josap wrote:

If you aren't in debt your credit score goes down. That is stupid.

Not stupid, just mechanical logic: you do not want to extend credit to somebody who has not demonstrated ability to pay down credit. Remember that credit bureaus do not have access to your paystubs, only to your credit behavior. If you are person with no credit history, your perceived credit worthiness will not be very high.

Thanks nemo, love that song. We should change it to "50 ways to leave your lender"...

Wait until they walkaway, rent, and then lose their jobs. They should stay to the last possible minute. Renters get bounced a lot faster. Especially as there is no social services net anymore.

That is when we will see the tent cities.

"Europe will split up its universal banks? Yeah, right..."

there is much more active protesting aganst the banking system in Europe,some government officials who are fundamentally opposed to the present bankng system and viable 3rd political parties in many countries in Europe.

The above pints IMO to real fundamental changes in the global banking system coming out of Europe rather than US/UK.

We already have tent cities. Here in this little raggedy town they are thinking of opening up a camp ground for them to get them out of the downtown area.

Blackwaterwannabe wrote:

If it's survival, what are the wrong reasons?

I meant the ratios, but you knew that.

OT to tg: Thank you for the med link a yesterday (or the day b4? It's been crazy). It is interesting stuff, and I wish solid answers would materialize faster.

Rajesh wrote:

would principal forgiveness prevent ruthless default?

Obviously, that depends on how much forgiveness will be offered

I had a conversation at work today with a few people and nobody seems to believe that homeowners have a moral obligation to keep paying. The consensus seems to be "Screw the Banks"...Anyone I've talked to that has tried to do a modification here is VERY hostile and ready to walk.

I had a friend who at one time was rotating 80k worth of credit card debt between cards using 0% transfer requests.

We had 0% in carried cc debt, paid off cc in full each month, twice the yearly income, a car paid in full and no late payments or other dings on our credit and yet his credit score was slightly higher.

Go figure.

nova wrote: Fed run. Daycare. Army Field Kitchen. ID check and piss testing required.

That didn't turn out so well in AA.

Comrade Kristina wrote:

Anyone I've talked to that has tried to do a modification here is VERY hostile and ready to walk.

I hear that even in recourse-states judged are becoming more sympathetic

That didn't turn out so well in AA.

I modeled that on Displaced Persons camps in Europe.

JP wrote:

It is interesting stuff

That is a kind word to the reality of the situation. Good luck

Rajesh wrote:

The $10,000,000 question: would principal forgiveness prevent ruthless default?

Large scale principal forgiveness would almost certainly be funded by taxpayers - Treasury would write a check on the underwater borrower's behalf to the lenders in question.

The exact moment free money of this nature starts getting handed out is the exact moment that all ethical and moral arguments in favor of paying up while underwater get tossed.

The lines for free money will be very, very long.

Actually, the more I think about it the best thing to do is not pay and drag it out. You end up being more vulnerable as a renter to job loss.

Comrade Kristina wrote:

I wonder what that means?

That we're inarticulate and use buzzwords to hide the fact?

I know I know ( repeated posts ) but this is so appropriate and I'm a big James Gang fan

James Gang - Walk Away - Joe Walsh
YouTube -  

So why the hell did James Walsh walk away from this kick ass gig to join the Eagles.... perhaps too much

New research suggests that when a home’s value falls below 75 percent of the amount owed on the mortgage, the owner starts to think hard about walking away, even if he or she has the money to keep paying.

Replace "home" with "SRS" and I think that would hit a little too close to home for a few of the commentariat.

"and about their social stature"

The degree to which this was tied up into the housing bubble, especially in coastal markets, is, err, interesting. A genuine psuedo-science like Sociology as opposed to a psuedo-psuedo-science like Economics might have interesting things to say about it.

This idea is crazy but maybe crazy is what we need?

Martin Feldstein: How to Stop the Mortgage Crisis 

Haha nova. There's a rap song that I love. It's called "F the game don't let the game F you"....

poic wrote:

there is much more active protesting aganst the banking system in Europe,some government officials who are fundamentally opposed to the present bankng system and viable 3rd political parties in many countries in Europe.
The above pints IMO to real fundamental changes in the global banking system coming out of Europe rather than US/UK.

Here is a counterview:
FT.com / US / Economy & Fed - EU governments sceptical on practicalities of plan
European Union governments were surprised by the Obama proposal and have been sceptical at the practicality of separating proprietary trading from broader market making. German officials say they believe separating riskier banking functions from retail banking could make the banking system less stable.
There was broader support at last week’s World Economic Forum in Davos for a suggestion from Lord Turner, chairman of the UK financial regulator, that proprietary trading be limited to a percentage of overall assets or business.

artichoke wrote:

I think "deadbeat" is becoming a badge of honor. It means you're screwing the banks, doing God's work.

You mean - literally following the trend of homeless chic!

nova wrote:

Write a book on "How to Game the System before it Games You." Keep it simple.

Page 1: Write a book on "How to Game the System before it Games You." Keep it simple.

Page 2: [blank]
Page 3: [blank]
Page 4: [blank]
Page 5: [blank]

Ahhahaha noob I laughed until I cried on that one. Eric is the master of dry humor...

MrBeach wrote:

artichoke wrote:

I think "deadbeat" is becoming a badge of honor. It means you're screwing the banks, doing God's work.

You mean - literally following the trend of homeless chic! Big smile

No it's better than that, if you are still squatting there. Not homeless!

MrM wrote:

Can you please fix the link? Thanks!

http://www.nber.org/feldstein/wsj03072008.pdf

EDIT: Or maybe this one?

Dr. Thoma's Take 

"People like me are beginning to feel like suckers,” Mr. Koellmann said. “Why not let it go in default and rent a better place for less?”

ROR or is it LOL?...people like me are beginning to feel like masterminds who would pay double if they rented.....

I'm N UR grafs messin' with the convexity of UR assumptions about consumer behavior.

Just think of all that money invested in mortgages based on the southeastward bulge of the blue line.

MrBeach wrote:

Possession will indeed be 9/10ths of the law!

Repossession is the other tenth?

An additional 2.3 million mortgages were approaching negative equity,

Add sales and closing cost, then they are underwater now.

My patron bought Friday and is underwater today...The new normal?

Terry wrote:

Plus the 72% that are not underwater, and those that do not have a mortgage, would likely be VERY unhappy about having to pay for this bailout.

Are you sure about that? They seem to be going along with having their interest income handed over to banks to cover their losses on crappy loans.

noob goldberg wrote:

Dr. Thoma's Take

Okay, now that I've actually read the article that I've linked:

Here's one way that such a program might work:

The federal government would lend each participant 20% of that individual's current mortgage, with a 15-year payback period and an adjustable interest rate based on what the government pays on two-year Treasury debt (now just 1.6%). The loan proceeds would immediately reduce the borrower's primary mortgage, cutting interest and principal payments by 20%. Participation in the program would be voluntary...

Although individuals who accept the loan would not be lowering their total debt, they would pay less in total interest. In exchange for that reduction in interest, they would decrease the amount of the debt that they can escape by defaulting on their mortgage. The debt to the government would still have to be paid, even if they default on their mortgage.

Participation will therefore not be attractive to those whose mortgages that already exceed the value of their homes. But for the vast majority of other homeowners, the loan-substitution program would provide an attractive opportunity. ... They will participate if they prefer the certainty of an immediate and permanent reduction in their interest cost to the possible option of defaulting later if the price of their own home falls substantially. ...

Low interest rates were kind of the root of the problem. I can't see how offering lower interest rates does anything except kick the can.

And not very far, at that.

Actually no Rajesh. She got robbed, she was underwater when she signed the papers.

It may be obvious, but nobody has yet said it, so I will.

Once a country and economy this big and credit-driven changes from being in fear and awe of banks to hating their guts, and wanting to screw them with CC and homeowner defaults, you can't go back to where you were before. It's not a phase or credit cycle. It's a permanent change in attitude.

You can blame it on a lot of things. But most of all, blame it on Greenspan/Bernanke. When humans try to play Zeus with giant, complex economies, bad unintended consequences will result.

Bernanke deserves to be Time's Man of the Year. Nobody has ever driven permanent, massive economic change faster than he has. The banking system and Fed will never be the same after Bernanke.

albrt wrote:

I'm N UR grafs messin' with the convexity of UR assumptions about consumer behavior.

I never, in a million years, expected to ever read a LOLbrt post.

noob goldberg wrote:

I can't see how offering lower interest rates

I don't see much incentive for the home owner. The overall payment is reduced slightly but they end up with debt that they can't walk away from. The only exception is if they can refinance the mortgage after the reduction and they had a high/adjustable rate on the old mortgage.

albrt wrote:

I'm N UR grafs messin' with the convexity of UR assumptions about consumer behavior.

I m 'greeing wit u and wanting cheezeburgers while looking at d graf gap between 'sumers and 'vesters.

All your grafs are belongz to me now!

I suspect most folks haven't put 1+1 together on that. Perhaps we could find a way to fit it on a bumper sticker?

The powers that be here in Sacramento have been bouncing that issue around too. The downtown area is one of the few areas that haven't been hit as hard as the general area yet and the last thing the landed gentry want is too homeless bring their perceived property values down. We used to have winter shelters at Cal Expo but they closed them down this year.

Yep, that's the one. Put it this way CM, I"m in a much nicer neighborhood with almost a whole acre and I'd be pretty happy if I got the per sq foot she got right now. Her lot isn't near the size of mine.

noob goldberg wrote:

I never, in a million years, expected to ever read a LOLbrt post.

I could not have done it on my own - it's a Tanta reference.

Calculated Risk: Options Theory and Mortgage Pricing

"The sense and sensibility of moving on"

YouTube - Remy Shand - Take A Message

Love this guy. Wish he'd come out with another CD.

volker the viking wrote:

at what point, what's the percentage ort raw number

Even banks will eventually get the message and start doing deals: "We forgive 5% of the mortgage, drop the interest 75 basis points if you start making payment again. We'll even fix your credit report free."

Rajesh wrote:

The $10,000,000 question: would principal forgiveness prevent ruthless default?

Sure. Just like making repayments on home loans optional allows for home prices to be held above affordable levels. Of course, it turns our entire system of buying homes into a charade. A bit like that the system of work and pay in the USSR: We pretend to pay you, and you pretend to work. In the same way, borrowers in the bubble areas of the USA pretend that shacks are worth half a million dollars, and then lenders pretend that borrowers living in shacks can repay half a million dollars.

Comrade Kristina (profile) wrote on Tue, 2/2/2010 - 6:42 pm
All your grafs are belongz to me now!

We should label the space between investor default and owner-occupier default the "denial gap." Unsurprisingly it is widest right around 100%. What may not be obvious is why there is any data in the 90%+ area. The prospect of spending 2-3% on touch ups and getting reamed with 6% transaction costs means 90% LTV sellers are still getting out with nothing more than bus fare.

Rajesh wrote:

I don't see much incentive for the home owner. The overall payment is reduced slightly but they end up with debt that they can't walk away from.

That was precisely the thought I had as well; does the government loan stay with the house, or does it become a personal liability?

Only an idiot in a non-recourse state would exchange an asset liability for a personal one, at par.

I'm in a recourse state but they don't follow through. I'm wrestling with the decision now. The mod came out of UW Friday, so far they haven't called me with final numbers.

@ sm_landlord (homepage, profile) wrote (in reply to...) on Tue, 2/2/2010 - 7:47 pm
km4 wrote:So why the hell did James Walsh walk away from this kick ass gig to join the Eagles....
To take it to the limit... Wink
Joe was doing a solo allbum (So What) in a studio down the hall from where the Eagles were making a record. There was disagreement in the Eagles camp, and they ended up getting rid of Bernie Leadon because of several disputes. The Eagles wanted to get away from County and do more Rock. Joe was a perfect choice, and they all knew each other and played on each other's records well before Joe joined. It worked out pretty well for everyone...

Nice vignette sm_landlord with wink acknowledged....damn I still wish it was more James Gang

Rob Dawg wrote:

why there is any data in the 90%+ area.

Unemployment or Medical expenses can cause people who would otherwise try to ride out a "temporary" downturn in home prices to end up in foreclosure. People tell surveys that home prices in my area are down 20% but my home has not lost any value.

We were talking about this a few nights ago in relation to the job market.

Why is it that you will have to work yourself to death and just get dumped on for a $10/hr job but that $25/hr job you eventually land is a lot better with less job related stress? You'd think the easier jobs would pay less but no. You have to be a total pr!ck to your fellow workers to make it up to the next rung.

We came up with the termed social cannibalism to try to define it. I know it could be refined but the word cannibalism has to stay because if you think about it, these are people emotionally eating other people and not in a happy happy joy joy way.

There will be no principal forgiveness. That should be pretty clear by now.

The answer will be short sales. Heck, the government is even paying you to move from your short sale. How obvious can it be?

Another excerpt from the CBS Evening News Story

"Jessica and Aaron Jenkins got in way over their heads when they bought their 5-bedroom dream home in Corona, California for over $700,000. They paid $2,800 dollars a month on their interest-only loan -- never touching the principal.

"It's cheaper than a 30-year fixed," Aaron said. "We can afford it so that's why we did it."

But this year, their loan would reset, adding $1,100 dollars to their monthly payment. In the next two years, nearly 361,000 loans will reset nationwide - increasing mortgage payments by an average of $1,000 per month.

That's why a record 3 million more foreclosures are expected in 2010. "

Housing Crisis Getting Uglier in 2010 - CBS Evening News - CBS News

ghostfaceinvestah:

as plain as the nose on your face

Huge Nose - Funny Animals, Funny Cats, Funny Dogs, Funny Pets

I have gently approached my friends about walking away from their mortgages - they are in effect holding a savings account with a negative interest rate: For every dollar they put into their mortgage, a substantial percentage is instantly vaporized, never to be returned to them in a future sale of the property.

These folks are in their 50s, with kids in college. They have been responsible financially all their life. To say they are stunned by their predicament would be an understatement.

Rajesh wrote:

Won't be pretty.

only if you're settin a good horse

otherwise, it ain't gonna happen

we just gonna watch that calf run for the border

No, instead we will see people moved out by the banks and the taxpayers will eat the banks loss that way. Nice.

Completely OT:

The week before the lunar new year (Feb 14 this year) is traditionally spent with families. China pretty much shuts down.

Econbrowser: Commodity inflation update

Next week may not be the best time to own commodities.

700k in corona? What the FRAK were they thinking?

ghostfaceinvestah wrote:

The government knows this.

they are more concerned about keeping the wrath pointed other directions

MrBeach wrote:

Terry wrote:
Plus the 72% that are not underwater, and those that do not have a mortgage, would likely be VERY unhappy about having to pay for this bailout.
Are you sure about that? They seem to be going along with having their interest income handed over to banks to cover their losses on crappy loans.

Homeowners are the elephants in the room. They vote, and they notice everything that knocks their home price down, or pushes it up. That's the real (political) reason we have the massive mortgage interest deduction, and Fannie Mae and Freddie Mac and the FHA and so on - to make home prices as high as possible for existing homeowners. All of that support has enormous cost, but those who pick up the tab either don't notice, or don't vote.

Mike in Long Island wrote:

But this year, their loan would reset, adding $1,100 dollars to their monthly payment. In the next two years, nearly 361,000 loans will reset nationwide - increasing mortgage payments by an average of $1,000 per month.

Would that $3900 payment still be interest-only, or would they finally start kicking in some principal? Not that it really matters, but it sounds like they're still stuck with $700K principal.

The idea of interest-only absolutely baffles me. But I'm easily baffled.

And yet the same silly little lemmings probably walk up to their newly branded CHASE ATM every few days, without even thinking who they are supporting. I watch them around here, clueless little sheep, one after another. We're still a long way away from people really understanding the screwing they are getting and how they've continually supported it through their own ignorance.

GDD9000 wrote:

700k in corona? What the FRAK were they thinking?

Dunno. Not familar with Corona, CA. If it's anything like Corona, Queens(NY) I understand your reaction.

Terry wrote:

None of these reporters or news outlets has ever had an original thought

surprisingly, there are some who don't think well of what you say either

albrt wrote:

I could not have done it on my own - it's a Tanta reference.

Calculated Risk: Options Theory and Mortgage Pricing

Good lord that woman was brilliant.

Only one reason for Corona to exist - as an escape path from a nastily congested ramp as you drive north and then try to head west to LA. Town-full-o-shirtboxes.

I don't think the gov understands how, once they understand this, that their entire world view will crack. Once it does, it is anyones guess who reshapes it for them.

I believe the Mayans were off by a month. The world will end November 6, 2012.

"You betcha" with a super majority in both houses of Congress.

Badger boy wrote:

I believe the Mayans were off by a month.

The electoral college meets on December 20, I believe. The result isn't official until then.

I am getting seriously freaked out - I again find myself agreeing with the Repubs

Your tax dollars at work

- NY Times

The American International Group has agreed to cut employee bonuses by $20 million and will distribute about $100 million on Wednesday, according to people with knowledge of the negotiations. But the reductions may not be enough to appease the company’s critics, who do not accept the company’s argument that it has to honor contracts from before its government bailout.
“A.I.G. has taxpayers over a barrel,” said Senator Charles E. Grassley, an Iowa Republican, in a statement on Tuesday night. “The Obama administration has been outmaneuvered. And the closed-door negotiations just add to the skepticism that the taxpayers will ever get the upper hand.”
A.I.G. first promised the retention bonuses to keep people working at its financial products unit, which traded in the derivatives that imploded in September 2008, leading to the biggest government bailout in history.
The contracts, which the company said were necessary to keep people in place to unwind its complex portfolio, called for the bonuses to be paid in regular installments. The final one, due in mid-March, was for about $198 million.
Fearing a firestorm like the one last spring, A.I.G. had been working with the Treasury’s special master for compensation, Kenneth Feinberg, on a compromise that would allow it to keep its promise in part, without offending taxpayers.
The agreement calls for employees who still work for the financial products unit to accept 10 percent cutbacks, while employees who have left the company must take 20 percent cuts. Those employees are still entitled to their bonuses under the contract, which adheres to the scheduled payments even if people have lost their jobs. The financial products unit has shed almost 200 people as it has wound down A.I.G.’s derivatives business.
...
So, while it appeared on Tuesday that A.I.G. and the Treasury had cut the bonus payment to just half of the $198 million that was scheduled for March, the total amount remains unclear. The company acknowledged Tuesday night that it had cut the original amount by $20 million, but did not confirm that the final payment would be $100 million.
Mr. Feinberg referred to the contracted amounts as “grandfathered payments” in a letter responding to Senator Grassley, and said they were not covered by the new rules he administers curbing executive bonuses at bailed-out companies.

patientrenter wrote:

omeone who borrowed more money for a home than it's pre-bubble value was acting responsibly.

I disagree gently. IMHO homes became the device for joe normal to save in. We had 60 years of teaching that it was so. Housing took on money's role of preservation of value. Whether it was true or not is another story.

Mike in Long Island wrote:

For reference 30yr fixed at 4.75% for 300k is roughly 2100/mo ballpark so even at $3900 it would appear to be less than fully amortizing. The recast rate shock would be massive.

And thus the zirp policy for as long as possible. It's quite a corner to be painted into.

EDIT: Okay, time to disconnect for a while.

"Walk away if you can! Walk awat while you can!!"

Only thing is since baks can come aftyer you, you need to take care of the legal aspect of it.

It is a business call and not a moral call!!

Each day you stay in an underwater house is a day you get more underwater.

So don't waste time... In life you sometimes make the wrong call!!

yagij wrote:

We've gotten so far into ZIRP territory that we can get periodic bouts of NIRP. Never had a prof. in undergrad tell me why loaning out money with NIRP was a good thing for some reason...

The entire concept of NIRP makes my

noob goldberg wrote:

The entire concept of NIRP

Makes a joke out of the mantra of saving for your retirement using compounding interest, eh?

tg wrote:

I disagree gently. IMHO homes became the device for joe normal to save in. We had 60 years of teaching that it was so. Housing took on money's role of preservation of value. Whether it was true or not is another story.

And I will respond in kind, tg - civilly. Certainly endless home price gains became the water-cooler gossip. But so are the sexual antics of sports stars and actors. It doesn't mean copying them is responsible personal behavior.

The notion that, far from having to pay to live in a home, most of the population could get paid handsomely by sitting on a couch at home, and spending large amounts of money on fancier kitchens and bathrooms and bigger homes, was always obviously unsustainable. Like any Ponzi scheme, the only winners were those who got in early and got out before the collapse, and the people running the scheme.

tg wrote:

I disagree gently. IMHO homes became the device for joe normal to save in. We had 60 years of teaching that it was so.

I think that's not quite right. We had about 50 years of teaching that it was so, but somehow the idea that you slowly, methodically paid down your mortgage with the idea of retiring free of debt gave way to the idea that your mortgage should be continually massaged and refinanced and you should never allow any equity to accumulate in your house.

I have a feeling that shift coincided with the transition from a generation that had grown up with parents who had experienced the depression gave way to a generation whose parents' formative years were the war and the postwar boom.

sportsfan wrote:

With what are you agreeing? It was Republicans who bailed out AIG.

With this sentiment: “The Obama administration has been outmaneuvered. And the closed-door negotiations just add to the skepticism that the taxpayers will ever get the upper hand.”

Rob Dawg wrote:

We should label the space between investor default and owner-occupier default the "denial gap."

Mind the gap! Brilliant >; )

Thanks for the Tanta link. I like "I'm just exercising my put"....BWAHAHA I'm gonna bring that up when I talk to Saxon next...hahahahaha

rich wrote:

Once a country and economy this big and credit-driven changes from being in fear and awe of banks to hating their guts, and wanting to screw them with CC and homeowner defaults, you can't go back to where you were before. It's not a phase or credit cycle. It's a permanent change in attitude."

People may want to watch out when the columbian drug lords and the mafia take over the banks, they have efficient ways of making you pay, pay or we break you knee cap, or kill you. (If we kill you we mark the debt paid in full)

Ahhhh, but that would mean we could fire back....Do you have any freaking idea how many guns are out there?

Rajesh wrote:

How many Treasury officials get multi-million dollar bonuses? What incentive do they have to try to get the upper hand?

They will get their reward in the next life, errr make that next private sector job.

Jonathan wrote:

They will get their reward in the next life, errr make that next private sector job.

It's like the rewards of religion without the dying part?

CaptainMorgan wrote:

We need a poll of how many have had a mortgage burning party
My FIL. He also sold his place in '06 in CA. A modest Korean war era shack in SoCal that he paid 15k for & got over 500k. Left a massive debt hole for the dope who bought it to fill, if he hasn't already defaulted.

MrM wrote:

Rewriting contracts in BK is a normal course of business.

primarily by expunging them from existence and that's okay

that's the system

and fuck the R's that changed the deal

Mike in Long Island wrote:

700k orig mort balance means when neg am increases principal to 875k whammo recast. 30 yr fixed on 875 at 5.5% is a monthly payment of @ $5000 or $1100 higher than their "reset" payment.

So we need ZIRP and a rapidly inflating housing market.

Well I feel better now.

As an aside, and just before I walk away from the computer for real , I just read El-Erain's forecast for 2010.

El-Erian Says Retreat in Stocks Will Worsen as Economy Slumps - Bloomberg.com

I don't know if I should feel relaxed or concerned that my outlook matches PIMCO's.

Dang volker....You mean CDS shouldn't come to the front of the line while average jerk can't file BK?

As far as cashing out equity...

Remember that people do what they are told to by the TV. No one can do what Countrywide can.

If they see 20 minutes of ads about 'freeing their home equity', who are we to say boo to them when they respond to people with a bunch of cheaply-borrowed money to lend at 8%.

Add in trying to keep up with the idiot down the street with a shiny duelly and a trailer with a couple of jet-skis....

bearly wrote:

Left a massive debt hole for the dope who bought it to fill, if he hasn't already defaulted.

For some reason I looked up the first house I bought on the tax rolls about two years after selling it, and it was listed as bank owned.

But I did sell to a dope, one who called me day of closing (after I had signed everything) complaining about having to pay PMI.

volker the viking wrote:

this is one of the stupidest posts ever in the history of the intertubes.

LoL! I agree. Interesting. A self-referential post. You will have a chance of escaping the stupid label, volker, if you make a substantive comment that avoids disparaging others. I will wait for it (without holding my breath).

Excellent comment Jonathan. I read an entire article by an insider that does marketing like this. He explained how they could force any outcome to any election just by threatening to unleash the marketing beast.

MrM wrote:

Rewriting contracts in BK is a normal course of business.
Adding exigent circumstance make it even more plausible.

And a really good case could be made for letting AIG go BK in 2008.

Hank Paulsen didn't do that. He fucked things up royally and it was completely over Bush's head.

Hearing an asshole like Grassley try to blame the Obama Administration is sickening.

Jonathan, I found the article. Well worth the read.

Daily Kos: State of the Nation

I apologize for the kos link but the guy posted there and he has some excellent insight into this as an insider.

Yup, sure am.

They screwed me long enough, now they get what they got coming.

Which is nothing!!!

YouTube - AEROSMITH - Get a grip - Live Holland - 1994

I support society to the extent it supports me- not to my detriment.

Someday this war's gonna end...

Yalt wrote:

They were also necessary.

hahahahahahahahahahahahahaha

snark?

No, not at all.

Citizen AllenM wrote:

Yup, sure am.

Speaking of support and deadbeatedness, how's AZ this week?

ive been in the woods for 24 hours so if this is a re post i apologize

from fresh air with terri gross npr

intro...with link to entire audio interview at bottom

"In 1962, Ed Thorp became every gambler's favorite mathematician when he published the first mathematically proven method for beating the dealer at blackjack.

Thorp's work revolutionized the game. But he went further: In 1967, Thorp devised a system that uses math and computers to predict the future of the stock market. His hedge funds and his personal portfolio have been profitable ever since.

Thorp and the people who use such systems have come to be known as "quants" — it's a reference to the quantitative-analysis techniques they employ — and their stories are told in Scott Patterson's new book The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It."

Thorp has taught at MIT and UCLA. Patterson writes for the Wall Street Journal. They join Terry Gross for a conversation about Patterson's new book."

'The Quants': It Pays To Know Your Wall Street Math : NPR

volker the viking wrote:

we just gonna watch that calf run for the border

Or carry a side arm and eat some veal.

If this is true then why do people in MIAMI stay in the houses for three years without paying the mortgage, taxes, HOA dues?

Why the banks do not foreclose on these properties and sell them?

This whole debate is a big BS generated by the PR companies working for the banks!!!!!!!!

sportsfan wrote:

Hearing an asshole like Grassley try to blame the Obama Administration is sickening.

And when I find myself agreeing with Grassley, I feel utterly depressed and freaked out

Quaking and shaking- Phoenix just passed a big sales tax increase on food, the Senate just passed a sales tax referral, so up go taxes to finally start bailing out the ship that is now firmly aground on the rocks of debt.

The entire state is just one step ahead of the bill collector, including me now;-}

It is liberating to tell somebody you no longer give a crap about your fico score.

Someday this war's gonna end...

patientrenter wrote:

Isn't this sanctity of contracts Tim Geithner's stated primary justification for paying GS the face value of the AIG contracts?

First, kindly note that Geithner didn't pay GS anything. AIG did.

Secondly, please recall that Geithner was not at Treasury when Treasury and the Fed bailed out AIG. Paulsen was.

Now the government has bailed out AIG 3 or 4 times in total, all to avoid an AIG BK.

If you have a way to avoid paying debts without filing BK, I'd like to hear it.

Citizen AllenM wrote:

It is liberating

CAM is going commando

MrM wrote:

I find myself agreeing with Grassley, I feel utterly depressed and freaked

I know exactly how you feel.

That's why the tines should be sharpest for those who practice to deceive.

Nah, give it a fancy name, make it onerous to apply for, and don't tell anybody how to get the super secret special deals the elite get on a regular basis.

The biggest stupidity is people can already get a huge writedown if they cram down the interest rate to miniscule. They don't understand the power of three percent less over 27 years.

But hey, I have given up telling the common man anything, after all, I have been frequently right here, and folks still denigrate me on a regular basis.

Someday this war's gonna end...

dryfly, I'm still very much in the deflationista camp. Wages are deflating rapidly as are home value and car value. Those are the big ticket items for Joe6pack. Food is still relatively cheap as well. I was paying much more when oil skyrocketed. I bought a 19lb rib eye cup for 77 bucks last night at Winn Dixie. That's 4 bucks a pound for rib eye.

Yalt wrote:

They were also necessary. Without all the debt there's nowhere to put all the capital.

Total debt = total lending.

I don't think it's quite as simple as this, Yalt. Sure, we know there was extra money from the trade deficit adding to the sources of money for lending, but the trade deficit was not a purely exogeneous variable. More lending led to higher asset prices, leading to more consumer spending on imports, further expanding the trade deficit. Tight lending might have dampened this feedback loop.

Comrade Kristina wrote:

If you find yourself agreeing with Chuck it is time for opiates...

I need a Floridian's take on something. How is the housing market in J'ville doing? Anyone know?

patientrenter wrote:

Tight lending might have dampened this feedback loop.

it always did before Phil Gramm, Senor Leech and Bliley teamed up to stick a big phallus into everybody by removing the banks hand cuffs

Citizen AllenM wrote:

I just haven't told command in Saigon.

Attaboy CAMbo

volker the viking wrote:

what with you being so much smarter and all

Nope- they just don't believe you.

Trust me, tell folks something they didn't get from Grover Norquist, or Rush Limbaugh, or Faux News, and it is like you are just plain UnAmerican.

I could even get behind hell if I could ten minutes alone with he and his wife volker...

Thirteen injured in Darwin, Australia bomb attack » Breaking News | Wire Update News | News Wires -
DARWIN, AUSTRALIA (BNO NEWS) -- At least 13 people were injured in a bomb attack on an insurance office building in Darwin, Australia on Wednesday morning, local media reported.

Comrade Kristina wrote:

That's 4 bucks a pound for rib eye.

That's pretty typical isn't? It is around here [Midwest]... though shrimp is more. Might be location specific.

Citizen AllenM wrote:

tell folks something they didn't get

yep, you get the old Soviet Shutdown when you go on too long

volker the viking wrote:

it always did before Phil Gramm, Senor Leech and Bliley teamed up to stick a big phallus into everybody by removing the banks hand cuffs

I think Barney did his part, too

Seriously dryfly? Normal price for ribeye down here not on sale is 10 bucks a pound. Not Eye of the Round but Rib Eye aka "Prime Rib"....Lately beef has been outrageous, I figure they got caught with a bunch of whole cups that are going out of date since the great culling of the herds. They had Porterhouse "on sale" two weeks ago for 7.50lb. I'll take Rib Eye over Porterhouse all day long.

frpm institutional risk analytics

ht link found by way of naked capitalism post

the original is here
Institutional Risk Analytics 

the money quote

"a federal bankruptcy judge in New York sitting on the Lehman Brothers bankruptcy, has voided the seniority claims of holders of various qualified investment contracts, ruling that their ipso facto clauses which subordinated other claims to their own were "null and void in bankruptcy." This is an important victory for fans of equal protection and due process, ...

Indeed, the same legal art that gave the swap counterparties in this latest case the impression that they were senior to the other creditors of the bankruptcy estate was used by former Treasury Secretary Hank Paulson and his successor, Timothy Geithner, to justify the rescue of American International Group (AIG). ...

And notice that the world has not ended when the holders of OTC contracts are treated like everyone else. Indeed, Judge Peck has made a number of rulings over the past two years re-leveling the playing field between holders of OTC contracts ... As we have noted before,... Judge Peck and US Bankruptcy Trustee Harvey Miller is the starkest condemnation possible of the AIG bailout, a hideous political contrivance that ranks with the great acts of political corruption and thievery in the history of the United States . "

Comrade Kristina wrote:

st economic type article I wrote over there

Well done.

dryfly, I can recall Grassley being as mavericky as McCain a long time ago.

He did seem to answer to his own principles back then. Today, he just seems senile to me.

Today's criticism of Obama in the article MrM quoted is pure lock step Republican crap.

Yalt wrote:

There was enormous demand for high yield debt instruments. Failure to deliver such instruments in quantity would have caused a decline in financial asset values

bullshit

you're a stooge

Yalt wrote:

Some similar process of financialization has taken place at the end of every capitalist regime, from the Genoese on. I don't know why it's a shock that it's now happened to us.

this is now the winner of stupidest post ever on the intertubes

The chart stops at 150%? No really. There are people with way higher LTVs. It wouldn't be hard to find 300%.

Yalt wrote:

Every time one of the old-time subprime lenders decided things were getting a bit out of control and maybe it was time to wind things in, Bear or Lehman would make them a deal they couldn't refuse, and then loosen standards even further as soon as they got hold of the operation.

stop digging

I like it CM, I think I'll go for a test drive tomorrow

RE wrote:

I paid off my house in 1996. Never had another mortgage since and don't regret it.

I have been looking at what would happen if you had a one year tax special. Pay off your mortgage in full and get a tax deduction for the first $100k of paydown.

ghostfaceinvestah wrote:

But we won't see large scale taxpayer funded principal forgiveness.

The homeowner will be allowed to default, but the investor in Fannie/Freddie mortgage paper and corporate bonds will be made whole.

volker the viking

regarding recent invectives leveled at

citizen allan m

and

yalt

you blunt what ever efficacy your arguments may have by leveling unwarranted insults

stop

"when the columbian drug lords and the mafia take over the banks"

That would be an upgrade from outfits like BAC and C. At least the Zetas are known for being organized, professional and thorough.

Yalt wrote:

But I don't matter and neither do you.

you're making the bankster's case

However, if the inheritance tax is about to reappear, I would like to bring up the Buy Your Kids a House Act.

Pretty simple. You can buy a house for cash and give it to your kids. Avoid all gift taxes or inheritance offsets in the future. Pulls leverage out of the system. Reduces future income tax deductions for mortgage interest. You need some prohibition against refinancing the house for 5 years or so.

For you Senate staffers on the board, click on my profile and send me an email. I have some calculations and a one page summary.

.

sportsfan wrote:

He did seem to answer to his own principles back then. Today, he just seems senile to me.

Today's criticism of Obama in the article MrM quoted is pure lock step Republican crap.

Could be - he's been there a looooong time.

The ultimate solution to the U.S. real estate crisis could be the demise of the Fed.

The value of the dollar ("Fed currency") technically is backed by the quality of the Fed's balance sheet. But it really is backed by the moral authority of the Fed to convince consumers (and the world) that Fed currency is legitimate.

If the tide turns against an independent Fed, then the tide will turn against the moral superiority of the U.S. dollar. The dollar will tank, and everything of real value (including real estate) will rise. All governments and central banks debase currencies. But not all central banks debase their own authority like Bernanke has done.

If you two kids don't stop I'll be forced to separate you...

People, just use the ignore button if your panties are getting all atwist. That's what it is for.

Yalt wrote:

I don't know why I'm here

neither do I, but good luck with whatever it is you're doing

it is a very open minded approach

5000 years of human history has shown the truth of absolutes

but you keep right on countenancing the probabilities of the irrational and I will place some of my trust in absolutes

Exactly Jonathan, and NO! We're not freaking there yet!

sportsfan wrote:

If you have a way to avoid paying debts without filing BK, I'd like to hear it.

Short sales? Foreclosures in non-recourse states? Many debt restructurings are done outside bankruptcy. Happens all the time.

This is a global bubble...China is going down next...in serial RE busts...fueled by international banking regulations and capital requirements as well as national policies...so it's a little more complex after all...since some of the regs are out of the national realm...such as Basel II and proposed international regulations coming from the G20 Pittsburgh meeting...the international banking network and its aggregate risk needs to be unraveled...

some investor guy wrote:

I have been looking at what would happen if you had a one year tax special. Pay off your mortgage in full and get a tax deduction for the first $100k of paydown.

In the present environment, I don't think there would be many takers. Allen's approach is economically much more rewarding. Your approach should have been proposed a long time ago and private debt wouldn't be at the stifling levels it is today.

Well put, Rich. This is precisely why I've been a dollar bear since early '02. Fiat means nothing without institutional and national prestige, and it didn't take a genius to see which way that was going against 65 cent swiss francs and $270 .

greenchutes wrote:

That's what it is for.

bullshit

the ignore button is for weaklings not in possession of the conviction of their principles