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Charles is correct. Governments that have separated their currency from gold can print as much money as they like . Its obvious that we have more than enough food , homes , cars and mass entertainment to keep the masses occupied these days. In this supersized economy most americans are carrying and storing a weeks or month's supply of food on their waist.
"back in the 1930s, you lose your job, that's it.
when you lose your job today, you just get another job. so that's already there..."
so that's the end of the mortgage crisis then?
"Didn't look like villains..." What kind of world do these guys thinking they're living in... Disneyland? These bankers didn't look or act like Alistair Sims in "A Christmas Carol"? Of course, these people are guilty; of course, there are wrong-doers in this mess.
(this comment was sent also to the takeaway, I got into the wrong place to send my comment - sorry)
The comment that American consumers have lost several trillion dollars in wealth resonated with me. I don't agree. If the money & wealth was a false value to begin with, then how can we lose what didn't exist in the first place?
What we see now or see in the next six-12 months is more likely the real value of wealth that had some time ago. The numbers in our 401K's in the last couple years are hardly the actual wealth that we had because they were based on false assumptions.
A little like the vacant lot where the big top is placed when the circus comes to town. While the circus it there, the show is going on and it's fun, but at the end of the day the circus packs up and goes on its way. And what's left is the vacant lot and a bit of elephant dung to help fertilize next year's lawn or crop.
All valuations are constructs. They are not "real". Economics is supposed to ration scarcities, the deal is that there are no scarcities with regard to food, shelter, clothing , and even transportation in this economy of the usa. its all about moving money and distribution of wealth. THink there are not enough flat screened TV's to pass around? Thats a jokeWealth is labour. the real cost of anything and everything is labour and labour is cheap.
math gives me a headache....
They need to define "spend"
robert -- keep in mind lots and lots of people make lots and lots of money gaming that herd mentality -- and knowing when to get out.
your advice is apt for the Fed and others responsible for massaging "the economy." for all others, there are just winners and losers, and plenty of each.
Brian, you got a couple of ”Johnny Come Latelys” here. Villains? What villains? Here is some information for you: for years Country Wide Mortgage gave high commissions for sales made on sub-prime loans. Country Wide’s information software for potential customers did not have income verification. Both the banking industry and the sales people who hoisted these mortgage on willing buyers calculated this. All was know for years and NPR did do much reporting on it.
Brian. For a few years I have been talking to people about htis topic and people have either called me crazy, ignored me or called me pessimmestic. There is a radio station here in NYC that has DJ's that promote certain sponsors. The station is 93.5 FM. They have beeb promoting First Republic Mortgage Bankers in Floral Park. I have heard the DJ's play on immigrants emotions thru the radio on the American dream. I have heard them push products such as NO DOC loans etc. I always wondered how if you have no documents, you can get a home loan?! They used to push the envelope on no income, no problem. As long as you breathe, you can get a loan. 80/20's. Etc. If I am a new immigrant from say Jamaica, come to the USA, and work at Kennedy Airport or somewhere making $450 a week, how do I afford a 450K home loan? They played on the ignorance of people and basically chastised them theu the radio for not being what they called a "productive person" for not owning a home. I have been to the seminars. What joke. People like this should be investigated. To this day they still do it.
It all started out after the stock market crashed. It seems as if people had to find another creative way to swindle people out of their money to keep their lifestyles afloat. No matter what the cost. Am I reaching out too far thinking this way?
Your comments about no-income, no-asset loans is an oversimplification. In the "old days", banks would give "no-doc" or "low-doc" loans to people who might not meet conforming rules IF the borrower put enough money down (let's say 20% or more) AND the bank saw clearly that their risk was minimal after a **legitimate** appraisal of the property. My bank had (and still has) a policy of not selling their loans, and clearly thought I was an acceptable risk. My interest rate is the same as a fully-conforming borrower would have gotten. I make my payments on time. And I am not a mafioso, drug dealer, etc.(Would I be writing this if I were?).
At least part of the real-estate blowup came from a serious corruption of the basics, including wink-wink appraisals, virtually undecipherable loan documentation, and the understanding by many banks that they would, and could, quickly sell their loans to ready buyers.
Well if people are greedy in the mind then you can't help but end up where we are now.I wonder if there is value in having an Uber set of credentials i.e Yale Undergrad, Harvard MBA and then kill your conscience and become greedy. Well if you think that is out of the realm of thinking just look around and see. After all we seem to hold those institutions in high esteem and have forgotten that having a conscience is good to have.are we willing to learn from the mistakes, I doubt it.
The guests highlight how strong the herd mentality is in the business world in general and on Wall St., in particular. Those who had doubts about the ever loosening credit standards kept their mouths shut. Going along with the herd was relatively safe while trying to slow down the runaway money train would have been suicidal.
Did anyone read the front page of the NYT yesterday?"Building Flawed American Dreams"Clinton opened the floodgates for lending at HUD.Lots of Dems jumped right in.They were lending like drunken sailors. And they went straight for the poor and lower middle class.http://www.nytimes.com/2008/10/19/business/19cisneros.html?_r=1&oref=slogin
Just a gentle reminder to stay on topic--which means comments about Powell's endorsement need to be under that thread. Thanks!
this story is a great example of why it is important for reporters to live in -- or at least visit -- locations outside NYC.
This story started in NYC in 2008 but most elsewhere in the US in 2004-5.
In 2006 towns were already passing ordinances against these signs plastering towns that read "STOP FORECLOSURES NOW CALL 800"
What's interesting about the report that Alex and Adam did, which other new outlets have failed to discuss, and is still not really well explained, is that securitization as an idea is not faulty. In faulty securitazition is and will remain an important tool in the finance system. And the issue is the assets being securitized and the huge demand for more and more "non-risky" securities.
Thanks for all the great reporting. Oh, and I would love to hear a better explanation of what re-capitalization of the banks is versus buying assets off the books (do the banks get more money out of the deal? why wouldn't the liquidity provided by purchasing the assets be the equivalent of the capital injection, forgetting about the difficulty in pricing the assets.)
i'm glad npr and mr. davidson, ira glass etc. are trying their best to fill this vacuum. their common sense is welcome. but for them to have "gotten it right" would have required this story to have been aired in 1999 (when fannie mae and freddie mac began relinquishing all lending criteria).
Of course the media discussing this while people were overspending instead of after they did it would have been more helpful.
Now it is important that npr and other msm point out that this is not a crisis but a downsizing of the economy. nothing is turning to dust! but of course that's been the tenor of the reporting. and of course lots of (non-npr) listeners around the world understand this context very well.
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