What a week. Somali pirates have captured a Ukraninian ship carrying ammunition and tanks to Kenya, stayed inside Somalia's 12 mile limit, keeping the US Navy (and soon, the Russian Navy) at bay.

Tourists and their Egyptian guides were kidnapped and taken for a 10 day ride into Chad. European commandos raided and rescued the prisoners.

Hubble Space Telescope suffered a nearly catastrophic failure causing a 14 Oct rescue mission to be (temporarily) canceled.

The Cern supercollider suffered a failure during testing - but no black holes.

N Korea, in exasperation with international cooperation, has driven out international inspectors and said they are restarting the plutonium reactor.

Thousands of people are still unaccounted for in Galveston.

Instead, we ignore all this to worry about silly money games and Congressman who cannot take their vacation. Some people were so concerned as to even listen to George Jr speeches every morning. What is this world coming to? Winter.

Fear not. It is no longer a bail out. Now it is a rescue plan. I'll take winter over spin anyday.

Someone on some news showed summed it up very well today I thought, "We're privatizing profit and nationalizing debt".

It sucks.

Yabbut, did you know the average N. Korean is three inches shorter than the average South Korean? It's true! Not everything is bad news! Cheer up! Wall Street, the "market", all that stuff is made up anyway.

That explains why Campbell Soup stock rose as the market crashed 777 points. More news that everyone should have seen if not so busy watching the obvious.

:lol2: I'm sure this has something to do with the price of tea in China too.

Seriously, folks, building a stockpile of long life food right now might not be a bad idea.

Most cities have only a few days worth of food in them, thanks to the brilliance of "just in time" inventory. Our economy is so interdependent that if one thing seizes up - say, fuel supplies - everything else will jam up behind it very quickly. Coal supply goes down - no electricity. Fuel pumps don't work - refinery doesn't work - transport becomes very hard to arrange - food becomes scarce... etc.
It could take a few weeks before things start trickling through again.

Most disaster agencies recommend everyone have at least one week worth of essentials on standby. Food, water, and don't forget the toilet paper *.

I am NOT forecasting the end of civilisation as we know it. Maybe nothing like the above will happen. But I reckon that for the next 1 or 2 years, there is a higher than usual chance of things going a bit haywire.

* and ammo, for those that require.
* and tinfoil hats.

2012. That's what the Mayans said and I've never known a Mayan (to be wrong)...wait. Does this mean I can drink now?

.

:lol2:

:lol2: at the fact that they took two tries to spell "fuckers".

This biting satire/live news feed brought to you by TWO-time Pulizer Prize winning Editorial Cartoonist, David Horsey, our very own home town crier.

House passed 263-161

Is that a good thing, V?
From what I heard this bill was chock-fuckin-full of pork too.

Yeah, I heard there was lots of oinking going on in the background, myself. What I'd like to know is if the CEO's of these failed banks and other lending institutions are going to be held accountable or are they just going to waft away on golden parachutes on the tax payer's dime? :mad2:

short answer:

No.

In my opinion, this is the wrong approach. Bailing is an appropriate illustration. And a certain amount of bailing is needed if you're in a leaky boat. But to make the boat seaworthy, you need to patch the leaks, not just bail. And I believe the leaks in this case are (largely) the defaulting mortgage holders. Those are the leaks that need to be PLUGGED.

Where in this whole spasm of FUD is an acknowledgment of the source of the crisis, and where is there an effort to address (one of the major) the root cause--mortgage defaults.

I'll hold forth in a later post on this BIG issue for me. Right now I have to type elsewhere.

IMO - The first thing that needs to be addressed is the accounting methods for the banks/lenders. No more "mark to market" - That is fuckin beyond insane!

I strenuously disagree. Mark to market is a good accounting practice. Without it, how in the world could you know the value of a company's assets? When the news is good, we'll tell you. When the news is not good, we'll just pick a number we like?

wtf?


eta:

For example:

You have a net worth. It is some value, some number. How do you reach that number? Well, today, you'd add up all your debt, then add up all your assets, subtract your debt from your assets and voila'! Your net worth.

But how do you assign a value to your debts? Well, I look at my loan statement. It tells me what I still owe. And your assets? How do I add them up? How do you value an asset? Your car, for example. What value is assigned to the car? *Your car is worth what you can get for it today.* No more, no less. Notice you don't have to sell your car to get that value, but you do have to make an estimation of what you would get if you did sell. That's mark to market. And the same goes for your house. And your baseball card collection. Without mark to market, what would you use as the basis for your valuation of your assets (or of the assets of a company)?

The problem is mortgage backed securities that now have next to no value. Lending institutions want to fix their books with a "some day my prince will come" value for their MBS's. Well, some day he may indeed come, but not today. We cannot go from a relatively transparent system of accounting to one that is opaque. How are we supposed to make informed investment decisions without mark to market? I'm with BigV.

My Rep voted no. I will vote for my Rep.

The system in place for so many years prior worked just fine. The guarantee is that there is a contract with a value associated to it. The mark to market system nullifies much of the "real value of the loan.

Clue me in, please.
 

You want to buy a house appraised at 100K.
Bank1 gives you a mortgage for 90k.
Bank1 figures you will repay 270k over 30 years.
Now when Bank1 sells that loan to Bank2, how much does Bank1 get?


You pay 10k on the mortgage loan, then default.
Bank2 now owns the house, and sells it for 100k.
Bank2 calculate it's loss at what they paid Bank1, minus 110k?

Of course to make it a simple example, I've left out payments to Bank1, before they sold the mortgage, and changes in the market value of the house.

I wonder if this will catch on...

I am going to punch myself in the nose and see if my mortgage co. will let me skip a payment.

That's a sad story, jinx.

My biggest complaint about this whole freakin debacle is the cnspicuous absence of a mechanism to balance the equation at the homeowner level. We have a very well established system for rebalancing a mortgage on a *second home* in the bankruptcy courts. Judges are empowered to call borrower and lender to the table and enforce a renegotiation of the terms of the loan, but, for reasons unknown to me, this power is not extended to cover loans on primary residences.

Why not? I would think that there is no class of borrower than residents who are more motivated to make it work! When I'm faced with getting the note paid or living under a bridge, I'm alllll over it. But for a second home, that same motivation isn't there. Why wouldn't you want to extend the same set of options to the borrowers for primary residences???

Because now, let's say someone doesn't pay and the home goes into foreclosure. Imagine that the mortgage is one that has been purchased as the security behind one of these corporate notes that have rapidly fallen out of favor. So we the people own the note and we're not getting paid. What now?

Foreclose? Kick them to the curb? Wouldn't the homeowner possibly think, no wai GWB is gonna boot me out. I'll just stay. That might happen, sure it could. Now we're not getting paid. Dammit.

Or.

Or we decide to evict him. Now we own the house. Who's gonna mow the lawn? Who's going to sell the house? Who's gonna buy it? And for what amount? A foreclosure sale is often offered at the loan balance, but the previous homeowner couldn't afford that rate, maybe the market isn't there. So we have to lower the price. Now savvy cash rich investors/speculators sensing that the market is heading downward would what? Wait, of course. Until the price goes down even more. Now we have to sell at some discount.

Why didn't we just DO THAT IN THE FIRST PLACE WITH THE FREAKIN HOMEOWNER? We could have saved all the processing bs and cost AND had a homeowner taxpayer stay in the home, helping keep the fabric of our community and economy stay knitted together.

These kinds of decisions are of course all case by case basis only. I don't think second homeowners should have any such benefits. Or at least back of the line buddy. Let the resident borrowers principal residence people, let them come together with the lenders (US) and work it out.

Because of the cash flowing from the lobbyists for the, Copper Plumbing/Wiring & Aluminum Window/Door/Siding, Recycling Association. It's much more convenient when the house is empty. :haha:

How in the name of all that's holy does a 90 year old woman have a mortgage?!

She doesn't anymore:

She could have easily gotten a 30 year at the age of 60 in 1978.

Wow. It's hard for people over 40 to get 30 year mortgages here.

My MIL, who was 63 at the time, got a 30 yr mortgage and she had impecible credit. I guess they figure that the house itself could have been resold at a profit and they would get their money back. They didn't figure that we were smart enough to place all of her assets in a trust before she died and that all of those assets would be transfered to the trust. Now the trust still pays her house payments from her remaining nest egg even though she died in Feb. The problem is they are coming from the nest egg and the house has not sold. So my wife's and her brother's inheritance dwindles in the mean time.

If they bought the house in 1970, the mortgage was probably paid off.
Now in 2004, they gave a then 86 year old woman, $45k plus an $11k line of credit, but she couldn't make the payments?
Something stinks... where'd the money go? :eyebrow:

Lemme see if I can do this - It doesn't matter whether it is a defaulted loan or not. The way I understand it is that Bank 1 sells the mortgage to Bank 2 for an amount less than they issued it for, say .5% and, most times, Bank1 keep that for managing/processing it.

The real issue is that the banks cannot take into account the value of the house in 5/10/20 or 30 years as an asset. When they are being judged "creditworthy" under the mark to market system, they can only use the immediate house/mortgage value today. They cannot take into account appreciation of the property or the interest they will earn on the loan.

Maybe it was one of those reverse mortgage things, and she was using the money to pay property taxes, plus eke out a small pension?

Maybe medical bills.

A former neighbor of mine refinanced her house a couple of years ago to re-side and re-roof it. Early this year the payments went up, so she tried to refinance again like they told her she would be able to do because housing prices will keep going up up up...but no dice, nobody would do it. She has had to give up her home because she is retired and doesn't have enough to cover the increased payments. It broke her heart. She's living in a retirement community that takes the rent out of her social security.

No, not a reverse mortgage, but I did notice it wasn't a bank, it was a loan company. I smell a rat. :eyebrow:

Or depreciation, I guess.

exactly xob - but that is typically the exception to the rule - not the norm when referring to a home.

As I discovered this weekend, the mortgage side of the current problem is only half the story. The other part is the practice of credit default swaps. This is a practice that has never been regulated or had oversight -- and should have.

Then they don't consider whether the neighborhood is in decline?

They are not allowed to consider anything other than the immediate value of the property if they had to sell it immediately - today.

Watching the market a little today...

Let's say the stock market drops 25%, but then it bounces back up 25%. You get your money back. Right?

Pretend you have $100 of a stock. It falls 25%, so now you have $75.

So you now have $75, but the market goes back up 25%, so it's all cool, right? 25% of $75 is $18.75. So you bounce back up to $93.75. Nifty how that works, huh? And the fund managers make their % on the way down and on the way back up too.

You're right, dar. Let's explore that a bit, shall we?

Credit default swaps, a kind of insurance policy I don't completely understand, were legislated to be free from the shackles of regulation by Phil Gramm. Read this story for details of the jailbreak in 2000.
"legal certainty" == legal immunity.

So Phil Gramm was the father of the unregulation of credit default swaps. What else do we know about Phil Gramm? He's McCain's principle economic advisor. Gulp.
From here.

I'm very unhappy with this pattern of decisions and choices.

Legalized gambling - the house always wins.

What you are describing is an illustration for why the sequence of returns is so important in creating portfolios and managing them for risk. Your last statement is kind of a throw away line though. The fund managers are managing investments and risks on the way down and on the way up. They are doing their jobs, why shouldn't they continue being paid?

Hey, at least Richard Fuld, #11 on Forbes list of highest compensation for CEO's, is safe. Thank god, thank god. But, he got away with only 300 million---somebody-quick!- start a telethon for this man!!

This is vile.

V - even if all that is as you say, which I think is a actually a skewed view of the situation, what did the current congress do to change that? What have they done to rectify the situation? Did they even attempt to change the regulations to pre 2000? Did they take any action to force lenders to do.....anything different or did they just throw $700,000,000,000.00 at the problem and at the same time pay themselves and another $110,000,000,000.00 in pork?

From what I can tell absolutely nothing.

Bail? Why should I bail? This is a Republican administration. That means the government will do it for me. All you lesser income people who are not entitled to my 14% Federal tax rate - you must keep working. After all, Uncle Sam will need your cash to protect our tax cuts.

But again, more socialism provided by Republican party wackos. Only poor people pay taxes. That also is Cheney socialism.

I'm sorry I missed where the republicans were pushing this bill and threatening if it didn't pass to pull it off their, oh so busy, schedules.

You mean the Fed, Treasury and White House are not Republicans? Oh. You mean all that legislation these past eight years that made businesses more responsible were not Republicans? You mean Harvey Pitts did not increase SEC funding to avoid these problems? You mean those recent changes to increase investment bank debt to equity ratios from 12 to 30 were not Republicans. Oh my god. You mean nobody is bailing the boat?

I must call my chauffeur so that I can get off this boat and take more money to the Cayman's. Socialism is now dead? Time to find a money friendlier economy. You guys keep bailing.

Thats more like it - You are so predictable.

Top 10 Tax Sweeteners in the Bailout Bill

It was a pain to copy each individually, but take a look at how congress works. Its not bad enough that we are, according to some of them, on the edge of financial ruin, and need to spend $700,000,000,000.00 of our money, but they also STOLE an extra $115,000,000,000,00 [thats over 16% additional] for their own pet projects just to get this DO NOTHING bill passed. This is only the beginning - they haven't changed the regulations, nor the accounting principles that helped create this problem. This is yet another example of the poorest leadership by our elected officials.
Honestly - this one sits at the foot of the democrats - I don't wanna hear any "Bush signed it" BS. The Dems are totally in charge of this one and pass or fail - its on them.
It just passes a huge debt on to us and - oh have you heard yet? There are already rumors of another bailout.

Thanks congress.

Horseshit.

This kind of oversimplification is lazy thinking at its worst. Please don't indulge yourself like this.

The day you see a 60% Democratic majority in both houses of Congress and a Democrat in the White House--then you can honestly say it was "totally the Dems' fault/credit".

Go look for yourself, from your own link.

Hold everybody individually responsible. My Rep, a Democrat, voted no.

I was reminded today of this Jim Cramer clip from a little over a year ago.

Now that we've given them all that money, everything is all fixed. See, they're relaxing and spending money, again. No tight belts at AIG, anymore!

Meanwhile, back at the spa:

http://www.breitbart.com/article.php...1&cat=breaking

Heh! Great minds think alike, Kitsune.

Does anyone feel like Balling?

If by "balling" you mean "lynching", yes.

No, I was thinking along the line of some other kind of "Balling"....

Ball gags and whips?

:whip:

That's too good for them.

Who didn't see this coming? You KNOW what they're gonna do with the next 700 billion we give them, don't you?

That's right: Chuck Norris jeans, cowboy boots, big screen TV's, cocaine and Courvosier.