Credit risk pollution Superfund is born, market soars

[marvenger]

Re: Credit risk pollution Superfund is born, market soars

if the principal obligations of the debt was reduced in line with ability to pay then the securities would have value, and people would carry on working to pay off their mortgage. I think the banking industry sees this as a dangerous precedent to set for their own power and seeing as they have the real power in washington they will get their way even though a reduction in principle would be the best way to protect the economy. I see iTulip's point about the political rammifications of defaulting on debt and hence certainty of bailouts for political reasons, but for some reason I chose to stick with financiers power explanations...they're the dominant power to me.

[Forrest]

Re: Credit risk pollution Superfund is born, market soars

if the principal obligations of the debt was reduced in line with ability to pay then the securities would have value, and people would carry on working to pay off their mortgage.

The question becomes who is holding the securities...and who are we paying the mortgages to? I would be delighted if my mortgage was reduced, but I rather doubt that any banker is likely to do so, much less the Fed, or the current regime in Washington.

But, since I like living at my house, I'll keep paying the note so long as the government keeps paying me the retirement I paid into. True, they receive interest on the fiat currency they send me monthly, and that I return to them on the mortgage they are now holding, but it's just another type of taxation...minimal, particularly since I'm only paying 5.5% on the mortgage, which is a lot less than a lot of people's taxes. (Tax free retirements have a few benefits.) Then, the passive income from my real estate provides a bit of income, and I have that nice metal lump under my pillow to comfort me against disaster...like the Dollar being worth less all the time.

I think the banking industry sees this as a dangerous precedent to set for their own power and seeing as they have the real power in washington they will get their way even though a reduction in principle would be the best way to protect the economy.

Having worked in banking and lending, particularly mortgages, I am quite sure that no one holding real estate of any kind will reduce the principle unless a really large gun is held to their head...unlikely, but nice to dream of. And were I the lender on any notes (an investment I will take up in less volitile real estate markets) I wouldn't take less than I was owed...especially if I lent the money in good faith, which most Banks do. Not the Fed, of course, but then, I don't consider them a bank...more like the Mob, really.

I see iTulip's point about the political rammifications of defaulting on debt and hence certainty of bailouts for political reasons, but for some reason I chose to stick with financiers power explanations...they're the dominant power to me.

Politicians are financed by a lot of different sources of money, and tussles between varying powers also affect the necessity to repay debt. We are not quite yet a unified Global entity, politically, or financially, so it's a bit hard to tell who really is dominent...in banking, or in politics.

The world is still a very uncertain place with a lot of unpleasant people who have uncivilized ideas of how to keep order, and collect debts. No matter who you think is running things, keep your options open, and watch your back.

[marvenger]

Re: Credit risk pollution Superfund is born, market soars

I'm only paying 5.5%

But if there's a RE bubble chances are your mortgage is a few times your income and your paying a lot more than 5.5%. Here in Sydney, median house price is 7 times median income....ouch! And we've high income taxes gst etc

unless a really large gun is held to their head

people have to demand congress do their job and use the mighty pen to get rid of the FED

more like the Mob, really.

agree!

so it's a bit hard to tell who really is dominent...in banking, or in politics. .

my belief is its whoever is behind the private organisation the FED. Ron Paul said he's been trying his whole life to uncover who is behind it and how they benefit from it, but its so secret no one knows except those in control. After hearing ron say that i didn't even really try myself, maybe a mistake but if anyone on iTulip knows please let Ron and I know. Creating money out of thin air and lending it to the government of the most powerful nation in the world at interest is about as powerful as it gets really.

The world is still a very uncertain place with a lot of unpleasant people who have uncivilized ideas of how to keep order, and collect debts. No matter who you think is running things, keep your options open, and watch your back.

Agree!

[nathanhulick]

Re: Credit risk pollution Superfund is born, market soars

And when the price is lowered to zero, and there is still no bid, then what??

The seller needs to continue to lower his price. In other words, pay someone to take them. Its no different than someone who owns a piece of land that has hazardous waste on it. The land may have a negative value because the cost of cleaning the waste is greater than the value of the land once its cleaned.