Spread the wealth???

[Morris Dovey]

I'm really, really hoping that you're still in that camp a year from now...

...I worry that we might be trying to put out a fire by smothering it with petrol.

[Chris Friesen]

You and me both. :)

It sticks in my craw that there don't seem to be any effective penalties for the industry people involved. Sure, a lot of people took on much higher mortgages than they could reasonably pay off, but their bankers led them on, or at least didn't dissuade them.

That is the risk. However, the alternative seems to be that a significant portion of the global banking system implodes because it was overextended.

Whoever thought that a developed nation (Iceland) could basically go bankrupt? It's crazy, but it happened.

Chris

[Tim Daneliuk]

One point: This was NOT "caused" by the bankers ... or at least not primarily. The banks are just the place where the problem finally showed up. This was caused by generations of deficit spending by an overweening and growing government. At some point, that government had a debt it could not service easily and thus dropped interest rates, thereby reducing the cost of the debt AND devaluing the currency to pay off old debts with new, less valuable money. In the mean time, that same government - in the true spirit of communism - forced banks to extend mortgages to people that had no business owning a house. The banks - guaranteed that they would never lose money thereby - jumped in enthusiastically and then went to the next level: If the government is making money cheap, why not start lending to ALL risky borrowers. Like I said, the banks are not blameless here, but the larger population and its government, both of whom spent madly with money they could not repay, bear the bulk of the blame.

[Morris Dovey]

Well, clearly, they hadn't gone far /enough/ into debt. :-b

I'm off to the polls to exorcise my frustrations.

[Tim Daneliuk]

This is nonsense. The "people to blame" are the big spending politicians and their mooching constituents who all wanted what they could not afford. The bankers - while not blameless - are the *last* place the problem was born. You want to punish someone? How about millions of Western/US citizens that bought stuff/houses/cars/boats they could not actually afford and then whined that they couldn't make the payments.

[Larry Blanchard]

Just remember that roughly one third of the US mortgages in default, at least from what I've read, were held by owners who never lived in the house, i.e. speculators. They got no or low down loans and just walked away when the market declined.

I know that for the last several years, I was surprised by the number of "for rent" signs on brand new houses.

[Chris Friesen]

Sure, there are many people who took on more debt than they could pay back. However, a responsible banker should say "no, you can't have that loan since the odds are that you won't be able to repay it".

If the loan officers had been doing their jobs, people would never have been able to get the loans to buy all that stuff. Instead, the banks were coming up with exotic mortgages to try and entice people to borrow more money. (I bought a house 2 years ago, and my bank was perfectly willing to give me a mortgage almost twice as big as what I was prepared to take on--and that's in Canada where the industry is more tightly regulated.)

The Fed made it so cheap (1% interest!) for large institutions to borrow money that it was extremely tempting for organizations to leverage themselves to the hilt in order to borrow from the Fed so they could turn around and lend it out at higher rates.

Chris

[Tim Daneliuk]

And thus, we the taxpayers, are offsetting the losses of gamblers. I have no objection to other people gambling/speculating. I have an objection to paying for their bad choices (as I do anyone else's bad choices). More interesting is that the actual mortgage default rate is still pretty low, it's just not as low as it has been historically. Why on earth we should bail out the dummies behind all this (the borrowers or the lenders) is still beyond me. Let the credit markets seize up and thereby clean out the crud from the financial system. In relatively short order (a few years) the system would be back to healthy operations. All we've done with the bailout is further collectivize the economy and delay a true, healthy recovery. Then again, it won't make much difference anyway. When His Holiness, Our Savior And Lord, Comrade Obama gets done with the US economy, there's not going to be much worth saving.

[Robatoy]

That's getting stale, Daneliuk.

[Tim Daneliuk]

Since when are people not responsible for themselves? The borrowers were big boys and girls. The idea that they were somehow coerced into borrowing is absurd on its face - it takes a LOT of paperwork and signing to finish up a loan. The fact is that people got greedy and now want to lay off their responsibility on the eeeeeeeevil bankers.

Not true. The Federal weasels forced the bankers to give loans to people whose only "income" was welfare via the foolish lending guidelines jammed down Freddie/Fannie. This was *government mandated* not initiated via the banks.

Both borrower and lender are adults of sound mind. Why do I have to pay to bail out either party of their respective stupidity?

Exactly. Now ask yourself *why* the Fed did this? Cheap money makes servicing the existing debt less expensive. This means political vermin can go into MORE debt to buy votes to get/stay elected. How else is the ultimate political weasel, Obama, going to make good on his many promises, for instance. More debt. Beyond that, artificially reducing the interest rate has the effect of devaluing the dollar, at least indirectly. This means that we get to pay off the old debt with much less valuable dollars - another common ploy of the political weasels. This works in the short term, but in the longer term, it corrupts the economic foundations of the nation so badly, it comes back to haunt all of us.

In short, the US economic has been destroyed not by that eeeeeeevil George Bush, or the eeeeeeeeeevil oil companies, or the eeeeeeeeevil bankers. It has been destroyed by *its people*. The mooching, lazy, something-for-nothing losers who want what they want whether they've earned it or can afford it. The political classes (all of 'em, left, right and center) and bankers were just accessories to the murder perpetrated by the greedy, foul, and malignant larger population.

[Tim Daneliuk]

It is truer than ever Robbie Baby. After he presides over the raping of the wealthy, economic reality is *still* going to hit this political gasbag (assuming he's elected). No amount of stealing (as his entire platform demands) can replace the consequent loss of productivity that will ensue. He's busy selling himself as the Sheeple's Messiah without the remotest clue of how very badly his ideas will further undermine the US, and thus all of Western, economic foundations. This weasel is going to make Carter look like a genius. Hold on to your private parts ladies and gentlement, we are about to see lots of unemployment (far beyond what we see now), negative growth, stagnation, and ultimately inflation. Meanwhile, the wealthy, the engine of new investment and capital growth, will still be wealthy - it will just be denominated in other currencies and stored in other nations.

Let Obama Communism begin - the people deserve it.

[Upscale]

Same old bullshit eh Tim? As usual, it's all about you.

[Tim Daneliuk]

No, it's all about people unwilling to take personal responsibility.

[lukeluck]

How many automobile companies since the 1900s had to pay Obama's tax rate?

lukeluck

>

[Jack Stein]

For the company that put them out of business, or the new company that replaces the company that didn't know how to run the business, or, for a company that sells something people actually want.

[Jack Stein]

Bailouts no, tax breaks on the other hand can be good. Corporations and business never pay taxes, you give them the money, unless they have a printing press in the basement. Business taxes sole purpose is to trick dumb asses into thinking someone else is paying taxes for them and to get the bottom half of society to actually pay something.

[LRod]

Yeah, those businesses are no burden on the infrastructure at all. No reason for them to pay taxes.

Damn bottom feeders. Spend what little they have on food and clothing and then don't pay taxes. Bastards!

[Upscale]

Actually, it is and always has been repeatedly about you. It always comes back to you. You don't give a rat's ass about personal responsibility just as long as you feel that it's not going to cost you anything.

Add onto that your absolute refusal to admit that society has contributed in a major way to your status quo and your ending comment that's always the same ~ "why do I have to pay?" Your insistence that everything you have in life was obtained solely by your own effort is a complete crock because it just isn't true. 99% of the benefits our society enjoys were provided by the people who came before us, people who worked, contributed and gave. That's certainly not you, because it always come down to the same thing with you. "why do I have to pay?" They're your words, repeated a large number of times. You have absolutely no concern for anyone except yourself. That's what it's like to be greedy, selfish and all consuming. Pitiful little world you live in.

You call me a thief for receiving publicly funded assistance so I can stay healthy enough to contribute back to society. I call you a liar, selfish and greedy to the extreme.

You take anything and everything you can legally get from society without giving back or stopping to wonder if you should be doing it in the first place. It's obvious who is the real thief here.

[lukeluck]

Oh come on Jack Don't throw good old common sense into this discussion. ;-}

lukeluck

[Jack Stein]

I agree with Chris. The "industry" should be penalized by going out of business, or whatever happens to them as the result of making bad business decisions.

The "people to blame" are the big spending politicians

Of course they should be punished. They should lose whatever it is they bought and didn't pay for and their credit rating should suck, and what ever else naturally happens when someone makes poor borrowing decisions. I, nor anyone in my family has ever welched on a loan, stuck anyone for money duly owed, and never intend to do so.

I remember when I was shopping for my first house in 1975 the realtor told me what amount of money the bank would lend me based on my income. I thought it was stupid, as I sure didn't think I could live on what was left after paying my taxes and mortgage. Not being totally stupid, I borrowed what *I* thought I could afford, not what anyone else was willing to lend me. My next house was even worse, around 1985 the realtor told me what I could borrow and it was insane. I can only imagine what people were borrowing in 2000+? I think you would have to be insane, stupid or trying to rip someone off from the get go to borrow huge sums of money that you had no real way of paying off. My guess is most of the loans went to dumb asses buying second houses and flipping them quickly for fast "easy" money. Nothing wrong with that but if you want to gamble big, with big potential returns, you are taking a big risk, if you lose, you lose, if the banks willing participate lose, they lose. No way should anyone else be asked to bail them out. You win, good, you lose, tough cookies.