U.S. subprime crisis: Harbinger of the apocalypse, or garden-variety economic downturn?

[EagleKeeper]

Originally posted by: dahunan

Originally posted by: GTKeeper



I don't think you can place the blame strictly on the 'average joe'. If you look at lending behavior overall, people tend to borrow on average, almost as much as they qualify for. What changed between the 1980s (when interest rates were 10%+) and today is that lending practices changed, not so much the borrowing behavior.

So when a bank says 'you qualify for a 500k mortgage' you think you qualify, which in turns means you can pay for it. Now, granted its not JUST the banks fault, but the banks did just as a poor job of projecting risk on these loans as the borrowers.

Remember, its the banks that came up with these sub prime loans, not the borrowers.

But did they really misproject how bad the risk was or was there some sinister plan? There is no way they could really think, with how bad american are with credit in general, that all these people could really repay these huge mortgages...

My Theory - and it may be not fully accurate
The loan originators (banks) want to unload their obligations as soon they can into the secondary markets. Those purchasers did not expect that the economy would slide over a 3-5 year period to the extent that people could not be able to refinance (they expected more sucker loans to be able to be written). With the housing values not climbing and the sucker market contracting at the buyer and lender levels all the items needed to create a massive fire sale happened.

The system may have been able to survive one of the hits, but not all three/four together.

 

[GTKeeper]

Originally posted by: dahunan

Originally posted by: GTKeeper

Originally posted by: palehorse74

Originally posted by: dahunan
SO.. who will repay us the $200+,000,000,000 the housing lenders stole from us then?

Or is that just average theft by Corporations?

did they really "steal" it, or was the Average Joe simply too stupid to avoid them?

I don't think you can place the blame strictly on the 'average joe'. If you look at lending behavior overall, people tend to borrow on average, almost as much as they qualify for. What changed between the 1980s (when interest rates were 10%+) and today is that lending practices changed, not so much the borrowing behavior.

So when a bank says 'you qualify for a 500k mortgage' you think you qualify, which in turns means you can pay for it. Now, granted its not JUST the banks fault, but the banks did just as a poor job of projecting risk on these loans as the borrowers.

Remember, its the banks that came up with these sub prime loans, not the borrowers.

But did they really misproject how bad the risk was or was there some sinister plan? There is no way they could really think, with how bad american are with credit in general, that all these people could really repay these huge mortgages...

I don't think this was a part of some sinister plan. There are a lot of lending institutions that were not hit with the sub prime write downs. Obviously they calculated the risk correctly.

 

[SphinxnihpS]

Originally posted by: smack Down

Originally posted by: SphinxnihpS

Originally posted by: RightIsWrong

Originally posted by: piasabird
Some people might pose the question, "Why should we expect prices to keep going up?"

It is more likely the prices are inflated to a level that is higher than what the properties are really worth, and this is a real estatate bubble that was just waiting to burst. Just let the unsound financial businesses fail. That is the law of the business jungle.

If that were the case, we wouldn't be bailing out Bear Stearns or other institutions.

Too many people are under the delusional idea that we are a capitalistic society when that is clearly not true. Our system is based primarily on it, but there is certainly tinges of socialistic and communistic influenced thrown into the mix as well.

WE, being the US government which WE THE PEOPLE comprise, did not bail out Bear Stearn. Bear Stearn is being absorbed by the Federal Reserve, which is neither federal or a reserve.

The delusion is not whether we are capitalist or not, it is that there is an economy. What there really is, is a sytem for private banks to be guaranteed to make money in perpetuity. If you think Microsoft is a trust, look at the Federal Reserve. Fortunately for them, the government (that's us again people), have permanently exempted them from anti-trust law.

You are right it wasn't Bear that was build out it was their counter parties the biggest being JP Morgan which got 30 billion dollars from the fed.

JP Morgan is the fed. LOL. The federal reserve is not fereral or a reserve. The people that run the federal reserve are member of the SECRET banks that comprise it. The banks are privately owned, but the identities of the major players are purposely obfuscated. JP Morgan is almost certainly one of the main banks comprising the Federal Reserve proper. All banks are part of the system. When you open a bank, you are franchising from the Fed, just as if you open a McDonalds. The difference between McDonalds and the Fed is that nobody has to eat at McDonalds, they can go to Burger King or the grocery store. You have to borrow money from somewhere, but since all banks act in trust to fix rates, set policeis, etc. you don't really have a choice. What is even more troubling is that the Fed advises the Treasury department on when and how much money to print. The entire monentary system in this country and most of the world is an illusion, and we could very well be on the verge of economic slavery.

 

[LegendKiller]

Originally posted by: SphinxnihpS

Originally posted by: smack Down

Originally posted by: SphinxnihpS

Originally posted by: RightIsWrong

Originally posted by: piasabird
Some people might pose the question, "Why should we expect prices to keep going up?"

It is more likely the prices are inflated to a level that is higher than what the properties are really worth, and this is a real estatate bubble that was just waiting to burst. Just let the unsound financial businesses fail. That is the law of the business jungle.

If that were the case, we wouldn't be bailing out Bear Stearns or other institutions.

Too many people are under the delusional idea that we are a capitalistic society when that is clearly not true. Our system is based primarily on it, but there is certainly tinges of socialistic and communistic influenced thrown into the mix as well.

WE, being the US government which WE THE PEOPLE comprise, did not bail out Bear Stearn. Bear Stearn is being absorbed by the Federal Reserve, which is neither federal or a reserve.

The delusion is not whether we are capitalist or not, it is that there is an economy. What there really is, is a sytem for private banks to be guaranteed to make money in perpetuity. If you think Microsoft is a trust, look at the Federal Reserve. Fortunately for them, the government (that's us again people), have permanently exempted them from anti-trust law.

You are right it wasn't Bear that was build out it was their counter parties the biggest being JP Morgan which got 30 billion dollars from the fed.

JP Morgan is the fed. LOL. The federal reserve is not fereral or a reserve. The people that run the federal reserve are member of the SECRET banks that comprise it. The banks are privately owned, but the identities of the major players are purposely obfuscated. JP Morgan is almost certainly one of the main banks comprising the Federal Reserve proper. All banks are part of the system. When you open a bank, you are franchising from the Fed, just as if you open a McDonalds. The difference between McDonalds and the Fed is that nobody has to eat at McDonalds, they can go to Burger King or the grocery store. You have to borrow money from somewhere, but since all banks act in trust to fix rates, set policeis, etc. you don't really have a choice. What is even more troubling is that the Fed advises the Treasury department on when and how much money to print. The entire monentary system in this country and most of the world is an illusion, and we could very well be on the verge of economic slavery.

Wow.

 

[LegendKiller]

Originally posted by: ShotgunSteven

Originally posted by: LegendKiller

Originally posted by: dahunan
Are the banks still way over their lending limits... Lending something like $8:1

It depends on their capital ratios and what is required for various asset positions.

It's a very complicated scenario, one which I deal with all of the time. Since I work for a european bank, we are governed by Basel II. Calculating the total capital used requires about 13 different inputs.

I believe they said on the Wall Street Journal This Morning earlier that JP Morgan Chase announced that they took on another three billion in leveraged loans.

And?

 

[ShotgunSteven]

Originally posted by: LegendKiller

Originally posted by: ShotgunSteven

Originally posted by: LegendKiller

Originally posted by: dahunan
Are the banks still way over their lending limits... Lending something like $8:1

It depends on their capital ratios and what is required for various asset positions.

It's a very complicated scenario, one which I deal with all of the time. Since I work for a european bank, we are governed by Basel II. Calculating the total capital used requires about 13 different inputs.

I believe they said on the Wall Street Journal This Morning earlier that JP Morgan Chase announced that they took on another three billion in leveraged loans.

And?

It was mentioned that they (JP Morgan and others of their ilk) now think the credit crunch is going to be over with much sooner than anticipated.

 

[techs]

Originally posted by: palehorse74

Originally posted by: dahunan
SO.. who will repay us the $200+,000,000,000 the housing lenders stole from us then?

Or is that just average theft by Corporations?

did they really "steal" it, or was the Average Joe simply too stupid to avoid them?

Yeah, it was the little old ladies fault. She should have avoided the armed robber.
Seems pretty irrational to blame the victim, doesn't it?

 

[SphinxnihpS]

Ever wonder why Bear Stearns went belly up, or more acurately why they were allowed by the Fed to go under? It's because they acted independantly from the rest of the large banks, and did not pony up the money they were asked for to bail out a giant hedge fund back in 1998.

 

[LegendKiller]

Originally posted by: SphinxnihpS
Ever wonder why Bear Stearns went belly up, or more acurately why they were allowed by the Fed to go under? It's because they acted independantly from the rest of the large banks, and did not pony up the money they were asked for to bail out a giant hedge fund back in 1998.

Yeah, because the Fed would allow them to collapse, screw millions of shareholders, erase tens of billions in wealth of the same people, and sink the financial markets, just to screw a few people at BSC.

Get a clue.

 

[dmcowen674]

Originally posted by: LegendKiller

Originally posted by: SphinxnihpS

JP Morgan is the fed. LOL. The federal reserve is not fereral or a reserve. The people that run the federal reserve are member of the SECRET banks that comprise it. The banks are privately owned, but the identities of the major players are purposely obfuscated. JP Morgan is almost certainly one of the main banks comprising the Federal Reserve proper. All banks are part of the system. When you open a bank, you are franchising from the Fed, just as if you open a McDonalds. The difference between McDonalds and the Fed is that nobody has to eat at McDonalds, they can go to Burger King or the grocery store. You have to borrow money from somewhere, but since all banks act in trust to fix rates, set policeis, etc. you don't really have a choice. What is even more troubling is that the Fed advises the Treasury department on when and how much money to print. The entire monentary system in this country and most of the world is an illusion, and we could very well be on the verge of economic slavery.

Wow.

Upset that others know your buds secrets?

 

[Vic]

Originally posted by: dmcowen674

Originally posted by: LegendKiller

Originally posted by: SphinxnihpS

JP Morgan is the fed. LOL. The federal reserve is not fereral or a reserve. The people that run the federal reserve are member of the SECRET banks that comprise it. The banks are privately owned, but the identities of the major players are purposely obfuscated. JP Morgan is almost certainly one of the main banks comprising the Federal Reserve proper. All banks are part of the system. When you open a bank, you are franchising from the Fed, just as if you open a McDonalds. The difference between McDonalds and the Fed is that nobody has to eat at McDonalds, they can go to Burger King or the grocery store. You have to borrow money from somewhere, but since all banks act in trust to fix rates, set policeis, etc. you don't really have a choice. What is even more troubling is that the Fed advises the Treasury department on when and how much money to print. The entire monentary system in this country and most of the world is an illusion, and we could very well be on the verge of economic slavery.

Wow.

Upset that others know your buds secrets?

Wow^2.

 

[LegendKiller]

Originally posted by: dmcowen674

Originally posted by: LegendKiller

Originally posted by: SphinxnihpS

JP Morgan is the fed. LOL. The federal reserve is not fereral or a reserve. The people that run the federal reserve are member of the SECRET banks that comprise it. The banks are privately owned, but the identities of the major players are purposely obfuscated. JP Morgan is almost certainly one of the main banks comprising the Federal Reserve proper. All banks are part of the system. When you open a bank, you are franchising from the Fed, just as if you open a McDonalds. The difference between McDonalds and the Fed is that nobody has to eat at McDonalds, they can go to Burger King or the grocery store. You have to borrow money from somewhere, but since all banks act in trust to fix rates, set policeis, etc. you don't really have a choice. What is even more troubling is that the Fed advises the Treasury department on when and how much money to print. The entire monentary system in this country and most of the world is an illusion, and we could very well be on the verge of economic slavery.

Wow.

Upset that others know your buds secrets?

No, upset that the internet allows people like that to spread such FUDD.

 

[nullzero]

Our economy is deterating rapidly on so many different areas. This economic downturn is going to be the worst we have encountered since 1929.

 

[LegendKiller]

Originally posted by: nullzero
Our economy is deterating rapidly on so many different areas. This economic downturn is going to be the worst we have encountered since 1929.

Please state your reasoning behind this statement?