Nationalizing American corporations is...?

[Avestan]

People have had to suffer. If they take a loan they can't pay for, they lose their house and in many cases have their credit destroyed. That's a fair bit of suffering. Please note that it's all individual suffering, it doesn't affect you or me.

On the other hand, banks who give out too many loans to people who can't afford to pay them and then end up on the brink of collapsing are now (in some cases) being bailed out by the government. That affects you and me by less of our tax dollars going to things that we do support, like unnecessary wars in your case or the many social programs that Obama wants to establish that will send us all to the poorhouse in mine.

I agree with cadalano. It's dumb for an individual to take on more of a loan than they can afford. But it's colossally stupid for a bank to give out loans to anyone who asks for one, regardless of whether or not the person has a reasonable shot of paying it, to the tune of hundreds of billions of dollars.

But it is amazingly smart for the execs at the tops of those banks to loan loan loan! All their comp is tied to growth figures and revenue under management.

THAT is the point I have been trying to make since I started posting here. We need banks to provide the liquidity necesary to keep the housing market strong, but we need to punish the shit out of the execs who made decisions to maximize their personal gain, NOT the long term viability of their firms.

That is why I believe part of the solution needs to be in restricting exec pay to long term, performance-based measures instead of short term gigantic cash bonuses.

No argument here that this is not a humongous tradgedy and I do feel bad for people who got caught in this, but as we think about potential solutions, we MUST not just turn this into a leanders vs. owners debate (they both deserve some blame), but we need to invest in really understanding what systemic problems existed that allowed this to occur.

In my opinion, it was a fundemental mismatch of short term executive incentives conflicting with the long term health of these firms and the country as a whole. I believe that a very few executives made some extremely selfish decisions and a lot of individuals fell into a trap because they decided to play follow the leader instead of just taking a step back and realizing that these loans are ridiculous. Believe it or not, a lot of us made the right decision here and now we are going to pay for the mistakes that many people made.

I am pissed because I did the right thing and will still get screwed. I do not have a tremendous amount of sympathy for the homeowners who helped perpetuate this scenario. As bad as the lenders were, this could have been averted by some common sense from our own population.

While we are at it. Everyone listen to me for a sec because I am going to tell you the next crisis right now.

TEAR UP YOUR FUCKING CREDIT CARDS IF YOU CANNOT PAY THEM DOWN EVERY MONTH. YOU ARE STUPID IF YOU MAINTAIN ANY BALANCE AT ALL ON YOUR CREDIT CARDS!!

[Zaelath]

Dude, that's bullshit. The people taking the loans can't afford them based on the value of the homes doubling every 5 years, they can afford them (or not) based on their income.

The only significant effect the doubling of the price has is to "secure" the granting of loans to clearly over extended (or in some cases, known non-payers) by knowing that you will get *some* money of these idiots, then foreclose and sell the house for more than you loaned. Thereby profiting at both ends.

This, simply put, was a pyramid scheme. Once you ran out of retards to buy homes at inflated prices from other retards, the system collapsed.

Greenspan saw it coming, in all likelihood the lenders saw it coming, but the lenders kept shoveling money out the door. It's still "smart" for the executives that get bonuses tied to lending figures to push push push, but it's not even close to ethical and they should be held to account. (I think we kinda agree here...)

I do agree that people don't understand risk; you just have to look at the funding you give to "prevent terrorism" compared to the funding you give to "reduce traffic accidents", which accounts for a lot more dead and maimed than terrorism. I guess you think ignorance is no excuse, but if I started handing out boxes of matches to 5 year olds, you wouldn't be apportioning any blame to them when they burnt their homes to the ground.

I worked in retail banking here, years ago, and no one was getting loans that extended them past 30% of their after tax income. Maybe 40% if they had a massive deposit. I have no idea if they used the same kind of numbers in the US prior to this sub prime fiasco, but I can understand why people would *think* that if they told the bank what they earn, and the bank said "you can afford to borrow $850k", that the bank actually meant it.

[Avestan]

Dude, that's bullshit. The people taking the loans can't afford them based on the value of the homes doubling every 5 years, they can afford them (or not) based on their income.

The only significant effect the doubling of the price has is to "secure" the granting of loans to clearly over extended (or in some cases, known non-payers) by knowing that you will get *some* money of these idiots, then foreclose and sell the house for more than you loaned. Thereby profiting at both ends.

This, simply put, was a pyramid scheme. Once you ran out of retards to buy homes at inflated prices from other retards, the system collapsed.

Greenspan saw it coming, in all likelihood the lenders saw it coming, but the lenders kept shoveling money out the door. It's still "smart" for the executives that get bonuses tied to lending figures to push push push, but it's not even close to ethical and they should be held to account. (I think we kinda agree here...)

I do agree that people don't understand risk; you just have to look at the funding you give to "prevent terrorism" compared to the funding you give to "reduce traffic accidents", which accounts for a lot more dead and maimed than terrorism. I guess you think ignorance is no excuse, but if I started handing out boxes of matches to 5 year olds, you wouldn't be apportioning any blame to them when they burnt their homes to the ground.

I worked in retail banking here, years ago, and no one was getting loans that extended them past 30% of their after tax income. Maybe 40% if they had a massive deposit. I have no idea if they used the same kind of numbers in the US prior to this sub prime fiasco, but I can understand why people would *think* that if they told the bank what they earn, and the bank said "you can afford to borrow $850k", that the bank actually meant it.

Banks do not make more than the loan amount on a foreclosed house. If they could do that, that means there is a buyer somewhere who values the property high enough to get the homeowner out of the loan with a profit.

By definition, that is not happening here. Look around wall street right now, clearly banks are KILLING IT with all these foreclosures!

[Zaelath]

Banks do not make more than the loan amount on a foreclosed house. If they could do that, that means there is a buyer somewhere who values the property high enough to get the homeowner out of the loan with a profit.

By definition, that is not happening here. Look around wall street right now, clearly banks are KILLING IT with all these foreclosures!

Jesus Christ, yes, NOW. NOW, that the prices are falling. The business model was not built on falling prices, it was built on the fairy story that houses always gain value.

Also, just because the house has retained/gained value, doesn't make it a liquid asset; that is "you owe us money NOW", not "you owe us money when you can get around to finding a buyer for your house, take your time, thanks buuuuuuddy" at the First Bank of Granola or wherever you're thinking of.

[Boogahz]

Banks do not make more than the loan amount on a foreclosed house. If they could do that, that means there is a buyer somewhere who values the property high enough to get the homeowner out of the loan with a profit.

By definition, that is not happening here. Look around wall street right now, clearly banks are KILLING IT with all these foreclosures!

Jesus Christ, yes, NOW. NOW, that the prices are falling. The business model was not built on falling prices, it was built on the fairy story that houses always gain value.

Also, just because the house has retained/gained value, doesn't make it a liquid asset; that is "you owe us money NOW", not "you owe us money when you can get around to finding a buyer for your house, take your time, thanks buuuuuuddy" at the First Bank of Granola or wherever you're thinking of.

Because it can take up to a year in some States to actually Foreclose on a home, there are probably more payment plans than you would think.

[Zaelath]

Yes, but if the price drops at all, you can't sell it for what you owe, which makes people hold on to the house. If the bank can get most of what you owe in a foreclosure they're still a long way in front given all the repayments you make in the first few years are primarily interest.

Regardless, the concept that people can "afford" loans based on the house increasing in value is flawed. It will stop them becoming bankrupt yes, but they'll still have paid a lot of money in interest and ended up with little or nothing to show for it.

I also don't doubt that a lot of people that have been caught out did their sums and could make repayments based on their current income, then one or both lost their jobs or had their income curtailed in some fashion that made the debts unservicable (like the widow).

[Xyun]

It bothers me that people don't consider the history of all this. There is a pattern of regulation and deregulation that has existed in this country since at least the1920's. The Great Depression brought about massive reform and regulation by FDR. Those regulations were put in place precisely to prevent the same circumstances that led to depression. Since that time, those regulations have slowly eroded, and although both parties are responsible, deregulation is turbo-charged during Republican control.

A vast majority of people, regardless of party, agree that deregulation is the primary reason we are facing the crisis we are facing. Everything I have seen or read by experts regarding this crisis also suggests that this is much bigger than the dot com bubble or even the savings and loan scandal. People panicked to the point that Jim Cramer is yelling on the TV about preventing the Second Great Depression. I don't know how much stock to put into the hysteria because I don't have a massive portfolio or savings.

What I know is that I don't want my fucking tax money going to bailing out incompetent fucking CEOs and greedy fucking billionaires. That tax money should be used for social(ist) or military programs, NOT communism.

Also, this here is a blatant lie:

McCain has almost never seen eye to eye with the Bush administration

Avestan, I used to respect you, but this statement means that either you are so utterly fucking stupid that you honestly believe it, or that you are lying through your fucking teeth. I suspect the former which is very very very sad. I'm really stunned. This is classic conservatism: the blatant denial of reality.

Here is the truth from the horse's mouth: http://www.youtube.com/watch?v=FzX7vsdEybo

Xyun,

I never respected you because you have never, ever, said anything that isn't sraight from the assholes of the democratic left establishment in this country. Sorry bud, but you are so far from unbiased that I don't even know why I respond to your posts (I usually don't read them at all).

What we need to understand is that there REALLY ARE good ideas from both sides of the political fence (really). People who 100% support any party's actions are followers and I rarely listen to what they have to say. You can tr to spin things any way you want, but John McCain has consistently gone against the Republican establishment when he thought it was the right thing to do. He is the only politician in recent history from either side of the divide who has been willing to take unpopular stances in the face of big elections (President) because he thought they were the right choices. He has also shown a willingness to compromise to get things done (Immigration) and I think that is also a sign of someone who knows how to broker a deal.

I like Obama, and when McCain looked like his campaign was going to die in the primaries, I told everyone at the office (they are all democrats because I live in Northern Cal) that if McCain did not win the nomination, I would enthusiastically support Obama over any of the other Republican candidates, but I am thrilled to say that he pulled it off. In my short life, I have never been as excited about a candidate at any level as I am about John McCain. It is almost too bad the dems are not putting up John Kerry again, because it would be a steamroll, but I stand by my statements 100%.

Some of you guys should try to take a step back and think about which of these people you think would make a better coach, boss, mentor, or addvisor. Who you would trust more to do what is right despite huge amounts of pressure from all sides (domestic, international, corporate, environmental). I would argue that exactly one candidate actually has a record of standing up to those pressures. The other might be good, but I just do not see the determination and confidence that McCain has always had when I listen to Obama talk. Next to McCain, Obama sounds more and more like a slick politician standing next to someone who has made a career out of reaching across party lines to get shit done.

I just havea really hard time listening to people who ALWAYS post on one side of partisan issues. If you want my respect (you likely don't give a damn), tell me some things the Republicans have done right in the last 8 years (unbiased individuals will find some).

Seems you are stuck in the year 2000 when all the things you are saying about John McCain was true. Unfortunately the rest of us are here in 2008 when John McCain has sold out every fucking thing you list or admired about him. I'm sorry you can't see it or admit it or realize it, but that doesn't negate the fact.

[Xyun]

I do not blame the situation on anyone, but I do blame the solution. These banks should be allowed to crash into ash and dust in my opinion. I am now going to be paying for stupid mortgage mistakes everyone else made when I said no to taking loans that I knew I shouldn't. As a result, I saw average house prices skyrocket so that if I want to live within 10 miles of work, I need $1 million to buy something. So I rent. And now I am going to by paying other people's mortages by proxy. This is, by far, the biggest letdown I have had from this administration and from the last eight years. f you cannot tell, I am a fiscal conservative, and I feel betrayed by those in office.

I agree 100% with this. Corporate welfare makes my stomach turn.

[Fash]

Yes, but if the price drops at all, you can't sell it for what you owe, which makes people hold on to the house. If the bank can get most of what you owe in a foreclosure they're still a long way in front given all the repayments you make in the first few years are primarily interest.

Regardless, the concept that people can "afford" loans based on the house increasing in value is flawed. It will stop them becoming bankrupt yes, but they'll still have paid a lot of money in interest and ended up with little or nothing to show for it.

I also don't doubt that a lot of people that have been caught out did their sums and could make repayments based on their current income, then one or both lost their jobs or had their income curtailed in some fashion that made the debts unservicable (like the widow).

I'm closing on my house on the 21st of October. I'm putting 17% down with a 15 year mortgage. Everything in the house is brand new. It's virtually impossible for me to wind up in a bad situation with this decision... Even if I lost my job 6 months from now, I'd never have to sell it for less than I owe. I waited until the time was right... omg!

[Avestan]

I think a lot of you need to learn to respect the idea of personal responsibility.

The government should protect those who cannot protect themselves, but not those who are too stupid to protect themselves.

Sorry about your house, but you should have been renting anyway. Declare backrupty, sell for a loss, whatever. Deal with it.

*shrug*

[Xouqoa]

I think a lot of you need to learn to respect the idea of personal responsibility.

The government should protect those who cannot protect themselves, but not those who are too stupid to protect themselves.

Sorry about your house, but you should have been renting anyway. Declare backrupty, sell for a loss, whatever. Deal with it.

*shrug*

Personal responsibility is not in most people's dictionaries, and that is part of what caused this problem as well.

[Funkmasterr]

Lack of personal responsibility is the root cause of a disturbing amount of the issues in this country right now. It just scares me how many people argue for peoples right to be irresponsible.

[Sylvus]

Who is arguing for the right to be irresponsible?

[Spang]

Fat people are irresponsible.

[Fash]

We definitely have the right to be irresponsible.. I've been that way for a considerable part of my life, though that has passed. What's not a right is being bailed out of your irresponsibility or catered to, because of it.

[Sylvus]

Perhaps I'm misunderstanding something. Which individuals have been "bailed out" after being irresponsible? Having your house foreclosed doesn't seem to me to be a bail out. The only bail outs that I'm aware of have happened from the government to large corporations. Like I said, I could very well be misunderstanding something.

That's why I (and I think cadalano, at the least, correct me if I'm wrong) place more blame on the banks that took on all of these questionable mortgages rather than on individuals who couldn't pay them. Arguing that banks should be giving out questionable mortgages is akin to arguing for the right to be irresponsible, in my book.

[Funkmasterr]

Perhaps I'm misunderstanding something. Which individuals have been "bailed out" after being irresponsible? Having your house foreclosed doesn't seem to me to be a bail out. The only bail outs that I'm aware of have happened from the government to large corporations. Like I said, I could very well be misunderstanding something.

That's why I (and I think cadalano, at the least, correct me if I'm wrong) place more blame on the banks that took on all of these questionable mortgages rather than on individuals who couldn't pay them. Arguing that banks should be giving out questionable mortgages is akin to arguing for the right to be irresponsible, in my book.

Trying to put the blame all on the banks isn't right though.

The government is working to "help" the people that are getting forclosed on because of these loans too, which shouldn't happen. Sorry, you made a bad gamble (or uneducated decision) and you fucked your families life up because of it. But guess what? It's no ones problem but their own. The banks and the individuals were both irresponsible and should be handled individually.

But in my eyes, you saying that the problem should never have existed because the banks should be making sure no one makes irresponsible choices with their finances is the same as saying it's ok for individuals to be ignorant and irresponsible, but someone else (the banks in this situation) should have stopped them from making those poor decisions.

I'm all for people suffering as much as they deserve. I don't have a single bit of sympathy for any of these people, no matter what the problem is in life, if you got yourself into it, it should be you and you only that gets you out of it, no matter how long and grueling the process is.

EDIT**

The reason that it's taking longer than it should to do whatever the government is going to do for the banks is because the Democratic party wants the bill to also include aid for the dumb asses that got these loans. That's precisely what I'm talking about and what you must be confused about.

EDITEDIT**

I wanted to preemptively say something else, because I know it will be mentioned. I'm not ok with the banks being bailed out but see it as pretty much necessary, because of it's effect on our economy. I do realize that all the people that have been forclosed on will effect our economy too, but I don't think anywhere near as severely, and I don't give a shit about their hardships.

[Forthe]

I wanted to preemptively say something else, because I know it will be mentioned. I'm not ok with the banks being bailed out but see it as pretty much necessary, because of it's effect on our economy. I do realize that all the people that have been forclosed on will effect our economy too, but I don't think anywhere near as severely, and I don't give a shit about their hardships.

Someone needs to explain to average citizens that if a bunch of banks collapse then the FDIC which ensures your bank accounts (max 100G anyway) will need a huge check from the fed to cover the losses. FDIC is already looking at a $150 billion shortfall, if the dominos start falling it is going to be ugly.