Any of you hippies protest at Wall Street?

[Postbiological]

This is the problem. You sit around thinking that it's not the individual's fault for not looking at the up and downside to every decision. You've abrogated all responsibility from the individual to the banker, but isn't that abrogation of responsibility a dereliction of humanity and free will that is inherent in every free person's duty? Whose fault is that? It's absolutely NOT the bankers fault. They are at fault for other reasons, but not because the borrower can't figure out they cannot afford all of their trash in the long-run.

I lived in Orlando during the height of the housing. You could see the signs everywhere and everybody threw loans and houses at me. I didn't do it because I knew it wasn't responsible. I knew I had student loans, credit cards, a car, and a wedding to pay for.

Of course, my reasonable thinking is so rare these days because you've actually placed all responsibility for it upon the bankers and not upon ourselves. You bitch about being slave to Wall Street but want to be a slave to them.

Do you not see the logical fallacy there?

No, you are not correctly assessing my perspective. I am saying that the irresponsible home buyer takes a share of the blame, but that share is not nearly as large as the sophisticated bankers who instituted the lending schemes.

 

[Postbiological]

Uh... so what share of the blame does government get if Wall Street gets the majority of it? Everything they have done was with the blessing of government. That's why asking the government to take a stand against the finance sector is retarded, they're in it together. You want change, stop voting. Stop spending money. Stop participating in society and start destroying society because this whole society is the problem. If you're not willing to make that sacrifice, shut the fuck up. All this "revolutionary" talk and no action. Pussies.

I guess approximately the same share that complicit or derelict police officers get for not preventing a crime?

 

[Postbiological]

Really? The freddie mac and fannie mae subprime securitization mandates predate wall street subprime volumes by some 5-10 years. Canada has had the same mortgage securitization as US ("wall street") for the last 20 years with a different outcome. Same interest rate policy as well.

The point is, there's plenty of blame to go around, pointing out one culprit merely shows your bias.

I do have a bias, in that I think the "elite" / rich / ruling class are increasingly moving society toward a situation in which there is a small but extremely wealthy upper class, and a beggared underclass, with perhaps a smattering in the middle.

For most of history this has been the case. There were patricians and plebes in Rome, peasants and nobles in Europe, and I think globalization has reduced the bargaining power of labor in developed nations and is allowing the upper class to gain more and more wealth and influence; to me this is as bad as it sounds and it needs to be countered.

 

[Juked07]

No, you are not correctly assessing my perspective. I am saying that the irresponsible home buyer takes a share of the blame, but that share is not nearly as large as the sophisticated bankers who instituted the lending schemes.

So the banker tricked the prospective homeowner into taking loans they ended up defaulting on? The homeowner otherwise would have made the right choices, but enter the banker and now they're doomed to fail?

Not trying to make any point.. just making sure I understand your viewpoint correctly.

Edit: actually I do think I have a position here.. I think if a borrower fails to pay back money they're suppose to pay back, it's primarily the borrower's fault. Arguing that it's the lender's fault gets awful tricky.. The sophistication of the lending scheme that justifies (correctly or incorrectly) the banker's decision to originate or repackage loans is more or less independent from the borrower's fiscal responsibility and knowledge of their own ability to repay. How can you blame default on the lender??

Why don't you lend me some money, I won't pay you back, and we'll all agree it was (mostly) your fault? I guess I'll shoulder a little blame, but only a little.

 

[bfdd]

I guess approximately the same share that complicit or derelict police officers get for not preventing a crime?

huh? That's a bad comparison. They were the bonnie to wall streets Clyde. They are part of the problem, not the solution you brainless twit.

 

[Postbiological]

Again, I am saying that the irresponsible home buyer takes a share of the blame for being irresponsible, but that share is not nearly as large nor of the same character as that of the bankers who instituted a system which further enriched a few at the expense of millions.

Frankly, I don't understand the responses that are overly focused on the actions of the home buyers / "little people."

I think it's more tough-guy, I want to feel some connection with rich people -- even criminal rich people -- by defending their point of view more than anything.

 

[Postbiological]

ed

 

[bfdd]

So the banker tricked the prospective homeowner into taking loans they ended up defaulting on? The homeowner otherwise would have made the right choices, but enter the banker and now they're doomed to fail?

Not trying to make any point.. just making sure I understand your viewpoint correctly.

Edit: actually I do think I have a position here.. I think if a borrower fails to pay back money they're suppose to pay back, it's primarily the borrower's fault. Arguing that it's the lender's fault gets awful tricky.. The sophistication of the lending scheme that justifies (correctly or incorrectly) the banker's decision to originate or repackage loans is more or less independent from the borrower's fiscal responsibility and knowledge of their own ability to repay. How can you blame default on the lender??

Why don't you lend me some money, I won't pay you back, and we'll all agree it was (mostly) your fault? I guess I'll shoulder a little blame, but only a little.

the only true lender with responsibility is the Fed as they are the issuers of currency and interest rates.

 

[halik]

Again, I am saying that the irresponsible home buyer takes a share of the blame for being irresponsible, but that share is not nearly as large nor of the same character as the bankers who instituted a system which further enriched a few at the expense of millions.

Frankly, I don't understand the responses that are overly focused on the actions of the home buyers / "little people."

I think it's more tough-guy, I want to feel some connection with rich people -- even criminal rich people -- by defending their point of view more than anything.

Again securitization of mortgage is and has been going on Canada as well, yet neither their economy or housing market has crashed. How do you explain that fact with the premise that securitization of loans was set up to "enrich a few at the expense of millions"?

 

[Juked07]

the only true lender with responsibility is the Fed as they are the issuers of currency and interest rates.

I agree whole heartedly that we have principle agent problems. Lenders need to make lending decisions in line with the risk that such transactions come with, and several factors can ruin this accountability. It can be confidence that the securities can be passed on to other buyers, confidence that a bigger entity will bail you out if you do poorly, or a number of other reasons. This is a systemic problem that has to change before institutions will consistently make risk appropriate decisions.

Of course there are problems with the system.

But for those who are saying that those problems are the cause of all of the little people's problems, I don't see the argument. Banks' failure to properly take responsibility for risk making decisions resulted in their own demise. It caused them to hold and trade securities whose risks they either didn't understand or didn't care about, and this was pretty much strictly bad for the banks in the end. How did that result in profit from the little guy? The little guys got together, failed to pay mortgages, and this brought down the banks, not the other way around. The banks didn't go and cause people to default.

?????

 

[Juked07]

Again securitization of mortgage is and has been going on Canada as well, yet neither their economy or housing market has crashed. How do you explain that fact with the premise that securitization of loans was set up to "enrich a few at the expense of millions"?

Agree. Securitization of mortgages is a mathematically sound way to diversify risk across revenue sources that are less highly correlated. Accurate (read: responsible and risk appropriate) modelling result in the possibility of loans being made while putting on less risk than ever before. This has allowed more homeowners in the past few decades than probably ever was possible in history.

Shitty modelling, failure to understand risks of higher correlation of default in a crash regime, lack of personal responsibility for investment decisions, etc led to bad decisions on the part of banks and other institutional investors. This nearly (or did) bankrupt several of them.

The borrower who didn't pay back the money he borrowed is shitty for other reasons. He doesn't have to understand any of the math or finance that went into making the loan possible. He's just responsible for paying the damn money back. Failing to do so is the borrower's fault. Sure, he might have lost his job or have medical bills. There is a chance of this happening no matter what some firm does in NYC. He needs to man up and take some responsibility >.>

 

[Postbiological]

Again securitization of mortgage is and has been going on Canada as well, yet neither their economy or housing market has crashed. How do you explain that fact with the premise that securitization of loans was set up to "enrich a few at the expense of millions"?

I don't understand the point of your question; are you saying that Canadian home buyers are less irresponsible than American home buyers?

 

[Juked07]

Again, I am saying that the irresponsible home buyer takes a share of the blame for being irresponsible, but that share is not nearly as large nor of the same character as that of the bankers who instituted a system which further enriched a few at the expense of millions.

Frankly, I don't understand the responses that are overly focused on the actions of the home buyers / "little people."

I think it's more tough-guy, I want to feel some connection with rich people -- even criminal rich people -- by defending their point of view more than anything.

No one's trying to feel good by siding with "criminal rich people." I genuinely would like to hear (or even be persuaded) by your explanation of how instituting a system that makes loans possible causes someone to borrow irresponsibly. Is the issuer of a loan or any other product for that matter really responsible for ensuring that people only purchase goods that are appropriate for them? They might be responsible for disclosing information so that consumers understand what they're getting into, but it makes no sense to hold them responsible for the investment or purchase decisions of customers.

The supermarket doesn't decide you should eat more vegetables. The convenience store doesn't try to make sure you buy floss. People are free to choose what they buy, and when available, what they borrow.

I can be poor as shit and I'll still think people should pay their debts. How is that the viewpoint of the rich??

Edit: And I do realize I keep posting the same thing repeatedly.. But people barely skim these responses, and I do hope to get a point across. I guess I tried to use different examples to keep it fresh =D

 

[SandEagle]

the only true lender with responsibility is the Fed as they are the issuers of currency and interest rates.

responsibility? lol. the mainstrem media is blaming high gas prices and climate change for the protests, completely ignoring the thousands of protest signs to end the fed. it istime to rebuild this great nation with a new monetary system.

 

[halik]

I don't understand the point of your question; are you saying that Canadian home buyers are less irresponsible than American home buyers?

I'm merely pointing out the fallacy in your argument.

People act in their best interests, whether it may be buying a house you don't have income for, because you see everyone else making money off them, passing legislature to make people that have no business owning real estate "homeowners" or sponsoring special purpose vehicles with no due diligence on the collateral. Complex system with agency problems and no regulation invariably ends up in a disaster and all participants are at fault.

 

[Postbiological]

And how many times do I have to say that I acknowledge that the blame goes beyond Wall Street to the home buyers and regulatory agencies, but not to an equal degree or for the same reasons. I don't understand this constant desire to defend Wall Street other than to have some sense of connection to it

 

[crownjules]

No one's trying to feel good by siding with "criminal rich people." I genuinely would like to hear (or even be persuaded) by your explanation of how instituting a system that makes loans possible causes someone to borrow irresponsibly. Is the issuer of a loan or any other product for that matter really responsible for ensuring that people only purchase goods that are appropriate for them? They might be responsible for disclosing information so that consumers understand what they're getting into, but it makes no sense to hold them responsible for the investment or purchase decisions of customers.

Determining a loan has nothing to do with what the money is used to buy. What the bank is deciding is whether or not they believe you will repay the loan plus interest given the info they have on you. Income, current debt obligations, past credit history, etc. This is how they make their living. Most sane people would expect that to be done with a modicum of competence.

Unfortunately, Wall St's greed demanded more and more mortgages. They bought them off the local banks/mortgage lenders to package up in their investment schemes. This not only paid the banks now (instead of waiting for 15-30 years to recoup the interest) but it also freed up their money to make further loans. And that's why the system became so over leveraged and destroyed our economy so spectacularly. So much of it was built on nothing but paper.

 

[halik]

Determining a loan has nothing to do with what the money is used to buy. What the bank is deciding is whether or not they believe you will repay the loan plus interest given the info they have on you. Income, current debt obligations, past credit history, etc. This is how they make their living. Most sane people would expect that to be done with a modicum of competence.

Unfortunately, Wall St's greed demanded more and more mortgages. They bought them off the local banks/mortgage lenders to package up in their investment schemes. This not only paid the banks now (instead of waiting for 15-30 years to recoup the interest) but it also freed up their money to make further loans. And that's why the system became so over leveraged and destroyed our economy so spectacularly. So much of it was built on nothing but paper.

Again to reiterate, securitization the way you describe it has been happening in canada for the last 20 years also. They didn't experience any sort of catastrophic repricing of real estate, which makes your argument that "wall street" repackaging of loans is the root cause of the crash void.

 

[crownjules]

Again to reiterate, securitization the way you describe it has been happening in canada for the last 20 years also. They didn't experience any sort of catastrophic repricing of real estate, which makes your argument void.

You're seeing it happen now as I've read. Canada didn't have the population on it's own to drive such a housing bubble. But now foreigners are coming in and starting to buy up your real estate and your prices have doubled in some places in the last decade. Vancouver is absolutely ridiculous right now it seems.

 

[Juked07]

Determining a loan has nothing to do with what the money is used to buy. What the bank is deciding is whether or not they believe you will repay the loan plus interest given the info they have on you. Income, current debt obligations, past credit history, etc. This is how they make their living. Most sane people would expect that to be done with a modicum of competence.

Unfortunately, Wall St's greed demanded more and more mortgages. They bought them off the local banks/mortgage lenders to package up in their investment schemes. This not only paid the banks now (instead of waiting for 15-30 years to recoup the interest) but it also freed up their money to make further loans. And that's why the system became so over leveraged and destroyed our economy so spectacularly. So much of it was built on nothing but paper.

This kind of securitization is absolutely the right way to distribute and diversify the risk of default over a broad population. It was exactly this mechanism that allowed so many Americans who needed to borrow at decent rates to buy homes to live the American dream in the decades prior. If banks fucked it up in the 2000s and did too many shitty mortgages, THEY were the primary victims of their own poor decision making. Huge financial institutions were the ones on the other side of irresponsible borrowers defaulting, not the average Joe. I mean come on, which tranches of CMOs did you buy for your investments? You didn't.

Yes, they made mistakes. Yes, they were trying to make money when they made those mistakes. That doesn't mean the concept is wrong or that those mistakes were self serving. They were not. Wall street hired less and fired more people around the crisis than any time in the last two decades. It's not like a bunch of people lost jobs and failed to pay mortgages and therefore the financial sector magically receives a bunch of money.

EDIT: And last time I checked, mortgages don't start existing without borrowers agreeing to borrow. The lender doesn't just decide he wants to lend more and unilaterally start handing out money and demanding interest.

For the record, I think Wall Street can be as scummy as the next guy thinks. And there are a lot of aspects of Wall Street culture I've come across that I straight up hate. But your arguments against them don't seem to make that much sense. Otherwise I'd probably get on board.

 

[Postbiological]

Again to reiterate, securitization the way you describe it has been happening in canada for the last 20 years also. They didn't experience any sort of catastrophic repricing of real estate, which makes your argument that "wall street" repackaging of loans is the root cause of the crash void.

How can it be the same if the result is dramatically different?

 

[Juked07]

How can it be the same if the result is dramatically different?

The point is that the strategy of diversifying risks through securitization (and therefore being able to do more loans, offer better rates, etc) is not broken. It is statistically correct. Imperfect modelling, lack of understanding, bad accountability along the way, over zealousness on perhaps both the parts of lenders and borrowers, and other factors led to the fail you see around you. Maybe Canada got it right, maybe not. Maybe we'll get it right going forward. It doesn't affect the correctness of the strategy.

It's not repackaging mortgages/securities that is wrong. It was poorly executed. Perhaps the system can be changed so that good execution is more likely in the future. But you're pointing your finger in the wrong direction. If you understand the situation better you'll be able to argue your viewpoint much more effectively. There are plenty of good changes we should all support. We need to figure out which ones those are and stop getting distracted by sweeping statements made by the misinformed.

I don't claim to know the answer, btw. But I do know enough to sometimes recognize when we're off the mark.

 

[Postbiological]

I don't think it's generally agreed that securitization of debt is as wise an idea as you are suggesting.

 

[Juked07]

I don't think everyone will agree with you that securitization of debt is as wise an idea as you are suggesting.

Bob and Mary are borrowing $100. Bob lives in Idaho. Mary lives in New York. They will default with 1&#37; probability each. Their default has some correlation < 1. Is it riskier (higher volatility of returns) for investor A to lend Bob money and investor B to lend Mary money, or for investor A and B to each lend half the amount to Bob and Mary?

If you can't provably figure out the answer, it's not your fault, but you simply don't understand the math behind it. The fact that the volatility of diversified investments is lower is NOT a matter of opinion. People who disagree don't just "have another viewpoint." They're wrong. It doesn't matter if everyone doesn't agree. That doesn't affect correctness. Read anything on portfolio theory if you genuinely want to know more about how this works..

Does securitization perhaps have negative externalities, like the possibility of overconfidence in shitty models? Maybe. But that's because people suck at it, not because the strategy is wrong.

 

[Dr. Zaus]

The fact that the volatility of diversified investments is lower is NOT a matter of opinion. People who disagree don't just "have another viewpoint." They're wrong.

True.

Americans (especially the current generation) feel entitled to do whatever they want not what is necessary.

Want a job?
Move out to the central valley in CA and pick crops.
There are some great career options in the military with good pay and amazing benefits.

There are jobs - plenty of them - these people just feel entitled to do whatever they want, whenever they want, however they want, for a lot of money.

I am so sick of this entitlement mentality.

That isn't how the world works or will ever work.

I have never seen patchouli stink hippies so aptly described.


The truth is that we are just seeing the pains of going into an Alpha Beta Gama society. The Alphas create knowledge, they are scientists and engineers (which is what those guys on wall-street are, you know?). The Betas can do well, they trade on their specialized knowledge that they apply to service the Alphas and other Betas; they are nurses, accountants and teachers; pay may be better for some Betas than for some Alphas (see lawyer > philosopher) but the prestige and 'joy' of working is still loaded towards the Alpha. Then we have the Gamas, they pick cotton, take out trash and serve food. They serve the alphas and the betas and other Gamas; they just get less service relative to the physical labor they put in. But physical labor is easy to come by, just run a generator, the hard part of life is mental labor.

Many people went to school thinking they would be an Alpha and can't seem to grasp that they've only qualified to be Betas at best. More people seem to think that it is your right to live wherever you want, no matter what your profession or status, when only that top 1&#37; even deserve to consider living in the best places. The top 1% put in 80 hours a week for decades to get to be that top 1%.

For most of history this has been the case. There were patricians and plebes in Rome, peasants and nobles in Europe, and I think globalization has reduced the bargaining power of labor in developed nations and is allowing the upper class to gain more and more wealth and influence; to me this is as bad as it sounds and it needs to be countered.

If you don't spend 80 hours a week working on making yourself a better person then you've got no room to complain about how "the system" or "the rich" screwed you. You screwed you.