US Regulation....A Proper Approach

[libertad]

The US cannot have its cake and eat it too.

One cannot have free markets mixed with government intervention.

Government intervention is the same as price fixing and/or manipulation.....which is illegal when non-government groups or individuals do this.

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The problems in housing/banking have arisen from excessive leverage issues.

The house problem today is a result of making little or no down payment which is nothing more than excessive leverage.

Excessive leverage is the sole reason most traders fail in the futures market.
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The remedy to the real estate issue is simple. Loans to properties must include a significant down payment, and be originated and managed locally.

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And what is very sad is that the problem that occurred was/is very simple in nature....but made so complicated by the total lack of very basic regulations.

What is incredulous are the losses that are now being shoved into tax liabilities.
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The other important regulatory issues relate to third tier asset holdings held by investment banks and commercial banks. It is because of company managerial liberties regarding their valuations that have allowed for even further leverage on faulty loan mortgage procedures.

Also there needs to be some remedy as to the seeking of funds from these firms which have contributed to the current debacle. So far, the likes of Paulson, Mack, Fuld, Blankfein, and others have not offered to back out the bonuses created by funny money for the last several years. There has been no accountability from this group. The fox is allowed to manage the hen house.
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The problem at hand is really very simple.

Intelligence that is found after the debacle is not intelligence at all.....it is stupidity.
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What has to happen?

All real estate values have to correct back to values substantiated by sound lending procedures and management.

The values both direct/indirect far exceeds $1 trillion.....and any legislation that is formed to try to buoy valuations above this....will only stall the inevitable drop in price....One can stall it, but not stop it.

The legal entanglement issues/costs even further compound the financial losses, as legal largesse adds its costs into the equation.

The people on watch regarding this very simple issue which is now crippling the US should be held accountable, as well as those directly responsible. More accountability has to be spread around to those which have financially benefited from faulty policies.

 

[thesharpone]

ok so you are saying the problem is due to the fact that many people got high leverage even though they wouldn't be able to afford the risk, without having to put much equity or proof of good income they were able to get loans

that tells me that people don't have much cash in hand, yes some of the home purchasers where speculators, but majority didn't even have cash in the first place to be able to use it as down payment

now you say; let's just let the home prices depreciate. That doesn't sound good

since the problem is that there is not enough cash in people's hand, and most they have is credit cards and loans, it would be better to inject cash into the average household, not by increasing wages and printing money (that would cause inflation) or by decreasing rates (that would just increase the amount of loan circulated, which would cause a type of inflation that would destroy the middle class) but by decreasing tax rates significantly

I know and you know that; that won't happen, neither will what you are asking for, specially now that most likely obama is going to be the next president, he is the man of change he is going to change america with just 300B$, guess how; he is going plant that in people's a** and dollar trees are going to grow out of it, and he is going to charge them a measly tax of 50% for the favor of inflating their a** open

 

[libertad]

http://www.reuters.com/article/newsOne/idUSN2542244220080726


The IMF agrees......

Short term rates were 6% in 2001.....and went to 1% ....as it was Greenspan who created the bubble in real estate in order to offset the $7 trillion loss in US stocks......

Only to result in a future washing out of this bubble remnant as the US is currently experiencing......

Normalized in this case means short term rates going back to where they were....around 6%......

The US would have been better off to have realized the $7 trillion stock loss and called it a day.....