It's Happening

[legion]

Bad lending practices are finally pulling down equity markets. I wouldn't be surprised if this causes a recession.

With the Dems in charge, I would expect lots of investigations and "big business" getting the blame. Ironically, the only effective solution would be to severly curtail lending to "high risk" borrowers--the exact people the Dems usually try to secure handouts for.

[kach22i]

High-Risk might also mean "new money" from self employed people taking on loans which could never be paid back.

Interest Only Mortgage Calculator
http://www.mortgageloan.com/calculator/interest-only-mortgage-calculator

[stevepaa]

Well, big busines is to blame. What's new? Everyone trying to compete for good quarterly earnings. New and creative financing schemes are offered to people with poor ratings.

By promoting a curtailing of loans, you are advocating more government control. Something Dems get lambasted for all the time.

[turbo6bar]

such a sourpuss.

[strupgolf]

I heard today the the state of New York is considering helping out people who got "stuck" with ARM loans. When will our government stop trying to be everything to everybody. Another "tea party" coming up.

[legion]

Originally Posted by stevepaa

Well, big busines is to blame. What's new? Everyone trying to compete for good quarterly earnings. New and creative financing schemes are offered to people with poor ratings.

By promoting a curtailing of loans, you are advocating more government control. Something Dems get lambasted for all the time.

I think you misunderstand. I'm stating what I expect the Dems in Congress to do.

I personally think that the banks took the risk, they should be stuck with it.

And if ignorance of the law is no excuse for breaking it, then ignorance of personal finances shouldn't be an excuse for getting out of bad decisions. In other words, the lenders and borrowers are equally culpable.

[Moses]

The sky is falling!

The Dow dropped 300 points in a day!

(Look at the past 12 months Dow performance)

[competentone]

Don't worry, before things get too bad, the Fed will turn the "printing press" on full blast and bail out everyone in trouble.

The responsible people will pay for others' irresponsibility through high price inflation -- and low real returns on investments and savings.

[turbo6bar]

Printing press full blast = horde gold

Wish I knew the answer. It sure seems like stagflation or runaway inflation is a possibility.

[Moses]

Originally Posted by turbo6bar

Printing press full blast = horde gold.

I think Tabs already has most of the gold.

[Superman]

Originally Posted by stevepaa

Well, big busines is to blame. What's new? Everyone trying to compete for good quarterly earnings. New and creative financing schemes are offered to people with poor ratings.

By promoting a curtailing of loans, you are advocating more government control. Something Dems get lambasted for all the time.

There may be some difference between the feedback you were hoping for and what you got, legion, but don't interpret your confusion with ignorance on Steve's part. Indeed, we liberals get a nice kick out of the very frequent irony on the Board. You conservatives complain about how much you detest gubmit while with the same breath descriving the new services you want the gubmit to do. Immigration is one of the newest examples.

If you're suggesting that borrowers are at least partially to blame (or wholly for that matter), then you'd get agreement from almost everyone. Including me. But if you're not noticing that the financial greed of corporations is a big part of the financial problems consumers have.......then you're not paying attention.

[turbo6bar]

Originally Posted by Moses

I think Tabs already has most of the gold.

'dula and bling go hand in hand.

[legion]

Originally Posted by Superman

There may be some difference between the feedback you were hoping for and what you got, legion, but don't interpret your confusion with ignorance on Steve's part. Indeed, we liberals get a nice kick out of the very frequent irony on the Board. You conservatives complain about how much you detest gubmit while with the same breath descriving the new services you want the gubmit to do. Immigration is one of the newest examples.

If you're suggesting that borrowers are at least partially to blame (or wholly for that matter), then you'd get agreement from almost everyone. Including me. But if you're not noticing that the financial greed of corporations is a big part of the financial problems consumers have.......then you're not paying attention.

Supe, you will hear no disagreement from me on this matter.

Read my very first post on my Real Estate thread. It was about loan officers doctoring loan applications without the applicants knowledge to keep their numbers up. That behavior is criminal IMO. The lenders themselves loosened their standards to the point that nearly anyone could get a loan. They will be ultimately punished when their loan portfolios aren't worth the paper they are printed on. I expect many lenders to go belly-up.

[MBAtarga]

Originally Posted by Moses

I think Tabs already has most of the gold.

Well, all the silver spoons anyway...

[legion]

BTW, what I was getting at was that the markets are finally starting to realize what we have been talking about for two years.

And Congress will react by pandering to ignorant borrowers. I honestly think this one is too juicy and Reps would probably do much the same.

[Superman]

Usually when I kick guys in the nuts, they get mad. You're doing pretty well, Legion. If you continue to keep your cool, I might pick on someone else. For a change.

[Rick Lee]

The subprime implosion was not caused by crooked loan officers. They have always existed and always will. But people getting 100% financing on houses they could ill afford and betting solely on endless appreciation to refinance their way out of their ARM's or using their equity as an ATM is what's bringing the industry to its knees. Investors were racing each other to come up with ever more lenient and creative underwriting guidelines and then telling mortgage brokers to make such loans and they'd buy them from them. The mortgage shops going under are doing so because of liquidity problems stemming from having to buy back so many loans for bad performance. The trickle down effect, aside from stinging the hell out of big investors, is that more foreclosures on the market drive down everyone's values and credit getting more scare cuts into the pool of buyers for those houses on the market. You may find it hard to believe, but a lot of what caused all this was 100% legal and plenty of it was encouraged by the gov't. through constant warnings about not giving enough loans to deadbeats and low income folks - translation: minorities and immigrants, aka government-favored grievance groups. We're all paying for it now.

[widgeon13]

Rumored correction coming to pass, may be more tomorrow.

[Porsche-O-Phile]

Yep, I think I'm gonna' put some $$$ into gold.

[the]

Originally Posted by Moses

The sky is falling!

The Dow dropped 300 points in a day!

(Look at the past 12 months Dow performance)

200 points here, 300 points there, before you know it you are in the 12,000s, then the 11,000s.