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BOYCOTT THE TOO BIG TO FAILS!
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boggsman1



Joined: 24 Jun 2002
Posts: 3607
Location: at a computer

PostPosted: Mon Jan 11, 2010 12:07 pm    Post subject: Reply with quote

We are at a very difficult crossroads. The total GOVT backstop is massive, Im not sure what the figure is, but the US is basically guaranteeing that the system wont collapse, and I dont know how we get out of it. Phil Graham was a MASSIVE influence of where we are today. I watched him and SEC chair Art Levitt debate for an hour the idea of neutral parties, elected by GOVT on corporate boards in 1994. The voracity and power of his not wanting ANY GOVT participation in private sector finance is stunning.
Back to today, I think that the system will change big time. There should only be two or three mortgage choices, just like Germany. 15, 30 yr fixed, and a straight adjustable with 35% down. This little rule would have prevented the collapse of the entire system. It would have kept Wall Street out of the securitization game, and it would have kept bad borrowers out of the market. The Sub Prime market would have never materialized, and HUD loans would have been scarce. The transition back to more normal times is going to be painful, but I dont think Glass Steagal comes back, even though I think it would be a good idea.
Nobody knows how we will return the system to normal, but I guarntee we will pay for it, it was a twenty five year credit party!
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boggsman1



Joined: 24 Jun 2002
Posts: 3607
Location: at a computer

PostPosted: Mon Jan 11, 2010 12:14 pm    Post subject: Reply with quote

Mac... let me be clear about the size of Subprime. It is $700B. That is the total of loans outstanding, as rated by the underwriter during orgination, or refi. Total Mortgage mkt is 12TR. If you want to read great analysis of the markets, going forward, read Chris Whalen.
Boggsman
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boggsman1



Joined: 24 Jun 2002
Posts: 3607
Location: at a computer

PostPosted: Mon Jan 11, 2010 12:15 pm    Post subject: Reply with quote

Mac... let me be clear about the size of Subprime. It is $700B. That is the total of loans outstanding, as rated by the underwriter during orgination, or refi. Total Mortgage mkt is 12TR. If you want to read great analysis of the markets, going forward, read Chris Whalen.
Boggsman
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mac



Joined: 07 Mar 1999
Posts: 5356

PostPosted: Mon Jan 11, 2010 2:59 pm    Post subject: Reply with quote

I don't dispute that the size of the subprime debt now is $700 billion. But the data I read when I researched this in some detail about 16 months ago showed that the sub-prime take down amounted to about 600-700 billion a year for the 3 boom years, which is where I got the $2 trillion number. Does that mean that the loans were paid off, or written off? I wouldn't dispute the conclusion that now, after the markets did not collapse completely, they are no longer a grave threat. There's a hell of a lot of debt out there.
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boggsman1



Joined: 24 Jun 2002
Posts: 3607
Location: at a computer

PostPosted: Mon Jan 11, 2010 3:50 pm    Post subject: Reply with quote

Mac....go read Greatest Trade Ever by Greg Zuckerman, a WSJ reporter. Your blood will boil. The insanity that was taking place from 2003-2007 will never be repeated in US history. The primary weapon of mass destruction , the Credit Default Swap, is described in great detail, and its use to destroy the financial system , and force a $185B bailout of one company AIG , is detailed. Remember the average Mortgage Backed Security only packed 5-8% of subprime garbagio, thus allowing the genius over at Ambac and MBIA to rate it AAA.
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mac



Joined: 07 Mar 1999
Posts: 5356

PostPosted: Mon Jan 11, 2010 10:18 pm    Post subject: Reply with quote

Thanks, I will. Usually money bores me, but theft is intriguing.
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theq



Joined: 10 Apr 2000
Posts: 640

PostPosted: Fri Jan 15, 2010 10:31 am    Post subject: Reply with quote

During a Yahoo Techtalk interview, economist Simon Johnson made another good point. He said that the bankers' bonuses make no sense, in part due to the elimination of the mark-to-market rules at the beginning of our present crisis. If the actual impairment to the bottom line was still tied to the value of a company's assets, and various mortgages and mortgage securities adjusted to real-world value, performance bonuses would disappear. At the very least, stockholders' equity is totally inflated. I believe that this is what stockholders should be very concerned with.

It's like me, if I still owned a house that was worth say, $900K at the peak of the market, and today is worth $650K, and I had $100K in the bank, considering myself a millionaire. In the real world, I've got a ways to go.

Here's my take, and one that I posted on Techtalk's comment section yesterday. Remember the T-shirt that said: "I don't have a drinking problem. I drink, I get drunk, I fall down, ...no problem." ?

For American bankers, it's more like: "I drink, I get drunk, YOU fall down,...no problem." The whole thing's absurd. But what else is new?
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jpbassking



Joined: 19 May 1998
Posts: 2386
Location: Leo

PostPosted: Fri Jan 15, 2010 11:01 am    Post subject: Reply with quote

theq wrote:
..But what else is new?


It is the end of an area and they know it. The wool has been lifted from peoples eyes and they've had enough so the fat cats are strokin each other while they still can.

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mrgybe



Joined: 01 Jul 2008
Posts: 2714

PostPosted: Fri Jan 15, 2010 12:59 pm    Post subject: Reply with quote

theq wrote:
At the very least, stockholders' equity is totally inflated. I believe that this is what stockholders should be very concerned with.


They absolutely should be concerned..........and it is the stockholders who should punish the management they put in place to steward their investment.............not the government. If management is doing something illegal, that's an entirely different matter, but simple shareholder apathy is not a reason for government intervention.
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jpbassking



Joined: 19 May 1998
Posts: 2386
Location: Leo

PostPosted: Fri Jan 15, 2010 1:50 pm    Post subject: Reply with quote

mrgybe wrote:
... simple shareholder apathy is not a reason for government intervention.


How about simple shareholder trust? Shouldn't we demand that those we trust with our money are honest and forthright and worthy of that trust and shouldn't we expect some kind of oversight on the part of our elected government in case they are not?

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