Help! My equity is trapped in my house!
It must be liberated, I say!

do reverse mortgages count as equity withdrawals?

"Just like there are other Madoffs out there, there may also be others AIGs out there and they should be grounded as well."

Not really a direct quote, but a great line of questioning.

Mortgage piggy bank is empty.

A couple of good items in today's NY Times.

Sasha Cohen is contemplating a comeback to competitive skating for the 2010 Olympics. Go Sasha! For newbies, CR is a friend of the Cohen family.

Cohen, Lacking a Gold, Considers a Comeback - NY Times

Also, the Times' lead editorial today is on-the-money critical of the Geithner plan:

EDITORIAL; The Bank Rescue - NY Times

"In other banking crises, both in this country and abroad, resolution of a systemwide problem has sooner or later involved separating solvent banks from insolvent banks. In the end, there is no getting around firing the executives at failing banks, acknowledging the losses, wiping out the shareholders and then deciding how the government can best restructure the institutions. The Obama administration has yet to explain why its approach is better than that."

Geithner has consistently been a hypocrite for advocating transparency yet failing to deliver it. He has got to go. The American people should stop aiming their wrath at pennies and start aiming it at the trillions of dollars Geithner keeps trying to hide under a blanket. When is the man going to deliver ANY real transparency?

When you multiple or divide negative numbers, you get a positive. So...if your house is worthless, and you get a home equity loan (hey, there is still plenty of frauds out there, working diligently on new scams - we're a nation of entrepeneurs), the negative on the negative equals a positive - you've got money!!! Buy SUV's and flat screens! Did that??? Do it some more!!!

Rep Ed Royce (R-California) challenged Geithner/Bernanke on AIG undercutting other insurance companies by 30% to gain business since AIG is now backed by the Fed. Bernanke denies that AIG is doing this.

(BTW: He has a great website that posts all his videos.)

This is a good thing, except for small business financing, obviously. Not everybody was using the home ATM to buy flat screen TVs-- many were using it in lieu of a small business loan. Betting the farm. It will take a few years before the fear wears off and people are willing to take that type of risk again.

In other news, apparently the smaller traders such as Cantor Fitzgerald are hiring:

Eat-What-You-Kill Bond Traders Rise From Wreckage (Update2) - Bloomberg.com

"We are so incredibly screwed...how much longer can this thing hold together.... "

My hope is that as the HELOC funded college students and medical care have to pay thier own way, prices will fall to sane levels.

Is this cart being driven or pushed and pulled?
Dillon Read & the Aristocracy of Stock Profits

Don't forget the violent nationalism. Always a hallmark of facism. The "we'll put a boot in your ass because we're America" mindset.

"Gotta love Brad Sherman (D, CA)"

Agreed. Those were some hard, pointed questons that represent his constituents interests and give lie to what Geithner is trying to do. It was fun watching him squirm, as I doubt he is used to having his nose rubbed in hid incompetence.

Ron Paul is asking questions in the AIG oversight hearing.

CNN.com Live 

"How do you plan to prevent future bubbles?"
BH,
Do we know what differentiates "bubbles" from normal business? I recall the long gone company Visual Technology, that went from a start-up making the first DEC compatible terminals in someone's basement to a company of several thousand employees, making the first portable PC-XT, and eventually dwindling back to oblivion due to unrestrained and unmonitored growth, poor business decisions, the vagaries of the market, and foreign competition. Apollo Computer followed a similar path. These two situations were basically local isolated bubbles, and their behavior could readily be extrapolated to the economy at large.
And I'm not so sure that the government should be trying to manipulate these companies, or for that matter, the economy to keep this from happening. The problem we're experiencing now is due to the fact that the government actually "encouraged" some of these big players to engage in inappropriate behavior; see Fannie, Freddie, etc.

"The problem we're experiencing now is due to the fact that the government actually "encouraged" some of these big players to engage in inappropriate behavior; see Fannie, Freddie, etc."

And that is kind of the point of the queston. By socializing risk, we have invited irrational behavior on a grand scale.

Bob Dobbs:

Concur. I can't get people to differentiate fascism from nazism for the life of me.

homedad43 says:
Today, 11:17:45 AM

I can't get people to differentiate fascism from nazism for the life of me.

(snark) Well, Naziism stands for national socialism. Since it contains the word socialism, it obviously a political ideology of the far left. Fascism, being on the political far right obviously is diametrically opposed to socialism in all its forms. (/snark)

Y'all should check out:
The Political Compass
and take the test. As it turns out, the differences between left and right are measured on an economic scale, while authoritarian versus libertarian are measured on a social scale. Thus, if you approve of state control of the economy, whether you're communist, socialist, or fascist, you're on the left end of the scale, away from free markets.

Bob Dobbs,

The question for me now is...did it go too far this time.
Everything is being done to preserve the structures that exist...but at least on the surface it seems like some of the old controls aren't working anymore.

We've dismantled the real economy and replaced it with a financial "fake" economy...based on high yield debt. But people can't pay to play anymore. Yes, we're trying to expand the monetary base (inflate), but there are extreme outside pressures that come into play at that juncture. Bonds, the dollar....corporatists can be global...but people are national...and they've been made increasingly so lately...

At my previous job, the founders all used MEW to help start the company. That's a good use. Paying for a liver transplant is potentially another good use.
Please no comments about universal health care; that sort of procedure will be one of the first to be eliminated.

My hope is that as the HELOC funded college students and medical care have to pay thier own way, prices will fall to sane levels.

It's amazing how government subsidies (e.g. mortgage interest deductions, student loans, health care, etc.) distort prices.

Sons make for better collateral in SF,as long as they are younger than 10

Well, if you missed Ron Paul, that's okay. It was not one of his better grillings. Basically he asked whether Brenanke favors capitalism or crony capitalism.

Bernanke says he favors "capitalism". [ What else could he say? ] The Fed was established in 1913 in response to the Boom/Bust cycle and in particular the Panic of 1907.

Ron Paul then says that the Bust cycle used to last 1 year or so, and now it is going to last longer. Then Ron Paul ran out of time....

Bama this was totally tasteless and obnoxious.

I think the American tax payer is going to have the last laugh in the end because there ain't no way in hell the tax payer is ever going to be able to pay back the debt Washington D.C. politicians are piling on us.

I think BO is going to go down in history as the biggest Buffoon of a president in history.

Maybe Timmy boy should come up with a plan to to buy up tax payer debt, that will work as well as anything else he can dream up.

I am shell shocked. We are approaching the event horizon and I haven't the faintest idea what going thru it will be like, or what it will be like on the other side. I don't think that whatever will happen is stoppable even. Going up to the top of the roller coaster with no view of the descent. Chinka chinka. . chinka chinka. . chinka chinnnnnnnnnnnkkkkkkkaaaaaaaaaa. . . . . . . . .

Moroco Bama, that was actually funny - the bagel comment.

He pops off in hearings and then what happens? Nothing! He is worthless.

Ron Paul is racist texan retard who like ross perot has one tune in his music book. If you check the other pages in it - they are either blank or about dixie being a kinder gentler place

Are you arguing that we shouldn't have a Congress? Crispy and cole for military dictatorship!<br/><br/>As opposed to the fablulous democracy we have now? You know, the one where all 5 former IBanks and AIG are fully represented.

Lawyerliz says:
Today, 9:35:29 AM
“I am shell shocked."
.
Florida has been through this before-- the boom of the 20's went bust and the state took about a decade to recover. But recover it eventually did.

In fact, Florida, Nevada, California, and a couple of other states seem to be particularly prone to boom and bust cycles. It seems to me the only way to handle that is through regulation at the state level. And you, LawyerLiz, are the woman to do that job. If I were a Floridian, I'd vote for you.

Florida land boom of the 1920s - Wikipedia, the free encyclopedia

Cinco-X says: Kinda' like a roller coaster, but as you approach the event horizon, time slows down, and after 20 years, you're still approaching the bottom. Just ask the Japanese;-) <br/><br/> A Japanese style ending to this would be good news in my view. The Japanese were borrowing from themsleves - it's a whole different ball-of-wax to to borrw from people who don't like you

Q. What was the root cause of the bubble?
A. A global savings glut

Q. How do you plan to prevent future bubbles?
A. "One of the key issues that should be debated as we look at the problem of bubbles in the future -- What should be the leading approach? Should it be monetary policy or regulatory supervisory authority?" [ He favors regulatory supervisory authority. ]

Q. Why did you not see this crash coming?
A. "Periods of euphoria are very difficult to suppress as they build [and] they will not collapse until the speculative fever breaks on its own." Oh wait, that was Greenspan.

Q. How do you get government out of the free market when we are now the world largest lender and insurer?
A. We don't. Ok, that is my answer, not his.

Looks like the Nasdaq may lead the party soon...

Yesterday EHP posted a link re microloans arranged by the Church in Italy to address the crisis there. I forwarded the link to a member of the Washington Interfaith Coalition, and he's interested:

Quote:

"Thanks! It would be interesting if [the parish] had a micro loan program: start up
very small businesses. I once did some work in this area and I found the
big banks were into helping as it gave them points under the Community
Reinvestment Act. You might mention this next Monday."

Also:

"Further thought: this program from Italy reminds me that I have seen that an
institution such as a parish, by providing some of the equity, gives the
bank an incentive to make a loan. It might be a way of unlocking some of
capital out there. Perhaps a young man living at home in N.W. D.C. needs a
car to get to a construction job, for example. "

Q. What was the root cause of the bubble?
A. A global savings glut

Yes, there is a global savings glut that was a response to the Asian currency crisis. However, the bigger problem is the inter-generational savings glut.

All it is going to take is the first one, then boom. The the dam will have burst. My suspicion is that it will happen on some college campus where the students are getting weaned from the HELOC teat and a finding out what the job market is like.

You must not get on campus much - I have two in school & no such angst - does rioting on WOW count?

Look for your riot in someplace like E LA or S Chicago - hot summer, lousy job prospects and some pissed off punk mouths off to an equally stress out cop and something unfortunate happens - they whole place then goes up in flames.

Same as it always was.

"Geithner could star in the Ice Capades the way he skates around questions"

He's no Gonzales.

The cost of a liver transplant (not including on going maintainance) is about $750k. Just work on the list down from there. Now, why do folks like you continue to post as anonymous; You're just as anonymous if you chose a handle like Dixie Narmus.

krid,

Ron Paul is interesting. I think many people here look at him positively. Unfortunately, many of us have been talking about the thing he's talking about for a long long time as well. He has a way of awakening people to his views, but their company is usually tedious for me at best.

I said yesterday that he's a bit like the Fool in King Lear. The "serious" people aren't going to listen to him any more than their going to listen to some of the colorful rhetoric on this blog.

If we want to get out of this mess in one piece, the change will have to occur from the bottom up...not from the top down (even it's from mister RP).

I just thank God the American tax payer can never pay back the load of debt our Congress has piled on us. The tax payer will get the last laugh.

Regarding the previous thread, a government would be perfectly suited to run an insurance business.

The problem is that when a government has quasi-unlimited borrowing capacity, or the ability to print money, there is no incentive to control cost. For casualty insurance, this probably isn't a problem, but health insurance is a different beast. Simply look at the monstrosity known as Medicare...

Anybody who uses Jim Cramer as the contrarian take note.

This morning he (and Erin) were on the Today show. About as giddy as I've ever seen him. Not only has the stock market bottomed but housing was going to have a good spring!

Yes, I was referring to "act of god" insurance like fires autos, not bond insurance.

I like playing the antagonist.

Stress test preview - Wow, they all passed and financial institutions are well capitalized!

People with good jobs and hope of a good job, do not riot. There is an inflection point out there, that if we cross, will lead to bad things. We may have already crossed it. Just wait this springs crop of college seniors start looking for work and getting that student loan bill.

"Shitty job prospects in the mid-to-late 70s too - still no riots."

"Of course, the funny thing about the gas riots of the 70s, was you had people vandalizing gas stations over the fact that there were lines ..."

"Carnival has been the site of various "race riots" beginning with the year of its inception. During the 70s riots erupted in 1976, 1977 and 1978 but it is ..."

I think flash mob gone wrong.

"I got some of them and a future son-in-law too (he's been laid off for three months)... I am telling you they aren't rioters. NEVER - HAPPEN."

Grandchild needs a liver transplant but gets jumped over on the list by some iBankers kid with bailout $$$?

"as the manufacturing base fled to Mexico."

I do not think Mexico is the problem. NAFTA is not the villain and has been beneficial overall in building a stronger economy. Mexico actually floats their currency, so if anything gets out of whack, there is recourse.

[Not only has the stock market bottomed but housing was going to have a good spring!]

Looking at my local MLS I am seeing A LOT od pendings. Far more than over the past 3 yrs. Most are FCs, but active nonetheless.

"I wouldn't call Ron Paul People trolls, turns out he was right all along and we are finally winning hearts and minds." -Michael

my mind just triggered a gag reflex, and my heart hardens itself wit every insipid remark...but you go ahead, get yourself a couple of sandwich boards and spread the good word...

Liz: I've been wondering about what the event horizon will be like although I haven't called it that.

Actually, I've been having nightmares to be honest.

What do I see as a plausible scenario?

1. Some TBTF entity goes belly up, possibly through a silent run.
2. Cascade effect via other instruments leads to others being rocked.
3. Feds have to throw such an amount at it that even the Chinese have to say "eff it" about their reserve holdings and begin to dump dollars. Others around the world follow suit - Japan, UK (which is already in a world of hurt and hating to see what little seed capital they have left pissed away), Arabs and Europe.
4. Dollar craters and commodity providers - led by our good friends the Venezuelans - start to demand payment for oil in other currencies. Yen? Euro? Gold?
5. Quick spike of oil (in dollar relativity) and follow through at gas pumps as gas skies. This leads through the economy in the coming weeks as cash-starved transport companies raise prices, followed by providers of basic foodstuffs. Retailers of non-essentials - think malls, many restaurants, non-durables will go under as folks cut back to bone to afford only essentials.
6. Liquidity starved firms lay off and then close - includes many transport firms which can't meet the gap between paying customers and fuel.
7. Grocery shelves become a bit more bare as non-essential goods (think soyburgers for example) vanish and surviving firms cut back on extra brands to only those brand lines that have reasonable production costs.
8. Assuming that many Americans only have one - two paychecks between them and the street - other banks/lenders see large-scale losses, further throwing the banking system into disarray.
9. Wholesale collapse of the equity markets and the bond markets as an increased number of firms fail to make their obligations.
10. In the months following, consider the prospect that the National Guard might have to be used to transport supplies - i.e. food, essential medical supplies - to select urban areas due to breakdown by the trucking firms as well as NG presence in streets resulting from unrest.
11. In the year or two following, see medical rationing as Medicare is reviewed wholesale to see what really needs to be done. (Medical providers are already seeing Medicare balking at paying for things that would've been no-brainers three years ago).

Yep, I have nightmares.

Congresscritter: "What's the back-up plan?"
Timmay: "This plan will work."

Pride goeth before the fall is actually:

Pride goeth before destruction, and an haughty spirit before a fall.
Better it is to be of an humble spirit with the lowly, than to divide the spoil with the proud.
-- Proverbs 16: 18-19 (KJV)

dryfly says:Today, 10:17:09 AM PDT
commentariat needs an expanded gene pool

Doesn't help that some here are a few chromosomes short of a full nucleus.

Ummmm, I am often accused of having XYY so it it averages out.

"No scary clowns or guys in goalie masks?"

I think I just got done watching Tim and Ben, the scary clowns.

Toxic Asset Plan May Involve Purchases From Funds, Rosner Says
By Jody Shenn

March 24 (Bloomberg) -- Treasury Secretary Timothy Geithner’s plan aimed at ridding banks of toxic real-estate assets may involve U.S.-backed purchases from hedge, pension and mutual funds at higher-than-current prices, Graham Fisher & Co.’s Joshua Rosner said.

Unlike the U.S. plan to finance buying of real-estate loans, details of which were released yesterday, guidelines for a mortgage-securities program didn’t specify that sellers would be limited to banks, said Rosner, an analyst in New York at the research firm.

The distinction may be one of several between a plan to strengthen banks to lend more by allowing them to sell loans at higher prices to public-private funds with Federal Deposit Insurance Corp.-backed financing, and a plan to offer Treasury and Federal Reserve loans to securities buyers.

Treasury investments in funds that will buy securities will be restricted to vehicles overseen by only as many as five managers initially, the government said. Those firms each must have at least $10 billion of assets under management; the number and size of managers of the loan-buying funds wasn’t limited.

Granting control of the bond-buying to firms with “already oligopolistic-like power” and not limiting sellers to banks raises the risk of abuse, especially in combination, Rosner said in an e-mail today.

“Will controls exist to prevent these five managers from buying each other’s bad investments, and make ‘confirming value,’ or excessive, bids to bid up the values of exposures on their books with tax dollars?” Rosner said.

Isaac Baker, a Treasury spokesman, declined to immediately comment today.
Toxic Asset Plan May Involve Purchases From Funds (Update1) - Bloomberg.com

The question I want to see asked is like this:

"So, Secretary Geithner, when are you going to stop raping the U.S. Taxpayer?"

But I would settle for this:

"After all these trillions in taxpayer-funded bailouts, where is the tangible, documented benefit to the nation? It seems to me that never in human history have so many paid so much, for so little. It's like reverse Churchill: 'Never have so few (bankers) owed so much to so many (the other 99% of the country)'. When will the taxpayers get control of the bankrupt companies they've already paid for many times over? After all, if a company is too big to fail, and yet it fails (needs bailout), then surely it's too big to be allowed to continue to fail even worse."

My other nightmares pertain to testosterone-addled, pimply-faced, Napoleon Dynamite wanna-bes asking my daughter out.

Of course, I never looked like that...

Besides where do you think grandchildren come from? You can reply after you stop hyperventilating.

I feel like I'm an extra in the greatest epic movie in the history of mankind.

Plot:
The evil genus Allan Greenspan engineers the greatest financial catastrophe the world has ever seen.
There are many actors throwing around trillions of dollars trying to maintain the class structure of the planet. Many subplots such as Madoff and Staford to keep the audience interested.

What would be a good name for this movie? Greenspan's Follies, Ponzenomics, Total Collapse? Suggestions please.

I listened to a lot of this morning's hearing.
Geithner is one evasive guy.

Blackhalo,
No, Mexico is not "the problem" and they have benefited from NAFTA, but a service economy must be based upon a foundation other than debt.

I guess we get the government we deserve.
It's incredible that members of conress, most of them lawyers,
cannot use five minutes wisely. A brief, one sentence, welcome
to the witness would suffice for an "opening statement." The
representative should have prepared two or three questions, with
followups. The chairman should instruct the witness to answer the
question when the witness is evasive. Since there are several members on the committee, they might have held a strategy session to choose questions to ask and take up any necessary followups on behalf of another member out of time.

Amazing lack of organization.

Michael says:Today, 10:35:51 AM“I loved Maxine Waters line of questioning early on in the testimony outlining all the guilt by association where Goldman Sacks is involve in this whole affair. She was great today. I'll look for a link to her line of questioning of Timmy .

While you're looking for that link and loving dirty Maxine, why don't you try googling Maxine Waters and One United Bank. I wanted to puke, she's simply trying to "help" a bank in her district...again.

Jesus, Michael. Get off RP's jock and your stupid petition and read the frickin' news some time, will ya?