-$9.8BillionUSD in 3 months

[stedtale]

http://news.bbc.co.uk/2/hi/business/7188909.stm




I don't think there have been many threads about this sub-prime mortgage thing, but with Citi losing so much, it's gonna really start effecting us all.

[fenderhutz]

You will find in the coming months once they start digging alot of these lenders qualified people that were even below the subprime level to boost sales/loans.

People with bad credit probably didn't care about the ARM loans and they rate rising. They got a house and were very nearsighted.

The banks hold much of the blame as well for not educating the borrowers properly and qualifying bad loans.

[Matt_W]

The world economy really isn't looking too hot at the moment.

Two bedroom apartments go for an average of £140,000, at the moment, around where I live. So, hopefully all of this crashing might make it good time to buy in a few months, when lots of people start having to sell up, as my girlfriend and I are looking to buy our first place.

[WillPlay4Food]

Originally Posted by stedtale

http://news.bbc.co.uk/2/hi/business/7188909.stm




I don't think there have been many threads about this sub-prime mortgage thing, but with Citi losing so much, it's gonna really start effecting us all.

I posted this in the beginner investing thread earlier today. I think a couple other numbers would be the fact Citigroup lost 18.1B in total for the last quarter and their revenues were down 70% as well.

[Diggler]

Hilarious.

First, the .gov threatens mortgage companies because they wouldn't give mortgages to 'high-risk' lenders under the guise of racism, etc. (never mind the companies were right), and pressure them to give out high-risk loans, which they did.

"It's not fair that I can't own a house... I deserve a house... I deserve a loan..." No you don't.

Now the chickens have come home to roost, and the .gov is blaming the mortgage companies for doing exactly what they told them do do under threat of more regulation.

The banks should have told the government to go to hell the first time, but it's hard to do when they can threaten you like that.

[middy]

What the hell did they expect to happen, extending all that bad credit?

[stedtale]

Originally Posted by Diggler

Hilarious.

First, the .gov threatens mortgage companies because they wouldn't give mortgages to 'high-risk' lenders under the guise of racism, etc. (never mind the companies were right), and pressure them to give out high-risk loans, which they did.

"It's not fair that I can't own a house... I deserve a house... I deserve a loan..." No you don't.

Now the chickens have come home to roost, and the .gov is blaming the mortgage companies for doing exactly what they told them do do under threat of more regulation.

The banks should have told the government to go to hell the first time, but it's hard to do when they can threaten you like that.

Truer words have never been typed. We (the US, the world, everybody) have such a short memory and are unable to link events like the Dig just did.

[Diggler]

Originally Posted by middy

What the hell did they expect to happen, extending all that bad credit?

What are you going to do? When Big Brother comes and says, "Write these people some loans or we're going to climb up your butt and pitch a tent," you write the loans.

[Diggler]

Originally Posted by stedtale

Truer words have never been typed. We (the US, the world, everybody) have such a short memory and are unable to link events like the Dig just did.

The BEST part is, guess what... GOVERNMENT bailout. More power.

Yay.

There should be a suit brought against the government by the shareholders of these mortgage companies. It's practically racketeering.

[csala]

The banks are to blame because they would give a 500k loan to someone who couldn't qualify for a credit card. At 100%. Stated income wage earner? What the hell is that?

The home buyers are to blame because they should have known they'd have to pay up sooner or later. Didn't anyone teach them that if you can't afford the 30 year fixed principal/interest payment maybe they should look for a smaller house? A little research goes a long way.

I know 24 year old kids who were buying million dollar homes at interest only ARMs, stripping their inflated equity after 6 months, and using the cash to buy Hummers and BMW's. One even bought a Bentley. Guess where they are now? Living with mommy and daddy again with a forclosure and shot credit.

[stedtale]

Originally Posted by Diggler

The BEST part is, guess what... GOVERNMENT bailout. More power.

Yes, that is troubling to me.

[Diggler]

Do you really think that banks WANTED to give a loan to someone with low income and bad credit? Of course not. Banks don't want people to default on their loans. They aren't real estate agents and don't want to resell your house. All they can do at that point is to try and minimize their loss. They want people who make their payments and bring the bank steady profits over 30 years.

Tell me what (willing) business model involves giving large sums of money to questionable risks with a low chance of payoff. It made no sense to give those loans out, and those that did are experts in what they do...

This is not a naturally-occurring phenomenon in the marketplace. This is the result of interference in the marketplace.

[middy]

Originally Posted by Diggler

What are you going to do? When Big Brother comes and says, "Write these people some loans or we're going to climb up your butt and pitch a tent," you write the loans.

I had no idea. It doesn't surprise me one bit.

[csala]

Originally Posted by Diggler

Do you really think that banks WANTED to give a loan to someone with low income and bad credit? Of course not. Banks don't want people to default on their loans. They aren't real estate agents and don't want to resell your house. All they can do at that point is to try and minimize their loss. They want people who make their payments and bring the bank steady profits over 30 years.

Tell me what (willing) business model involves giving large sums of money to questionable risks with a low chance of payoff. It made no sense to give those loans out, and those that did are experts in what they do...

This is not a naturally-occurring phenomenon in the marketplace. This is the result of interference in the marketplace.

These wholesale lenders would immediately sell their loans to the secondary market (Wall Street, etc). They had no intention of servicing these loans once they were funded. As long as the borrower would be able to handle the payments for 6 months from closing, the lenders were basically off the hook. If the borrower defaulted after 3 months or so, the lender would be asked to buy it back.

[Diggler]

Yes, but they were still writing loans that make no sense. It turned into a game of 'hot potato' because the loans had to be written. They just had to gamble that they weren't stuck with them when this time came.

[csala]

Originally Posted by Diggler

Yes, but they were still writing loans that make no sense. It turned into a game of 'hot potato' because the loans had to be written. They just had to gamble that they weren't stuck with them when this time came.

I think everyone knew that it would eventually hit the fan, but when you're making 300k per month writing these loans, it's not easy to locate your moral compass.

[Diggler]

Ultimately, though, the blame lies squarely on the idiots who bought the homes with these mortgages. No matter what.

I bought a house I could afford. These people didn't. They'd lose at the simple game of life somehow... they always find a way.

"What the American people don't know is what makes them the American people." -Ray Zalinsky, Tommy Boy

[Kosko]

Diggler man, I completely respect and agree with everything you're saying there.

So I have no real macroeconomic knowledge, or even micro for that matter; I can hardly keep a checkbook. What does this all mean in the bigger picture? Are we basically going to borrow from China and the world and at what point are we just bought out? What does it mean for the reset of the world to be invested in a America?

[Diggler]

Another 'fer example... if we didn't have such a sizeable population of morons, things like this wouldn't have been invented. Those who apply for and use things like these cards fully deserve to starve during retirement. But I'm sure we'll bail them out too.

http://biz.yahoo.com/ts/080114/10398....pf=retirement

Borrowing against your nest egg is becoming as easy as stopping at an ATM.

A growing number of companies now offer employees the option of being issued a debit card that taps a 401(k) loan. The card, called ReservePlus, allows workers to withdraw funds from their 401(k)s.

The immediate concern for consumers is that impulse spending desires could trump their long-term savings needs.

Here's how it works: After a company adopts the program, employees can transfer their approved loan line into a ReservePlus account online. Later, they receive a debit card that they can use to take out as much or as little as they need of the loan amount -- on average taking out 35% less than they applied for, says David Young, director of Reserve Solutions at The Reserve, the company offering the cards.

The loan begins only after the money is removed from the account. Instead of a payroll deduction, participants are billed directly, and then pay back the loan through the same mechanisms used to repay a credit card. Depending on the employer, some may also qualify for a revolving loan -- taking out and paying back money as they need it.

...

The debit cards are "not for everybody," Young says. But adds, though, that the cards give people a sense of confidence and control, which in turn encourages otherwise reluctant people to participate in retirement programs, knowing that their savings won't be locked up for decades.

...

[Diggler]

Originally Posted by Kosko

Diggler man, I completely respect and agree with everything you're saying there.

So I have no real macroeconomic knowledge, or even micro for that matter; I can hardly keep a checkbook. What does this all mean in the bigger picture? Are we basically going to borrow from China and the world and at what point are we just bought out? What does it mean for the reset of the world to be invested in a America?

Honestly, I don't know... and I pretty much stopped caring because I'm surrounded by suicidal dopes.

All you can do is pay off YOUR debt, make smart decisions, and sock away money for retirement. If everyone takes care of their own business, everything should work out.

I don't think the future is going to be good though. We keep rewarding bad behavior and encourage more of it, like the ATM/401K post before. Stupid is SUPPOSED to hurt, so you learn from it. Now, I look at people who got great rates because of an ARM, and now they're going to have the government bail them out. I guess I'm the dumb one for getting a reasonable fixed rate I could afford, rather than taking the cheaper ARM and allowing the government to bail me out. How is it 'fair' that they're getting their mortgages paid while I'm not?

-disclaimer... I don't want, nor would take, any kind of leeching assistance like that, it's just making a point.