16.8% Unemployment

[quote]K2000 wrote:
You’re still glossing over a lot.

Why were people unable to pay their mortgages? Because they were losing their jobs, getting sick and going broke, variable mortgage rates were jumping, and so on. People didn’t buy with the intention of not paying their mortgages. The shaky economy caused that.

Also, the mortgage default problem is bad, but that’s not what brought us to the brink of economic collapse. That would be the mortgage brokers bundling all these bad mortgages together and selling and re-selling them with A1 ratings. If people were simply defaulting on their mortgages, the scale of the problem would be much smaller, and not threaten to wreck our entire economy.[/quote]

You are confusing the problem with the effect. As I said, volumes have and will be written about this time in history, so of course I am not developing every single detail. People that had no business buying a home were stepping up because they “deserved” one. They were stepping up because a) they wanted to b) you now had the new age carpetbaggers in the game, gaming the system, working from their self interest and exploiting the new abberatted system. These were most of the brokers and lenders and all the wing nuts that came up with a way to shed themselves of this soon to be imploding paper through the creation of Mortgage Backed Securities.

Going back, the Bush Administration began sending out warnings in early 2001, saying Fannie May and Freddie Mac had gotten way too big and could easily cause strong repercussions in the markets. In 2003 the warnings were elevated to a systemic risk that could reach well beyond the housing sector. The Bush Admin wanted a strong regulatory body to oversee the two Government Sponsored Enterprises, (Fannie and Freddie).
But then came the ever level headed Barney Frank, claiming that the GSE’s were just fine, and what we really needed was more loans for the marginal home owner. He accused the Bush Admin of creating a “sky is falling” mentality that was wrong and ridiculous. The legislation was blocked.
Greenspan finally stood up after accounting issues started showing up in the GSE’s, claiming that they must be gotten under control or risk insolvency in future crisis. Shummer and Franks came to the rescue, praising the job the GSE’s had done.
McCaine came out on the Senate floor in early 2006, warning that without immediate regulation disaster was emanate. The Bill came out on party lines. The Dems all voting against and the Republicans falling to get the votes needed to pass.

When you get a moment, google Community Reinvestment Act. Carter passed it in the seventies. When done right, it worked a little. Then Clinton and the Dems changed it in 1995. These revisions allowed for the securitization of loans containing subprime mortgages.
Banks were now forced to issue $1 Trillion in new subprime and created subprime mortgage securities. Bear Stearns was the first to do it (remember them?)
Fannie May got into the act, pushing down the requirements for subprime mortgages. Next came variable rate, adjustable rate, NO MONEY DOWN. By 2005 95% of Fannie’s subprime loans were variable rate. Fannie kept telling the banks to write the loans and they would guarantee them. Now demand is outstripping supply and home prices are going up at at accelerated rates.
But wait. Interest rates started to rise. Gas started to rise. People started missing payments. Banks stopped writing the loans. And things started to go bad. The whole scheme depended on a steady steam of new loans to compensate for the steady stream of loans going bad. When equilibrium was lost, things began to implode. Foreclosures began to rise, home prices started to slip, more sellers than buyers. Foreclosure rose more on this viscous cycle till Fannies guarantees were now worthless. They could not guarantee the loans. Fannie had been overstating their assets. Banks started collapsing. Jobs began to disappear, and we find ourselves where we are now.
The Bush admin tried to stop it in 2003 with regulation for the GSEs. The Dems went nuts, the race card came out, and the Democrats were able to block the legislation. Barney Frank, Melvin Watt, Maxine Waters, thank you for nothing.
McCain made another attempt in 2005. The Dems blocked it again. And again in a last chance effort in early 2007.
The Dems were panicking and so were the GSE’s and other entities that had made billions on this house of cards. Guess who they started funneling money to in the maximum quantities allowed. Barrack Hussein Obama. In the case of Fannie, Obama received 47 to 1 in dollars donated for their campaigns.
Poor people did not cause this. Free markets did not cause this. Deregulation did not cause this.
BAD GOVERNMENT REGULATION DID CAUSE THIS.
Bad social engineering.
Socialist are only worried about their intent.
Conservatives know you have to look down the road at outcomes and unintended consequences.
Liberals are the parent that gives the kids all the ice cream they can eat, takes the hugs and then disappear.
Conservatives are the parent that are left with a house full of sick kids with tummy aches. They end up having to fix the problem. It is not fun being the responsible parent, but it is necessary.

[quote]jsbrook wrote:
K2000 wrote:
You’re still glossing over a lot.

Why were people unable to pay their mortgages? Because they were losing their jobs, getting sick and going broke, variable mortgage rates were jumping, and so on. People didn’t buy with the intention of not paying their mortgages. The shaky economy caused that.

Also, the mortgage default problem is bad, but that’s not what brought us to the brink of economic collapse. That would be the mortgage brokers bundling all these bad mortgages together and selling and re-selling them with A1 ratings. If people were simply defaulting on their mortgages, the scale of the problem would be much smaller, and not threaten to wreck our entire economy.

Exactly. The relaxing of mortgage standards was foolish and contributed to this. And government did have a hand in that. But that is the biggest problem or contributing factor. Securitization and bogus use of financial instruments to resell things with no value at a high price (done by the financial sector and not the government) is what’s bit us in the ass and caused us to be where we are. [/quote]

Well there was a) the cheap money issued by a government granted monopoly and b) the implied garantuee that Fanny May, Freddy Mac and other big banks were to big to fail and would be bailed out if necessary.

If someone lets kids loose in a candy store after instructing them that their actions would not have any consequences whatsoever, would you seriously blame the kids?

Bankers are what they are, give them cheap money and the Greenspan put and they go berserk.

[quote]orion wrote:
jsbrook wrote:
K2000 wrote:
You’re still glossing over a lot.

Why were people unable to pay their mortgages? Because they were losing their jobs, getting sick and going broke, variable mortgage rates were jumping, and so on. People didn’t buy with the intention of not paying their mortgages. The shaky economy caused that.

Also, the mortgage default problem is bad, but that’s not what brought us to the brink of economic collapse. That would be the mortgage brokers bundling all these bad mortgages together and selling and re-selling them with A1 ratings. If people were simply defaulting on their mortgages, the scale of the problem would be much smaller, and not threaten to wreck our entire economy.

Exactly. The relaxing of mortgage standards was foolish and contributed to this. And government did have a hand in that. But that is the biggest problem or contributing factor. Securitization and bogus use of financial instruments to resell things with no value at a high price (done by the financial sector and not the government) is what’s bit us in the ass and caused us to be where we are.

Well there was a) the cheap money issued by a government granted monopoly and b) the implied garantuee that Fanny May, Freddy Mac and other big banks were to big to fail and would be bailed out if necessary.

If someone lets kids loose in a candy store after instructing them that their actions would not have any consequences whatsoever, would you seriously blame the kids?

Bankers are what they are, give them cheap money and the Greenspan put and they go berserk.
[/quote]

23 banks have failed here, within the last 30 days. We are facing the outright collapse of our financial system.

Rahm Emmanuel has said that we should ‘take advantage of every crisis’. He will. The banks will simply be taken over by the Fed. That’ll prevent runs since everyone knows that the Fed can always print up whatever they need.

[quote]Headhunter wrote:

23 banks have failed here, within the last 30 days. We are facing the outright collapse of our financial system.

Rahm Emmanuel has said that we should ‘take advantage of every crisis’. He will. The banks will simply be taken over by the Fed. That’ll prevent runs since everyone knows that the Fed can always print up whatever they need.
[/quote]

Once that happens we will enter hyper inflation. China see’s whats about to happen that’s why they are urging their people to go to gold. I am willing to be that by the end of this depression we will be back on the gold standard, our Fiat dollar is dead.

What do you think fannie and freddie were doing?

[quote]John S. wrote:
Headhunter wrote:

23 banks have failed here, within the last 30 days. We are facing the outright collapse of our financial system.

Rahm Emmanuel has said that we should ‘take advantage of every crisis’. He will. The banks will simply be taken over by the Fed. That’ll prevent runs since everyone knows that the Fed can always print up whatever they need.

Once that happens we will enter hyper inflation. China see’s whats about to happen that’s why they are urging their people to go to gold. I am willing to be that by the end of this depression we will be back on the gold standard, our Fiat dollar is dead.[/quote]

I have seen the arguments for both. I still believe we are headed for a deflationary depression. Save your money people. Go to thestreet.com and check the strength of your bank, brokerage and life, property and casualty insurance company.
AS far as the insurance companies go, I can tell you that USAA and State Farm lead the pack. Banks are harder, as the list of “strong” banks is getting shorter and shorter.

[quote]JEATON wrote:
John S. wrote:
Headhunter wrote:

23 banks have failed here, within the last 30 days. We are facing the outright collapse of our financial system.

Rahm Emmanuel has said that we should ‘take advantage of every crisis’. He will. The banks will simply be taken over by the Fed. That’ll prevent runs since everyone knows that the Fed can always print up whatever they need.

Once that happens we will enter hyper inflation. China see’s whats about to happen that’s why they are urging their people to go to gold. I am willing to be that by the end of this depression we will be back on the gold standard, our Fiat dollar is dead.

I have seen the arguments for both. I still believe we are headed for a deflationary depression. Save your money people. Go to thestreet.com and check the strength of your bank, brokerage and life, property and casualty insurance company.
AS far as the insurance companies go, I can tell you that USAA and State Farm lead the pack. Banks are harder, as the list of “strong” banks is getting shorter and shorter.

[/quote]

How do you figure deflationary? We are printing money, which means inflation has to happen. We are printing on such a large scale that Hyperinflation is pretty much guaranteed. If you want to save yourself get into gold fast before the Chinese drive the prices up to unseen levels.

[quote]JEATON wrote:
John S. wrote:
Headhunter wrote:

23 banks have failed here, within the last 30 days. We are facing the outright collapse of our financial system.

Rahm Emmanuel has said that we should ‘take advantage of every crisis’. He will. The banks will simply be taken over by the Fed. That’ll prevent runs since everyone knows that the Fed can always print up whatever they need.

Once that happens we will enter hyper inflation. China see’s whats about to happen that’s why they are urging their people to go to gold. I am willing to be that by the end of this depression we will be back on the gold standard, our Fiat dollar is dead.

I have seen the arguments for both. I still believe we are headed for a deflationary depression. Save your money people. Go to thestreet.com and check the strength of your bank, brokerage and life, property and casualty insurance company.
AS far as the insurance companies go, I can tell you that USAA and State Farm lead the pack. Banks are harder, as the list of “strong” banks is getting shorter and shorter.

[/quote]

I dont see how its going to be deflationary, as long as helicopter Ben is at the Fed. The guy is an “expert” on the great depression, hes not going to let deflation take hold. He will inflate the deflation away anyway possible.

Ben has no say in the matter.

Through ‘07 dollar denominated debt soared to $50 trillion, while the total of currency plus Fed reserves was still below $1 trillion. None of these debt figures include derivatives and governments’ unfunded liabilities, which are in the range of another $200 trillion.
Over the past year, the Fed has doubled the stock of base fiat money (monetary base) in the form of reserves by creating new dollars and exchanging them for outstanding IOU’s. The total of base fiat money backing bank deposits has soared my multiples to $1 trillion. But total bank debt, including off-balance sheet debt, is $18 trillion. So, the stock of bank credit, not to mention all credit, is still huge compared to the stock of base fiat money. As long as this is true, deflation can continue.

JEATON, while I see what you are saying but you are dead wrong, you are forgetting the dollar is falling. The less the dollar is worth the more things will cost, which is called inflation. We are going to keep printing because we think we can spend our way out of this. See Bailouts, Stimulus, Cash for clunkers, and a whole bunch of other stuff.

Your savings are going to get wiped out, invest in gold and I promise you will make it through this.

I plan on staying in school and riding this out that way.

We will simply have to agree to disagree. Yes the dollar has been falling as the market has been rising. Gold, in my opinion will make a brief run above $1,000 and then soon reverse. As our current “manic” echo works its way out of the stock market in the coming weeks, the dollar will base and start up in a long term run. Gold will fall back to the mid $600’s.

Never forget that we represent 5% of the world population, yet we produce 20% of the worlds economic output. Our GDP is almost twice that of China, with less than 25% of their population.

When things turn back down, which I am afraid they soon will, the world will flee back to the dollar. It will rise, gold will fall.

Now, having said all that, I fully recognize that if I knew it all I would be on my private beach somewhere and not giving a flip about this board or much else, so take my opinions at face value.

[quote]JEATON wrote:
Ben has no say in the matter.

Through ‘07 dollar denominated debt soared to $50 trillion, while the total of currency plus Fed reserves was still below $1 trillion. None of these debt figures include derivatives and governments’ unfunded liabilities, which are in the range of another $200 trillion.
Over the past year, the Fed has doubled the stock of base fiat money (monetary base) in the form of reserves by creating new dollars and exchanging them for outstanding IOU’s. The total of base fiat money backing bank deposits has soared my multiples to $1 trillion. But total bank debt, including off-balance sheet debt, is $18 trillion. So, the stock of bank credit, not to mention all credit, is still huge compared to the stock of base fiat money. As long as this is true, deflation can continue. [/quote]

Unemployed people also don’t have any of the printed dollars to spend and that hinders any inflation.

I think the Dems will make unemployment insurance pay longer and longer until we have a guaranteed annual income policy. Now up to 79 weeks in many states. And starving people rarely vote for the party in power.

Republic → Democracy → Oligarchy → Tyranny → Collapse

[quote]JEATON wrote:
We will simply have to agree to disagree. Yes the dollar has been falling as the market has been rising. Gold, in my opinion will make a brief run above $1,000 and then soon reverse. As our current “manic” echo works its way out of the stock market in the coming weeks, the dollar will base and start up in a long term run. Gold will fall back to the mid $600’s.

Never forget that we represent 5% of the world population, yet we produce 20% of the worlds economic output. Our GDP is almost twice that of China, with less than 25% of their population.

When things turn back down, which I am afraid they soon will, the world will flee back to the dollar. It will rise, gold will fall.

Now, having said all that, I fully recognize that if I knew it all I would be on my private beach somewhere and not giving a flip about this board or much else, so take my opinions at face value. [/quote]

2/3 of our GDP is spending, it is artificial. With china making the move to gold, expect the world to follow. Fiat money is being show to be what it truly is, worthless.