Wake Up, Get Angry, DO SOMETHING - Spitzer, Fed, the F. Fathers, Economy and Bush

[Scorpvenom]

*edit* I realize this is a long post but I hope some of you find it a worthwhile read. I've posted a very interesting article about the real reason for Eliot Spitzer's demise and a youtube video that explains the current market situation pretty well (I'd ignore the first four minutes dealing with Cramer but that's up to you). The link and the video are in my second post for those that wish to read those.

WAKE UP We are surrounded by charlatans, mass mis-information from the media, corrupt politicians on a larger scale than at anytime in the history of America, and a government run by said politicians whose motive is simple: Accumulate as much power as possible by manipulating the public into becoming docile, complacent, subserviant cattle with no hope. All the while, these politicians are making as much money as possible at expense of American lives, American treasure, American security, and at the expense of the welfare of human beings across the globe. How much money is enough? How many billions of dollars do these people need to satiate themselves? There is no end to their greed and no conscience in their inner being.

My background I am a business admin major and recent college graduate from a very good business program (public - not private). I graduated with a near 4.0 GPA (sex, drugs and rock'n'roll prevented the 4.0 lol). I question everything -- anyone who doesn't is part of the herd.

I had an excellent Finance teacher who really got me interested in the stock market, properly valuing companies using intrinsic valuation methods, and who repeatedly used Warren Buffett as an example of the right way to look at things and invest (and rightly so), etc. While some may scream bull shit, I predicted we would be entering a recession (I didn't know exactly when at the time and technically, we haven't meet the definition yet, but we will shortly) over a YEAR ago based on the EXACT reasons that we are in one now (mortgage securitization market collapse, subprime mortgage fiasco, corrupt lenders, hedge fund collapses, a weakening dollar, etc. and now a credit crisis). I also feared this could be one of our WORST recessions ever (the worst since the Great Depression -- now top economists including Greenspan have suggested as much over the past couple weeks that things could become that bad).

Why am I saying all this? I'm not some internet tough guy that lacks an education and is re-hashing what I've heard on the news and other places (although some of it will invariably be what others have said). I've THOUGHT these things through and I've done research. Thinking is cool, k? ALWAYS THINK, ALWAYS QUESTION. Reminds me of that Tool song "Third eye" which goes repeatedly in the beginning "think for yourself, question authority"

Concerning my political views, I am moderate with a republican leaning. G.W. Bush is the worst president in the history of the United States (I'm a history buff and I'm not basing this on the fact that I am in my mid-20s and I only remember Bush Sr., Clinton, and Bush Jr. I'm comparing him to all presidents. Nor am I basing this on the fact that far left pundits thinks so as well).

In short, I'm not someone you would expect to post the below information (links in my 2nd post). Also, concerning the Jim Rogers thread that is going on (he is a very, very smart guy and is one of the lone voices on CNBC, bloomberg news, et. al. who is speaking honestly about the state of our economy, the Fed, and the future). In the long term, he will be proven right about commodity investing and investing in the Far East. He has written two books on commodities and investing in China, which I've ordered and plan to read upon their arrival. While I won't recommend them to others until I read them, I've heard nothing but great things about them.

GET ANGRY It is time for people to get angry, stay angry, and spread the word about how fucking corrupt our government, our media*, and Wall Street truly is.

You Can Do Something Most people are herded along their entire lives and never question anything. They assume the news is trustworthy for the most part, the government isn't all that corrupt, and anyone who suggests otherwise is a loon. It is the responsibility of educated people, free thinkers, and the like to spread the TRUTH concerning the state of our government, our media, and world affairs. Don't just walk up to your ultra conservative Republican friend and say Bush is the devil, the media is all lies, and corruptness is seething from every inch of the American political landscape. If you do so, your friend will again regard you as a loon because foxnews and other media outlets warned me about people like you!! They will listen to anything else you say with a major filter from there on out. You must gradually wake people up from their apathy. Point out glaring contradictions and problems first and subtler ones later.

For example: Hey, Jim! Did you know that Halliburton (Dick Cheney used to be company president) and Carlyle Group (who includes members of Bin Laden's family, Bush Sr. as former CEO, the Saudi Oil family, James Baker, et. al.) received the two largest no bid contracts for the reconstruction efforts in Iraq? Wow, they sure are lucky!

Did you also know they had egregious accounting errors (I'm sure an honest mistake) by charging $25 per can for coke (The exact # escapes me but you get the point)? Also, did you know that after 9-11, in an emergency cabinent meeting, Colin Powell reported that Dick Cheney repeatedly screamed, IRAQ damnit! It was Iraq! Even after he had just received a briefing that in all probability Bin Laden and Afghanistan were the major parties involved? Also, did you know that in 1996, an American think-tank of neoconservative known as newamericancentury.org called for the invasion of Iraq? Upon researching this organization, I realized Cheney, Paul Wolfowitz, and Jeb Bush are members! I thought you'd like to know! We'll talk more later!

Hey Jim! Wow, I noticed something funny. Whenever Hugo Chavez, Vladimir Putin, or Iran's President (fuck spellin his name) rattle their sabres, oil prices spike up immediately! I read this interesting article (don't mention it is the New York Times-- or fox news listeners will ignore you right there) that suggested Putin may be the richest man in the world! He apparently has anywhere from $40 billion or more due to his large stakes in Russian oil companies. (Unless you've been living under a rock) Did you also know that George Bush, Sr. got his career start by working for Shell Oil? I wonder how all this instability in oil producing countries is affecting his pocketbook?

Jim, I was thinking. Since the end of the cold war, military spending was dramatically cut, particularly during the Clinton administration. The defense industry is a several hundred billion dollar industry. That's big! I wonder how they feel about these cuts? Wait, a minute...we have a new threat, terrorism! We can't cut anything else, in fact, the threat is so deadly we must dramatically increase defense spending. Osama bin Laden is highly sophisticated for a man that lives in a cave. Did you also know that George Bush, Sr. before he was president was the Director of CIA? Apparently, when working to stop the invasion of the Soviets into Afghanistan, Osama bin Laden was one of our greatest allies. However, when we left Afghanistan, we left the Afghanis out to dry and he became very, very angry! Luckily, however, his family is still good friends with Bush, Sr. and invests in his old company, Carlyle group. If they can overlook his slights, why can't Osama too? I wonder what would happen if we actually killed Osama Bin LAden? Who would be the face of terrorism then?

Slowly, present people with facts and hope they begin to connect the dots and break out of their apathy!

(Obviously the preceding paragraphs are full of sarcasm but also full of facts.)

The Final Solution If enough people are woken up, removed from their herd complacency, and realize, omfg, maybe we can do something? Maybe some real changes can finally be made to fix this government. However, I fear that voting in the two party system may not work. We may finally need a true, third party alternative. However, so many people are blindly and stupidly led to believe that no third party candidate could ever win so why throw away my vote? At least, this is what the media tells me! This is the type of thinking that has to end for some true change to occur. If enough people get pissed off, stay pissed off, and spread the word. Maybe a real third party candidate can get elected and begin to try to get rid of all these corrupt ass holes that are Washington today.

The media would say I'm just a foolish idealist that has no hope of enacting this change. I say, fuck you very much. Maybe if we all become a little idealistic, we can truly enact some everlasting change. That change starts with me. That change starts with you. That change starts with each and everyone one of us saying, enough is a fucking enough. We aren't listening to you anymore. We are going to listen to ourselves.

* Foxnews is owned by Rupert Murdoch's News Corp. He is a major republican, new owner of the Wall Street Journal, and powerful as fuck. Much of the media manipulation is a result of this man. However, a major caveat, all American media organizations are guilty of media manipulation. Fox is just one of the more egregious examples.

[Scorpvenom]

Listen past the four minute mark (he strikes a lot of themes that are very similar to Jim Rogers):

YouTube - Bear Stearns, Jim Cramer, The Federal Reserve, JP Morgan

Greg Palast » Eliot’s Mess

The $200 billion bail-out for predator banks and Spitzer charges are intimately linked

By Greg Palast
Reporting for Air America Radio’s Clout

March 14th, 2008

[To hear the Podcast of Eliot's Mess read by Palast, click on the link below…]
While New York Governor Eliot Spitzer was paying an ‘escort’ $4,300 in a hotel room in Washington, just down the road, George Bush’s new Federal Reserve Board Chairman, Ben Bernanke, was secretly handing over $200 billion in a tryst with mortgage bank industry speculators.

Both acts were wanton, wicked and lewd. But there’s a BIG difference. The Governor was using his own checkbook. Bush’s man Bernanke was using ours.

This week, Bernanke’s Fed, for the first time in its history, loaned a selected coterie of banks one-fifth of a trillion dollars to guarantee these banks’ mortgage-backed junk bonds. The deluge of public loot was an eye-popping windfall to the very banking predators who have brought two million families to the brink of foreclosure.

Up until Wednesday, there was one single, lonely politician who stood in the way of this creepy little assignation at the bankers’ bordello: Eliot Spitzer.

Who are they kidding? Spitzer’s lynching and the bankers’ enriching are intimately tied.

How? Follow the money.

The press has swallowed Wall Street’s line that millions of US families are about to lose their homes because they bought homes they couldn’t afford or took loans too big for their wallets. Ba-LON-ey. That’s blaming the victim.

Here’s what happened. Since the Bush regime came to power, a new species of loan became the norm, the ‘sub-prime’ mortgage and its variants including loans with teeny “introductory” interest rates. From out of nowhere, a company called ‘Countrywide’ became America’s top mortgage lender, accounting for one in five home loans, a large chunk of these ‘sub-prime.’

Here’s how it worked: The Grinning Family, with US average household income, gets a $200,000 mortgage at 4% for two years. Their $955 monthly payment is 25% of their income. No problem. Their banker promises them a new mortgage, again at the cheap rate, in two years. But in two years, the promise ain’t worth a can of spam and the Grinnings are told to scram - because their house is now worth less than the mortgage. Now, the mortgage hits 9% or $1,609 plus fees to recover the “discount” they had for two years. Suddenly, payments equal 42% to 50% of pre-tax income. The Grinnings move into their Toyota.

Now, what kind of American is ‘sub-prime.’ Guess. No peeking. Here’s a hint: 73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites. Dark-skinned borrowers aren’t stupid – they had no choice. They were ‘steered’ as it’s called in the mortgage sharking business.

‘Steering,’ sub-prime loans with usurious kickers, fake inducements to over-borrow, called ‘fraudulent conveyance’ or ‘predatory lending’ under US law, were almost completely forbidden in the olden days (Clinton Administration and earlier) by federal regulators and state laws as nothing more than fancy loan-sharking.

But when the Bush regime took over, Countrywide and its banking brethren were told to party hearty – it was OK now to steer’m, fake’m, charge’m and take’m.

But there was this annoying party-pooper. The Attorney General of New York, Eliot Spitzer, who sued these guys to a fare-thee-well. Or tried to.

Instead of regulating the banks that had run amok, Bush’s regulators went on the warpath against Spitzer and states attempting to stop predatory practices. Making an unprecedented use of the legal power of “federal pre-emption,” Bush-bots ordered the states to NOT enforce their consumer protection laws.

Indeed, the feds actually filed a lawsuit to block Spitzer’s investigation of ugly racial mortgage steering. Bush’s banking buddies were especially steamed that Spitzer hammered bank practices across the nation using New York State laws.

Spitzer not only took on Countrywide, he took on their predatory enablers in the investment banking community. Behind Countrywide was the Mother Shark, its funder and now owner, Bank of America. Others joined the sharkfest: Goldman Sachs, Merrill Lynch and Citigroup’s Citibank made mortgage usury their major profit centers. They did this through a bit of financial legerdemain called “securitization.”

What that means is that they took a bunch of junk mortgages, like the Grinning's, loans about to go down the toilet and re-packaged them into “tranches” of bonds which were stamped “AAA” - top grade - by bond rating agencies. These gold-painted turds were sold as sparkling safe investments to US school district pension funds and town governments in Finland (really).

When the housing bubble burst and the paint flaked off, investors were left with the poop and the bankers were left with bonuses. Countrywide’s top man, Angelo Mozilo, will ‘earn’ a $77 million buy-out bonus this year on top of the $656 million - over half a billion dollars – he pulled in from 1998 through 2007.

But there were rumblings that the party would soon be over. Angry regulators, burned investors and the weight of millions of homes about to be boarded up were causing the sharks to sink. Countrywide’s stock was down 50%, and Citigroup was off 38%, not pleasing to the Gulf sheiks who now control its biggest share blocks.

Then, on Wednesday of this week, the unthinkable happened. Carlyle Capital went bankrupt. Who? That’s Carlyle as in Carlyle Group. James Baker, Senior Counsel. Notable partners, former and past: George Bush, the Bin Laden family and more dictators, potentates, pirates and presidents than you can count.

The Fed had to act. Bernanke opened the vault and dumped $200 billion on the poor little suffering bankers. They got the public treasure – and got to keep the Grinning’s house. There was no ‘quid’ of a foreclosure moratorium for the ‘pro quo’ of public bailout. Not one family was saved – but not one banker was left behind.

Every mortgage sharking operation shot up in value. Mozilo’s Countrywide stock rose 17% in one day. The Citi sheiks saw their company’s stock rise $10 billion in an afternoon.

And that very same day the bail-out was decided – what a coinkydink! – the man called, ‘The Sheriff of Wall Street’ was cuffed. Spitzer was silenced.

Do I believe the banks called Justice and said, “Take him down today!” Naw, that’s not how the system works. But the big players knew that unless Spitzer was taken out, he would create enough ruckus to spoil the party. Headlines in the financial press – one was “Wall Street Declares War on Spitzer” - made clear to Bush’s enforcers at Justice who their number one target should be. And it wasn’t Bin Laden.

It was the night of February 13 when Spitzer made the bone-headed choice to order take-out in his Washington Hotel room. He had just finished signing these words for the Washington Post about predatory loans:

“Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.”

Bush, Spitzer said right in the headline, was the “Predator Lenders’ Partner in Crime.” The President, said Spitzer, was a fugitive from justice. And Spitzer was in Washington to launch a campaign to take on the Bush regime and the biggest financial powers on the planet.

Spitzer wrote, “When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners the Bush administration will not be judged favorably.”

But now, the Administration can rest assured that this love story – of Bush and his bankers - will not be told by history at all – now that the Sheriff of Wall Street has fallen on his own gun.

A note on “Prosecutorial Indiscretion.”

Back in the day when I was an investigator of racketeers for government, the federal prosecutor I was assisting was deciding whether to launch a case based on his negotiations for airtime with 60 Minutes. I’m not allowed to tell you the prosecutor’s name, but I want to mention he was recently seen shouting, “Florida is Rudi country! Florida is Rudi country!”

Not all crimes lead to federal bust or even public exposure. It’s up to something called “prosecutorial discretion.”

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.
Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.

Or maybe we should say, 'indiscretion.'

************
Greg Palast, former investigator of financial fraud, is the author of the New York Times bestsellers Armed Madhouse and The Best Democracy Money Can Buy.

[Zerai]

Oh nvm. I should have read farther.

[Zistrix]

Originally Posted by Scorpvenom

*edit* I realize this is a long post but I hope some of you find it a worthwhile read. I've posted a very interesting article about the real reason for Eliot Spitzer's demise and a youtube video that explains the current market situation pretty well (I'd ignore the first four minutes dealing with Cramer but that's up to you). The link and the video are in my second post for those that wish to read those.

WAKE UP We are surrounded by charlatans, mass mis-information from the media, corrupt politicians on a larger scale than at anytime in the history of America, and a government run by said politicians whose motive is simple: Accumulate as much power as possible by manipulating the public into becoming docile, complacent, subserviant cattle with no hope. All the while, these politicians are making as much money as possible at expense of American lives, American treasure, American security, and at the expense of the welfare of human beings across the globe. How much money is enough? How many billions of dollars do these people need to satiate themselves? There is no end to their greed and no conscience in their inner being.

My background I am a business admin major and recent college graduate from a very good business program (public - not private). I graduated with a near 4.0 GPA (sex, drugs and rock'n'roll prevented the 4.0 lol). I question everything -- anyone who doesn't is part of the herd.

I had an excellent Finance teacher who really got me interested in the stock market, properly valuing companies using intrinsic valuation methods, and who repeatedly used Warren Buffett as an example of the right way to look at things and invest (and rightly so), etc. While some may scream bull shit, I predicted we would be entering a recession (I didn't know exactly when at the time and technically, we haven't meet the definition yet, but we will shortly) over a YEAR ago based on the EXACT reasons that we are in one now (mortgage securitization market collapse, subprime mortgage fiasco, corrupt lenders, hedge fund collapses, a weakening dollar, etc. and now a credit crisis). I also feared this could be one of our WORST recessions ever (the worst since the Great Depression -- now top economists including Greenspan have suggested as much over the past couple weeks that things could become that bad).

Why am I saying all this? I'm not some internet tough guy that lacks an education and is re-hashing what I've heard on the news and other places (although some of it will invariably be what others have said). I've THOUGHT these things through and I've done research. Thinking is cool, k? ALWAYS THINK, ALWAYS QUESTION. Reminds me of that Tool song "Third eye" which goes repeatedly in the beginning "think for yourself, question authority"

Concerning my political views, I am moderate with a republican leaning. G.W. Bush is the worst president in the history of the United States (I'm a history buff and I'm not basing this on the fact that I am in my mid-20s and I only remember Bush Sr., Clinton, and Bush Jr. I'm comparing him to all presidents. Nor am I basing this on the fact that far left pundits thinks so as well).

In short, I'm not someone you would expect to post the below information (links in my 2nd post). Also, concerning the Jim Rogers thread that is going on (he is a very, very smart guy and is one of the lone voices on CNBC, bloomberg news, et. al. who is speaking honestly about the state of our economy, the Fed, and the future). In the long term, he will be proven right about commodity investing and investing in the Far East. He has written two books on commodities and investing in China, which I've ordered and plan to read upon their arrival. While I won't recommend them to others until I read them, I've heard nothing but great things about them.

GET ANGRY It is time for people to get angry, stay angry, and spread the word about how fucking corrupt our government, our media*, and Wall Street truly is.

You Can Do Something Most people are herded along their entire lives and never question anything. They assume the news is trustworthy for the most part, the government isn't all that corrupt, and anyone who suggests otherwise is a loon. It is the responsibility of educated people, free thinkers, and the like to spread the TRUTH concerning the state of our government, our media, and world affairs. Don't just walk up to your ultra conservative Republican friend and say Bush is the devil, the media is all lies, and corruptness is seething from every inch of the American political landscape. If you do so, your friend will again regard you as a loon because foxnews and other media outlets warned me about people like you!! They will listen to anything else you say with a major filter from there on out. You must gradually wake people up from their apathy. Point out glaring contradictions and problems first and subtler ones later.

For example: Hey, Jim! Did you know that Halliburton (Dick Cheney used to be company president) and Carlyle Group (who includes members of Bin Laden's family, Bush Sr. as former CEO, the Saudi Oil family, James Baker, et. al.) received the two largest no bid contracts for the reconstruction efforts in Iraq? Wow, they sure are lucky!

Did you also know they had egregious accounting errors (I'm sure an honest mistake) by charging $25 per can for coke (The exact # escapes me but you get the point)? Also, did you know that after 9-11, in an emergency cabinent meeting, Colin Powell reported that Dick Cheney repeatedly screamed, IRAQ damnit! It was Iraq! Even after he had just received a briefing that in all probability Bin Laden and Afghanistan were the major parties involved? Also, did you know that in 1996, an American think-tank of neoconservative known as newamericancentury.org called for the invasion of Iraq? Upon researching this organization, I realized Cheney, Paul Wolfowitz, and Jeb Bush are members! I thought you'd like to know! We'll talk more later!

Hey Jim! Wow, I noticed something funny. Whenever Hugo Chavez, Vladimir Putin, or Iran's President (fuck spellin his name) rattle their sabres, oil prices spike up immediately! I read this interesting article (don't mention it is the New York Times-- or fox news listeners will ignore you right there) that suggested Putin may be the richest man in the world! He apparently has anywhere from $40 billion or more due to his large stakes in Russian oil companies. (Unless you've been living under a rock) Did you also know that George Bush, Sr. got his career start by working for Shell Oil? I wonder how all this instability in oil producing countries is affecting his pocketbook?

Jim, I was thinking. Since the end of the cold war, military spending was dramatically cut, particularly during the Clinton administration. The defense industry is a several hundred billion dollar industry. That's big! I wonder how they feel about these cuts? Wait, a minute...we have a new threat, terrorism! We can't cut anything else, in fact, the threat is so deadly we must dramatically increase defense spending. Osama bin Laden is highly sophisticated for a man that lives in a cave. Did you also know that George Bush, Sr. before he was president was the Director of CIA? Apparently, when working to stop the invasion of the Soviets into Afghanistan, Osama bin Laden was one of our greatest allies. However, when we left Afghanistan, we left the Afghanis out to dry and he became very, very angry! Luckily, however, his family is still good friends with Bush, Sr. and invests in his old company, Carlyle group. If they can overlook his slights, why can't Osama too? I wonder what would happen if we actually killed Osama Bin LAden? Who would be the face of terrorism then?

Slowly, present people with facts and hope they begin to connect the dots and break out of their apathy!

(Obviously the preceding paragraphs are full of sarcasm but also full of facts.)

The Final Solution If enough people are woken up, removed from their herd complacency, and realize, omfg, maybe we can do something? Maybe some real changes can finally be made to fix this government. However, I fear that voting in the two party system may not work. We may finally need a true, third party alternative. However, so many people are blindly and stupidly led to believe that no third party candidate could ever win so why throw away my vote? At least, this is what the media tells me! This is the type of thinking that has to end for some true change to occur. If enough people get pissed off, stay pissed off, and spread the word. Maybe a real third party candidate can get elected and begin to try to get rid of all these corrupt ass holes that are Washington today.

The media would say I'm just a foolish idealist that has no hope of enacting this change. I say, fuck you very much. Maybe if we all become a little idealistic, we can truly enact some everlasting change. That change starts with me. That change starts with you. That change starts with each and everyone one of us saying, enough is a fucking enough. We aren't listening to you anymore. We are going to listen to ourselves.

* Foxnews is owned by Rupert Murdoch's News Corp. He is a major republican, new owner of the Wall Street Journal, and powerful as fuck. Much of the media manipulation is a result of this man. However, a major caveat, all American media organizations are guilty of media manipulation. Fox is just one of the more egregious examples.

Oops, nevermind. I thought your title said "Kfed" in it.

[Scorpvenom]

GREG PALAST IS OBVIOUSLY A LIBERAL NUT!!! FOXNEWS TOLD ME SO!!!

'A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murder is less to fear.' - Marcus Tullius Cicero

Also, please take note, the federal reserve is an independent CORPORATION and is not an actual part of the Federal government.

[Arbitrary]

Here’s how it worked: The Grinning Family, with US average household income, gets a $200,000 mortgage at 4% for two years. Their $955 monthly payment is 25% of their income. No problem. Their banker promises them a new mortgage, again at the cheap rate, in two years. But in two years, the promise ain’t worth a can of spam and the Grinnings are told to scram - because their house is now worth less than the mortgage. Now, the mortgage hits 9% or $1,609 plus fees to recover the “discount” they had for two years. Suddenly, payments equal 42% to 50% of pre-tax income. The Grinnings move into their Toyota.

I have had to explain this to so many people who think it is the fault of the family for getting a loan they couldn't afford.

These higher risk loans had a purpose. They were for people with bad credit that were still probably ok risks and they gave people an opportunity to fix their credit and then refinance later.

These loans had a lower than normal failure rate for years and then were handed out in increasingly larger numbers. Tons of people had bad loans, home prices inflated, and the failure rate started to rise up to the previously accepted normal level. With the devaluation of those properties (that were never worth the sticker price) and the increasing defaults the actual good risks who didn't do anything wrong can't even refinance their loans.

Which leads to more defaults, more devaluation of property, and a greater difficulty in getting a loan.

[AladainAF]

I have had to explain this to so many people who think it is the fault of the family for getting a loan they couldn't afford.

I'm confused by your quote. It IS the fault of the family for getting a loan they couldn't afford.

Newsflash: Never, ever, ever, ever, ever, ever get an ARM or a non-Fixed rate mortgage unless you can 100% guarantee you will not be in the home at the time the rate changes.

[Arbitrary]

I'm embedding Scorp's vid because of how amazing it was. Also included is part 2 where evidence is provided that Jim Cramer's buy Bear Stearns call was deleted.

[AladainAF]

Cramer dropped the ball for sure. However, he is correct that he cant tell everyone "Get out get out!" Think of it this way. What if you worked for company X, and then one day Jim Cramer decides to go on the air in front of the american people and say "Company X is doing horrible, and they are going to be worthless soon, GET OUT GET OUT GET OUT *scream some, throw things*". He could potentially be sued by all of the employees who lose millions combined because the stock tanks, and then the company goes out of business, regardless of how bad of a shape the company X was in before.

NO ONE is perfect on the stock market. People screw up all the time. Its your responsibility, and not Jims, to do your own homework. Hes there for just a television show, just like all the other shows on CNBC, except the ones that are on actually -during- the market open.

[Arbitrary]

Originally Posted by AladainAF

I'm confused by your quote. It IS the fault of the family for getting a loan they couldn't afford.

The higher risks loans have a legitimate purpose for certain families with bad credit who may still be good risks. I'm only excusing blame from those specific people.

Like I said, the failure rate on those loans (and the investments the banks packaged and sold) was actually below average for years so that's great. The system was working beautifully. You get your loan, fix your credit, refinance, and everything is roses. As the housing market inflated, the number of these loans increased, and the failure rate shot up, the previously good risks are getting fucked right along side the total morons and that just isn't right.

[Tripamang]

Originally Posted by AladainAF

Cramer dropped the ball for sure. However, he is correct that he cant tell everyone "Get out get out!" Think of it this way. What if you worked for company X, and then one day Jim Cramer decides to go on the air in front of the american people and say "Company X is doing horrible, and they are going to be worthless soon, GET OUT GET OUT GET OUT *scream some, throw things*". He could potentially be sued by all of the employees who lose millions combined because the stock tanks, and then the company goes out of business, regardless of how bad of a shape the company X was in before.

NO ONE is perfect on the stock market. People screw up all the time. Its your responsibility, and not Jims, to do your own homework. Hes there for just a television show, just like all the other shows on CNBC, except the ones that are on actually -during- the market open.

What about all the people who lost all their money by staying in? They could just as easily sue him. I'm not really what your point is, if a stock/company is tanking everybody loses, really in the end the company should be looking out for it's investors not keeping the sham going.

From my perspective the US economy has been heading towards tanksville for a long time. The Canadian government in the early 90's decided that they had to balance their budget, it was the only way that we were going to be sustainable or even survive when/if things went to shit. We now sit with a comfortable level of over taxation and a nice amount of money in reserves if shit does hit the fan.

Out of all this the thing I'd be most pissed about as an American citizen would be the fact that the banks were allowed to usurp the laws put in place to protect you from just these kinds of situations. I guess how many people have to lose their home before people start freaking out and taking to the streets saying "Why the did this happen to me?"

You just can't borrow forever and never balance the budget and expect things to work out, US government after US government has been making it the next persons problem to sort out the financial situation and no one has stepped up. There is going to be a major correction, Canada is probably going to tank with it but maybe not as bad.. it was coming.. it was in the works. You can't borrow money from thin air and inflate at your own discretion and expect this not to happen. I'm pretty sure I read an article just shortly after Canada balanced it's budget with Alan Greenspan using Canada as an example of what would have to happen in the US if they wanted to stay in their current financial power house position, I guess nobody was listening.

Funny lots of people are willing to listen now..

[Gigfc]

Cliffs?

[GrobbeeTrull2.0]

Everyone's still blaming the victims here, but no one says a word about the actions of the federal government to bail out the banks but watch the homeowners flounder still.

Consolidating power, as it were.

[Soriak]

The problem with the housing market is that people used their houses as an investment - not just a place to call home and stay permanently.

At that point it's just an extremely highly leveraged investment, ie little equity and a lot of debt. You can do that with stocks as well, except the people who got no-downpayment mortgages would never qualify for it. The issue is that nobody in the legislature looked at the macroeconomic consequences of allowing such highly leveraged investments.

So while each individual is responsible himself for getting foreclosed, the effect of large scale foreclosures is something congress has to accept blame for. It's not unreasonable to require a downpayment of 10%-20% so that the person buying the house has a stake in it as well.

Also, please take note, the federal reserve is an independent CORPORATION and is not an actual part of the Federal government.

You should take a look at the history of central banks (not just in the US) - there's a very good reason why it is this way in a lot of countries. (and should be that way in every country) People who set monetary policy can never be elected officials or be at risk of losing their jobs for their decisions. A central bank needs to be independent of the politics, or it stops being effective.

Just imagine if the President could set monetary policy. Since a lower interest rate means cheaper mortgages and easier access to credit and lower rates, there's no way economics would beat politics in the decisions.

[Soriak]

I think some news articles are leaving people with what I believe to be the wrong impression - namely that this is a crisis of liquidity. (ie banks/investors don't have cash on hand) However, I think that's not the real issue - the real problem is entirely one of confidence.

Basically, money is available but nobody trusts the others enough to loan them money at a reasonable rate. The symptoms would be the same, but simply cutting the interest rate wouldn't do much good - and we see that it hasn't done anything so far.

If we think this is true, it'd at least rule out a hands-off approach. A lack of confidence is a huge market failure that likely wouldn't self-correct for a very long time, leaving the country (and potentially the global economy) in a strong recession/depression for years. That's really not an option. So it's only a question of WHAT can be done, not IF anything should be done. I guess there are hundreds of economists around the world working on the "what" and some progress has been made already.

I'm very worried about upcoming downgrading of AAA debt. That's likely going to lead to billions of dollars in write-downs again and cause right another crisis of confidence. The Fed seems to try and prevent this by allowing banks to offload that onto the fed itself. That could work. (the fed doesn't have to publish downgrades, banks do)

I think people need to get over the principle of fairness - who cares if it's fair? Some companies may get bailed out that shouldn't be and it's likely going to cost the taxpayer money... you could waste money worse. Fairness doesn't do you any good if unemployment rises, you spend the next 5 years looking for a job and people still get thrown out of their houses.

If it comes down to spending a couple hundred billions and getting out of this with a blue eye versus spending years in a recession (or worse a depression) it's a pretty simple choice. Oh yeah: failing banks would also mean the FDIC got stuck with a huge bill. That's going to cost the taxpayer also.