The fit hits the shan on Wall Street
Welcome to another Black Monday.
Or rather, Red Monday — red for all the hemorrhaging taking place on Wall Street.
Lehman Brothers is filing for bankruptcy; Bank of America Corp. is buying Merrill Lynch & Co. For once, they didn’t get straight-out bailouts from Washington. But the Fed took several actions “to provide additional support to financial markets, including enhancements to its existing liquidity facilities.”
And there may be more on the way. U.S. automakers are pushing for $25 billion in government-backed low-interest loans. Naturally, the auto industry denies it is asking for a bailout, but taxpayers will be on the hook if the automakers fail to repay the loan. Insurance giant AIG also wants a government hand-up, if not a direct handout.
And now is the time where I get to say, “See, I told you so.” From March 17, 2008, as the Bear Stearns bailout was underway:
I warned from the start of stimulus-palooza that we were headed in this direction. Both political parties support these massive government interventions–from empowering judges to meddle with private contracts to backing billions in mortgage securities. This isn’t the last step. It’s the first. And you know who will end up getting screwed: The responsible and the frugal.
***
More from Business Week:
“Mondays better not get any more manic than this. Wall Street expected to spend today trying to contain the damage from a bankruptcy filing by Lehman Brothers (LEH) after the fourth-largest investment bank failed to find a buyer for its broken balance sheet over the weekend.
And that’s not all. There’s the distressed sale of Merrill Lynch (MER) to Bank of America (BAC) for approximately $44 billion, and a radical restructuring plan for American International Group (AIG), the insurance giant which became a major player in mortgage-related securities and derivatives.…The plunging prices of Merrill and AIG raised the possibility that the market had figured out that the two are harboring big new losses from mortgage-linked securities. Worse, if Merrill and AIG lost a lot of capital, Wall Street sees fewer ways to replace that capital since the Fannie and Freddie deals. Terms of the government’s takeovers of Fannie and Freddie trashed the value of their preferred stock.
Until now, preferred stock has been a prime tool for daring investors to inject new capital into a company needing rehabilitation. The Fannie and Freddie deals indicated that preferred investors could lose big, along with common stock investors, in distressed takeovers. Both Merrill and AIG raised new capital early this year by issuing securities similar to preferred. Lehman also raised money from preferred investors, who are now likely to be wiped out in a bankruptcy. So now big issues of preferred securities may not be available to fill holes in balance sheets from new losses.
After a bad week, a working weekend, and a manic Monday, Wall Street can only hope the credit storm is at its worst.
***
Update: Lehman Bros. associates gave far more to Democrats than to Republicans. Just something to remember when Democrats blame this mess on the Bush Administration. (And now that The One is weighing in, let’s not forget this either.)
See what others have said
Note from Michelle: This section is for comments from michellemalkin.com's community of registered readers. Please don't assume that I agree with or endorse any particular comment just because I let it stand. A reminder: Anyone who fails to comply with my terms of use may lose his or her posting privilege.
Trackbacks
- Badger Blogger » Blog Archive » It’s going to be an interesting day on Wall Street
- “Barack Obama is neck deep in money from issuers of subprime loans…” « Gunservatively!
- The Federal Reserve, Great Depressions, and Socialism « I Took The Red Pill (and escaped the Matrix)
- Michelle Malkin » Black Monday update: AIG tries to borrow its way out of debt
- Corruption You Can Believe In: Failed Sub Primes and Mortgage Fraud Lendors Funneled Money to Dodd & Obama the Most. Fannie & Freddie Gave $200 Million to Partisans-Most Went to Democrats! Dodd, Obama Among Top Recievers. Republicans Attempted to
- Corruption You Can Believe In: Failed Sub Primes and Mortgage Fraud Lendors Funneled Money to Dodd & Obama the Most. Fannie & Freddie Gave $200 Million to Partisans-Most Went to Democrats! Dodd, Obama Among Top Recievers. Republicans Attempted to
- Corruption You Can Believe In: Failed Sub Primes and Mortgage Fraud Lendors Funneled Money to Dodd & Obama the Most. Fannie & Freddie Gave $200 Million to Partisans-Most Went to Democrats! Dodd, Obama Among Top Recievers. Republicans Attempted to
- Disingenuous Dems Lying About Credit Crisis « The Dude’s Blog
- BizzyBlog » Latest Pajamas Media Column (’Very Different Economic Times in Red vs. Blue States’) Is Up; Some Follow-ups
- Calanda-Technology.Com » Blog Archive » Latest Pajamas Media Column (’Very Different Economic Times in Red vs. Blue States’) Is Up; Some Follow-ups
- Calanda-Technology.Com » Blog Archive » Latest Pajamas Media Column (’Very Different Economic Times in Red vs. Blue States’) Is Up; Some Follow-ups, Including ‘Barney’s Rubble’
Comments
You must be logged in to post a comment.
Categories: Subprime crisis
Right Pundits
» Joe Lieberman: Fort Hood Shooter Is ‘Home-Grown Terrorist’
Legal Insurrection
» Bruni de la Motte for Health Care CzarRiehl World View
» Obama: No Military Death Shall Go UnexploitedLegal Insurrection
» In The End: No Public Option, No Abortions, No Pelosi, No ReidThe Other McCain
» Paralysis by analysisThe Powers That Be
» Obama: ‘Don’t Jump to Conclusions’ About Ft. Hood; Immediately Jumps to ConclusionsLegal Insurrection
» NY Times Names Names
Nothing but sunshine and rainbows since the Democrats took over in 2006. Yet somehow, for some reason, I am expecting the crying out of a million Liberals and Democrats that same `ol screed…”It’s Bush’s Fault”
Remember all this.
(Was I really first?)
For all of us on the “Suck It Up” bandwagon, this is it. This is what we’ve asked for. Here is where the banks and finance companies will finally get their just desserts. I’m actually happy this moment finally came.
Now, I’ll make my prediction:
All those deranged Lefties (you know; Pelosi, the Kennedys, Reid, Biden, their ilk, and even the Anointed One) will be calling for bailing out Wall Street today. They will flip on their position of punishing companies who do wrong, and even promote corporate welfare, but just in this case.
And the MSM will give them a pass on whatever they say, but will pounce on any Republican, regardless of their position.
Like going to the doctor, today we will finally address the pain we have been masking with pain killers for a long time. Unfortunately, the treatment is going to be complex, the damage will be extensive, and we will lose functionality for a while (and may even risk our financial death).
Government intervention… isn’t it grand?
I can’t wait for the day when they control my healthcare “options.”
Someone needs to teach these private sector entities “how to fish”. Can’t keep handing them a free blue-plate seafood platter every time their belly growls.
Corporate Greed and Malfeasance, plain and simple, goes unpunished once again …
They refuse to accept the fact that any business profile shows periods that go up and down with regularity …
Instead of dealing with those facts they spend their time continually looking for new ways to “cook the books” so they keep up an appearance of profitability for the “shareholders” and to “H” with the truth about their business …
Realistically no business goes up in value forever … but they work hard to give that false appearance to attract more investors … instead of working harder to make their business stronger and more flexible to handle the normal fluctuations of the economy …
I’m surprised he even needed a curriculum vitae; isn’t affirmative action enough?
Wrong thread; I hate Mondays…
In many respects, it is “Bushs Fault.” He encourage lending to people who could not afford it. He encouraged loans to Illegal Aliens. And he doesn’t appear to be stopping bail out after bail out.
Just keep those “R” Jerseys on real tight. I’ll be voting Chuck Baldwin. The two party system is broken, I can no longer enable more of the same.
gov’t intervention is how all this started in the first place. the gov’t, mandating that loans be set aside for undesirable loan seekers, or risk of being sued for discrimination into oblivion, set the stage for this. though Lehman’s problem isn’t residential loans, but commercial, it’s the residential loan shock that’s reverberated throughout the market.
speaking of residential loans, is there a way to find out how many of the loans in foreclosure were loans to illegals? there has to be some connection between CA having the highest foreclosure rate, and illegals getting loans.
Today—Everybody call your senator and congressman-today
NO MORE BAIL-OUTS, NO MORE BACKING, NO MORE DISCOUNT WINDOW.
TODAY–TODAY
I couldn’t be more delighted about Lehman Bros. taking it in the shorts. They bought the business where my father used to work, but had not clue one about the industry they were getting into, they simply bought it because the beancounters at LEH saw it had an impressive balance sheet.
Well, they mismanaged it so badly, that they wound up having to virtually give it away to the next owners at a fire sale price, not to mention running the company’s good reputation into the ground in the process.
Karma can be sweet.
It’s time to stop the handouts. Mismanagement and handing out loans to those who couldn’t or wouldn’t pay is now going to be put on the backs of hard working people. I am so tired of my taxes going to bailouts whether corporate or individual.
Not a good day.
Profanity. You complain about four letter words in liberal blogosphere, but somehow fit and shan don’t bother you. It’s a double standard.
Immorality. You support Palin for her Christian morals. Yet Palin has not sailed that close to her supposed beliefs. She got pregnant before marriage — something that seems to run in the family. She lies constantly about her political actions, in Troopergate, on the bridge to nowhere, etc.
If you want to be hard edged right wing judgementalists, fine. Grow a pair (an unfortunate phrase that comes up here every day) and look at the people you associate with.
So both the GOP and the Dems create a “bi-partisan compromise” to make it harder for mortals to declare bankruptcy and then turn around and start giving money way to corporate idiots and crooks who have bankrupted their own multi-billion dollar businesses.
In many respects the government made the problem and will now make it worse. I concur that the government is broken and needs to be fixed. The way to fix it is to shut down no less than 80% of the federal government.
all I can say is, it’s a full time job being lgm
MM wrote:
Same for AIG – they had their hands elbow deep in Boston’s Big Dig (a black hole if ever there was one), and contributed to JFK II’s presidential bid in ‘04 (and no doubt to his bid for re-election to the Senate this year).
Someone woke up on the wrong side of the bed this morning..
May God help us all. The next four years will be a replay of Jimmy Carter unless some of the adults in DC do not step up.
My dad always told me to not sell stocks.
Well, fortunately, about three years ago, I sold my AIG stock as well as my children’s.
Now I only have international stock investments.
lgm , you seem to miss the allusion.
From Webster-Merrian inline dictionay
So this obviously means that the Shan will become fit and rise up in Myanmar (Burma). Retribution and come-uppance can be sweet. Learn your history better next time – Profanity my a**!
Fit and shan. I don’t think they mean what you think they mean.
Wow, clearly nobody ever makes this mistake. Do you want to burn her now? Do you even know anything about christianity?
So far the only lies here have been from the left.
And of course you weren’t being judgemental about the preganacy thing. Did you wake up on the wrong side of the bed today or did you just look at the polls?
Methinks it is time to pull my CD held by Bank of America. And no, I won’t tell anyone where I bury it…
BTW I bought heavily into bonds 6 months ago.
Oops – inline=online. Dang interweb!!
For LGM: RCP has McCain up 2.1% and that doesn’t count the bradely effect.
Just pop another pill, it will be ok.
Just FYI it’s banks and finance companies that make your way of life possible. No finance companies means no capitalism, no capitalism means welcome to the Third World.
Also keep in mind that these firms employ tens of thousands of people who aren’t “fat cats” and haven’t gotten rich from “cooking the books”. Mostly they go in, do their jobs and serve their clients.
Something like this had to happen, because until the situation came to a head there was no way for it to get better. But to take delight in it or talk about “just desserts” is ignorant and perverse.
lgm: Someday would you please explain what you support? I’m beginning to think that you have no position on anything except that conservative equals bad. Rules are bad. Absolutes are bad.
Further, I’d venture to suggest based on your comments here that deep down, you believe lgm is the center of the universe, that you are the decider of everything.
Please offer something of substance
Well Housewife, you are secure to the first 100K of all your deposits at a bank(thank you FDIC). If you worry, just spread your assets to multiple banks. And don’t forget, the limit (as I was told by multiple bank personnel) is the total for all accounts associated to a SS# at an institute. So savings/checking/money market/cd’s all need to be taken into account.
You betcha, Tarzan, we’ll get right on it LOL…
Saukeye – I submit this in fact is PART of the problem…it limits personal responsibility of the individual making the deposit. With FDIC backing, the depositor’s only concern is maximizing interest rate. Solid financial standing doesn’t even enter the thought process. Consequently, the incentive system encourages people to ignore risk/return.
Democrats FAILED, Businesses BAILED
ConservativesRuss – lgm is just trying to take the focus away from us discussing what screw ups the Dems are and how they are responsible for this financial mess. Remember with libers, it’s the means justify the ends, not the other way around. He doesn’t have to make any sense to accomplish what he is trying to do. Just move along..nothing to see here.
Huffpo is calling a drop of 2.75% in the dow “black monday”. Drama queens. Its not black anything (which BTW is racisttttt) untill its down at least 5%
Though I am covered by FDIC for the amount of money held in the bank, it worries me that Bank of America is using (essentially) my money to buy a distressed company.
I am not an economist by any stretch of the imagination, nor do I have much of an idea of how Wall Street works, but it seems to me that taking on bad debt is bad.
With Bank of America, I could probably maximize my interest rate by burying my money in a Mason jar.
It depends on how the buyer handles it. If they have good management, they can actualy make alot of money from it.
Unless you’re a shareholder in BAC they’re not using your money. Customer deposits are not used to finance operations.
They’re not taking on bad debt. There are units within companies like Merrill that are now and always have been profitable. That’s what makes it attractive to take over.
Misscheryl – I’ve observed lgm for over a year here. There are a few liberals here who actually have a position once in a while and it’s actually possible to have a discussion of “the issues”. With lgm, I understand his moral superiority prevents him from engaging in rational discussion. It only allows him to be against everything. He did state once that “he wants his country back” – I’m still trying to figure out exactly what he wants back. The word “back” implies that what he desires once existed. My understanding of history doesn’t give me any shining examples of what he seems to desire.
To people like you and me it means that. But to assume that that’s what it means when lgm says it is to assume that he has a clear grasp of language and some kind of coherent thought process.
I am not convinced those are safe assumptions.
Looks like lgm just read a talking points memo, and hurried here to make some comments accordingly.
I didn’t know there were any adults in Washington. Names please, I need names.
I thought we had watch dogs to keep Wall Street from ever folding again, I want to know who poisoned the dogs.
At the risk of being attacked by lgm, I gotta tell you, I am praying hard for America today.
MM kicks ass!!! lgm must be one of those babies that Jill Greenburg made cry. lgm wants to change the fact that Lehman Bros associates gave more money to the Dems than Republicans. Change, change, change, change, change, change, change, change, change, change, change, change, change, change, change, change, change, change.
/s/
José
If the citizenry of the United States is bailing out these enterprises, how come I have yet to receive my stock certificates specifying my ownership stake in said organizations?
sonofdy and James Felix~ Thanks for the explainations! I feel a bit better…now about my mutual funds…
Is it just me or am I the only one who woke up and saw this and nearly cried tears of joy…. now about that fence.
http://news.yahoo.com/s/ap/mccain
Hate to say it but these spoiled little crooks need to be taken to the woodshed, and the worst of them to the Federal Penitentiary. Run these bad actors out of the economy. Take the painful medicine now and let’s get it over with.
LGM, for once come up with a comment with respect to the issue on the thread instead of your version of general liberal pontification. Sometimes you actually have a point I can agree with when you do stay on the issue with respect to a particular thread.
I do find it interesting that now morals are so important for your kind to emphasize when the rest of us were
askedtold to “move on” with respect to Bill Clinton and his scandals- your boy in the whitehouse- when it suits your liberal ilk. Why didn’t your kind care that ferrociously back then, hmmmmm?I hate to say it, but the Fed needs to be completely hands-off on this one. Let capitalism run it’s course. Once the banks’ stocks have tanked a more capable executive will come it and buy it all at a discount and make it great again. Those that can’t will be gone and those that can will be behind the wheel.
So giving house loans to illegals and any other person who walks in with no down payment, or ability to repay — You think that was a bad idea? Then why did Congress pass ADDI 2003?
Look at it this way, how much money would trashing the CAFE rules save the taxpayers? You know, those are the rules that tell automakers they must build roller skates because customers cannot figure out they may no be able to afford a car that gets 10 mpg — So government must force auto makers to build high mileage cars, that no one concerned with being squashed will buy.
And then there is the issue of oil and what the Democrat’s no drill policy is doing to the economy.
Oh yeah. Bambi is out blaming Bush … WOW that’s an original line isn’t it.
this is one HUGE example of government creating laws or policies to “help the poor, and feed the children” and the fast money wharton/harvard wizards abusing the system and EXPECTING if it all falls apart to be bailed out. i build my house or business next to the ocean, and expect fema to cover me should a huricane hit. i invest in risky ventures and i expect to keep the profits and have the government take the loss, and if things really go bad, then bail me out. WHAT HAS OUR WONDERFUL CONGRESS DONE WHILE THIS COUNTRY GOES INTO MELTDOWN? INVESTIGATE BUSH AND HIS APPOINTEES! the chairman of the ways and means doesn’t pay his taxes, half the senate democrats are taking sweetheart deals from countrywide, and other lenders. you make loans to people who can’t pay for those loans (even illegals) and then you take that loan and use it as collateral to borrow money to make other risky loans as if the underlying loan is platinum, and pretty soon you have a ponzi scheme needing a bailout. our government is bankrupt from it’s 50 year policy of trying to keep people from being responsible for their actions. it doesn’t take a village, it takes responsible leadership and no more giving your crying brat a treat to get it to behave, but instead giving it some discipline. life isn’t fair! get over it. there are winners and losers, and the more we confiscate from the winners to give to the losers, the deeper the hole we create. even those bastions of socialism the google boys recognize that government gets in the way of progress so they are creating offshore facilities to avoid government taxes, regulations, and enforcement. i often wondered why microsoft didn’t buy some island and set up it’s own kingdom with it’s own government and rules. it seems google is smarter than microsoft.
The true inflation rate this year is between 7.5% and 10%. These financial institutions need to fail on their own. Government overspending and low interest rates are the problem. We need to let the free market finds it’s balance.
Real issue: Where did all this bad debt come from? Consumer protection laws are supposed to protect people from taking loans they have little chance of paying back. Bush era deregulation and relaxation of regulation allowed lenders to flout these rules and generate a mountain of bad debt. Clinton would not have let it happen.
The auto industry problems were caused by the UAW tactic of targeting one of the Detroit big three in each contract cycle and twisting its arm into a bloated contract. Then the other two would have to sign similar contracts. The pay and benefits for UAW employees rose above what their true value was on the world market. US cars are several thousand dollars above the same car manufactured by car makers not subject to these exorbitant contracts. There is no way that the big 3 can be competitive. Before any bail-out is considered the big 3 should be allowed to get out of the contracts.
I am still wishing the feds had never bailed out New York.
“I certainly don’t fault Sen. McCain for these problems,” Obama said, “but I do fault the economic philosophy he subscribes to.”
Which philosophy would that be, Obama? Capitalism? Yeah, we already know you’re against that.
This can’t be stated enough, so that it is out there in the public discourse, because as sure as there will be an election, the Democrats will try to blame this on President Bush. It won’t work, but they’ll try it.
Hopefully the government’s refusal to bailout Lehman will serve as an example to GM, Ford and Chrysler NOT to count on the public’s dime in solving their inability to deal effectively with the auto union, which is the main source of the big three’s solvency problems.
On September 15th, 2008 at 9:40 am,
I don’t agree with that, but I partially see your point. However, a bank was never intended to be a method of financial gain. It was a safe place to store your money. My grandmother used her mattress – it may have been a better choice. We have had enough institutional failures in the US for most people to never want to be separated from their money again. The last stock market and banking crash led to the FDIC (see this) being created. It provides a reassurance that your money is reasonably safe. If not, most banks would die a quick death (think Schumer and IndyMac). And it is a service I pay for (you know, those pesky service fees each month).
However, I do agree that if you are investment banking for financial gain, then the depositor should assume the whole risk. After all, if you reap all the reward, you should suffer all the risk. That is the personal responsibility part. If I decide to risk my money, then I should not be handheld by the government if the deal goes south, obviously. And when talking of maximizing interest rates, sure, I do that, because the bank is using my money to make more money – and as a greedy capitalist, I want my cut. Of course what I earn in interest per year, is about the same as what I find walking down the street.
Oh Really. You got to be kidding. Fannie Mae was started by a Democratic President. It turned into, along with Freddie Mac a lax and corrupt institution. It had to provide loans to people who had no business buying homes thanks to Democratic politicians who used the FHA loans as an urban renewal plan.
This whole fiasco has been fueled by greed from politicians on both sides of the aisle. Banks were just too happy to oblige, especially those California banks who were competing for give away loans. Add the loans given to illegal aliens who had no business even being here, we have this fiasco.
Don’t tell us what Clinton would do. He was too busy chasing skirts to notice.
Now lets here from MR. Credit Card Hero – Biden.
LGM, the deregulation you cite happened in 1980 and 1982.
http://money.cnn.com/2008/01/30/real_estate/congress_subprime.fortune/
Spoken like a true ignoramus.
Favorite liberal words: Bush! Regulation! Protect People! How about Personal Responsibility? Oh wait, they don’t want that, do they?
I forget – exactly how are the Republicans different than the Democrats these days? I guess while the Democrats give my money to other people, Republicans give my money away to corporations.
Greenspan is the guy who kept rates artificially low, starting in the Clinton administration. When the pot started to boil, he retired.
Too bad the free market is such a bad idea.
lgm – Explain to me again why congress should be involved in regulation? Last I was aware, congress couldn’t even run a restaurant and had to turn it over to the private sector.
What are you talking about? Clinton signed the banking overhaul in 1999! He is the President who signed off on the changes to the laws that allowed this to happen.
FNMA and Freddie Mac had lots of Democrats on the Board with Republicans.
Wake up already! Both parties are in collusion. We’re screwed ‘08.
And the deregulation actualy first happened in 1980 and 1982. Bush was not president then.
Thank you for being on target, LGM. Actually Clinton did contribute to this problem by working with Sen. Phil Gramm (Democrat turned REpublican) by signing the deregulation of the commodities industry in 1999 this is what begat the issue of trading the record number of “interest rate swap securities” that are traded as commodities-they require peopel with a definite math background (like B.S.math degree as a minimum) to even analyze these instruments… and far too many of these instruments slipped into otherwise “safe” portfolios hence causing part of the current credit crisis…the other part being the apparent fact that as long as we have FDIC backing of savings without personal peril applied to bank managers for fraud, we will have bank managers doing stupid things all the time-they’ve got a “soft budget constraint” with government bailouts….Clinton also went along with other formas of deregulation of Glass-Steagall in the nineties leading to the current deregulation/lack of supervision of areas that have existed as financial investemnts and many more that have only popped up within the last few years as part of “financial architecture”. The Fed itself had been bending Glass-Steagall for years before it waas formally recinded in the nineties. Bill Clinton, however did contribute to the problem, LGM.
LGM is right though that the Republicans have also contributed to this mess. Clinton alone cannot be blamed for all that has gone wrong with banking in this country.
Have any of the so-called “smart people” on Wall Street gone to jail yet?
Why not? Oh, I forgot, we live in the era of vulgar socialist capitalism.
Oh I agree, its just a stupid as blaming bush for everything. Nobody held a gun to the borrowers heads either….
I think someone here realizes it’s over for Obama-Biden and is trying desperately to avoid it by positing his usual equivocations, distortions, obfuscations, ad hominems and innuendos on nearly every thread.
You are also correct, sonofdy…I forgot. Far too many people just got stupid/greedy and went for the ARMs without planning for their worst impact.
Thank you
That would be nice along with confiscation of their property to help pay for this mess…and teach a good, penurious lesson
By the time Bush got into office practically all the de-regulation and lack of oversight had already become instituionalized. To blame Bush as instigator would be like blaming the first person to arrive at the scene of the crime scene for what already took place.
Help me out. Instead of raising the mortgage rates, why not leave them where they are for several years and not forcing people to default.??????
Six or eight months ago when Michelle first posted about this, I went on record on here stating that this would have a domino effect which would shake the big banks due to their entangled investment in the sub-prime mortgage industry. I based this on the understanding I gained having attained a fairly tough business administration degree from Georgetown College years ago. Now that we’re hearing the big names being bandied about, and reports of second quarter losses in the BILLIONS of dollars, it’s evident that we’re about two shakes away from a complete financial meltdown.
This is why Hillary’s big money banker buddies were in a panic when this all started. This is why she was calling for a gov’t bailout months ago. It’s no surprise at all. Obama’s got Fannie Mae and Freddy Mac bigwigs on his campaign staff? Hmmmmmm, I’d think he’d know what’s up too, unless he really is an empty hat.
Anyway, I don’t have any real solution to offer, and I’m not sure there really IS a solution for this problem. It’s a market-wide readjustment for over-valued property. When you invest in a business, like an investment bank, which really produces nothing, and simply relies on its reputation to encourage more people to invest, when that reputation is shaken by poor investment decisions, then the market takes it’s money elsewhere.
Simply put, the money has left the building and it ain’t coming back anytime soon! Unless the Federal Government happens to give them OUR money… which at some point will actually happen to prevent the super-banks from teetering.
That’s my prediction for this morning…
For the first time LGM has a small part of the picture right.
I am so freaking sick of people who can’t see anything unless it’s packaged in some sort of left-right prism. We do realize that the “conservative” white house just nationalized our mortgage industry. We do realize that with bipartisan support, these bailout bills have been overwhelmingly passed. We do realize that the budget deficit and the national debt have ballooned to staggering numbers. We do realize that the expenditures reported to us don’t even include the war – and in the future it wont include the Fannie/Freddie expenditures. We do realize that both presidential candidates have mirrored eachother’s positions on basically every issue that matters to the country.
Jesus Christ people, if the libs were talking about nationalized health care these right-of-center blogs would be in nuclear meltdown. Now, we have the government backing 5 trillion in mortgage debt, and putting taxpayers on the hook for the continuing meltdown in the mortgage market, and all I’ll read about on the righty blogs is that Obama likes arugula and Palin has a vagina.
Guess what geniuses? This country is burning up and we are sitting around fiddling. Republican and Democrat are same, and will continue these policies till this country goes into a full-blown recession or full-blown hyper-inflation. My guess is when that happens, most blogs will still be arguing over gay marriage and why the other side is the boogeyman.
But hey, let’s continue focusing on the important issues of the day – remember, McCain is old, Palin is a woman, Biden has hair plugs and Obama is black.
My god – we deserve all of this.
Wrong on pretty much every count. Consumer protection laws are supposed to protect people from their own stupidity? No. They’re supposed to protect people from potentially dangerous products. The continuing problem with the left is that they think noone (but Republicans and conservatives) should be held accountable for their own actions. Far from lenders “flouting” laws, they were adhering to the laws passed by a Democrat Congress forcing them to make loans to borderline or worse borrowers, in the name of “fairness” and “diversity”. NOT making the loans would have subjected them to legal action. Bankers aren’t idiots. (Well, not all of them.)Their job is to make money for their investors. Lending money to people who have no hope of repaying it is not business, it’s liberal stupidity.
Hey BruceG – why not enforce a contract? The contract between the lender and borrower says the creditor offers a certain interest rate for a period of time and then has the right to adjust it. Apparently you want to re-write that?
Are you ok with re-writing other contracts?
Hey lion – what blog were you responding to – I seem to have missed what you are talking about here on MM.
Wrong again, saying that fairness and diversity legislation is responsible for the mortgage mess is like saying earmarks are responsible for the national debt. It wasn’t deregulation that caused the mortgage mess, it was government intervention. The moral hazard caused by the Federal Reserve setting interest rates and 1% for so long, Fannie and Freddie insuring whatever toxic waste the banks would send them, rating agencies rating mortgage backed securities as AAA paper, banks issuing mortgages with no care to see them repaid, set up a perfect storm. Remember that this is not a Democrat-Republican issue, these problems have been manifesting themselves since we went off the gold standard and as a nation, mortgaged our production, for consumption. Everyone was happy during the housing bubble, because they felt rich, but it was fraudulent wealth, created through increased demand, irrational exuberance, and cheap money from the Fed.
LGM suffers from the same affliction as many commenters on this site – viewing the world through an (R)/(D) looking glass. It’s important to realize that if the politician is in Washington, or looking to go to Washington, their main goal is to screw you (the taxpayer) over.
And over, and over, and over, and over…
Actually responding more to comments – Malkin at least has shown resiliency against the political machine and has reported on bailouts and illegal immigration. As no other righty blogs have even reported on our nation’s full blown socialism – commenting here was my option. Plus I think the partisanship angle still holds water on this blog and needs to be addressed.
The Federal Reserve, Great Depressions, and Socialism
The problem is a whole lot more complicated than can be profitably discussed on a message board. Of course it stems from FDR’s socialist policies. Of course FNMA and Freddie Mac shouldn’t even exist, much less be the primary guarantors of mortgages. Of course we shouldn’t be bailing out banks, brokerage houses, or anybody else with taxpayer money. Of course the rating agencies should have been more accurate – and should be held accountable for that failure. But that still doesn’t change the fact that the proximate cause of the collapse was the subprime collapse.
Of course, once you can unilaterally re-write a contract it is no longer a contract, and there is no more business to be conducted.
lgm,
Man, I’ll tell you… those professional athletes are soooo evil. They’re always failing to accomplish their goals. They drop balls. They trip and fall. They let their opponents get in their way. Yeah, I know they work hard and they’re better than everyone else on the planet. But still, they’re more evil than everyone else because they don’t succeed at everything they try.
Unfortunately, this is all pretty easy for me. We used all of our savings during my 18-month unemployment run during the dotcom bust. Now we’re both employed at about 30% less than before, pretty much living paycheck to paycheck. So nothing much to lose this time around. My husband does have a 401K and pension with his employer but, as they say, investment is for the long-term and our long-term is 20+ years away.
It’s my parents who suffer when this crap happens. They’re retired so they have no long-term left. They are dependent on returns and interest rates, neither of which are helping much lately. However, they are very frugal people and will probably do just fine. Unlike others we know in their 60s, they didn’t keep buying up and have owned their home for many years. Medical and dental are their big expenses now.
If I’m the BruceG your referring to:
I think if the original mortgage was let’s say 5%, 5% is better than no% that you get when they default. Wait till the housing crises has passed and then start pushing the rates up. A $125,000 house is worth nothing if it’s empty and you can’t sell it.
Was it not the case that Countrywide and other lenders were pressured by the Gov’t to make it possible for low income buyer to get a home loan?
Now the gov’t crucifies these lenders that did what they asked. Not that the lenders weren’t complicit as well… same goes for many buyers who lied about income, with or without a broker’s help.
There are many pieces and I’m not certain it originated from Dems… but I know this… Dems and a certain number of republicans are seeing to it that tax payers foot the bill. Whether that’s the best path through this, I don’t know. But they had better learn the lessons of this mess.
It’s call Responsibility.
It’s called…
typo
As with my parents. They were part of a society that understood the value of savings, having been survivors of the Great Depression. (Of course, my father never quite understood that FDR’s policies extended, rather than ending, the depression.) I envy them that much. I’ve still got about 10-12 more years left on my mortgage, and I’m still looking to move again – typical fiddle-footed American.
Michelle
You might want to consider removing the bussinessweek link in your article.
Currently 100s of pages on the BW website has been infected with code to get visitors to download malware.
http://www.net-security.org/malware_news.php?id=990
I did not check to see if that page was infected.
common sense, just wait until medicare/medicaid and social security go bust because they too are just ponzi schemes which 1/2 the country is using to suck at the govmnt trough. think 1990 russia.
sonofdy said (#70):
True, but there is lots of evidence of borrowers not understanding or being told all the conditions of a loan. Many were not aware that the low “teaser rates” were only for the first few years. You can argue that this information was in the fine print, but who reads fine print?
really? what evidence? people aren’t stupid. if you don’t know that a balloon loan rate will change, or that a no-principal loan isn’t a dumb idea, then they deserve to lose their house.
when you’re making the biggest purchase of your life, you’d BETTER read the fine print.