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rentingman
Posts:280
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| 10/06/2008 7:25 PM |
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Most of the recent news has quoted leaders as saying we need to inject, "Confidence" into the market. Interestingly that when you are trying to rip someone off it is called a confidence game.
I apologize in not having confidence to believe that a cashier making $25K annually is not goig to be able to pay off their million dollar mortgage.
I would like to open this up to the forum. Do you believe the issues in housing and stocks is a lack of "confidence" or perhaps something more real, an inability for borrowers to pay? If borrowers have an inability to pay what is the goal of the government plan to instill "Confidence" in the market? I think it might be to sucker the savers into losing whatever money they might have, which might simultaneously help large corporations. |
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wilson
Posts:541
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| 10/06/2008 7:51 PM |
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Did you walk to school or did you carry your lunch?
P.S.: It's not an "either or" choice. There is lack of confidence preciitated by many factors. |
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Jack**
Posts:74
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| 10/06/2008 8:38 PM |
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[quote]an inability for borrowers to pay?[/quote]
I think its more like Corp America not being able to absorb the huge losses that accumulated when consumers discovered they didn't have the resources to pay for the losses they created by over borrowing.
In short, its a complete lack of cash by everyone involved. |
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kelly564
Posts:59
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| 10/06/2008 9:32 PM |
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| and it's the lack of confidence that anything will hold its value anymore, so why buy? Just wait til next month and it will be worth less. |
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rentingman
Posts:280
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| 10/06/2008 10:06 PM |
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Is it lack of confidence or lack of solvency?
Here are a few examples
Creative Capital Leasing owned at least 20 condos in SD (primarily Gaslamp Citsquare and Meridian) all going to foreclosure
Krome family (profiled in Union Tribune) owned 14 properties in at least four states all going to foreclosure
Toscanini family (20+ condos from SD to LA, primarily 350 W Ash) all going to foreclosure
Women with 20 Pay Option ARMs in Reno, complained to the San Fran paper about her situation (foreclosures)
Janae purchases (see Bubbleinfo.com) many in foreclosure now
These examples are off the top of my head. There are many more examples on the BMIT blog.
So I ask again is confidence really the problem? How can you have long term confidence when 5 people are not paying the mortgages on 100 homes?
So are Paulson and Bernanke playing a confidence game? In that case who will be the winner?
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tpc
Posts:499
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| 10/06/2008 10:30 PM |
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| When wall street talks about confidence, it means that the smart guys haven't been unable to unload all of the stocks they would like to get rid of so they are looking new money to enter the game so that they can unload their junk. Forget about the fact that your stock will go down in the short term, have a 5-10 year investment horizon. You know, thats what the smart money does???? |
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TotoMMB66
Posts:98
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| 10/07/2008 12:26 AM |
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The country is running on an astronomical deficit, how come the banks aren't allowed to? And did they make 100% bad loans? There has/had to be some sort of good "product" in their portfolios. I know I have paid all of my loans, credit cards, and other obligations on time. I know I couldn't save WaMu by myself, but for the millions of houses they sold, they couldn't salvage anything? How come the bad (CFC, WaMu, Lehman), are REALLY bad, and the good (BofA, Wells, Goldman) seem to be really good? Seems like there's zero confidence from top to bottom. Or, maybe that's what happens when they create a bogus batch of products (SIVs, CDOs, you name it), swap them like baseball cards (losing all value/ownership in the process) and rely solely on insurers to save their hides. And it's incredible...last Monday, no bailout, market drops 778 points. This Monday, ink still drying on the bailout, drop of 350. The Fed (Treasury, whomever) has been lending money to banks all year...how come there's still a credit crunch? It seems like an awful lots of companies/banks are sitting on their hands, trying to make this as difficult as possible. Sounds like a 4 year-old holding their breath to get their way. Of course, I don't know any 4 year-olds that don't eventually cave it. Wish our government had some backbone.
Oh yeah, nice pick Paulson, going back to Wall Street for someone to manage this mess. And now there are calls for a rate cut...what is that going to do? Provide more cheap credit that isn't out there now? Give the money back to the people...let them do with it what they want... |
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Brian
Posts:2210
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| 10/07/2008 12:52 AM |
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The confidence that they are talking about is the ability to borrow OPM (other people's money) to pay down debt and keep the wheels of commerce spinning.
Look at most American consumers. They are indebted to their eyeballs so several month of unemployment will result in a cascading effect of defaults.
Ultimately, it's a question of solvency because asset values have now dropped below what people owe on them (liabilities greater than assets). They are not able to borrow anymore and the defaults will continue.
10
million homeowners will walk before this is over.
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tpc
Posts:499
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| 10/07/2008 9:27 AM |
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[quote]ok at most American consumers. They are indebted to their eyeballs so several month of unemployment will result in a cascading effect of defaults.[/quote]
Brian-Exactly right. The two pillars that were keeping the economy moving since the 2001 nasdaq crash has been housing (construction industry) and consumer spending fueled by easy credit and the wealth effect (increasing housing prices, home equity lines of credit, etc). Consumer spending represented 2/3s of the economy. Now that these 2 pillars have collapsed and our manufacturing base has been exported overseas (thank you corporate america), what are going to rely on to dig ourselves out of this hole?????? |
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Brian
Posts:2210
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| 10/07/2008 9:33 AM |
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I'm not too fond on Perlstein because he's beholden to Wall Street, but here's an article by him.
Our economy of the last 8 years was nothing but bubbles upon bubbles.
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Bubble Popping Wordlwide
what we've got is a liquidity crisis that is bigger than anyone has ever seen, on top of an insolvency crisis that is bigger than anyone has ever seen. And thanks to the explosion of cross-border trade and investment, the crisis has not only gone global but now threatens to take most of the global economy into recession.
"World on the edge," is how the Economist magazine summed things up on its cover this week. And that is certainly how things felt during yesterday's wild ride on stock and money markets.
What we now have is a set of economic and financial bubbles bursting at roughly the same time.
Here in the United States, the bursting of the residential real estate bubble punctured the first hole in the credit bubble, which in time brought an end to the corporate takeover bubble, the commercial real estate bubble and the commodities bubble. Because of those bubbles, Americans became convinced that they were wealthier than they really were, leading to a consumption binge that created mini-bubbles in autos, vacation travel and retail sales. Now those have burst as well.
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TotoMMB66
Posts:98
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| 10/07/2008 11:02 AM |
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| All that's left is to burst the Republican bubble. |
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lurknomore
Posts:271
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| 10/07/2008 11:08 AM |
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| Toto--We may not be in Kansas anymore, but Help is on the Way!! |
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