"Dave" wrote in message
...
On Thu, 9 Oct 2008 13:18:53 -0700, "Capt. JG"
said:

of which you convenient left out the
last part...

When I was listening to the debate I nearly burst out laughing. Here he
was
trying to take McCain to task for saying the economy was basically sound,
and then saying when he was asked whether he thought the economy would get
much worse before it gets better: "No. I am confident about the American
economy." Gimme a break.



I'm sure you need one, but I didn't almost burst out laughing when McCain
said:

"I have a plan to fix this problem"

"And with the plan that -- that I have, that will do that"
"We've got to have a package of reforms and it has got to lead to reform
prosperity and peace in the world. And I think that this problem has become
so severe, as you know, that we're going to have to do something about home
values."

"I like Meg Whitman [former CEO of eBay and current McCain campaign
adviser], she knows what it's like to be out there in the marketplace. She
knows how to create jobs." (and lay them off, apparently)

"I left my campaign and suspended it to go back to Washington to make sure
that there were additional protections for the taxpayer in the form of good
oversight, in the form of taxpayers being the first to be paid back when our
economy recovers -- and it will recover -- and a number of other measures."

--
"j" ganz @@
www.sailnow.com

On 9 Oct 2008 16:56:02 -0500, Dave wrote:

On Thu, 09 Oct 2008 17:18:08 -0400, said:

With apologies to Lloyd Bentsen, you, sir, are no Mark Twain!

When you do it, it's just baby-talk.

Ah, some have no sense of the finer points of the language.

Well, at least you admit THAT.

On 9 Oct 2008 17:08:01 -0500, Dave wrote:

On Thu, 09 Oct 2008 17:19:24 -0400, said:

There you go, attacking the messenger rather than addressing the
issue.

See my reply to Doug.

Didn't see it. This is usenet, Dave. Not all posts make it to all
servers. You are no Mark Twain, and I guess we can add that you are no
Sherlock Holmes, either.

On 9 Oct 2008 18:32:01 -0500, Dave wrote:

On Thu, 09 Oct 2008 17:22:29 -0400, said:

What he said was that he had faith in the economy as far as it's
ability to eventually recover.

That may have been what his handlers had told him to say, but it certainly
wasn't what he said. Read the question he was answering, and then the
answer.

I think you are "handling yourself" on this one Dave.

...something you'd rather sweep under the rug in the rush to blame
those evil libby-rull Democrats!

Dave wrote:
Nope. I blame the failures of the investment banks on their own stupidity in
over-leveraging their capital and their undue concentration of assets. The
guvmint should have let all of them run to the bankruptcy courts if they
couldn't continue to meet their obligations, instead of bailing them out.

OK, good so far.

The only problem I have is that if we simply let the banks fail in an
economy that has grown increasingly dependent on credit.... addicted
to it, you might say.... then failure will spread quickly thru every
level of the economy. Bank failure was one of the tripwires of the
Great Depression.

But apparently Thunder doesn't know the difference between a bank and an
investment bank. No one who did would mention CRA in the same sentence with
investment bank. That's why I suggested he take a nap while those who know
something about the subject discuss it.

I think I got it.

We have a financial crisis caused by the CRA and commercial banks
giving mortgages to unsuitable lenders. But the investment banks have
nothing at all to do with the CRA and they're the biggest part of this
crisis.

Maybe you can explain just a little further Dave. You may be making a
leap of faith here that I can't follow....

DSK

wrote in message
...
...something you'd rather sweep under the rug in the rush to blame
those evil libby-rull Democrats!

Dave wrote:
Nope. I blame the failures of the investment banks on their own stupidity
in
over-leveraging their capital and their undue concentration of assets.
The
guvmint should have let all of them run to the bankruptcy courts if they
couldn't continue to meet their obligations, instead of bailing them out.

OK, good so far.

The only problem I have is that if we simply let the banks fail in an
economy that has grown increasingly dependent on credit.... addicted
to it, you might say.... then failure will spread quickly thru every
level of the economy. Bank failure was one of the tripwires of the
Great Depression.

But apparently Thunder doesn't know the difference between a bank and an
investment bank. No one who did would mention CRA in the same sentence
with
investment bank. That's why I suggested he take a nap while those who
know
something about the subject discuss it.

I think I got it.

We have a financial crisis caused by the CRA and commercial banks
giving mortgages to unsuitable lenders. But the investment banks have
nothing at all to do with the CRA and they're the biggest part of this
crisis.

Maybe you can explain just a little further Dave. You may be making a
leap of faith here that I can't follow....

DSK

Many investment banks bought huge amounts of the mortgages and packaged them
into "Collateralized Mortgage Obligations" ("CMO"), slicing and dicing the
packages into multiple tranches and then selling the various tranches to
investors, including banks, private investors, and hedge funds. The MBA's
on Wall Street kept getting wilder and wilder until no one knew what they
were buying anymore, or what the CMOs were worth. When rates went up and
mortgage holders with adjustable rate mortgages started defaulting some of
the higher yielding tranches (riskier tranches) cash flow became impaired
and investors started asking hard questions. The answers scared them and
they quit buying. Market values fell, mark to market rules required write
downs, and now we are in free fall.

"jlrogers±³©" wrote:
Many investment banks bought huge amounts of the mortgages and packaged them
into "Collateralized Mortgage Obligations" ("CMO"), slicing and dicing the
packages into multiple tranches and then selling the various tranches to
investors, including banks, private investors, and hedge funds. *The MBA's
on Wall Street kept getting wilder and wilder until no one knew what they
were buying anymore, or what the CMOs were worth. *When rates went up and
mortgage holders with adjustable rate mortgages started defaulting some of
the higher yielding tranches (riskier tranches) cash flow became impaired
and investors started asking hard questions. *The answers scared them and
they quit buying. *Market values fell, mark to market rules required write
downs, and now we are in free fall.


Yep, looks right on the mark to me... but how is it the CRA's fault?
Just because everything from gas prices to warm beer is always blamed
on the nearest handy Democrat?

Looks to me like the crash was caused by greed & stupidity, helped
along by some concurrent bubbles popping.

As a private individual, if I buy an investment without carefully
researching it's true risk, then it's my fault if it goes south. I
take the hit. If dozens of investment banks do the same thing, to the
tune of squajillions of dollars, then it drags the rest of us down...
a bail-out to avoid massive bank failure may be in the best public
interest (although my vote would be to take the first round of bail-
out money from the pockets of those CEOs)... it's sure not the fault
of some muddle-headed doo-gooders who decades ago said, "hey wouldn't
it be nice if banks offered nice mortgages to poor people?"

The proble is that we Americans have a whole slew of unhealthy
addictions. Addiction to oil and addiction to credit are the two
biggies. Our borrow-and-spend government is merely a reflection of the
fact that the U.S. has a negative savings rate. The "average" US
household carries about $10K in credit card debt and our total average
indebtedness is over $150K per person. I've pointed this out as a
problem many times (even though it's not the way I manage my own
finances) long before the current banking/mortgage/credit crisis hit
the headlines.

We are addicted to oil and credit. Both are very destructive habits
that we *will* break in the near future... one problem we have is that
oil companies and financial companies are both profiting heavily from
these bad habits, just like cigarette companies profit from addiction
to nicotine. It's going to be either a fight break free or a complete
wreckage of the nation when we hit bottom.

Fresh Breezes- Doug King

wrote in message
...
"jlrogers±³©" wrote:
Many investment banks bought huge amounts of the mortgages and packaged
them
into "Collateralized Mortgage Obligations" ("CMO"), slicing and dicing the
packages into multiple tranches and then selling the various tranches to
investors, including banks, private investors, and hedge funds. The MBA's
on Wall Street kept getting wilder and wilder until no one knew what they
were buying anymore, or what the CMOs were worth. When rates went up and
mortgage holders with adjustable rate mortgages started defaulting some of
the higher yielding tranches (riskier tranches) cash flow became impaired
and investors started asking hard questions. The answers scared them and
they quit buying. Market values fell, mark to market rules required write
downs, and now we are in free fall.


Yep, looks right on the mark to me... but how is it the CRA's fault?
Just because everything from gas prices to warm beer is always blamed
on the nearest handy Democrat?

Looks to me like the crash was caused by greed & stupidity, helped
along by some concurrent bubbles popping.

As a private individual, if I buy an investment without carefully
researching it's true risk, then it's my fault if it goes south. I
take the hit. If dozens of investment banks do the same thing, to the
tune of squajillions of dollars, then it drags the rest of us down...
a bail-out to avoid massive bank failure may be in the best public
interest (although my vote would be to take the first round of bail-
out money from the pockets of those CEOs)... it's sure not the fault
of some muddle-headed doo-gooders who decades ago said, "hey wouldn't
it be nice if banks offered nice mortgages to poor people?"

The proble is that we Americans have a whole slew of unhealthy
addictions. Addiction to oil and addiction to credit are the two
biggies. Our borrow-and-spend government is merely a reflection of the
fact that the U.S. has a negative savings rate. The "average" US
household carries about $10K in credit card debt and our total average
indebtedness is over $150K per person. I've pointed this out as a
problem many times (even though it's not the way I manage my own
finances) long before the current banking/mortgage/credit crisis hit
the headlines.

We are addicted to oil and credit. Both are very destructive habits
that we *will* break in the near future... one problem we have is that
oil companies and financial companies are both profiting heavily from
these bad habits, just like cigarette companies profit from addiction
to nicotine. It's going to be either a fight break free or a complete
wreckage of the nation when we hit bottom.

Fresh Breezes- Doug King

CRA was the catalyst. In the old days mortgages to be sold to Freddie and
Fannie had to meet rigorous criteria with respect to specific financial
ratios (e.g., loan to value, income to loan amount), verifications with
respect to employment, income, and net worth. Rates were fixed, so the
borrower could depend on a fixed payment. The requirements were so strict
it took "forever" to close a loan.

CRA was the beginning of removing the standards. Adjustable rates was the
killer.

CRA

On Fri, 10 Oct 2008 12:27:33 -0700 (PDT), wrote:

"jlrogers±³©" wrote:
Many investment banks bought huge amounts of the mortgages and packaged them
into "Collateralized Mortgage Obligations" ("CMO"), slicing and dicing the
packages into multiple tranches and then selling the various tranches to
investors, including banks, private investors, and hedge funds. Â*The MBA's
on Wall Street kept getting wilder and wilder until no one knew what they
were buying anymore, or what the CMOs were worth. Â*When rates went up and
mortgage holders with adjustable rate mortgages started defaulting some of
the higher yielding tranches (riskier tranches) cash flow became impaired
and investors started asking hard questions. Â*The answers scared them and
they quit buying. Â*Market values fell, mark to market rules required write
downs, and now we are in free fall.


Yep, looks right on the mark to me... but how is it the CRA's fault?
Just because everything from gas prices to warm beer is always blamed
on the nearest handy Democrat?

Looks to me like the crash was caused by greed & stupidity, helped
along by some concurrent bubbles popping.

As a private individual, if I buy an investment without carefully
researching it's true risk, then it's my fault if it goes south. I
take the hit. If dozens of investment banks do the same thing, to the
tune of squajillions of dollars, then it drags the rest of us down...
a bail-out to avoid massive bank failure may be in the best public
interest (although my vote would be to take the first round of bail-
out money from the pockets of those CEOs)... it's sure not the fault
of some muddle-headed doo-gooders who decades ago said, "hey wouldn't
it be nice if banks offered nice mortgages to poor people?"

The proble is that we Americans have a whole slew of unhealthy
addictions. Addiction to oil and addiction to credit are the two
biggies. Our borrow-and-spend government is merely a reflection of the
fact that the U.S. has a negative savings rate. The "average" US
household carries about $10K in credit card debt and our total average
indebtedness is over $150K per person. I've pointed this out as a
problem many times (even though it's not the way I manage my own
finances) long before the current banking/mortgage/credit crisis hit
the headlines.

We are addicted to oil and credit. Both are very destructive habits
that we *will* break in the near future... one problem we have is that
oil companies and financial companies are both profiting heavily from
these bad habits, just like cigarette companies profit from addiction
to nicotine. It's going to be either a fight break free or a complete
wreckage of the nation when we hit bottom.

That is all right on. Indebtedness has been encouraged for maybe 15
years now. IMO the 401k, which allowed Wall Street directly into the
paycheck of many workers, was the beginning of the problem.
The new money allowed inflation of stock prices, and made everybody
happy with the magic money of "created wealth."
But it took consumer spending and indebtedness to maintain the facade
of equity wealth.
That's a simplistic outline, and the whole truth is really complicated
by other elements, like shipping manufacturing overseas, which
increased stock prices at the expense of more worker indebtedness.
We've really been living in a financial fantasyland for many years.
A long-running Ponzi scheme.
But the worst mistake is that most of those in charge - gov and
business - abandoned their fiduciary responsibilities.
A vast fleet of ships with drunken captains.

--Vic

"Dave" wrote in message
...
On Fri, 10 Oct 2008 11:30:31 -0700 (PDT), said:

We have a financial crisis caused by the CRA and commercial banks
giving mortgages to unsuitable lenders. But the investment banks have
nothing at all to do with the CRA and they're the biggest part of this
crisis.

You're seeing only part of the picture, Doug. The major players among the
home mortgage originators were neither the commercial banks (which lend
primarily to business) nor the investment banks (who also didn't generally
originate home mortgages). You had a vast universe of mortgage banks, S&Ls
community banks and others who originated mortgages, warehoused them for a
short time, and the sold them to investment banks, who packaged them into
pools, carved up those pools into various risk tranches, and sold the
pieces. Those pieces then ended up in the hands of a number of players,
including both investment banks buying the pieces, often the riskiest
pieces, on the basis of high leverage. Some, but not all, of the mortgage
originators were subject to CRA requirements. In addition, banks could
satisfy CRA requirements by buying into pools of mortgages made to buyers
in
poorer areas. CRA was, if you will, one element that increased the
pressure
to push more low quality mortgages through the pipeline, ultimately ending
up as parts of the pools.

When the high default rates surfaced, the effect was that nobody knew what
the value of the various pieces of the pooled mortgages were worth. Buying
dried up, depressing the value of these pools. Then mark to market
accounting came into the picture and said that since mortgage backed
obligations were being sold at low prices, everybody holding those
obligations had to write down the value of those obligations to the low
prices, whether or not they intended to sell at those prices. Those
write-downs hit earnings and reduced the regulatory capital of the
institutions holding them. Since the amount these institutions can lend is
limited by the ratio of their regulatory capital to their risk-weighted
assets and total assets, they reduced lending (loans are an asset on their
balance sheets), including not just home lending, but lending to
businesses,
and tried to raise capital. You can trace it from there.

I get to see the process first-hand, since I regularly have to wrestle
with
how community banks can stay in compliance with regulatory capital
requirements.

Maybe you can explain just a little further Dave. You may be making a
leap of faith here that I can't follow....

Hope this helped.

Well said.