How to fix the Mortage problem with no tax payer Money

[Dari]

Originally posted by: feralkid

Originally posted by: Dari
How about we let those that should fail fail and stop propping up house prices, which are artificial?

Watching politicians trying to fix the economy is like watching doctors give someone severly addicted to heroin more heroin to keep them alive. Let them die.

Yow! You seem to understand neither addiction nor economics.

Oh, I understand economics. I think what Paulson did with Lehman Brothers was good (even though people panicked and it made things worse in the short term). Unfortunately, I think the current Administration learned the wrong lessons from letting Lehman go under. Now they'll try to prop everyone up.

As for addiction, IMHO if somebody (is an adult and) wants to kill themselves, why stop them? Why waste resources on a failed project when it could be put to better use elsewhere?

 

[LegendKiller]

Originally posted by: Dari

Originally posted by: feralkid

Originally posted by: Dari
How about we let those that should fail fail and stop propping up house prices, which are artificial?

Watching politicians trying to fix the economy is like watching doctors give someone severly addicted to heroin more heroin to keep them alive. Let them die.

Yow! You seem to understand neither addiction nor economics.

Oh, I understand economics. I think what Paulson did with Lehman Brothers was good (even though people panicked and it made things worse in the short term). Unfortunately, I think the current Administration learned the wrong lessons from letting Lehman go under. Now they'll try to prop everyone up.

As for addiction, IMHO if somebody (is an adult and) wants to kill themselves, why stop them? Why waste resources on a failed project when it could be put to better use elsewhere?

Yeah, letting Lehman fail was such a great idea. It's why the Securitization market is still shut down. Why the ABCP market can't fund anything over overnight paper with reasonable spreads, and why hundreds of businesses, many major ones, cannot fund themselves because the aformentioned problems.

Letting LEH fail was an utter disaster and is mainly the cause for tens of thousands of job losses for no real good reason.

 

[Genx87]

nm

 

[Dari]

Originally posted by: alchemize

Originally posted by: Dari
How about we let those that should fail fail and stop propping up house prices, which are artificial?

Watching politicians trying to fix the economy is like watching doctors give someone severly addicted to heroin more heroin to keep them alive. Let them die.

Yah, but the whole US economy is addicted to heroin (consumer spending and freely available credit), so we're really getting methadone to try and bring us down slowly. I think cold turkey would kill the patient.

False. I think this country seriously needs to learn how to balance its books. IMHO, change should start at the top (government) but I'm a cynic. Germany has been getting a lot of flack lately for not having a stimulus package proportional to its size. But the Germans are smart and prudent people who know the financial crisis is elsewhere so there is no need to waste money at home when it won't change much (Germany has a great export industry but their entire economy isn't built around that, unlike other countries).

The worse thing America can do now is take more happy pills to bring back the bad old days. Unfortunately, Obama is heading in that direction. It's like the entire government just doesn't get it. When there was a bubble, the regulators were mute. Now that there's a deep recession, the government wants to go further into the red. The problem is what will happen when the economy recovers. I'm going to take a wild guess and say the government will try to ride that recovery for all it's worth and forget about its long-term obligations.

 

[halik]

Originally posted by: NewPhone
How to fix the Mortage problem with no tax payer Money

The Goverment should just lock all mortgage interest rates to 5% for 5 years

If think this is a good idea then write a letter to your senator

head assplodes

 

[Dari]

Originally posted by: LegendKiller

Originally posted by: Dari

Originally posted by: feralkid

Originally posted by: Dari
How about we let those that should fail fail and stop propping up house prices, which are artificial?

Watching politicians trying to fix the economy is like watching doctors give someone severly addicted to heroin more heroin to keep them alive. Let them die.

Yow! You seem to understand neither addiction nor economics.

Oh, I understand economics. I think what Paulson did with Lehman Brothers was good (even though people panicked and it made things worse in the short term). Unfortunately, I think the current Administration learned the wrong lessons from letting Lehman go under. Now they'll try to prop everyone up.

As for addiction, IMHO if somebody (is an adult and) wants to kill themselves, why stop them? Why waste resources on a failed project when it could be put to better use elsewhere?

Yeah, letting Lehman fail was such a great idea. It's why the Securitization market is still shut down. Why the ABCP market can't fund anything over overnight paper with reasonable spreads, and why hundreds of businesses, many major ones, cannot fund themselves because the aformentioned problems.

Letting LEH fail was an utter disaster and is mainly the cause for tens of thousands of job losses for no real good reason.

Was Lehman also too big to fail? You cannot privatize profit and socialize losses forever. In other words, you can't pretend you're a capitalist country when you're actually socialist. Either the mask comes off or there will be more cynics like me.

 

[halik]

Originally posted by: LegendKiller
Interest rate payments won't get us anywhere. The only real solution is to mark the loan to market, write down the principal balance. If the house is sold for greater than the written down principal balance, subtract out the amount of principal payments made from the delta and the remainder goes to the bank.

Homeowner stays in the house at the current market value.

Bank keeps getting payments

Securitization owners keep getting payments

Upside goes to the bank/bondholders.

Everybody wins.

I think the government is/was pushing for shared equity mortgages for a while, it's probably the best and cleanest way to devaluate real estate and keeping the occupancy rates steady.

 

[Dari]

One problem with the last Administration is that their approach was too onconsistent. If anything (since everybody is too big to fail according to some here) they should've siphoned off all the bad loans from the banks and had them guaranteed by the government. That would've been far more efficient than the hodge-podge approach by Bernanke, Paulson, and others.

 

[LegendKiller]

Originally posted by: Dari

Originally posted by: LegendKiller

Originally posted by: Dari

Originally posted by: feralkid

Originally posted by: Dari
How about we let those that should fail fail and stop propping up house prices, which are artificial?

Watching politicians trying to fix the economy is like watching doctors give someone severly addicted to heroin more heroin to keep them alive. Let them die.

Yow! You seem to understand neither addiction nor economics.

Oh, I understand economics. I think what Paulson did with Lehman Brothers was good (even though people panicked and it made things worse in the short term). Unfortunately, I think the current Administration learned the wrong lessons from letting Lehman go under. Now they'll try to prop everyone up.

As for addiction, IMHO if somebody (is an adult and) wants to kill themselves, why stop them? Why waste resources on a failed project when it could be put to better use elsewhere?

Yeah, letting Lehman fail was such a great idea. It's why the Securitization market is still shut down. Why the ABCP market can't fund anything over overnight paper with reasonable spreads, and why hundreds of businesses, many major ones, cannot fund themselves because the aformentioned problems.

Letting LEH fail was an utter disaster and is mainly the cause for tens of thousands of job losses for no real good reason.

Was Lehman also too big to fail? You cannot privatize profit and socialize losses forever. In other words, you can't pretend you're a capitalist country when you're actually socialist. Either the mask comes off or there will be more cynics like me.

First off, the whole idea and mantra of "privative profit and socialize losses" is complete bullshit. Society benefits from profits, first by taxing the shit out of corporate profits (we have one of the highest corporate tax rates of any country in the US, except for Japan), then by taxing the shit out of the highest earners making that money. Finally, most of the benefit of the profits either go to society as a whole through dividends, or through stock appreciation, by anybody who owns the stocks, including pension and mutual funds.

Second, the benefits of saving LEH would have extended past mere profit or loss. The very fact that the BK has completely fucked the markets is far more important. Orderly market participation and functioning is the most important aspect of our markets. To simply toss that aside and not attribute a monetary or economic value to it is myopic and stupid.

As we are seeing now, without the functioning of markets, our economic is fucked.

 

[LegendKiller]

Originally posted by: halik

Originally posted by: LegendKiller
Interest rate payments won't get us anywhere. The only real solution is to mark the loan to market, write down the principal balance. If the house is sold for greater than the written down principal balance, subtract out the amount of principal payments made from the delta and the remainder goes to the bank.

Homeowner stays in the house at the current market value.

Bank keeps getting payments

Securitization owners keep getting payments

Upside goes to the bank/bondholders.

Everybody wins.

I think the government is/was pushing for shared equity mortgages for a while, it's probably the best and cleanest way to devaluate real estate and keeping the occupancy rates steady.

I agree 100%. Everybody takes a hit, everybody benefits from the upside. Either way, if the house is foreclosed upon, or whether the loan is written down the investor is fucked. They are net-net at a $0 status. However, if they keep people in the house, they still get P&I and things work out much faster. If prices go back up, they get the increase up until it goes above the original value of the loan.

Only a fool would sit by and say "well, I get nothing out of that!". Everybody wins.

 

[brandonbull]

Originally posted by: LegendKiller
Interest rate payments won't get us anywhere. The only real solution is to mark the loan to market, write down the principal balance. If the house is sold for greater than the written down principal balance, subtract out the amount of principal payments made from the delta and the remainder goes to the bank.

Homeowner stays in the house at the current market value.

Bank keeps getting payments

Securitization owners keep getting payments

Upside goes to the bank/bondholders.

Everybody wins.

I can relate to that. My the value of my home has been destroyed in the last year and I would have no chance of selling my home for the next few years.

 

[Dari]

Originally posted by: LegendKiller

Originally posted by: Dari

Originally posted by: LegendKiller

Originally posted by: Dari

Originally posted by: feralkid

Originally posted by: Dari
How about we let those that should fail fail and stop propping up house prices, which are artificial?

Watching politicians trying to fix the economy is like watching doctors give someone severly addicted to heroin more heroin to keep them alive. Let them die.

Yow! You seem to understand neither addiction nor economics.

Oh, I understand economics. I think what Paulson did with Lehman Brothers was good (even though people panicked and it made things worse in the short term). Unfortunately, I think the current Administration learned the wrong lessons from letting Lehman go under. Now they'll try to prop everyone up.

As for addiction, IMHO if somebody (is an adult and) wants to kill themselves, why stop them? Why waste resources on a failed project when it could be put to better use elsewhere?

Yeah, letting Lehman fail was such a great idea. It's why the Securitization market is still shut down. Why the ABCP market can't fund anything over overnight paper with reasonable spreads, and why hundreds of businesses, many major ones, cannot fund themselves because the aformentioned problems.

Letting LEH fail was an utter disaster and is mainly the cause for tens of thousands of job losses for no real good reason.

Was Lehman also too big to fail? You cannot privatize profit and socialize losses forever. In other words, you can't pretend you're a capitalist country when you're actually socialist. Either the mask comes off or there will be more cynics like me.

First off, the whole idea and mantra of "privative profit and socialize losses" is complete bullshit. Society benefits from profits, first by taxing the shit out of corporate profits (we have one of the highest corporate tax rates of any country in the US, except for Japan), then by taxing the shit out of the highest earners making that money. Finally, most of the benefit of the profits either go to society as a whole through dividends, or through stock appreciation, by anybody who owns the stocks, including pension and mutual funds.

Second, the benefits of saving LEH would have extended past mere profit or loss. The very fact that the BK has completely fucked the markets is far more important. Orderly market participation and functioning is the most important aspect of our markets. To simply toss that aside and not attribute a monetary or economic value to it is myopic and stupid.

As we are seeing now, without the functioning of markets, our economic is fucked.

Those tax rates are nominally high but they come back to earth once all the exemptions and deductions are put in place. BTW, it's funny that you mention Japan because their economic objectives are far different from ours. Their main interest is in social stability. THat is why their wealth curve is so wide (the vast vast majority are middle class). And they also prioritize employment over profit. So, the taxation of Japanese companies is welcomed by Japan. In America, as I mentioned earlier, those taxe are watered down heavily so that you end up having an imbalance and the middle class ends up picking up the tab (that's one reason why the gap between rich and poor is so great).

Perhaps if the Bush Administration had a well thought-out plan for the economic crisis (which began in March of 2007) then we wouldn't be in the situation we are in today. But let's not pretend, given our economic history, that all these companies deserve to be around today.

 

[heyheybooboo]

^^^^^
I don't want to enter the fray but the effective US corporate tax rate is something like 17-18%. Two-thirds don't pay taxes (I'm assuming these are all s-corps).

The only reason I jumped in here is that Bloomberg has an article today that says US banks have around $1.5tril in capital and overall losses approaching $3.5tril. Kinda crimps the OPs idea of locking interest rates.

The issue I have (and I'm sure many others) whatever the ultimate solution there will be an inordinate amount of crooks who make out like uber-bandits in this one ...

 

[sandorski]

This is such a huge problem there are no easy fixes and we don't even know how bad the situation is yet. The Bailouts may or may not work, it is the first time such a thing has been attempted on such a large scale, so time is needed to truly understand what effects it will have. There will be negative consequences, no doubt, but whether they're worse than just letting things go, I highly doubt it.

One thing I think could have been tried is a temporary ban on Foreclosures. Sort of a cooling-off period where Banks and Borrowers could have possibly re-negotiated Mortgages. Perhaps having the $Bailout used to recover some of the Difference to the Bank, to make renogiation more palatable. That would be rather time consuming, a Red Tape nightmare, and possibly rife with Fraud. It also wouldn't save everyone's Mortgage, but could have helped soften the blow overall.

If the proper reguations were in place, this could have been avoided.

 

[JS80]

Originally posted by: heyheybooboo
^^^^^
I don't want to enter the fray but the effective US corporate tax rate is something like 17-18%. Two-thirds don't pay taxes (I'm assuming these are all s-corps).

The only reason I jumped in here is that Bloomberg has an article today that says US banks have around $1.5tril in capital and overall losses approaching $3.5tril. Kinda crimps the OPs idea of locking interest rates.

The issue I have (and I'm sure many others) whatever the ultimate solution there will be an inordinate amount of crooks who make out like uber-bandits in this one ...

If 2/3 of US corporations are break even, then why would they have to pay taxes?

S-Corps don't pay taxes by law.

Corps still pay payroll tax no matter what.

Employees of corporations pay plenty of tax.

What is your point?

 

[dullard]

Originally posted by: heyheybooboo
I don't want to enter the fray but the effective US corporate tax rate is something like 17-18%. Two-thirds don't pay taxes (I'm assuming these are all s-corps).

I can help your argument out. From the GAO: 2/3rds of companies don't pay federal income taxes. Although, many of those are S-corporations, which pay tax through income tax of the owners. However, it isn't all. 25% of corporations that pay no federal income tax are large ($250M+ in assets).

 

[JS80]

Originally posted by: dullard

Originally posted by: heyheybooboo
I don't want to enter the fray but the effective US corporate tax rate is something like 17-18%. Two-thirds don't pay taxes (I'm assuming these are all s-corps).

I can help your argument out. From the GAO: 2/3rds of companies don't pay federal income taxes. Although, many of those are S-corporations, which pay tax through income tax of the owners. However, it isn't all. 25% of corporations that pay no federal income tax are large ($250M+ in assets).

If they have no net income, or are using NOL carryforwards, or are using R&D tax credits, why should they pay federal income tax?

 

[shiner]

Originally posted by: Fear No Evil
What about those of us that didn't overpay and didn't agree to stupid mortgages?

How dare you be responsible!!!!

 

[JS80]

Originally posted by: Fear No Evil
What about those of us that didn't overpay and didn't agree to stupid mortgages?

You get effed in the ay. Welcome to the club.

 

[Slew Foot]

Originally posted by: JS80

Originally posted by: Fear No Evil
What about those of us that didn't overpay and didn't agree to stupid mortgages?

You get effed in the ay. Welcome to the club.

You can stop paying your mortgage and spend your money on stupid shit like a good consumer. Then eventually youll get the bank to write down your principal to an "affordable" level.

 

[LegendKiller]

Originally posted by: dullard

Originally posted by: heyheybooboo
I don't want to enter the fray but the effective US corporate tax rate is something like 17-18%. Two-thirds don't pay taxes (I'm assuming these are all s-corps).

I can help your argument out. From the GAO: 2/3rds of companies don't pay federal income taxes. Although, many of those are S-corporations, which pay tax through income tax of the owners. However, it isn't all. 25% of corporations that pay no federal income tax are large ($250M+ in assets).

However, once you strip out the ones with tax-loss carry forwards, the ones in current losses, ones with valid overseas operations without repatriation of revenues due to capital investments, among other caveats, our tax rate is still the 2nd highest.

Many love to point out the ones that don't pay, but they forget the major caveats.

 

[LegendKiller]

Originally posted by: Dari

Originally posted by: LegendKiller

Originally posted by: Dari

Originally posted by: LegendKiller

Originally posted by: Dari

Originally posted by: feralkid

Originally posted by: Dari
How about we let those that should fail fail and stop propping up house prices, which are artificial?

Watching politicians trying to fix the economy is like watching doctors give someone severly addicted to heroin more heroin to keep them alive. Let them die.

Yow! You seem to understand neither addiction nor economics.

Oh, I understand economics. I think what Paulson did with Lehman Brothers was good (even though people panicked and it made things worse in the short term). Unfortunately, I think the current Administration learned the wrong lessons from letting Lehman go under. Now they'll try to prop everyone up.

As for addiction, IMHO if somebody (is an adult and) wants to kill themselves, why stop them? Why waste resources on a failed project when it could be put to better use elsewhere?

Yeah, letting Lehman fail was such a great idea. It's why the Securitization market is still shut down. Why the ABCP market can't fund anything over overnight paper with reasonable spreads, and why hundreds of businesses, many major ones, cannot fund themselves because the aformentioned problems.

Letting LEH fail was an utter disaster and is mainly the cause for tens of thousands of job losses for no real good reason.

Was Lehman also too big to fail? You cannot privatize profit and socialize losses forever. In other words, you can't pretend you're a capitalist country when you're actually socialist. Either the mask comes off or there will be more cynics like me.

First off, the whole idea and mantra of "privative profit and socialize losses" is complete bullshit. Society benefits from profits, first by taxing the shit out of corporate profits (we have one of the highest corporate tax rates of any country in the US, except for Japan), then by taxing the shit out of the highest earners making that money. Finally, most of the benefit of the profits either go to society as a whole through dividends, or through stock appreciation, by anybody who owns the stocks, including pension and mutual funds.

Second, the benefits of saving LEH would have extended past mere profit or loss. The very fact that the BK has completely fucked the markets is far more important. Orderly market participation and functioning is the most important aspect of our markets. To simply toss that aside and not attribute a monetary or economic value to it is myopic and stupid.

As we are seeing now, without the functioning of markets, our economic is fucked.

Those tax rates are nominally high but they come back to earth once all the exemptions and deductions are put in place. BTW, it's funny that you mention Japan because their economic objectives are far different from ours. Their main interest is in social stability. THat is why their wealth curve is so wide (the vast vast majority are middle class). And they also prioritize employment over profit. So, the taxation of Japanese companies is welcomed by Japan. In America, as I mentioned earlier, those taxe are watered down heavily so that you end up having an imbalance and the middle class ends up picking up the tab (that's one reason why the gap between rich and poor is so great).

Perhaps if the Bush Administration had a well thought-out plan for the economic crisis (which began in March of 2007) then we wouldn't be in the situation we are in today. But let's not pretend, given our economic history, that all these companies deserve to be around today.

As I mentioned in the post above, many of the exemptions and deductions are standards (deduction of interest, or losses, or loss carryforwards). Evne if their social objectives (through economic policies) are different, our tax rate is still far higher, even on an effective basis, than most of the world's countries. Some compare taxes paid to GDP, which is a silly measurement considering the amount of government spending incorporated into GDP.

Who is to choose what companies should and should not be around due to temporary market imbalances? Almost all of the current problem is due to nothing but liquidity premiums placed upon assets, NOT CREDIT LOSSES.

 

[JS80]

Originally posted by: Slew Foot

Originally posted by: JS80

Originally posted by: Fear No Evil
What about those of us that didn't overpay and didn't agree to stupid mortgages?

You get effed in the ay. Welcome to the club.

You can stop paying your mortgage and spend your money on stupid shit like a good consumer. Then eventually youll get the bank to write down your principal to an "affordable" level.

as retarded as that is, my coworker is considering doing this just because she's pissed everyone gets bailed out, yet she has to keep an expensive mortgage she CAN afford. So she's going to "not pay" then negotiate lowering the principal. I figure this type of stuff will spread throughout.

 

[LegendKiller]

Originally posted by: heyheybooboo
^^^^^
I don't want to enter the fray but the effective US corporate tax rate is something like 17-18%. Two-thirds don't pay taxes (I'm assuming these are all s-corps).

The only reason I jumped in here is that Bloomberg has an article today that says US banks have around $1.5tril in capital and overall losses approaching $3.5tril. Kinda crimps the OPs idea of locking interest rates.

The issue I have (and I'm sure many others) whatever the ultimate solution there will be an inordinate amount of crooks who make out like uber-bandits in this one ...

The $3.5tr in losses against 1.54tr in capital is a silly amount. The default rate simply doesn't work out, especially on a net basis, when comparing those losses to all of the assets originated in the last 5 years. Even at 20TR in assets, that'd be a 17.5% default rate on a net basis. I call bullshit on that.

That doesn't even take into account future revenues to offset the losses, nor current loan-loss reserves. Additionally, the losses projected are against ALL assets but only comparing to what the banks have in capital. Much of the assets he projects with 17.5% losses aren't even held by the banks.

 

[eleison]

Originally posted by: dullard

Originally posted by: Fear No Evil
What about those of us that didn't overpay and didn't agree to stupid mortgages?

You can rest assured that your house won't plummet in value, that you won't have foreclosures at your next-door neighbors and drug dealers/gang members moving in. You can rest assured that you can actually sell your house when time comes for you to move. You still have a good bank account balance, good credit rating, and a home over your head. If the bailout works, the economy won't crash and you'll still have a job. You'll have a pretty nice life after a bailout. Without a bailout, who knows...

Part of the recent bailout moves have put 30-year mortgages in the mid 4% range. Maybe you should consider taking advantage of it and refinance. You could save hundreds of dollars a month.

For people who did not "overpay" and buy more house than they can afford, once the bailout takes affect... you will still live in your house which is probably worse than the house that other people overpaid for... In addition to that, since the housing prices did not "plummet", you will also be free not to upgrade to a bigger house which your neighbor probably has and which he can afford ONLY because of the bailout... stupid you for being responsible. In addition, for those who were responsible, you will also get the benefits of having to pay for these bailouts via increases in taxes (maybe not today, maybe not tomorrow, but trust me, you will pay).

As more money is being pumped into the system to pay for people's mortgages which they cannot afford, watch as jobs are not created since most of the money is not about "creating wealth", but about paying mortgages of people that shouldn't be in those houses in the first place. As time moves on, see more people ask for more bailout money... and even more money... .and even more money... and even more bailout money..

The government has already gotten one round of bailouts and it didn't work.. The american worker is total farked.