For the Financial Geeks of TB.........

[Geddyfleaharris]

Just an observation....

With the turmoil/falling of North American stock markets this morning it seems, IMO, that people trying to make big, fast bucks have put the entire financial system in a crisis. I have listened to a couple of radio shows this morning. If people don't think that a 160 year old investment bank going the way of the dodo bird is serious then they have no idea how our North American economic system works. Yes this is the American stock market that is reeling but Canada will be affected. Our countries are too closely tied to not be.

Some people on the shows I have listened to have said that the entire banking system could be on the verge of failure. I myself am not sure if things are that serious (not an economist or banker) but at the very least the financial landscape of North America is changing right before our eyes.

I find it fascinating in a car crash type of way.

Also hope that no one needs too much financing for the next little while..........

[Benjamin Strange]

I'm not a financial geek, but I've been watching this as well with some apprehension. I don't like that our government bailed out Freddie Mac / Fanny Mae, but I can understand why it was done.

We're on a rather precarious edge in America right now. I think we're just a few short steps away from a recession, or perhaps even a depression. It's time to pay the piper for all our financial irresponsibilty.

[Scarlet Fire]

We're in for a few rough years, for sure, but it won't be another Great Depression. The same thing happened in Japan a few years ago. They had a rough couple of years, but they're doing okay.

[dsDodgers]

Originally Posted by Scarlet Fire

We're in for a few rough years, for sure, but it won't be another Great Depression. The same thing happened in Japan a few years ago. They had a rough couple of years, but they're doing okay.

they've got the automotive industry to bank on
America has..well...uhh...multi trillion dollar national debt

id be nice if you were right and we turned it around, but without major control over a multi billion dollar industry,

[invisiman]

Every time the market crashes it's hailed as a doomsday. It happens when creativity gets the best of common sense. Will things be bad? Probably. But I doubt it will change the way we live unless we manage to fall into a liquidity trap.

[pointbass]

I'm definitely NOT a financial wizard, not by any stretch of the imagination, but I am very much in control of my own finances. I know (as does my wife) where we are with our money every day, where the weak points are, where our risk is, and how much pain we can withstand in the event the whole financial market cr*ps the bed. Thanks to competant professionals, we also have some ways to minimize our exposure.

What is scary, though, is how many people we know who have no idea as to where they stand financially. They just keep on buying and over-extending themselves ... for these folks, a significant bottoming out of the economy will be brutal.

I don't think it should all be doom and gloom, but folks need to become much more aware of the state of the US economy and how that could impact them .... time to start paying a little attention .....

[Eublet]

I have very strong opinions on all this, all of which would get me some infraction points if I were to express them. It's safe to say that there aren't enough fingers around to point at all who are to blame for this mess. Too many sleez-balls, especially our politicians, past and present, on every level, in every party, who made this possible with their greedy deals and partisan bickering. And looking at the current conversational landscape, it's not going to get any better.

[tycobb73]

I don't blame the average person for this, I blame the loan agents. Most people don't know what type of mortgage they got and what it truly means. They may know what it is in name, but they really don't know what it is. And the lenders were more than happy to keep that info to themselves. The average home buyer didn't know what questions to ask.

Although there will be ups and downs there will not be another great depression due to fed banking policies made popular by Greenspan.

We have to rough it out and we'll be fine.

I have masters in business and accounting and work as an accounting consultant so I guess that makes me a financial geek.

[Eublet]

Originally Posted by tycobb73

I don't blame the average person for this, I blame the loan agents. Most people don't know what type of mortgage they got and what it truly means. They may know what it is in name, but they really don't know what it is. And the lenders were more than happy to keep that info to themselves. The average home buyer didn't know what questions to ask.

EXACTLY! In fact, the language of the pile of documents you have to design is all written for some lawyer to have to read in case there is ever a dispute. It's not worded so that the average joe knows what he's getting into. That's the hole problem with everything these days. Every single contract you enter into is crafted to prevent you from understanding any of it without having a full legal team on hand to assess things. That works great for corporations and such who have that type of personel, but it's retarded for consumer contracts where people just expect to get a fair deal for their money. All this ARM, reverse mortgage, balloon payments, yada yada. It's all evil and is designed to rip the consumer a new one whenever possible. The fact that our elected officials have let this go on for years while boatloads of experts have advised them of the problem is completely unacceptable. And you can turn on the news right now and here two different political machines talking about everything BUT what will fix the situation, and pointing fingers at everything except the real problem.

[fenderhutz]

Originally Posted by Geddyfleaharris

people trying to make big, fast bucks have put the entire financial system in a crisis.

If people don't think that a 160 year old investment bank going the way of the dodo bird is serious then they have no idea how our North American economic system works. Yes this is the American stock market that is reeling but Canada will be affected. Our countries are too closely tied to not be.

Some people on the shows I have listened to have said that the entire banking system could be on the verge of failure. I myself am not sure if things are that serious (not an economist or banker) but at the very least the financial landscape of North America is changing right before our eyes.

I find it fascinating in a car crash type of way.

Also hope that no one needs too much financing for the next little while..........

That's capitalism at work.


As for blaming loan agents for this mess? No freaking way. I blame the ignorant people that got a house payment that was 40% of their income (or greater). There are also reasons for this mess that can't be discussed on TalkBass right now for political reasons. Blaming loan officers for our country and ship we are sinking in right now would be like blaming a Honda Civic for global warming, it might have small contribution, but it's not even close to be THE reason for the problem.

[Eublet]

Originally Posted by fenderhutz

That's capitalism at work.

Not at all. Capitalism doesn't involve government programs, subsidies, and political bureaucracies, which this whole problem reeks of.

[MakiSupaStar]

YAY! I went poo this morning.

[Geddyfleaharris]

Originally Posted by MakiSupaStar

YAY! I went poo this morning.

LOL thank god Maki weighed in!

Actually I would describe this as greedy capitalism. I am a business owner and I am all for making a buck but derivatives and complex financial set ups where the people buying and selling them can barely explain what they are or how much they are worth is not capitalism. This is glorified betting.

One report this morning said that a lot of these fund managers/account executives got bonuses for how many mortgages they wrote. Easy to see how this went off the rails.

I also agree that the individual might have some blame in this. If you and your spouse are each making $10 or $12 per hour how the heck do you think you can afford a $250,000.00 home? At the same time most of these people who qualified for mortgages probably shouldn't have so then it goes back to the bankers who weren't doing their job.

Hopefully this isn't a political discussion.

[Thor]

If you had shorts you made money today. No shortses and you might be a bit nekkid.

It's not the end of the world. A lot of people do quite well in
markets that fall. Those are people who buy low. Or short
certain investments. Plenty of money was made today by
somebody.

That money will sit on the sidelines for a bit until they need
to get it moving again.

[Brad Johnson]

Originally Posted by tycobb73

I don't blame the average person for this, I blame the loan agents.

Originally Posted by fenderhutz

As for blaming loan agents for this mess? No freaking way.

Sorry guys, it was a combination of both. To think either side is fully to blame just doesn't look at the entire picture.

There were people who knew better than to put what they "owned" at risk and their were people who didn't. There were loan agents who oversold what was available and there were those who did loans for people who, if they only exercised a modicum of financial restraint, would've been fine. There were banks that made money available with far less restrictions than before. There were people heavily invested in those banks, who stood to gain much if everything worked out. IF. If the bank was comfortable with it, should the agent not offer it? I seriously doubt the overall welfare of the US economy was part of the thought process on a local level.


The loan-to-value or LTV on my home went from below 80% to about 90% over the course of the last year. What did I do to cause that? Nothing. I didn't borrow against it, I just lived in it. If I had previously been at 90%, I'd likely be upside down by now. This is a problem so many face.

So if I ended up with job problems (many people have), health problems (many people have) or whatever, would that be my fault? Or would it be the fault of the broker I did my loan with around five years ago?

Neither. In any event, I chose to err on the side of caution in not thinking the ridiculous appreciation we saw in the housing market would continue. So I didn't take out all of the equity I had on paper. Many people didn't factor this in. The individual cases vary so it's really pointless trying to blame one side for everything.

[Masher88]

So, Is the US government going to bailout Lehman Bros. too? I can't find any info....

Where is all this bailout money coming from? Loans from China?

[WalWarrior]

Ah let's do what corporate America does. Let's go out and by that expensive bass, treat all our pals to dinner and drinks on that credit card.....


.....then call that pig in Stolen.

Or wait better yet. Rack up all your bills that you have no way in hell of paying back..... then declare Bankruptcy.

Sheesh!

Effective $ management is when the check to the undertaker bounces.

[Benjamin Strange]

Originally Posted by Masher88

So, Is the US government going to bailout Lehman Bros. too? I can't find any info....

Where is all this bailout money coming from? Loans from China?

There is no bailout - it wouldn't be polically expedient to do so, right after bailing out Fannie Mae and Freddie Mac. Some people weren't happy about having their tax dollars support these companies (myself included), and would have screamed bloody murder if the treasury bailed out yet another failed mega-corporation.

[Trevorus]

I think Brad has a good set of points, there.

Another problem I saw in this whole mess is that people who were getting adjustable rate mortgages were really gambling with their livelihood. The same also with people who borrowed heavily against their homes. In my opinion you should only invest with something you could stand to lose.

[doctorjazz]

By the way, all thank-you cards for the current situation can be directed to the Fed, due to the government's policy of printing up a bunch of worthless money to fund whatever ridiculous projects it undertakes and to bail out politically well-connected corporations when they go belly-up.