Chade on 1/10/2008 at 02:06
Quote Posted by heywood
Not sure what your point is. The net loss is impossible to quantify because the true value of these assets is not known.
Yes. That was really my only point, although I guess personally I would expect the US govt to make a net loss of $100 billion at the most. Admittedly that figure isn't based on any sort of hard numbers at all and I could easily be shown to be wrong.
Gryzemuis on 1/10/2008 at 02:11
Yes, we can only speculate about the final numbers.
But the fact that no company wants to touch those sub-prime loans with a ten-foot pole, makes me believe that there is no way to turn them into a profit. Otherwise some greedy bastards on Wallstreet (or elsewhere) would have taken a gamble and bought them. Same thing with some banks. The fact that nobody wants to buy those banks (or parts of them), and they need to be bailed out by goverments, makes me believe that there is no way to make a profit from those banks. Short term or long term.
Chade on 1/10/2008 at 02:44
My argument is that the passage of the bill and the final lowest value of the stocks are not independant. The sooner the banks can start lending again, the sooner people will start buying houses again, the sooner the value of the houses will go up, and the more the loans will be worth.
The precise opposite is also true, which is why the value of the loans will keep plunging if nothing is done.
But even in the best case it's going to take a big insitution to hold the bad loans untill people start taking on debt again and the house prices come back up. Hence the American government intervention.
Of course, I am no expert, and it's very easy to advocate the passage of this American bill when you're standing in Australian shoes.
Pyrian on 1/10/2008 at 03:37
Quote Posted by Scots Taffer
Single largest point drop in history...
Quote Posted by Pyrian
Point drop isn't nearly as relevant as percentage. In percentage terms, it's still hefty, but not nearly champion.
Quote Posted by Scots Taffer
Sure, but it's still what I said it was.
I didn't criticize your statement for being factually inaccurate, I criticized it for focusing on (and apparently drawing inaccurate conclusions from) an irrelevant measure when much better and much more relevant measures are easily at hand.
Ko0K on 1/10/2008 at 03:47
Quote Posted by Thief13x
and that, is why I emailed 4 senators tonight regarding their vote on wed. Apparently the House was flooded with emails prior to the vote and, given the narrow margin, could have had some influence. I would urge you all to do the same.
(
www.senate.gov) senate.gov
You do realize that your state has only two senators, just like all the other states, right?
Scots Taffer on 1/10/2008 at 03:48
Quote Posted by Pyrian
I didn't criticize your statement for being factually inaccurate, I criticized it for focusing on (and apparently drawing inaccurate conclusions from) an irrelevant measure when much better and much more relevant measures are easily at hand.
What incorrect conclusions do you assume I've come to from observing that factoid?
For the record: none; I was just making an observation amidst the commentary. The line about windows being open is more of a joke about reactionary everyone in and around the markets is.
heywood on 1/10/2008 at 04:13
Quote Posted by Chade
My argument is that the passage of the bill and the final lowest value of the stocks are not independant. The sooner the banks can start lending again, the sooner people will start buying houses again, the sooner the value of the houses will go up, and the more the loans will be worth.
The precise opposite is also true, which is why the value of the loans will keep plunging if nothing is done.
But even in the best case it's going to take a big insitution to hold the bad loans untill people start taking on debt again and the house prices come back up. Hence the American government intervention.
Of course, I am no expert, and it's very easy to advocate the passage of this American bill when you're standing in Australian shoes.
I hope you're more right than I, but that's not what I'm seeing. First, a little anecdotal evidence to share with you:
Just the other day, I got a sales call from the bank who holds my mortgage offering me a $500 credit if I was looking to refinance, and then I got a follow-up letter today. This bank is primarily a mortgage lender and has eaten their share of bad debt. Their stock price is practically nothing and they're in rough shape, but they are adequately capitalized and not likely to fail. I have decent credit but not excellent credit.
Now, to get to the point:
In the mortgage market, the problem is not that the banks aren't lending, it's that people aren't interested in buying. Prime mortgages are still easy to get at historically low rates just under 6%. People are hesitant to buy homes because they're not convinced that real estate values have finished correcting yet. Even if they can afford it, nobody wants to buy a depreciating asset.
The main thing driving the depreciation is foreclosures. If you can stem the tide of foreclosures, real estate values will level out and the housing market will return to normal (pre-boom normal that is). But the proposed bailout plan does jack squat to help avert foreclosures. Democrats have won "assurances" from the Treasury Secretary that the government will gain leverage over banks through buying their assets and they can use that leverage to "encourage" the banks to accept reduced payments from homeowners in trouble. Whatever. If the Secretary was serious about addressing the foreclosure problem, he would be using his recently acquired mortgage lenders FNMA and FHLMC to refinance high risk mortgages. Instead, he seems hell bent on making sure his fellow masters of the universe (Tom Wolfe reference) get bailed out first.
But that's just the mortgage market. The problems with the US (and world) financial system are broader than that. We still have huge $$ in hedge funds chasing the next bubble while the government and most households are buried in debt.
Thief13x on 1/10/2008 at 04:14
Quote Posted by Ko0K
You do realize that your state has only two senators, just like all the other states, right?
sure I do, it doesn't mean I can't email the senators of the state I go to college in too though.
Chade on 1/10/2008 at 04:22
Quote Posted by Scots Taffer
a joke about reactionary everyone in and around the markets is.
Priorities, priorities ...
(Not that this post represents a realistic or even usefull attitude, but still ...)
EDIT: Heywood, I'll respond later, btw. You could be right, I'm not pretending to be an expert. Might be time to do more research.
Ko0K on 1/10/2008 at 04:55
Quote Posted by Thief13x
sure I do, it doesn't mean I can't email the senators of the state I go to college in too though.
Oh, okay... I'll write Nevada senators too, then, since I go to Vegas to game once in a while. Never mind that I'm not registered to vote there or anything.
