Are we doomed?
Is the world doomed?
Is it a large overreaction?
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And now, we sprinkle nem-x liberally with Old Spice!
[xIMG]http://www.doommovie.com/images/DOOM_splash_delivery2_02.jpg[/IMG]
Now photoshop parce's head inside Karl Urban's huge mouth.
Anyway, we're not doomed. People with useful skillsets should still be able to find work, though it might more difficult and take longer to do so. It's the kids fresh out of college with a BA in Psychology who are fucked.
Under capitalism, man exploits man. Under communism, it's just the opposite. - John Kenneth Galbraith
I think there's a good chance that we're all going to see a proper full-on global depression, though. I've no idea what those feel like, but I expect they suck outrageously.
Friday toward the end of the day, everyone discovered that the bill was not agreed upon, and so naturally those people who were banking on a bill on thursday would pull their money out on monday. The rest of it is the ensuing panic, but represents a pretty average market drop.
It just goes to show you the extent to which perception dominates economics.
Regarding the mortgage meltdown, it's a funny story actually: The blame for our present situation can be traced back to a typo in a report submitted to the house and senate in 1992.
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Maradon! had this to say about Robocop:
Don't forget, thursday Democrats falsely announced that the bill was agreed upon and the market jumped 300 points.Friday toward the end of the day, everyone discovered that the bill was not agreed upon, and so naturally those people who were banking on a bill on thursday would pull their money out on monday. The rest of it is the ensuing panic, but represents a pretty average market drop.
It just goes to show you the extent to which perception dominates economics.
Regarding the mortgage meltdown, it's a funny story actually: The blame for our present situation can be traced back to a typo in a report submitted to the house and senate in 1992.
That little rally doesn't exist in isolation. Bear in mind that the DJIA was 4000 points higher this time last year, and still has plenty of plummeting left to do before it's back around the long term growth trend.
Even after that, there's still room to sink. If it can go as far above the trend as it was these past years, it can certainly go below it too.
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Pvednesing:
That little rally doesn't exist in isolation. Bear in mind that the DJIA was 4000 points higher this time last year, and still has plenty of plummeting left to do before it's back around the long term growth trend.Even after that, there's still room to sink. If it can go as far above the trend as it was these past years, it can certainly go below it too.
Oh, I didn't mean to imply that the market was not in the shitter right now, only that the 777 point drop that everybody is making a fuss over didn't exactly constitute black friday.
Once someone does something about mark to market, the good mortgages out there, which are the vast majority of them, will be able to be sold at their real asset value, instead of the real asset value of the few bad mortgages out there.
Part of the problem is that Fannie, Freddie, and a lot of the other major banking institutions have become a luxury resort for aging or irrelevant politicians. Everyone from Barny Frank's ex lover to Chelsea Clinton goes there to rake in a heap of cash every once in a while, and nobody wants to endanger that, so horrible anachronistic rules like mark to market and the Glass Stiegel act are radioactive.
You've heard lots of people talking about what to do to fix this, but have you heard anyone talking about what caused it, and what they might change to keep it from happening again? Because I haven't.
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Maradon! had this to say about Tron:
You've heard lots of people talking about what to do to fix this, but have you heard anyone talking about what caused it, and what they might change to keep it from happening again? Because I haven't.
Isn't that Obama's entire platform? Isn't he catching flak from the right for talking about fixing the root problem instead of focusing on the short-term fix? He's oversimplifying it because that's what politicians do regardless of how well informed they are, but he seems to be on the right track.
edit: avoid your template "but he's a lefty so he's wrong" in your answer Kegwen fucked around with this message on 09-30-2008 at 10:16 AM.
The trouble with that fact is that it contained a typographical error - the actual data that the study was based on compared a white man with assets of $100,000 to a black man with assets of $10,000 both trying for a $60,000 loan.
Whether any deliberate purpose can be assigned to this "typo", the result was one of the hidden success stories of the Clinton era.
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LA Times, May 31, 1999In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains. It has aimed extensive advertising campaigns at minorities that explain how to buy a home and opened three dozen local offices to encourage lenders to serve these markets. Most importantly, Fannie Mae has agreed to buy more loans with very low down paymentsor with mortgage payments that represent an unusually high percentage of a buyers income. Thats made banks willing to lend to lower-income families they once might have rejected.
Maradon! fucked around with this message on 09-30-2008 at 10:23 AM.
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Over the mountain, in between the ups and downs, I ran into Kegwen who doth quote:
Isn't that Obama's entire platform? Isn't he catching flak from the right for talking about fixing the root problem instead of focusing on the short-term fix? He's oversimplifying it because that's what politicians do regardless of how well informed they are, but he seems to be on the right track.edit: avoid your template "but he's a lefty so he's wrong" in your answer
I have no idea what Obama has been proposing to fix this.
If you know, please share.
The fact of the matter is, most of the people who are losing their houses aren't losing them because their exotic mortgage ballooned, they're losing them because they just got too big of a mortgage for them to afford.
When my wife and I went to get qualified, we got qualified for $450,000. But instead, we bought a house worth $175,000, because it's what we knew we could afford comfortably on just my salary. I remember thinking at the time, that if I wasn't good with numbers, and I didn't know what we could afford, my basic instinct would have been to just trust the bank- after all, why would they tell me I could afford $450,000 and sell me on a mortgage and house that I couldn't possibly afford? And the fact of the matter is, in order to afford a $450,000, I'd have to drastically change every other aspect of my life style, and I'd pretty much just have enough money to eat Kraft Dinner every night by candlelight.
So as I see it, it's a joint issue. On one hand, you've got banks not being very careful about the amount of money they approve people for, and on the other hand, you've got people not being very smart about the amount of money they are taking mortgages out on.
But there are people who are losing their houses because their exotic mortgage ballooned as well. And there are people losing their houses because they lost their job. And there are people losing their houses because they got themselves too deep in credit card debt and their rates just spiked and their gas and energy prices are though the roof. And there are people losing their houses because their interest only 5 year loan is up and their house value has fallen so far that they can't sell it, nor can they afford to re-finance and take the loss.
There is no single cause that you can pin on either party for our housing market being in the shit hole it's in. It's a vortex of suck.
Maradon's point is valid, and encouraging FM and FM to take on riskier mortgages did have an impact. But so did the bills passed in 99 by a republican congress that made these crazy ass exotic mortgages possible. And so did the lack of regulation on wall street that permitted banking companies to lend money to themselves. It's a very very big issue.
In order to get us out of this shit hole, a few things need to happen.
1- Foreclosures need to stop. They are causing housing values to plummet and making it impossible for both banks and homeowners to get the amount of money out of their house that they need when they sell or auction.
2- These exotic loans need to stop. Interest only loans alone are responsible for fucking up most of the higher rent/more desirable housing markets nation wide, as people need to sell at a significant gain in order to afford the costs associated with selling a home, let alone to move up to a bigger/better house. When you have that much upward pressure, even from minority of the houses on the market, it causes inflation on the whole thing.
3- Banks who did not lend money prudently, including FM&FM, need to be punished, hard. These bailouts should extend only to the point where people are still capable of getting a mortgage at a reasonable rate, and stop there. We can't over correct the market or we won't allow the housing bubble to deflate as far as it needs to to prevent any future damage.
Basically the problem is that rich people are being crybabies, as usual. "Plz save us guys, how will we make enough money to sleep on a different bed of bills every day?"
Also we'll never be able to get loans again but who cares right guys? Right?
"Don't want to sound like a fanboy, but I am with you. I'll buy it for sure, it's just a matter of for how long I will be playing it..."
- Silvast, Battle.net forums
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And I was all like 'Oh yeah?' and Maradon! was all like:
I have no idea what Obama has been proposing to fix this.If you know, please share.
This is a good question. A quick glance at his site doesn't reveal anything, but I didn't look very hard.
I hope I hear more substance behind the lipservice he's paid to fixing the root problem. I'd also like to hear something from him beyond his whole abandoning the "failed policies of the past" thing. He's way oversimplifying it.
I get the feeling that he has a decent grasp on the situation, but his advisors are telling him to keep it simple in debates and stump speeches. Or perhaps they're telling him to avoid talking about it until the short-term crisis is averted. Maybe he doesn't really have a firm idea! Only time will tell, I guess
The best possible outcome is an easing of the correction so that it causes the least amount of havok possible. The banks that messed up need to be allowed to fail. The people who were idiots need to be allowed to lose their houses and declare bankruptcy. The only role of the government in this is to keep the impact of these failures as low on the people who didn't screw up as is reasonable, while still allowing the aforementioned correction to take place.
But yes, I'm all for punishing the failing banks. Bitches ain't shit.
"Don't want to sound like a fanboy, but I am with you. I'll buy it for sure, it's just a matter of for how long I will be playing it..."
- Silvast, Battle.net forums
$700 billion in bad assets? Because a large number of debtors can't make their mortgage payments regularly enough?
Try $50 trillion in unfunded outlays because a large number of people can't pay into the system because they haven't been born yet.
These are the fruits of "mixed economic systems." Maradon! fucked around with this message on 09-30-2008 at 08:55 PM.
Cue the return of most of the money lost yesterday. Pvednes fucked around with this message on 10-01-2008 at 03:10 AM.
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I bet you never expected Maradon! to say:
Ironically, 700 billion is just shy of all the money we've spent in Iraq and Afghanistan since 2002
So what's the chance of us getting the money we spent on Iraq and Afghanistan back?
We're buying mortgages, we're not handing them money for nothing. Yes, the price tag is big. Yes, our return on investment is not going to be a huge money maker, but we should get at least our initial investment back.
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Blindy. had this to say about Pirotess:
So what's the chance of us getting the money we spent on Iraq and Afghanistan back?We're buying mortgages, we're not handing them money for nothing. Yes, the price tag is big. Yes, our return on investment is not going to be a huge money maker, but we should get at least our initial investment back.
Let me put it this way: Would you put your money in financials right now?
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Pvednes stopped lurking long enough to say:
Let me put it this way: Would you put your money in financials right now?
Well, that's a good point, but it's still not the same thing as a complete loss.
Under capitalism, man exploits man. Under communism, it's just the opposite. - John Kenneth Galbraith
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Channeling the spirit of Sherlock Holmes, Pvednes absently fondled Watson and proclaimed:
If you divide the bailout by the number of tax returns, you'll see it's around $5000 from every American taxpayer.
Perhaps, but the overall cost of not bailing out--distasteful as a bailout is--is expenentially more.
--Satan, quoted by John Milton
And before you go there...
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A total of 142 responded, of whom 46% identified themselves as Democrats, 10% as Republicans and 44% as neither. This skewed party breakdown may reflect academias Democratic tilt, or possibly Democrats greater propensity to respond. Still, even if we exclude respondents with a party identification, Mr Obama retains a strong edge.
Blindy. fucked around with this message on 10-03-2008 at 04:20 PM.
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Inferno-Spirit got all f'ed up on Angel Dust and wrote:
I'd much rather see the numbers taken only from the "neither" grouping and/or an equal number of party supporters on each side.
You can infer that pretty easily. A lot of the responses are 10%~ in McCain's favor, and 10% of the respondants identified as Republicans....
If 70% of the votes for McCain were less than favorable, and only 40% of the respondents were Democrats, you can assume 30% of the unidentified voters put McCain less than favorable.
And since around 15?% voted Favorably for McCain, and 10% were Republicans, then 5% of unidentified voters put McCain as favorable.
So that means that 65% of unidentifieds voted McCain average.
If you do the same thing with Obama, you end up with...
6% unfavorable
90% average
4% favorable
And for ease of comparison- for McCain
30% unfavorable
65% average
5% favorable
Which gives Obama a measurable lead. Of course, this is only if you assume that the party members strictly voted in a partisan way.
This is all well and good if you consider keynesian economics valid and ignore the fact that it's been a disaster every time it's been applied, and even managed to perpetuate the great depression nine years longer than it needed to last.
Unlike Keynes, though, most rational people consider prosperity to be the proper end of an economic system, and not forced social equalization, aka "fairness".
In short, a great many people call themselves economists and hold economics degrees when they are not economists at all, but social workers. The idea that Obama would be "good" for the economy depends on your idea of "good". If destroying industry and giving handouts to special interest groups is your idea of good, then even I do not disagree that Obama would be good for the economy. Maradon! fucked around with this message on 10-03-2008 at 07:24 PM.
I mean, everyone knows supply side economics never let you down. Blindy. fucked around with this message on 10-03-2008 at 07:47 PM.
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Over the mountain, in between the ups and downs, I ran into Blindy. who doth quote:
Just to clarify- they disagree with you, therefore they must be the kind of economic researchers who are wrong.
No, they agree with Obama, who openly agrees with Keynes, and so they probably also agree with Keynes.
The history of keynesism speaks for itself.
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I mean, everyone knows supply side economics never let you down.
They don't.
It just seems so wrong to cut taxes on wealthy, but if you're dedicated to truth you will eventually realize that you can't take water from a spring, the spring makes the damn water. Rich people create the damn money and the more they make the more everyone has, so the best thing is to get out of their damn way.
That is where keyenes and every other socialist fails: They like the products so much that they trample production to get them to everyone. They cut open the golden goose and just assume that everyone will be happy forever passing around the golden eggs that currently exist and never any more.
Plus mutant horrors, but those are not endemic to libertarianism Maradon! fucked around with this message on 10-03-2008 at 10:35 PM.
