I thought an over-inflated military industrial complex with a side-order of fanatical laissez-faire capitalists was the "American Dream".

ScubaDude1960: FTA: Lax regulation of Fannie Mae and Freddie Mac led to the mortgage companies taking on too many risky loans, Wallison said.

We'll just ignore the expansion of the money supply and the artificially low interest rates, without which none of this could have happened. We'll also ignore that fact that, due to the expansion of the money supply and the artificially low interest rates, no amount of regulation could have prevented the bubble.

This is interesting to me. Given that lobbyists have an enormous amount of power I think you are correct, but in a rational universe this would not be so. Lots of ordinary americans made a ton of money while many big losers were also created. The question for me is that since Wall Street has mastered hedging via derivatives and other financial devices and since the big money is in knowing what side of volatility to be on, is it really in the best interest for big banks to create a stable economy?

aneki: Thing I don't understand, is that if the government is going to own most the mortgages...

Why even bother with the current mortgage structure at all?

Wouldn't it be more profitable to have an interest only for life structure in place? Most of these defaults started occurring when mortgages reset, why have them reset at all? Just take any fannie/freddie loan and say hey, you just make your interest payment, and if you don't pay off the loan by the time you die, we take the house and sell it to someone else.

This is a banker's wet dream. Flood the market with money, and drive up prices to the point that the banks own everything and everybody else rents it from them.

aneki: Thing I don't understand, is that if the government is going to own most the mortgages...

Why even bother with the current mortgage structure at all?

Wouldn't it be more profitable to have an interest only for life structure in place? Most of these defaults started occurring when mortgages reset, why have them reset at all? Just take any fannie/freddie loan and say hey, you just make your interest payment, and if you don't pay off the loan by the time you die, we take the house and sell it to someone else.

There's two reasons that this is colossally stupid:

The first, already alluded to by others, is that the "buyer" would end up with all the incidents of ownership (responsibility to make repairs, cover insurance, absorb liability, etc.) with none of the benefits. A similarly-situated rented has none of these problems.

The second is that someone who incurs debt only for the deduction is the definition of a financial idiot. It's not mortgage payments that are deductible, it's mortgage interest. Interest, by definition, is the cost of money. In 2009 the standard deduction is $5,700 per person, but you lose this when you itemize to take the mortgage-interest deduction. Therefore, only interest payments above $5,700 during the year result in additional deductions. Moreover, the middle marginal rate is 25%, so you only avoid 25 cents in taxes for every dollar you spend. Dollars of interest, remember, not purchasing dollars. And only after the first $5,700 of course. Which you would have avoided anyway...

Just another reason why buying a house is not an "investment."

NewportBarGuy: ScubaDude1960: Transferring wealth does not create wealth.

It does take millions away from people who didn't earn it and gives it to those that did. Which is nice.

Unless you think appointing people to corporate boards to agree to your salary, so you will do the same for their salary is in the best interest of the shareholders is awesome.

Which you do.

What the heck are you talking about? I was responding to a post about bailing out Fannie/Freddie, which involves looting the taxpayer to prop up mortgage companies that made really bad investments.

Northern: ScubaDude1960: FTA: Lax regulation of Fannie Mae and Freddie Mac led to the mortgage companies taking on too many risky loans, Wallison said.

We'll just ignore the expansion of the money supply and the artificially low interest rates, without which none of this could have happened. We'll also ignore that fact that, due to the expansion of the money supply and the artificially low interest rates, no amount of regulation could have prevented the bubble.

This is interesting to me. Given that lobbyists have an enormous amount of power I think you are correct, but in a rational universe this would not be so. Lots of ordinary americans made a ton of money while many big losers were also created. The question for me is that since Wall Street has mastered hedging via derivatives and other financial devices and since the big money is in knowing what side of volatility to be on, is it really in the best interest for big banks to create a stable economy?

It's not in the big banks' interest to have a stable economy. That's why they created the FED and started the process that took us off of the gold standard. But, we get what we deserve. Anybody who thinks that the government makes laws and regulations to keep the big guys from crushing the little guys is a fool, and, sadly, they vote by the tens of millions.

ScubaDude1960 2010-01-01 12:48:10 PM
It's not in the big banks' interest to have a stable economy

Srsly do I HAVE to tell you the story of the f%$@ing goose that laid the golden eggs?

A stable economy is what built those banks up in the first place.

Do you see "big banks" investing in places like Chad, moron?

That's why they created the FED and started the process that took us off of the gold standard.

Oh yeah. When you're incapable of reasoning, whup out the Handy Dandy Conspiracy Theory^TM.

10 U.S.C. 311: aneki: Thing I don't understand, is that if the government is going to own most the mortgages...

Why even bother with the current mortgage structure at all?

Wouldn't it be more profitable to have an interest only for life structure in place? Most of these defaults started occurring when mortgages reset, why have them reset at all? Just take any fannie/freddie loan and say hey, you just make your interest payment, and if you don't pay off the loan by the time you die, we take the house and sell it to someone else.

There's two reasons that this is colossally stupid:


And yet there are countries out there in the world where this is standard faire. And they didn't have a mortgage implosion like us.

aneki: 10 U.S.C. 311: aneki: Thing I don't understand, is that if the government is going to own most the mortgages...

Why even bother with the current mortgage structure at all?

Wouldn't it be more profitable to have an interest only for life structure in place? Most of these defaults started occurring when mortgages reset, why have them reset at all? Just take any fannie/freddie loan and say hey, you just make your interest payment, and if you don't pay off the loan by the time you die, we take the house and sell it to someone else.

There's two reasons that this is colossally stupid:


And yet there are countries out there in the world where this is standard faire. And they didn't have a mortgage implosion like us.

Are you seriously advocating permanent debt slavery?

Kittypie070: ScubaDude1960 2010-01-01 12:48:10 PM
It's not in the big banks' interest to have a stable economy

Srsly do I HAVE to tell you the story of the f%$@ing goose that laid the golden eggs?

A stable economy is what built those banks up in the first place.

Do you see "big banks" investing in places like Chad, moron?

That's why they created the FED and started the process that took us off of the gold standard.

Oh yeah. When you're incapable of reasoning, whup out the Handy Dandy Conspiracy TheoryTM.

That was a very well-reasoned, logical and articulate response. Thank you.

ScubaDude1960: We'll just ignore the expansion of the money supply and the artificially low interest rates, without which none of this could have happened. We'll also ignore that fact that, due to the expansion of the money supply and the artificially low interest rates, no amount of regulation could have prevented the bubble.

I'm pretty sure that the repeal of Glass-Steagall had a pretty big role in this whole thing. But other than that, I agree. Fark Greenspan, and fark Bernanke.

GAT_00: What's interesting is that hundreds of thousands of mortgages cost less than one year of the defense budget. But clearly, defense spending isn't too high.

Um no. Subzidizing portions of those mortgages costs that amount, not the mortgages themselves. Learning are we?

TofuTheAlmighty: That's right, subby, blame the average schmucks trying to eke out a living.

Oh, that's rich. The average schmuck didn't buy a house at 6x his annual income, dipshiat.

ScubaDude1960 2010-01-01 03:47:56 PM
Kittypie070: ScubaDude1960 2010-01-01 12:48:10 PM
It's not in the big banks' interest to have a stable economy

Srsly do I HAVE to tell you the story of the f%$@ing goose that laid the golden eggs?

A stable economy is what built those banks up in the first place.

Do you see "big banks" investing in places like Chad, moron?

That's why they created the FED and started the process that took us off of the gold standard.

Oh yeah. When you're incapable of reasoning, whup out the Handy Dandy Conspiracy Theory^TM.

That was a very well-reasoned, logical and articulate response. Thank you.

You are very welcome. Have a pleasant evening.

/*snrt*

Never mind me, I'm one of those rare few who've made plenty of money but don't spend it like an ass and remain frugal and charitable. I must be a liberal communist.

Saturn5: If only someone had tried to fix Fannie Mae and Freddie Mac before the housing meltdown.

"There's nothing wrong with Fannie Mae." -the Democrats (new window)

I hear the curent president and that Dodd guy from Connecticut threatened to filibuster any mention of legislation looking into Fannie and Freddie's loan practices. or something....

I wonder if being the recipient of the most political donations from them had anything to do with that.

jjorsett: When Barney Frank "rolls the dice," taxpayers are the ones who lose. Thanks Barney.

A democrat did something during 14 years of complete republican control? How exactly?