Jim Rogers Rips MSNBC a new one!!

[smack Down]

Originally posted by: LegendKiller

Originally posted by: GTKeeper
Sorry to break it to you but the average joe is just sheeple herded around by society. So in effect the answer is yes.

Think of it this way. What the banks did as you very well known is the equivalent of me having 1,000,000 dollars and giving 100,000 of it away at a time simply asking 'promise you will pay it back' without even knowing the person I lent the money to!

What are the odds that I get all my money back? And who is the true idiot in this case? Me or the people that I lent the money to that are irresponsible? I think its more my fault because I was dumb enough to lend the money in the first place, KNOWING it was probably a bad idea. Do you disagree with that?

I think you're completely underestimating the intelligence and absolute ruthlessness and singlemindedness of some of these "investors" in this latest bubble.

Take for example a woman I went to college with. She was a friend of my wife's that I met while dating her. Always kind of a "hippie chick", never really cared about money. She graduated 1 credit shy of a masters from our school, it was a program offered by the university so that a new teacher could be 1 credit from getting a masters, but still be able to get hired as a new teacher.

she moved down to Naples FL, where my MIL lives, and got a job teaching for about 35k/yr. Eventually she bought a condo for $130k. She renovated it for 20k and made it pretty nice. Within 9 months the condo was appraised at $280k.

She had a baby in that time from a guy who was a revolving boyfriend. But in that time she decided to play the RE market game (2004). She hatched a plan to buy a $500K house, paying for it with the "equity" in her prior house, and then selling her reproductive eggs to make the monthly payments. I called her and advised that this was a bad idea, said she was putting her kid's future at risk. I went through the cashflows, showing that especially after flood/hurricane insurance she'd be underwater every month by $500. She ignored it and said I was jealous.

That eventually fell through, but she did buy a place for $350K in a place. She cashed out 140k in "equity" from her old place, using only 20k down for the new one, and paying off $80k in CC bills and 40k in refinishing costs of the other place. She lied about her income in both loans.

Fast-foward to today. She now has two kids with a different boyfriend. She has $600K in mortgages with houses worth approximately 320K. She quit her teaching job to run a daycare out of her home.

Not so ironically, she is now collecting welfare because she's a "single mom" of two. Her boyfriend of 3 years makes $60k as an electrician. However, since her business is all cash, they aren't married, and she refuses to allow her kid (from another dad) and his own kid to go on his insurance. Thus, she gets medicaid as well. Now she apparently got the banks to "help" her with her mortgages, reducing payments and altering terms.

She's now taking her "new money" (aka, the payment assistance she got from the banks) and spending it on stupid shit, such as $200 birthday cakes for her kid, and Abercrombie clothes for a 4 year old.


You see, people aren't brainless. They are very calculating and manipulative. They think the world owes them a quick buck and they'll do anything to get it. She's intelligent, but greedy, and should deserve everything she gets.


I agree that things should be much more cut and dry and banks should be allowed to fail. However, it isn't that easy in the real world.

And yet for some reason you want to bail out the idiot bank that lent about 10x a person income.

 

[LegendKiller]

Originally posted by: smack Down
And yet for some reason you want to bail out the idiot bank that lent about 10x a person income.

Yes, but then I also advocate *FIXING* the situation. This is a mutually exclusive decision you have.

1. You let the banks fail, like all other consumers. HOW MUCH DOES THIS COST?

2. You save the banks, let the consumers fail. HOW MUCH DOES THIS COST?

You guys think this is a simple "fuck the banks, nothing will happen if they fail".

Sorry, but financial analysis doesn't work like that. You have to consider the scenario in each case and weigh the costs of each scenario.

From my perspective, letting the banks fail will cost the country far more in borrowing costs, lost jobs, financial liquidity, among a myriad of other things.

The biggest problem here is stopping this shit either before it happens or when it starts to get ridiculous. It was painfully obvious by 1999 that the ridiculousness of the .bombs was out of hand, especially with how the banks were pumping and dumping. Yet, nothing happened until AFTER they blew up. Then it was "gosh, why didn't we see that one coming?"

Same thing with housing. It was obvious by 2004 that things were just ridiculous. Had we stopped it, things would have worked out differently.

What your problem is is that you think I am a person who is totally for bailing out the banks. Sorry, but I look at it from a far more pragmatic perspective.

 

[ponyo]

:laugh: That was great! I see he still haven't lost it.

 

[LegendKiller]

Originally posted by: JeffreyLebowski

Originally posted by: LegendKiller


So, in other words. Consumers are idiots who cannot think, have no personal responsibility, and depend on non-capitalistic ideas and socialist government control to keep them in line and under control?

Ok. Great.

Part of the problem is the lending industry is so complicated and the mortgage process and everything that goes into it is overly complicated. A person of average intelligence is not going to understand half the shit in that contract. And that's the way the lenders want it.

It's no longer the 1st Bank of Smalltown giving a loan so it's clients and residents of the town can get a home and prosper and in doing so the community as a whole (including the bank) prosper and grow.

Now it is about making as much $$$ as quick as possible and fuck the people whose heads you step on to do it.

Passthrough financing has also lowered borrowing costs significantly and has modernized a field which needed modernization.

It's not that difficult to say.

1. All borrowers need to verify income, at all times.

2. All borrowers need to have X% of coverage on their *VERIFIED* income.

3. ARM products need to be able to cover X% and also an estimated amount of the forward yield curve after the reset period.

4. All borrowers need to have X% down payment (call it a minimum of 5%). No silent seconds.

5. All borrowers need to be FICO scored.

6. All borrowers who are subprime need to carry PMI.

7. ANY income from the sale of a house needs to be taxed.

Many others. This stuff isn't difficult and could be enacted easily. Some exceptions would be needed, but this should capture 90% of everything.

 

[smack Down]

Originally posted by: LegendKiller

Originally posted by: smack Down
And yet for some reason you want to bail out the idiot bank that lent about 10x a person income.

Yes, but then I also advocate *FIXING* the situation. This is a mutually exclusive decision you have.

1. You let the banks fail, like all other consumers. HOW MUCH DOES THIS COST?

2. You save the banks, let the consumers fail. HOW MUCH DOES THIS COST?

You guys think this is a simple "fuck the banks, nothing will happen if they fail".

Sorry, but financial analysis doesn't work like that. You have to consider the scenario in each case and weigh the costs of each scenario.

From my perspective, letting the banks fail will cost the country far more in borrowing costs, lost jobs, financial liquidity, among a myriad of other things.

The biggest problem here is stopping this shit either before it happens or when it starts to get ridiculous. It was painfully obvious by 1999 that the ridiculousness of the .bombs was out of hand, especially with how the banks were pumping and dumping. Yet, nothing happened until AFTER they blew up. Then it was "gosh, why didn't we see that one coming?"

Same thing with housing. It was obvious by 2004 that things were just ridiculous. Had we stopped it, things would have worked out differently.

What your problem is is that you think I am a person who is totally for bailing out the banks. Sorry, but I look at it from a far more pragmatic perspective.

It is going to cost more to bail out the banks then not.

It is going to benefit very few and very rich to bail out the banks at the expense of the poor and tax payers.

And you will never be able to make it illegal not to take risk when you socialize the losses.

 

[sandorski]

I think the biggest risk to just letting Banks Fail is the possibility of recreating a 1929 run on the Banks panic. Everytime a Bank fails many Customers end up losing lots of $$. Perhaps they were foolish for keeping more than the Insured amount, but when the stories start piling up people will just hear of these losses and act accordingly, whatever that is.

 

[JS80]

It's sad to see people advocating repeating history by killing liquidity in this environment. I personally don't like bailouts and I think equity holders should get nothing but to let these entities fail is like shooting yourself in the face.

 

[LegendKiller]

Originally posted by: smack Down

Originally posted by: LegendKiller

Originally posted by: smack Down
And yet for some reason you want to bail out the idiot bank that lent about 10x a person income.

Yes, but then I also advocate *FIXING* the situation. This is a mutually exclusive decision you have.

1. You let the banks fail, like all other consumers. HOW MUCH DOES THIS COST?

2. You save the banks, let the consumers fail. HOW MUCH DOES THIS COST?

You guys think this is a simple "fuck the banks, nothing will happen if they fail".

Sorry, but financial analysis doesn't work like that. You have to consider the scenario in each case and weigh the costs of each scenario.

From my perspective, letting the banks fail will cost the country far more in borrowing costs, lost jobs, financial liquidity, among a myriad of other things.

The biggest problem here is stopping this shit either before it happens or when it starts to get ridiculous. It was painfully obvious by 1999 that the ridiculousness of the .bombs was out of hand, especially with how the banks were pumping and dumping. Yet, nothing happened until AFTER they blew up. Then it was "gosh, why didn't we see that one coming?"

Same thing with housing. It was obvious by 2004 that things were just ridiculous. Had we stopped it, things would have worked out differently.

What your problem is is that you think I am a person who is totally for bailing out the banks. Sorry, but I look at it from a far more pragmatic perspective.

It is going to cost more to bail out the banks then not.

It is going to benefit very few and very rich to bail out the banks at the expense of the poor and tax payers.

And you will never be able to make it illegal not to take risk when you socialize the losses.

And you determined this...how?

I know your analysis of the plane+treadmill was of top quality, so I wait your wizened analysis.

 

[LegendKiller]

Originally posted by: sandorski
I think the biggest risk to just letting Banks Fail is the possibility of recreating a 1929 run on the Banks panic. Everytime a Bank fails many Customers end up losing lots of $$. Perhaps they were foolish for keeping more than the Insured amount, but when the stories start piling up people will just hear of these losses and act accordingly, whatever that is.

You'd absolutely recreate 1929. It's interesting, similar events caused 1929 and the opposite action is being taken, preventing 1929. Yet people fail to realize that the cost of a 1929+ is far higher than the alternative.

What's worse is that the events that were enacted to prevent a 1929 were in place up until 20 years ago, after which they were slowly removed.

 

[smack Down]

Originally posted by: LegendKiller

Originally posted by: sandorski
I think the biggest risk to just letting Banks Fail is the possibility of recreating a 1929 run on the Banks panic. Everytime a Bank fails many Customers end up losing lots of $$. Perhaps they were foolish for keeping more than the Insured amount, but when the stories start piling up people will just hear of these losses and act accordingly, whatever that is.

You'd absolutely recreate 1929. It's interesting, similar events caused 1929 and the opposite action is being taken, preventing 1929. Yet people fail to realize that the cost of a 1929+ is far higher than the alternative.

What's worse is that the events that were enacted to prevent a 1929 were in place up until 20 years ago, after which they were slowly removed.

Right and if the titanic had turn right just before striking the iceberg instead of left it wouldn't have sunk. It is the opposite so it must prevent anything bad from happening.

Let those who made bad investment take the hit and leave the reset of us alone.

 

[LegendKiller]

Originally posted by: smack Down

Originally posted by: LegendKiller

Originally posted by: sandorski
I think the biggest risk to just letting Banks Fail is the possibility of recreating a 1929 run on the Banks panic. Everytime a Bank fails many Customers end up losing lots of $$. Perhaps they were foolish for keeping more than the Insured amount, but when the stories start piling up people will just hear of these losses and act accordingly, whatever that is.

You'd absolutely recreate 1929. It's interesting, similar events caused 1929 and the opposite action is being taken, preventing 1929. Yet people fail to realize that the cost of a 1929+ is far higher than the alternative.

What's worse is that the events that were enacted to prevent a 1929 were in place up until 20 years ago, after which they were slowly removed.

Right and if the titanic had turn right just before striking the iceberg instead of left it wouldn't have sunk. It is the opposite so it must prevent anything bad from happening.

Let those who made bad investment take the hit and leave the reset of us alone.

Because it'd only affect those who made bad investments. Great one sparky.

Still waiting for your expert analysis.

 

[imported_Lothar]

Jim Rogers is no different from T. Boone Pickens.

 

[BansheeX]

Originally posted by: LegendKiller
Nobody has been able to explain to me how people would be better off if we had let everything crumble.

As rchiu said above, Rogers has his own motivations.

What's silly is that his investments in China can't be doing all that well. He's sucking wind there and will continue to do so. China is a big mess.

China's financial problem is that they're continuing to link their currency to ours and loaning out money to an American economy that can't pay it back. Otherwise, their economy is on sounder foundations because they are producing far more goods than we are while we are essentially selling services to each other and importing everything, which is entirely dependent on being subsidized by willing foreign creditors. They don't need our consumption in order to drive their economies, they have plenty of would-be consumers themselves, and as soon as their currency is allowed to appreciate, they will be consuming their products instead of sending them over here for overvalued pieces of paper. But Keynesians have exported their banking system and theories elsewhere. So far they're doing a bang-up job of convincing the world that inflation is not above our bond yields and that American collapse would be mutual. These misconceptions may unravel if it's gets bad enough that they see those results as being the inevitable destination of current policies. There is a limit to how much foreign banks can inflate their currencies to keep the dollar from falling more precipitously against them.

No doubt, Rogers and others like him are betting that this is what's going to happen, and if they're right, Chinese stocks are huge bargains right now.

 

[smack Down]

Originally posted by: sandorski
I think the biggest risk to just letting Banks Fail is the possibility of recreating a 1929 run on the Banks panic. Everytime a Bank fails many Customers end up losing lots of $$. Perhaps they were foolish for keeping more than the Insured amount, but when the stories start piling up people will just hear of these losses and act accordingly, whatever that is.

Ok so what is the other option? Fire up the printing presses to give billions of dollars to ever bank? Therefor driving up inflation more and making dave's drive for 5 come true. The inflation will cause even more people to fall behind on there mortgages causing more losses at the banks.

The losses are real and they are not going to go away no matter how much money the FED prints.

 

[LegendKiller]

Originally posted by: BansheeX

Originally posted by: LegendKiller
Nobody has been able to explain to me how people would be better off if we had let everything crumble.

As rchiu said above, Rogers has his own motivations.

What's silly is that his investments in China can't be doing all that well. He's sucking wind there and will continue to do so. China is a big mess.

China's financial problem is that they're continuing to link their currency to ours and loaning out money to an American economy that can't pay it back. Otherwise, their economy is on sounder foundations because they are producing far more goods than we are while we are essentially selling services to each other and importing everything, which is entirely dependent on being subsidized by willing foreign creditors. They don't need our consumption in order to drive their economies, they have plenty of would-be consumers themselves, and as soon as their currency is allowed to appreciate, they will be consuming their products instead of sending them over here for overvalued pieces of paper. But Keynesians have exported their banking system and theories elsewhere. So far they're doing a bang-up job of convincing the world that inflation is not above our bond yields and that American collapse would be mutual. These misconceptions may unravel if it's gets bad enough that they see those results as being the inevitable destination of current policies. There is a limit to how much foreign banks can inflate their currencies to keep the dollar from falling more precipitously against them.

No doubt, Rogers and others like him are betting that this is what's going to happen, and if they're right, Chinese stocks are huge bargains right now.

Their economy is on sounder foundations? What the fuck are you smoking? Their "foundation" IS the US economy. Without us, they've got nothing.

China, forever, has subsidized energy to keep inflation down as their lower classes grow into prominence. This has helped squelch increases in prices for various goods due to higher demand with the same supply. They're still a very top-heavy country, whereby the lower classes produce inefficiently, while the higher classes suck all of the wealth, the higher classes are growing far faster than the lower's can support them, creating great price disparity.

Add on top of that the very fact that they have had their own credit bubble. The chinese banks are sitting on hundreds of billions of bad loans to communist/capitalist business leaders. They don't have the accounting systems we do to show this debt, which would show up in the US, but not there. As a result, their banks are even less sound than ours, but the government props them up far more than ours does, since they are all practically state owned.

Their economy has been able to survive the combination of problems only because they had a cheap currency to transport cheap shit to the US and, to a lesser extent, the US. Overall, they are still very resource poor, which will eventually constrain their ability to grow, unless they start taking resources, since their reduced ability to export and increased inflation, will result in less reserves and more civil unrest.

Their rate of inflation is far higher than the US, especially now that the energy subsidies are being stripped away.

It's readily apparent you know jack shit about China but love to toss it about to make yourself look important.

 

[BansheeX]

Originally posted by: LegendKiller

It's readily apparent you know jack shit about China but love to toss it about to make yourself look important.

What I do know is that despite your fevered ranting, we are running massive trade deficits to that "mess" you reference. That we're a debtor nation to that mess is all the more telling of how screwed we are. And unlike past trade deficits, we aren't exactly borrowing to build productive infrastructure that will pay itself back.

And what, you think legitimate wealth creation (in any class) doesn't give us problems over here? Of course they're having supply problems as a result, but that's because they have to outbid an overvalued currency that they are deluded into propping up. Everyone's competing for a finite amount of goods and they're going to start demanding and getting more of it. You mention energy dependency as if they need us for that. That has nothing to do with us, we have the same problem. Their ability to import energy for their growing economy is at odds with ours. They can give the world products. What are we going to offer? Haircuts, backrubs, insurance policies? Easily pirated software? Ra ra government bonds that don't even cover inflation?

This correction that we've been meaning to have for a long time is quite necessary and it's going to be quite severe now that the Fed has delayed it this long with two monster bubbles. The government is trying to prop up the service sector, the retail outlets, the real estate jobs, the homebuilders, basically everything opposite of what a weak currency is good for (exports). It's going to take YEARS to tear down all these malls and build factories again.

 

[rchiu]

Originally posted by: smack Down

Originally posted by: sandorski
I think the biggest risk to just letting Banks Fail is the possibility of recreating a 1929 run on the Banks panic. Everytime a Bank fails many Customers end up losing lots of $$. Perhaps they were foolish for keeping more than the Insured amount, but when the stories start piling up people will just hear of these losses and act accordingly, whatever that is.

Ok so what is the other option? Fire up the printing presses to give billions of dollars to ever bank? Therefor driving up inflation more and making dave's drive for 5 come true. The inflation will cause even more people to fall behind on there mortgages causing more losses at the banks.

The losses are real and they are not going to go away no matter how much money the FED prints.

Were do you get the FED is giving billions of dollars to banks? Do you even read up on the current news and really understand what the FED is doing? 1st, FED is only lending banks money in exchange for triple-A grade assets so banks can do their business in this tight credit market without taking a big hit on the cost of borrowing. Do you understand what triple-A rated bond is? 2nd, if FED does guarantee fannie/freddie's asset, they are not giving money away, they are only guaranteeing assets that are rated in A level as oppose to junk bond at triple B and below.

This market lack confidence, lack liquidity, two things that kills banks. Banks can have very sound financial structure, but with lack of confidence, lack of liquidity, it will be hard for them to survive. So FED is specifically helping to address those two short term problems. Only ignorant people, or people with their own agenda, choose to ignore that fact and states FED is giving out free money, or adding 5 trillion dollar debt in one weekend crap.