six Pack can expect the same as always - DIDLEY SQUAT.
One way for mortgages to be worked out is to focus on areas with clusters of foreclosures. Essentially helping people who are being screwed by their neighbors' predicaments. I don't know whether it's be politically viable or systemically helpful.
Baron Von Helmut III :
Do you honestly believe that the more prudent, paid-current borrowers with good credit scores are going to suddenly decide to default just to become eligible for this? What!?
Let's say you owe $400k on a house now worth $300k. So you stop making payments, take this deal, then sell your house, walking away with nothing at the closing table. You spend $10k to move all your shit, and become a renter - at one of the lovely types of pads that are let to people with poor credit - for several years. By the time you again qualify for a mortgage, the home you left is again worth $400k, and to repurchase it you now must put another $40k down.
How is that such a 'win' for you?
The moral hazard in this is huge
Oh. Well, that will certainly put a stop to the idea, then. You'll recall how it's figured so prominently in the plans rolled out to date.
I feel like a poker player who's put all his chips in the middle with top set and watched as my opponent hit a 3-outer straight to scoop the pot. Over and over and over again, for about 14 months and counting.
I've made all the right decisions about debt, for all the right reasons, and yet with every hand that plays out, I wind up poorer.
@ Currently Accounting--
Dude, that's like such an 18th Century mindset.
Angry Saver - Joe Mama, Joe 6P, Joe the plumber and all the other sheeple joe's out there are too dumb to realize what is going on...when the DEEEEEEEEP recession of 2009-2010 hits they will blame it all on Obama and the Dem's
Anybody that thinks that Sheehan has any chance has no clue about San Francisco politics.
Pelosi will be reelected by a landslide.
Paterson and Corzine Press Congress for State Rescue Package - NY Times
cut backs cut backs .....
"Do you honestly believe that the more prudent, paid-current borrowers with good credit scores are going to suddenly decide to default just to become eligible for this? What!?"
Guy in my office making 6 figures is already talking about this.
I believe his cousin already got a new car, ramped up the credit cards and did the same thing as well.
What is a landslide, and how much do you want to bet?
No kidding. At this point the only thing I car about in a president is a moral compass. I'm an anarcho-capitalist, but even I can recognize that Obama is a better person than McCain. He will be the most decent person to hold the office since Carter. Given that we're screwed economically no matter who wins, I'll take honesty and morality or policy.
TCA | 10.29.08 - 5:19 pm | #
That is so foolish to say either way. I am sure you do not know either of these men. That sounds like something a teenager would say.
When even Bloomberg news calls it 500 Million and then 500 Billion in the same story about this mortgage bailout, then you realize the exact nature of this problem. We are dealing with fictional money units that are beyond the understanding of all of us.
Wall Street bonuses this year are reported to be around 100 Billion...many going to those companies that received funds under TARP. They get paid that kind of money for being able to conceive this cloud of fictional money.
I believe his cousin already got a new car, ramped up the credit cards and did the same thing as well.
He's a patriotic American, stimulating the economy!
Seriously though, it's like we're starting to eat the seed corn and burn the furniture for firewood. Making fart jokes as a plague decimates the population.
Pilgrim,
Good name for finding a new country. America is as corrupt today as England was when the Pilgrims left.
Where to go? If I stay here, it'll only be to join the revolution.
Schnaps, if you care to change the premise to fit your argument, go for it. That is not what I said and that is not what is being proposed.
If the govt is willing to do workouts to keep you in your existing home based upon some unkown ability to pay and it knocked 200k off your mortgage balance and you got to live there without paying the mortgage for a year or so while they figured all this out, your saying people with good credit, like myself, are not going to even consider it as an option?
Ok.
As of the beginning of LAST week, not taking into account GM/Chrysler, the new swap lines, the purchase of CP and assorted Hankie's small change outflows...
$700 Billion Treasury to purchase toxic mortgages and other non-performing assets from financial institutions.
$50 Billion To guarantee principal in money market mutual funds.
$10 Billion+ Treasury purchases of mortgage-backed securities (MBS) in September. More to come.
$144 Billion In additional MBS purchases by FNM and FRE. Limit $850 billion. FNMs portfolio currently holds $758.1 billion and FRE holds $798.2 billion.
$85 Billion AIG bridge loan giving the Fed a 79.9% controlling stake in the firm.
$87 Billion Repayments to JP Morgan (JPM) for providing financing to underpin trades with the now bankrupt Lehman Brothers. In response to the Fed & Treasurys stand against providing public funds to consummate a deal.
$200 Billion $100 billion capital infusion for FNM and FRE by the Treasury.
$300 Billion Provided to the FHA to refinance failing mortgages into new, reduced principal loans with a federal guarantee as part of the housing bill.
$4 Billion Provided to local communities to purchase and repair abandoned homes due to foreclosure.
$29 Billion Financing for JPMs takeover of Bear Sterns. The Fed takes $30 billion in non-performing assets as collateral.
$200 Billion Currently outstanding loans to banks through the Feds Term Auction Facility. Recently updated to allow loans of 84 days in addition to the original 28-day!
$150 billion stimulus checks
Someone here posted this a week or so ago (?). I was so stunned I saved it so I could reference it again. Stunning.
"That is so foolish to say either way. I am sure you do not know either of these men. That sounds like something a teenager would say."
So undergrad-level cynicism is better? We all make judgment calls all the time about people we don't know. You'd have to be pretty blind not to see that Obama has miles more integrity.
"Quadrillion" does not even have a settled definition in English.
That is so foolish to say either way. I am sure you do not know either of these men. That sounds like something a teenager would say.
We know this: if you look at the country as Clinton left it or as W left it and conclude that Republicans in power are a good thing, then all reason has left you and you are little more than a brainwashed zombie.
TAX CUTS... TAX CUTS... BRAINS...
Wall Street bonuses this year are reported to be around 100 Billion
How can anybody be even remotely surprised by this.
What a sham.
[You'd have to be pretty blind not to see that Obama has miles more integrity]
Better get your head around THIS.
YouTube - Obama and Wright: He Never Complained Once
There will be more 'voluntary defaults,' no doubt.
There will be more dudes like Broward who say "F You" and take their ball of cash into an early retirement instead of slaving to produce. The smart ones know their price.
Most government action will be blown into the wind, with a cost we cannot imagine.
So we're screwed. Give up. It's a game you can't win.
But don't go jumping in front of a train. Buy a little bait shop near a lake, do cash transactions, and chill. Leave MadMax at WalMart.
Baron:
In one sense, I understand looking at whatever comes of this plan.
As we're all going to receive the bill for this, we probably ought to put a sharp pencil to it and see if there's any benefit to be had from participating.
going to work. be back later to set up the bet RE.
Who haz "reamer cream"?
BVH^3- that's not what is being proposed.
CSC, thanks.
This is the political sop of crumbs for the little guy, so that the feast at the high table can continue unabated. More evidence that the crony communists in China are doing about as much justice to capitalism as the crony capitalists in Washington are doing justice to socialism. The Europeans have better ideas about how government should intervene, witness the about face on how the TARP works, because they have much more practice. Amerika now has socialism without any real socialists in charge, which with a healthy dose of what's generally recognized as moral hazard.
This war is nowhere near ending.
Pissed Off In California writes:
You REALLY have no idea how H1Bs work. I was on an H1B for a few years. You are a W2 employee of a company, thus you file regular taxes just like anyone else.
Can confirm that :
I also was on an H1B1 (ca. 4 years assignment in the US, working for a US multinational company).
It's exactly as you write :
Was a W2 employee of that company, payed and filed regular taxes, social security and that anual (semi-voluntary) contribution to United Way, Red Cross or similar) just like anyone else.
My other assignee colleges did the same. No 1099.
Is it November 5th yet?
About the only way to survive(that's being able to eat)is to go underbelly with all forms of employment bypassing the Goverment(no more taxes.) At my age it certainly wouldn't matter, the younger generations will just have to figure it out.
The Goverment is blowing up, and if you've ever been in a business and seen it going south as if it was on speed, we are seeing this daily with this goverment.
Waiiit.... so if a lender agrees to lower a borrower's interest rate by 1% (lenders ARE restructuring interest rates right now, they just aren't reducing the amount of hte loan itself) and then the borrower goes "wait a sec, I'm 300k under water here" and walks away, and the lender foreclosees on a 1million dollar loan for ah ouse that's now only worth 700k, the government is on the hook for that 300k?
I don't understand this, it doesn't even sound anything close to logical. I think its a good thing for the government to encourage lenders to try and work things out rather than foreclosing but it should be in lenders best interests to foreclose on the ones that deserve it and modify the ones that look like they will be repayed if only the rate is locked at a certain rate or something along those lines. I mean if the government guarantees modified loans, then the lender has incentive to modify BAD loans too, because it'll still get something back. Right? I mean, am I understanding this right? It sounds just ....bizarre.
Hey--Wheresmyretirment--you missed some:
404 Not Found
treasury press release on fannie and fredie mercury. what a mess.
HP-1242: Treasury, IRS Issue Guidance on Indirect Ownership of Fannie and Freddie Preferred Stock
Many financial institutions have invested in Fannie Mae and Freddie Mac preferred stock indirectly through certain adjustable rate preferred programs and other vehicles. Pursuant to the authority granted in EESA, the revenue procedure includes guidance describing when these financial institutions receive ordinary treatment on:
· gains and losses on this stock recognized by a trust or other entity taxed as a partnership in which the financial institution is a partner;
· gains and losses on the sale of an interest in a partnership that owns this stock;
· gains and losses on the sale of this stock that the financial institution received in a distribution from a partnership;
· gains and losses on this stock recognized by certain subsidiaries of financial institutions; and
· gains and losses on the sale of this stock that the financial institution received in certain "transferred basis" transactions.
Currently Smoking Cannabis | Homepage | 10.29.08 - 5:40 pm |
One thing I have noticed over the years is if you pay a small amout of tax the IRS will leave you be. Pay off the house/car before dropping out. Then like you said,cash is king.
Jesus H Crist on a crutch!!!
In each of my 4 house purchases over the last 40 years -- never more than one at a time -- I never paid more than 3 times my anua income, I put between 20% and 40% down, and I paid the monthly payment on time even when I was out of work and had to take it out of savings -- including 401(k) with penalty.
Then when I got laid off of the last time and couldn't get a job because of my age, I sold my last house and started renting again.
WHERE THE HELL IS MY REWARD ??? !!!
I think any "reporting" we hear from the media is only designed to get us worked up, as seen here. The future is never what you think it's gonna be, so let's just wait and see. As far as all these "irresponsibles" are concerned, do you really want them on the street? I mean, what about the children? The social costs would be far more onerous than keeping them in their homes. Listen to yourselves. Geez. Or is it that you just can't bear to be "worth" only so much, while some poor schlub gets a break for once. I agree, they shouldn't have bought houses they couldn't afford. But who PUT them in those houses? All the true law-breakers WILL be punished. I guarranty it. Nobody gets away with anything in this country. Sooner or later, everything comes full circle, so relax, and don't do anything stupid. Peace out.
Just so you know, my own personal opinion is that there simply needs to be a shit-ton of foreclosures.
But that ain't gonna happen.
There is no political will to allow the market to run its course here, and I think we all know that. So, given the fact that the gov't will be doing something, we'd be better to consider the details of the plan than to bemoan its very existence.
What is a landslide, and how much do you want to bet?
She'll win by at least 20% over whoever is next, Sheehan, Berg or Walsh.
"But who PUT them in those houses?"
I remember how scared I was when I signed my loan agreement. I had never been so scared in my life as when they forced the pen into my hand and put the gun to my head.
I still have nightmares about it.
snake-eyes:
Fine if they were taken advantage of, but if they were buying play stations, ipods, expensive sneakers etc.....then forget it!!!!!!!
WTF!!!
WHERE THE HELL IS MY REWARD ??? !!!
Ethan | 10.29.08 - 5:45 pm | #
There are a lot of people I work with who did the same who are also asking this question...Its gonna get ugly. Heck we have some new cars/trucks in the lot at work and everybody paid cash. NOBODY is borrowing right now.
Chris
Taken for Granite--did you watch the video?
A company would have to be nuts not to issue a 1099 to a contractor and report it. It's a deductible business expense.
hey guys
listen to this
Bloomberg News
bloom is sending warnings through faber
Prepare yourself for the end of USA as you remember it in 3 to 5 years...
Rectal bleeding is a side effect of Governmental Intervention.
Whatev - Of course they were buying all that crap. What's the alternative? Round 'em up and gas 'em? Stop taking it personally. Hell, it's only money.
It is DEMAND & SUPPLY in the housing market. Even if we try to artificially fight the balnace, the real market will not settle until DEMAND and SUPPLY balance each other.
It is very simple...like gravity.
In the meantime, I am going back to the casino tonight.
Ok snake-eyes, I am going to do some yoga and meditate (or medicate). Then maybe I will feel better.....but I kind of doubt it will work.
Crispy writes:
"I say everyone stop paying their mortgage, credit cards, car loans, etc... and then lets see what happens..."
What about those of us with no debt?
Not much we can do, I guess, other than whine to our congresscritters.
Tax revolt works-1099 or just claim 15
Volker
I'd be concerned about ex post facto laws impacting this strategy. The've thrown out whole sections of the Constitution, why not this minor proviso. In fact, some precedent exists for them to do so, check recent (last ten years or so) tax laws.
I would love to go to court for tax evasion in front of my peers and paint the story of the saver, not bubble participant, tax payer with daughter who made the decision based off helping my family not someone that I don't know......what are they going to do send u to an overcrowded prison. You could start a revolution just off that...
my 3 cents...left after bad market day ystrdy...
Why not just declare mortgage rates of more than some index value (10 year treasury rate plus 2-3%?) usury and tax the interest above that amount at 105%? Voila, modifications overnight.
"Do you honestly believe that the more prudent, paid-current borrowers with good credit scores are going to suddenly decide to default just to become eligible for this? What!?"
Sure.. when they bought a $650,000 with a 10 yr. interest only loan and now the house is worth only 325,000. Because of the write off currently it is the same as rent.. As soon as rent drops you betcha they will walk..
Whatev: You should try it anyway. It doesn't require faith. It'll work.
"sm_landlord writes
What about those of us with no debt?
Not much we can do, I guess, other than whine to our congresscritters."
Wow .. I thought I would never say this... But that really sucks when you don't have any debt...
Whatev:
OT and political and, yes, I watched the video.
My views aren't determined by who sits in the pulpit, though in my case they've been pretty good sorts, mostly. Rev. Wright can say "god damn America" simply because this is more or less still America.
I'm not sure what sort of mind considers a paid political ad a reasoned source or citation. PPAs like that are crafted to solidify pre-existing hatred for an opponent. They don't change minds.
In theory couldn't this just accelerate the rate of deflation? What would prevent these people from just dumping them on the market right after receiving a loan mod?
"Now you're asking the pilots who crashed the..." (cutoff)
Thanks for the Faber link. Nice find.
Whatev - if it doesn't work, you're not doing it right. Peace brother.
Markar writes:
A company would have to be nuts not to issue a 1099 to a contractor and report it. It's a deductible business expense.
To reiterate my point, I have paid numerous contractors over the years and I always issue 1099 forms to them. The employer does not send the 1099 to the IRS. The employer is supposed to send a corresponding 1098 to the IRS, but I have never done so. Nevertheless, I still write off the contractor pay as a legitimate business expense (which it is). Don't confuse 1098 reporting with deductions for expenses on the employer side.
To summarize:
bearly wrote:
...
At the end of my rather unscientific redistribution experiment I realized
the homeless guy was grateful for the money he did not earn, but the waiter was pretty angry that I gave
away the money he did earn even though the actual recipient needed money
more.
I guess redistribution of wealth is an easier thing to swallow in
concept than in practical application.?
bearly
The key is to tax the minority to finance the free money to the majority. But the 250k number being floated isn't even close to the level it will end up at, what with the Gov't burning trillions on the various bailouts. Uncle Joe gave us the first freudian slip on that fabrication. (150K) The real number will end up like 100k by the end.
100k is middle class in most metro areas. But if O can keep the "majority" happy, he'll be good with that.
Hey, I've got an idea. Congress can draft every homeowner and put them on active orders to defend their homes from terrorists. Then under current law all of their interest obligations will be capped at 6%.
[PPAs like that are crafted to solidify pre-existing hatred for an opponent. They don't change minds.
burnside]
Would you feel the same way if McSame were a 20 YEAR MEMBER OF THE KKK ?
Look, this is a disgrace on a national scale and somehow it's off limits? None of that material is fake. It's real, and everyone needs to come to terms with it before Nov 4th.
"Better get your head around THIS.
YouTube - ? v=I3IAjphhw6E"
Got my head around it. Unimpressed. More swiftboating - that's what necessary when the Republican side has no actual accomplishments to tout.
Wells Fargo issues shares to Treasury to raise $25 bln
Wells Fargo issues shares to Treasury to raise $25 bln - MarketWatch
bearly - You made your point; this is not the place for propaganda. You have economics to talk about (ie tax policy), good stuff.
Raw politics isn't what keeps people coming here. Please don't poison the well.
ew thread
bearly writes:
It's 109K until he lowers it. See, he's pretty adaptive. The 109k is the SS Taxable income ceiling that will get eliminated.
HUGE TAX INCREASE ON THE MIDDLE CLASS.
The median American household income (50% make more and 50% make less) is about $45K. The 80/20 line is about $90K. You're talking top 5% money, and you have the gall to claim that that is middle class? Even with the later restriction of W2 income at this level, I don't buy it.
Accept it. You're R_I_C_H. Just accept it.