skeptic economists

midniteeuropa · Mar 23, 2009

this may be an ignorant comment...but why do these so called "economists" act as if the homes behind these mortgages have all burned down ?

all these homes would literally have to burn down to ashes for them to be really worthless, junk status.

realistically speaking, these homes behind these defaulted mortgages would have to burn down to ashes if they were indeed worthless and toxic.

if the gov't is absorbing these junk mortgages at close to "burnt down" prices, then wouldn't that be a deal ?

Misthos · Mar 23, 2009

A burnt down house, owned free and clear is better than these mortgages.

Why?

If you own a house that was burned down - you remove the debris and you still have a piece of land that may be worth, say, 50K.

If you lend someone 300K for a house that is now worth 200K, what do you have? Negative 100K. Ouch.

I'd prefer the burned down house with a free and clear buildable lot than an out of whack loan to value.

Government has no idea what they unleashed with free trade. Global wage arbitrage will kill the average American income, and with it, Real Estate values. Interest rates too, can only be suppressed for so long. It's worse than most people can fathom.

midniteeuropa · Mar 23, 2009

your logic makes absolutely no sense, this has to be the stupidest thing I've read here on ET.

is this the logic that is driving these shorts in the market ? wow

Quote from Misthos:

A burnt down house, owned free and clear is better than these mortgages.

Why?

If you own a house that was burned down - you remove the debris and you still have a piece of land that may be worth, say, 50K.

If you lend someone 300K for a house that is now worth 200K, what do you have? Negative 100K. Ouch.

I'd prefer the burned down house with a free and clear buildable lot than an out of whack loan to value.

Government has no idea what they unleashed with free trade. Global wage arbitrage will kill the average American income, and with it, Real Estate values. Interest rates too, can only be suppressed for so long. It's worse than most people can fathom.

dumb_mother · Mar 23, 2009

Quote from midniteeuropa:

your logic makes absolutely no sense, this has to be the stupidest thing I've read here on ET.

is this the logic that is driving these shorts in the market ? wow

i disagree, i thought it seemed fairly reasonable

deswamped · Mar 23, 2009

Quote from midniteeuropa:

this may be an ignorant comment...but why do these so called "economists" act as if the homes behind these mortgages have all burned down ?

all these homes would literally have to burn down to ashes for them to be really worthless, junk status.

realistically speaking, these homes behind these defaulted mortgages would have to burn down to ashes if they were indeed worthless and toxic.

if the gov't is absorbing these junk mortgages at close to "burnt down" prices, then wouldn't that be a deal ?

Its not a bad deal if the united states has another asset bubble in the not too distant future (unlikely). But not such a good deal otherwise since it is talking capital that would efficiently go where most needed, and forcing it to go somewhere else. Yet not all together terrible deal, in that no money will be lost in the purchase. But this is the whole point. Screw money. It's the economic activity that matters to the mainstream, not a profit of indistinguishable dollars.

midniteeuropa · Mar 23, 2009

just like the suckers that joined the bull ride when the dow was 14k, here comes the shorts to join the bear ride at 7500k.

Misthos · Mar 23, 2009

Quote from midniteeuropa:

just like the suckers that joined the bull ride when the dow was 14k, here comes the shorts to join the bear ride at 7500k.

Do you work for Citi or AIG?

midniteeuropa · Mar 23, 2009

if break even is worst case scenario, then this is the best bet of a lifetime.

Quote from deswamped:

Its not a bad deal if the united states has another asset bubble in the not too distant future (unlikely). But not such a good deal otherwise since it is talking capital that would efficiently go where most needed, and forced to go somewhere else. Yet not all together terrible deal, in that no money will be lost in the purchase. But this is the whole point. Screw money. It's the economic activity that matters to the mainstream, not a profit of indistinguishable dollars.

deswamped · Mar 23, 2009

Quote from Misthos:

Government has no idea what they unleashed with free trade. Global wage arbitrage will kill the average American income, and with it, Real Estate values. Interest rates too, can only be suppressed for so long. It's worse than most people can fathom.

Free trade is good for everyone economically. Trust me.

There are of course other negatives. Countries lose their culture, and the division of labour leads to boring repetitive dead end jobs.

But this is an economics forum. So I'm sticking with the economics.

It is not free trade that is killing the American lifestyle. It is wasted capital put into unproductive entities. Unproductive entities severely reduce standard of living on an economic basis.

deswamped · Mar 23, 2009

Quote from midniteeuropa:

if break even is worst case scenario, then this is the best bet of a lifetime.

Lets agree to disagree on that for the sake of my lazyness.