Ben Stein Says 'Bailout' Is A Scam: Use Money To Bailout Homeowners Directly
- Thread starter ByLoSellHi
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I think their are basically two types of mortgages in jeopardy of being defaulted - 1) those sold to people wanting to buy a house for the first time and being sold on their ability to pay. No matter their level of intelligence, they were deceived. The people selling the mortgages were raking in a commission on every mortgage and just wanted the sale. They deluded many of these people into thinking they could afford to buy. 2) flippers that were just in it for the money, sort of like us traders, they knew the risk of the trade. They probably already owned a home.
Any direct help to the homeowners should be directed to the first group - they could probably pay their initial loans unless they were "option ARMS", a real scam allowing you to pay whatever you wished and just have the missed payoff portion added on to the loan. Sort of like a credit card, but worse. The flippers should get the same help we get when we have a losing trade.
When the Wall Street firms packaged the mortgages they were able to sell the mortgages for more than they were worth. That is, by splitting the mortgages into payoff priority and interest steps, they could sell the split-out mortgage packages for about 20% more than the face value of all the mortgages. Thus, even paying off the mortgages leaves 20% of the entire sub-prime money problem as a loss to be absorbed by the package buyers.
The derivative side bets are a whole nother story.
Jack
Any direct help to the homeowners should be directed to the first group - they could probably pay their initial loans unless they were "option ARMS", a real scam allowing you to pay whatever you wished and just have the missed payoff portion added on to the loan. Sort of like a credit card, but worse. The flippers should get the same help we get when we have a losing trade.
When the Wall Street firms packaged the mortgages they were able to sell the mortgages for more than they were worth. That is, by splitting the mortgages into payoff priority and interest steps, they could sell the split-out mortgage packages for about 20% more than the face value of all the mortgages. Thus, even paying off the mortgages leaves 20% of the entire sub-prime money problem as a loss to be absorbed by the package buyers.
The derivative side bets are a whole nother story.
Jack
Have you ever seen some of these subprime dumps? I might rather live in a prison than some of those places.
Ya know what, the regulators were pressuring those guys to make the loans, they had to make the loans or they were in trouble. It was a form of regulation stemming from the Democrat's overwhelming need to give money to poor voters so they would keep on voting Democrat... I think the lenders in that situation really went overboard when they found they could sell off the risk however. Those folks at that level aren't Wall Street, they are Countrywide level.... Wall Street was involved in the credit default swaps, not the mortgages.... I don't see how anybody can not expect Wall Street to be insanely greedy, just look at a video of floor traders screaming and yelling and shoving and pushing and throwing paper all over the floor... hell yes, it's unbridled greed, get over it
Ben Stein's outlook is extremely long run, if you don't start on his program when you are 25 you are screwed. He recommends buying only when the indexes are below their 200 week moving averages and that happens not often at all, in recessions mostly... he probably hates short term traders, I'm waking up to the fact that some people, maybe lots of people, really don't like short term traders... Warren Buffet seems to not like us or at least he is of the opinion that it is entirely random and therefor folly...
On a political level, the government's main job originally was to protect and create a framework for happiness and prosperity, not to give money to anybody... the bailout is really constitutionally completely illegal but most in the USA think the constitution is a "living document"... I say it was born live and just needed to be nurtured, not obliterated with socialism and fascism but that is a whole 'nother thread....
this is an asinine proposal. the FEd govt is gonna run around buying houses to artificially support prices while the debt market collapses. do you kow how f-ed up the maintenance on those homes would be? the much ballyhooed RTC would order 2 appraisal on every property and then call back in 6 months b/c the appraisal was too old & they hadnt even looked at it... two more appraisal fees. can you see the govt trying to manage a million SFRs... oofa!
first, the main cause in every area of this "problem" is over-leverage. a liar-loan borrower gets a 97% LTV a from a fractional reserve bank - the liar/borrower is levered 39-to-1... the bank is leveraged like 10-1... then the paper is bought by a hedgie levered 25-to-1... you can see how little it takes to tip over the upside-down debt/leverage pyramid. THAT is the problem... then derivatives were sold to highly leveraged bettors that could not meet cross-party obligations... house of cards, falling like dominos.
why is the govt not going after people that lied on loan apps and prosecuting them? why arent lenders and loan officers (and appraisers of which im one) getting hauled into court? im sick of liar-borrowers getting painted as unsuspecting victims... that looks good in the L.A. Times, but should be on fertilizer bags.