Dave wrote:
Hope this helped.

Yes, well done & thanks.

Some of what you've written here, I already knew... some is new to me.

I don't have much of a head for business, machinery is much more
straightforward thanks. But I do have at least a bit of a head for
numbers and what a lot of people have been saying does not add up.

The CRA is part of the crash picture, chalk that up to the Law of
Unintended Consequences. But it ain't the biggest root cause.

We should work at raising the level of public discourse, not lowering
it.

Next... how about health care!

I'll start- saw a statistic a few weeks back that the "average" US
household spends about the same on electronics as on health care... I
bet this doesn't include employer-paid or gov't-supplied benefits, but
still it shows where the priority is.

Regards- Doug King

On Fri, 10 Oct 2008 14:09:55 -0500, "jlrogers±³©"
wrote:


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.

And it didn't help that the lowest yielding, most secure tranches
were often rated AAA by the rating agencies, so investors thought they
were getting a sound investment. It turns out that many of those so
called triple A's became riddled with defaults.

But Doug, when problem solving you always need to look for root cause.
The red X in statistical DOE terms. There are many contributing
factors, however the root cause, the red X is simply setting up a
system to give people who could not afford these properties and loans
in the first place a way to get them with no skin in the game. That's
why I blame the dems. Just another social engineering experiment gone
bad.

If the systems were not set up, they wouldn't get the loans, they
wouldn't get the properties, they wouldn't default the loans, the
loan originators, incentified by commission and no skin in the game
wouldn't have sprouted on every street corner, the stinky CMO's would
never have been created, the CEO's of Fannie and Freddie would not
have become multimillionaires based on an incentive system that
resulted from quantitiy of loans made, demand for housing wouldn't
have accelerated artificially driving prices higher, and the list goes
on.........

On the other side of the once heated market is the pre-construction
flipper. Another entity with no skin in the game, but at least in
that game someone other than the taxpayer had to take the hit.

Frank

Dave wrote:

Hope this helped.

That's got to be one of the better explanations I've read, thanks Dave.

It would appear that there is a lot of places to lay blame. The phrase
you used earlier (I think it was you) "Perfect Storm" seems most apt.

Cheers
Martin

wrote:


Next... how about health care!

Ah now don't do that, Dave is sure that if you had some kind of
universal health care the "po" folks, having nothing better to do with
their time would spend most of their time enjoying the untold comforts
and amusements to found in your nations emergency rooms and physicians
waiting rooms.



I'll start- saw a statistic a few weeks back that the "average" US
household spends about the same on electronics as on health care... I
bet this doesn't include employer-paid or gov't-supplied benefits, but
still it shows where the priority is.
\

Actually I think that you spend about about $12,000 per capita on health
care, about the same that we do, except we all get it up here, not just
those who can afford it.

Cheers
Martin


A

On Fri, 10 Oct 2008 18:10:17 -0400, Marty wrote:

wrote:


Next... how about health care!

Ah now don't do that, Dave is sure that if you had some kind of
universal health care the "po" folks, having nothing better to do with
their time would spend most of their time enjoying the untold comforts
and amusements to found in your nations emergency rooms and physicians
waiting rooms.



I'll start- saw a statistic a few weeks back that the "average" US
household spends about the same on electronics as on health care... I
bet this doesn't include employer-paid or gov't-supplied benefits, but
still it shows where the priority is.
\

Actually I think that you spend about about $12,000 per capita on health
care, about the same that we do, except we all get it up here, not just
those who can afford it.


Don't know where you made up that figure, I ran a large, self insured,
employer based operation, and spent approximately $4000 per capita,on
an 80/20 cost sharing ratio with a demographic about twenty years of
age above the national average.

suggest you check your figures.

Cheers
Martin


A

Frank Boettcher wrote:
On Fri, 10 Oct 2008 18:10:17 -0400, Marty wrote:

wrote:

Next... how about health care!
Ah now don't do that, Dave is sure that if you had some kind of
universal health care the "po" folks, having nothing better to do with
their time would spend most of their time enjoying the untold comforts
and amusements to found in your nations emergency rooms and physicians
waiting rooms.


I'll start- saw a statistic a few weeks back that the "average" US
household spends about the same on electronics as on health care... I
bet this doesn't include employer-paid or gov't-supplied benefits, but
still it shows where the priority is.
\

Actually I think that you spend about about $12,000 per capita on health
care, about the same that we do, except we all get it up here, not just
those who can afford it.


Don't know where you made up that figure, I ran a large, self insured,
employer based operation, and spent approximately $4000 per capita,on
an 80/20 cost sharing ratio with a demographic about twenty years of
age above the national average.

suggest you check your figures.

Factor in the Medicaid/Medicare budgets....

Cheers
Martin

Marty wrote:

Don't know where you made up that figure, I ran a large, self insured,
employer based operation, and spent approximately $4000 per capita,on
an 80/20 cost sharing ratio with a demographic about twenty years of
age above the national average.

suggest you check your figures.

Factor in the Medicaid/Medicare budgets....

Actually, you are closer Frank, 12k per family, more like 4K-5K per
capita. Oh and don't forget the sizable chunk of population that gets
health care through VA.



Cheers
Martin

Vic Smith wrote:
But the worst mistake is that most of those in charge - gov and
business - abandoned their fiduciary responsibilities.

Bingo.
It's as much an epidemic of irresponsibility as a fiscal crisis.


A vast fleet of ships with drunken captains.


I like that analogy.
Many people who have no clue what it means to be a Captain think
everything is going fine.
And many more think it's fine because it's a lot of fun as long as
you're one of the drunks!

DSK

Frank Boettcher wrote:
*And it didn't help that the lowest yielding, most secure tranches
were often rated AAA by the rating agencies, so investors thought they
were getting a sound investment. *It turns out that many of those so
called triple A's became riddled with defaults.


True enough... part of the problem is that these were a new type of
instrument that nobody knew how to assess the risk of; but it's also
true that there was little accountability and due diligence as these
intruments were marketed thru-out the finance world.

The default rate, as a percent, has only gone up a small amount. A
bigger problem is the crisis of confidence... when it turns out that
even the safest-rated instruments can be hit by default, *and* the
insurance is worthless, then people panic and want to dump their
investment before they lose the whole pie.

After all, what makes a $20 bill worth $20? The fact that people will
accept it as valuable for a certain range of goods & services...
pretend for a moment that terrorists had broken into the Mint and
infected random $20 bills with AIDS (or something), then you'd have
the same effect... free-fall!

And this is *still* only part of the problem, as I see it... we've
been thru cycles of tight credit before, and cycles of loan default
(remember the junk-bond scandals). The answer is, people who have
money to loan insist on higher interest rates. But now we (the U.S.A.
is not just addicted to credit, we need CHEAP credit! We cannot afford
to take on higher debt just to service the debt we've already taken
on! The country is balancing on the edge of a cliff here and Paulson &
Bernanke are desparate not just to ease credit but to keep interest
rates low.


But Doug, when problem solving you always need to look for root cause.

Agreed. And I think the CRA (you might as well add in President Bush's
'Ownership Society') is indeed part of what got us here. I just don't
see it as The Big Cause.

The red X in statistical DOE terms. *There are many contributing
factors, however the root cause, the red X is simply setting up a
system to give people who could not afford these properties and loans
in the first place a way to get them with no skin in the game.

But they *did* have skin in the game. The same as you or I... keep
paying or lose your home.

Dave's point about computers enabling the dizzying array of mortgage
loan terms is also a good one.

IMHO one of the inherent factors in being "conservative" means to be
leery of new things such as new types of financial instruments.

Regards- Doug King

Don't know where you made up that figure, I ran a large, self insured,
employer based operation, and spent approximately $4000 per capita,on
an 80/20 cost sharing ratio with a demographic about twenty years of
age above the national average.


Factor in the Medicaid/Medicare budgets....

Marty wrote:
Actually, you are closer Frank, 12k per family, more like 4K-5K per
capita. *Oh and don't forget the sizable chunk of population that gets
health care through VA.


Hey!
HEY!!!

Guys, I was only JOKING about bringing up health care!!

DSK