Crisis looms for entire economy

[EJ]

Crisis looms for entire economy
March 24, 2007 (Newsday)

by Peter Morris is chairman of the PRM Realty Group

Congress must focus on rising mortgage defaults to prevent a slip in confidence leading to collapse

If Washington doesn't address the rapidly building multi-trillion-dollar crisis in residential mortgage defaults, its paralysis will help trigger a national economic recession that could touch every homeowner.

The crisis has been building for months - if not years. Experts agree it is a result of banks and other lenders' granting home loans to people who were not truly able to afford the payments. Now, with the national economy in a slide, the number of mortgage defaults is rising at an alarming rate.

Before we engage in the usual finger-pointing over how we got into this mess, let's agree on an aggressive course of action to mitigate it. Our nation must recognize there will be economic pain if the problem goes unaddressed; there will be residential foreclosures and billions of dollars in write-offs as auditors discover that many of these mortgages can never be fully paid down. Many families will find that they may have to consolidate their living space if they hope to hold on to at least one viable residential dwelling.

The nation must ensure that the mortgage market remains viable, liquid and stable. The response should include a government restructuring of a portion of the multi-trillion mortgage debt through federal and state underwriting.

AntiSpin:

Dear Congress,

We made a fortune in real estate during the housing bubble. Now that it's collapsing, my industry is screwed. Can you please rescue me and my pals with a tax-payer bailout? We'll throw in a couple of bucks from the private sector to make it look good.

Our annual contribution toward your next re-election campaign is enclosed.

Thanks!

Signed,

Les Rippemoff
Chairman, Housing Bubble Racket Realty Group

__________________________________________________ ________

Dear Congress-critter,

There is absolutely no excuse for this. This is the most predictable "financial crisis" in history.

If you pay one red cent of my hard earned money to bail out anyone who was sold a mortgage they could not afford before you've extracted every red cent made by the lenders and banks who created this crisis–which iTulip.com has been warning you about since 2002 and dozens of web sites since then–I am going to do everything in my power to see to it that you don't serve out your term of office.

Signed,

Hard Working Taxpayer

__________________________________________________ ________

Dear Les,

It's not about pointing fingers, it's about who gets left holding the bag.

Where were your letters to Congress during the housing bubble, when you were making money hand over fist and could have helped prevent the "crisis" that you want me and millions of other taxpayers to bail you out of now?

Screw you.

Signed,

Hard Working Taxpayer

________

iTulip Select, The investment thesis for the next cycle™.

[Jim Nickerson]

Re: Crisis looms for entire economy

Dear Hard Working Taxpayer,

Remember the first rule of life: shit slides down hill.

Good luck, sucker.

Les

[jk]

Re: Crisis looms for entire economy

Dear Hard Working Taxpayer,

I think I recall meeting you during my last fundraiser at my good friend Les' house. If not, I hope to meet you at the next one.

Les and the rest of the banking and real-estate community have just been doing their best to make the American Dream of home ownership a reality for millions of people who thought they could never afford a house of their own. And they did make it a reality, at least for a year or two. Or maybe just a month or two, but it was the American Dream come true! And the voters and taxpayers who are now struggling to keep those Dreams deserve sympathy and help from all of us.

I will be submitting legislation, the Keep the American Dream from Becoming a National Nightmare Act of 2007, which will appropriate money for a Domestic Real Estate Affordability Mission [D.R.E.A.M.] Commission, which will be empowered to guarantee refinanced mortgage loans in danger of default, extending terms if necessary to 50 to 70 years, with the possibility of debit balances remaining at the end of those terms in order to keep payments affordable. And those new mortgages will have interest rates set below the market, if that's what it takes, with the difference capitalized into the residual debit balances.

The current mortgages will be paid off immediately, and in full, to relieve those citizens of their currently unbearable burdens! This will also stabilize any financial institutions formerly put at risk by current loans. And the new, government guaranteed mortgages will be issued by those companies in the private sector with expertise in the mortgage lending business.

I am sure you can see all the benefits that will flow from the D.R.E.A.M. Commission, and hope you will join me in supporting the Keep the American Dream from Becoming a National Nightmare Act of 2007.

Thank you for your support,

Your Congress-Critter

[Tet]

Re: Crisis looms for entire economy

Dear Hard Working Taxpayer,
Domestic Real Estate Affordability Mission [D.R.E.A.M.]

LMAO, well done.

[jtabeb]

Re: Crisis looms for entire economy

Dear Hard Working Taxpayer,

I think I recall meeting you during my last fundraiser at my good friend Les' house. If not, I hope to meet you at the next one.

Les and the rest of the banking and real-estate community have just been doing their best to make the American Dream of home ownership a reality for millions of people who thought they could never afford a house of their own. And they did make it a reality, at least for a year or two. Or maybe just a month or two, but it was the American Dream come true! And the voters and taxpayers who are now struggling to keep those Dreams deserve sympathy and help from all of us.

I will be submitting legislation, the Keep the American Dream from Becoming a National Nightmare Act of 2007, which will appropriate money for a Domestic Real Estate Affordability Mission [D.R.E.A.M.] Commission, which will be empowered to guarantee refinanced mortgage loans in danger of default, extending terms if necessary to 50 to 70 years, with the possibility of debit balances remaining at the end of those terms in order to keep payments affordable. And those new mortgages will have interest rates set below the market, if that's what it takes, with the difference capitalized into the residual debit balances.

The current mortgages will be paid off immediately, and in full, to relieve those citizens of their currently unbearable burdens! This will also stabilize any financial institutions formerly put at risk by current loans. And the new, government guaranteed mortgages will be issued by those companies in the private sector with expertise in the mortgage lending business.

I am sure you can see all the benefits that will flow from the D.R.E.A.M. Commission, and hope you will join me in supporting the Keep the American Dream from Becoming a National Nightmare Act of 2007.

Thank you for your support,

Your Congress-Critter

Shit, That IS WHAT'S going to Happen, See Every Time you try to lead a RESPONSIBLE LIFE all you do is FUCK YOURSELF. There won't be any better pricing in the market because all the CRAP will stabilize prices just as they are. I've freaking had it. I'm maxing out my Credit cards and getting 17 1.5 Mill I/O loans for investment purposes tomarrow! (B4 the bailout starts, cause god knows that the real SUCKERS are the ones who get to buy afterward after all sins are forgiven for all the idiots our there) Oh and as a bonus my constat purchasing power will go down by what? 50%. Fuck you VERY MUCH congress.

"Sorry about the language, but I'll bet you 100 oz of Gold the above is exactly what happens!"

[jk]

Re: Crisis looms for entire economy

as i wrote that parody i too realized that it was exactly what will happen! the proposal keeps the so-called "owners" in penury, prevents prices from going down for anyone who waited, funnels extra profits to all the banks and lenders by paying off the impaired credits, and guarantees future profits and fees to the same institutions via underwriting the new subsidized mortgages. a perfect solution!

[Jim Nickerson]

Re: Crisis looms for entire economy

Shit, That IS WHAT'S going to Happen, See Every Time you try to lead a RESPONSIBLE LIFE all you do is FUCK YOURSELF. There won't be any better pricing in the market because all the CRAP will stabilize prices just as they are. I've freaking had it. I'm maxing out my Credit cards and getting 17 1.5 Mill I/O loans for investment purposes tomarrow! (B4 the bailout starts, cause god knows that the real SUCKERS are the ones who get to buy afterward after all sins are forgiven for all the idiots our there) Oh and as a bonus my constat purchasing power will go down by what? 50%. Fuck you VERY MUCH congress.

"Sorry about the language, but I'll bet you 100 oz of Gold the above is exactly what happens!"

jtabeb,

I'd hate to see any hard working taxpayer lose 60K+ bonars on a bet, so I hope things turn out such that you keep you gold.

Richard Russell is given to non-market commentary from time to time and the other day noted, "There are also three levels of existence. The lowest level is what a person owns. The next higher level is what a person does. The highest level is what a person is."

I don't know of any facts that would support what Richard said, but I believe if one is honest and has pride, then at least for me his enumeration of the levels of existence is correct.

I have no idea how old you may be, but assuming you expect to live a long life, it might turn out as mine has. The older one gets, the greater the opportunity to reflect on one's past actions. The fewer dumb, ignorant, or dishonest things one has done, the less burdened is one's conscience. If I could go back and and change things in my life it would not to be to make more money and to have more stuff, but rather to have done fewer dumb, ignorant, or dishonest acts.

My suggestion is don't abandon doing those things that you have reason to believe are right.

[Tet]

Re: Crisis looms for entire economy

as i wrote that parody i too realized that it was exactly what will happen! the proposal keeps the so-called "owners" in penury, prevents prices from going down for anyone who waited, funnels extra profits to all the banks and lenders by paying off the impaired credits, and guarantees future profits and fees to the same institutions via underwriting the new subsidized mortgages. a perfect solution!

In a rigged game, sometimes those running the sting need to appear like they were the losers as well as those that were the marks. This is the only way to keep the marks coming back to the table. Certainly the real losers will not receive any subsidies.

[jk]

Re: Crisis looms for entire economy

If I could go back and and change things in my life it would not to be to make more money and to have more stuff, but rather to have done fewer dumb, ignorant, or dishonest acts.

words of wisdom!

[EJ]

Re: Crisis looms for entire economy

as i wrote that parody i too realized that it was exactly what will happen! the proposal keeps the so-called "owners" in penury, prevents prices from going down for anyone who waited, funnels extra profits to all the banks and lenders by paying off the impaired credits, and guarantees future profits and fees to the same institutions via underwriting the new subsidized mortgages. a perfect solution!

And don't forget–last but certainly not least–your solution keeps tax revenues flowing. Sure, the national debt grows even more, but as long as taxes remain low, and foreign central banks are willing to fund it, no one cares.

The viability of this solution is limited only by, A) the willingness of US citizens to see the national debt rise even more, and by, b) the continuation of US Trade Deficit Financing. As US citizens feel no pain as a result of A because of the continuation of B–that is, interest rates remain low and inflation, well, stays relatively low–then a policy like the one you have devised is possible.

[qwerty]

Such stuff as dreams are made on.

Yes, let's keep things in perspective.

"You do look, my son, in a mov'd sort,
As if you were dismay'd: be cheerful, sir:
Our revels now are ended. These our actors,
As I foretold you, were all spirits and
Are melted into air, into thin air:
And, like the baseless fabric of this vision,
The cloud-capp'd towers, the gorgeous palaces,
The solemn temples, the great globe itself,
Yea, all which it inherit, shall dissolve
And, like this insubstantial pageant faded,
Leave not a rack behind. We are such stuff
As dreams are made on, and our little life
Is rounded with a sleep.--Sir, I am vex'd:
Bear with my weakness; my old brain is troubled.
Be not disturb'd with my infirmity.
If you be pleas'd, retire into my cell
And there repose: a turn or two I'll walk,
To still my beating mind."

[qwerty]

Where's the floor though?

That's what the politicians will no doubt do, but politicians can only get going AFTER the shit has hit the fan (q.v. Global Warming).

So, how bad does it have to get before Congressional Hearings are held, and how much worse can it get before action is taken?

I mean, prices might well be stabilized, but maybe a good bit lower than where they are now, no?

[Charles Mackay]

Re: Crisis looms for entire economy

NAR and NAHB were the second largest contributors to Bill Clinton and they got their payback in the way of Clinton's Taxpayer Relief Act of 1997 that kicked off the housing bubble. $500,000 tax free gains upon selling a house... no reinvestment required. That kicked off the small builder flipping mania.

[ThinkBig]

Re: Crisis looms for entire economy

That's funny. The "letters" in reply to a bailout sound just like the one I wrote to my Senator on Friday. The gist of it was "Not with MY tax dollars, you don't" . Tap the party participants that made big profits over the past four years if you want to save the poor homeowner.

[DemonD]

Re: Crisis looms for entire economy

Dear Congress,

Thanks for allowing the Fed to inflate the dollar, running a deficit, and selling debt based on your assets. We especially thank you for using those inflated assets to buy all our stuff! We'll be by in a few years to collect on that debt. Keep up the good work until then.

Sincerely,
China

P.S. We hear Fort Knox is beautiful this time of year.