I'm just curious if there is actually an issue, or merely the way accounting for the mortgages work. http://www.forbes.com/opinions/2008/09/22/treasury-accounting-plan-oped-cx_bw_bs_0923wesburystein.html?feed=rss_author It seems odd the mortgage backed securities could be worthless when there is still a house (plus a monthly payment) backing it. Ed wrote: > On Thu, Sep 25, 2008 at 11:21 AM, Nathan wrote: > >> On Thursday 25 September 2008 09:43:09 Joshua Zeidner wrote: >> >>> Hey all, >>> >>> sorry for the OT, but I think the gravity of this situation offsets >>> the negatives of making this post here. >>> >>> In case you are not aware, congress is currently considering >>> emergency legislation for a supposed 'bailout' of 700 billion dollar >>> credit line to the US Treasury in order to provide 'liquidity' to >>> credit markets in the US and worldwide. The situation is somewhat >>> complex, but what I want to explain here is how it relates to things >>> you may see every day as an Arizonan. You have no doubt seen more >>> than one totally ridiculous and imprudent mortgage loan dispensed in >>> the area over the past few years. You might have assumed that these >>> risky loans would be the problem of either the bank or the borrower. >>> The alarming aspect to these recent developments are that we as >>> Americans have learned that it is in fact *all of us* that are going >>> to pay for these bad loans. Does that sound fair to you? And it gets >>> better: when we fork up the 700 billion, houses will not even become >>> any more affordable. If you are struggling you will continue to >>> struggle despite this unprecedented transfer of wealth to the >>> treasurer. With 700 billion dollars we could build houses for the >>> entire country. This bill amounts to nothing less than robbery. >>> >>> I truly hope that you consider calling your congressmen and >>> congresswomen and voice your opinion to this bill. Your real voice >>> makes a difference. >>> >>> thanks all, and I really hope you call your representatives. We as >>> a country have to stop complaining and get involved. Im not really an >>> 'activist', Im just a regular American who knows enough about this >>> situation to know how much of a tragedy it is. >>> >>> you can get the phone numbers here by typing in your ZIP code: >>> http://www.congress.org/congressorg/home/ >>> >>> thanks, jmz >>> >> Hear hear! >> I could not have said it better myself. Once again, our government has >> disguised highway robbery as 'helping the American economy' >> >> Good OT Josh. >> >> nathan >> --------------------------------------------------- >> PLUG-discuss mailing list - PLUG-discuss@lists.plug.phoenix.az.us >> To subscribe, unsubscribe, or to change your mail settings: >> http://lists.PLUG.phoenix.az.us/mailman/listinfo/plug-discuss >> >> > > The reason we are forking up 700B is not to make houses affordable. > that will continue to happen over the next 6 months as the housing > market continues to drop. What you are putting your 700B up for is to > take mortgages that are in default (after reassembling them from bits > & pieces) off the books of financial institutions so they don't go > bust so other financial institutions will again trust them > (accountants are screwing us here with new rules too). This is because > 700B is 5% of the mortgage paper out there, which is only a (small) > part of the ~74T paper these banks have out there in all types of > contracts (actively traded every day). In 12 to 24 maybe 36 months the > housing market will again begin to "not move down" the extent of this > may be driven by demographics, but also there will be a time when all > this excess inventory will be sold - then the market will come back > and housing will again be an appreciating market. The Government will > then be able to sell the paper it bought with the 700B, most likely at > a profit. The profit comes from buying "toxic" paper at the bottom of > the market (pennies on the dollar) being "safe hands" through the > market troubles, and selling the paper (no longer toxic because the > housing market is back) for many more pennies on the dollar. > > This is how all the great fortunes became huge - they come in at the > bottom of the market - soak up whatever nobody can stand to have and > wait until everyone wants it again because the sky isn't falling. This > is result of too much money in the system, too much complexity in the > market, and a machine that has been creating low to no quality paper > over - well, since 1999. > > From the policy wonk perspective, once you reassemble the pieces of a > mortgage under one owner (Uncle Sam) you can re-negotiate the mortgage > without totally abandoning contract law - so the agency created to > manage this 700B, will be able to "reschedule" the mortgage with a > stressed home owner - which can't be done today, because nobody can > find all the parties to the contract, let alone get them all to agree. > > That's not to say there aren't real, large institutional crooks who > are trying to run as many Americans as far into debt as possible - you > know, just like the ethics of the RIAA. > --------------------------------------------------- > PLUG-discuss mailing list - PLUG-discuss@lists.plug.phoenix.az.us > To subscribe, unsubscribe, or to change your mail settings: > http://lists.PLUG.phoenix.az.us/mailman/listinfo/plug-discuss >