mortgage rate freeze

[Konig]

I was rather surprised that the plan got through. Im just wondering who is ultimately paying for the home owner's bad decision? I thought the banks are discounting and freezing their rates to "help" these homeowners but "helping" middle class people out seriously doesnt sound like what a banker will do.

 

[Edwood]

The home owners and tax payers pay in the end. These are banks we're talking about here.

 

[Konig]

Quote:

Originally Posted by Edwood /img/forum/go_quote.gif The home owners and tax payers pay in the end. These are banks we're talking about here.

i thought the banks are bailing out the home owners in trouble here? And how do the taxpayers pay? so they pay the IRS, IRS pay the government, government pay the bank later on?

 

[stevenkelby]

Quote:

Originally Posted by Konig /img/forum/go_quote.gif so they pay the IRS, IRS pay the government, government pay the bank later on?

No, no-one pays anyone back. The economy would collapse, capitalist economies are built on debt. That's how every cent gets into the system, it's all "borrowed". Instead of paying it back, the banks just borrow more, the mint prints it, people borrow it. It's unsustainable but the world economy should last a few more years...

 

[sinus1982]

Quote:

Originally Posted by stevenkelby /img/forum/go_quote.gif No, no-one pays anyone back. The economy would collapse, capitalist economies are built on debt. That's how every cent gets into the system, it's all "borrowed". Instead of paying it back, the banks just borrow more, the mint prints it, people borrow it. It's unsustainable but the world economy should last a few more years...

2nd that. absolutely true.

 

[Uncle Erik]

Freezing rates won't help the houses bought on spec. Won't do anything to remedy the housing oversupply thanks to demand from spec, either.

This is just prolonging the inevitable. Probably past November 2008, if there's any significance to that.

 

[coolshot]

Quote:

Originally Posted by stevenkelby /img/forum/go_quote.gif No, no-one pays anyone back. The economy would collapse, capitalist economies are built on debt. That's how every cent gets into the system, it's all "borrowed". Instead of paying it back, the banks just borrow more, the mint prints it, people borrow it. It's unsustainable but the world economy should last a few more years...

no we still have the earth to rape of her resources and cheap labor to exploit. when that runs out then its done....

 

[Konig]

Quote:

Originally Posted by stevenkelby /img/forum/go_quote.gif No, no-one pays anyone back. The economy would collapse, capitalist economies are built on debt. That's how every cent gets into the system, it's all "borrowed". Instead of paying it back, the banks just borrow more, the mint prints it, people borrow it. It's unsustainable but the world economy should last a few more years...

when u say the banks borrow more do u mean borrow from global bond investors? With all these writedowns coming which global investor will actually lend money to those banks?

 

[stevenkelby]

That too, but I meant the reserve bank/treasury. Don't want to talk about it, I'll get carried away and depressed.

 

[Konig]

Quote:

Originally Posted by stevenkelby /img/forum/go_quote.gif That too, but I meant the reserve bank/treasury. Don't want to talk about it, I'll get carried away and depressed.

ok, so fed prints more money to supply to the banks. But isnt that money devalued? so whats the point of printing 20% more $ for the banks if the value of the money decreases by 20%?

 

[sinus1982]

Quote:

Originally Posted by Konig /img/forum/go_quote.gif ok, so fed prints more money to supply to the banks. But isnt that money devalued? so whats the point of printing 20% more $ for the banks if the value of the money decreases by 20%?

this is where the
North American currency union - Wikipedia, the free encyclopedia
jumps in. it is highly probable that this whole thing currently going on is staged to introduce this new currency.

 

[ken36]

"Nattering nabobs of negativism." - Spiro Agnew. VP of the USA and convicted felon.

Not you guys too. IMO, nobody can predict what's going to happen. I do know that things usually work out, just fine. This is in spite of governments and banks and "experts".

 

[AlanY]

This bailout is just a massive transfer of wealth from those who don't own homes to those who do and the predatory lenders that enabled the situation.

 

[marvin]

Quote:

Originally Posted by konig I was rather surprised that the plan got through. Im just wondering who is ultimately paying for the home owner's bad decision? I thought the banks are discounting and freezing their rates to "help" these homeowners but "helping" middle class people out seriously doesnt sound like what a banker will do.

There's lots of incentives all around for the banks to cooperate. If they don't rework the mortgages, then their only option will be to repo the houses and attempt to sell them in a seriously depressed market. The government will also step in with heavy regulations, investigations, and all sorts of nice things that impede the bank's ability to operate.

If they do cooperate with the government, then they get government money to fix their mistakes with, minimal government intrusion later on, and get to move the whole mess out for a few years.

Quote:

Originally Posted by Uncle Erik /img/forum/go_quote.gif Freezing rates won't help the houses bought on spec. Won't do anything to remedy the housing oversupply thanks to demand from spec, either. This is just prolonging the inevitable. Probably past November 2008, if there's any significance to that.

You're thinking too short term. Hillary (and the rest of the Dems) pushed a 5 year rate freeze, which would conveniently push everything out past November 2012. Certainly looking like they'll get it. Still not great for speculators, but at least it'll put a damper on additional oversaturation due to foreclosures.

 

[OptionTrader]

Quote:

Originally Posted by AlanY /img/forum/go_quote.gif This bailout is just a massive transfer of wealth from those who don't own homes to those who do and the predatory lenders that enabled the situation.

Predatory lenders?? What about the fact that the people in trouble did not read the contract they signed to get their mortgage. Anyone who obtained an ARM at a time when interest rates were at multi-decade lows is, at best, a fool. People were buying way beyond their means. Traders have seen this coming from a mile away.

No sympathy here.