Bankers Bet On Failure of US Homeowners

Discussion in 'Economy' started by hvactec, Aug 12, 2010.

  1. hvactec
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    hvactec VIP Member

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    The more American homeowners lose, the greater some bankers profit. Logic dictates that banks would want to mitigate their losses and resolve troubled loans with borrowers. But the reverse is true for those bankers who bet against the bonds backed by American families' homes and who make even more as the bond values plummet. Unwittingly, millions of American families became racehorses on the subprime racetrack. By saddling the horses with as much debt as possible on terms that made the load increasingly overwhelming to burden, there was little chance of anyone crossing the finish line. Even so, bankers gussied up the horses and took wagers from unwitting MBS investors such as pension funds and smaller banks all under the noble pretense of providing homeownership opportunities for all. And in the backroom, Goldman Sachs, Deutsche Bank and Paulson & Co. were betting billions that homeowners and MBS investors would fail spectacularly.

    Now millions of families are falling apart under the burden of failing in a game they could never have won. Admirably but foolishly, some of the families borrowed from friends and family, took on second and even third jobs, and ran themselves to exhaustion trying to find a stride to the finish line. But the incline on the track increased with each interest rate adjustment, and the track at points became as steep as that of a mountain pass in the Rockies. At this point, government officials feigned assistance by designing a program in which they promised to level off the track by temporarily reducing interest rates, but only if the nearly-exhausted families could prove their worthiness through a three month “trial".

    However, when the incline remained intense even after the first three months, they were cheered on. “Just make it a few more months and then you will reach the Promised Land”. That was the message, yet the Promised Land remained an illusion for 9 out of 10. The survivors did not fare much better. They were only allowed to continue the impossible journey if they were saddled with even more debt and forced to remain in the race an additional ten years. Ultimately, there will be few if any survivors. Instead, the wreckage is immense, with families crushed, divorced, homeless, and/or staying in the basements and garages of friends and family. They are drained physically, mentally and financially.

    Equally bamboozled, the pension funds and smaller banks lost billions on their bets. Much like a nerd who thought he was making friends with the football team, M&T Bank ponied up $82 million to Deutsche Bank in February 2007 to invest in Gemstone VII, a bond issue backed by subprime loans. Internal emails from Deutsche traders at the time referred to subprime loans as “the plague” and stated “these bonds are going much, much lower.” Still, they pretended to befriend M&T, took their money and betrayed them. Ten months later M&T had lost 98% of their investment, whose value had dropped to just $1.9 million.

    Read more Bankers Bet On Failure of US Homeowners - Jorge - ShametheBanks.org
     
  2. Terral
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    Terral Terral Corp CEO

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    Hi Hvac:

    Your Opening Post contains some information about bankers betting on the failure of U.S. Homeowners and a lot of 'disinformation.' Most everything you see on the major News Networks points fingers at the 'symptoms' of the Financial/Mortgage/Foreclosure/Bankruptcy Crisis without ever addressing the real causes. The bankers have every reason to bet on the failure of American Homeowners, but over reasons that do not appear in your Opening Post:

    The primary reason that Housing Prices will continue to slide down the slippery slope is over 'worker displacement' for these reasons:

    1. NAFTA Offshoring of the manufacturing base.

    2. Outsourcing of service sector JOBS to countries like India.

    3. 23 Guest Worker Programs that import 1.5 Million Foreign Nationals into the USA amid massive unemployment.

    4. 20 to 30 Illegal Aliens stealing identities and JOBS from working Americans.

    The corrupt Federal Government is doing NOTHING to protect the JOBS of American Citizens, as if real Americans can compete with 10 to 20 Illegal Aliens living in one house. The Consumer Base is IMPLODING along with the Tax Base, which means fewer and fewer Americans can afford to make an offer on your house. Foreclosures are escalating higher and higher, which places far too many distressed houses on the open market. That drives down the demand for new houses and forces more and more working class Americans into the unemployment line.

    The banks have no reason to lend you money on a house that will be worth 'less' in the very moment that you sign the papers at closing. Therefore, the banks are forced to short the housing market, because Housing Prices will definitely continue to spiral down. The only way to reverse the trend is to:

    1. Repeal the NAFTA-like Treaties that give foreign nations the upper hand for a level playing field.

    2. Repeal the legislation that gave us 23 Guest Worker Programs and put Americans back to work.

    3. Place a LARGE tax on anyone outsourcing JOBS overseas and south of the border and produce legislation that rewards companies for hiring Americans over foreign workers.

    4. Enforce the perfectly good Immigration, Employment and Document Fraud Laws already on the books.

    These measures will put Americans back to work and produce more and more buyers for your house, goods and services here in the USA. The Consumer Base will enlarge and the American Consumer will have more money to spend on house payments and his taxes. The foreclosure and bankruptcy rates will decline and the Govt will receive more tax money for paying the bills and for paying down the National Debt.

    Think about it: The banks are supposed to lend out money to American Workers, but the Federal Government is perfectly willing to allow Illegal Aliens to come in and steal his job. That means the banks have absolutely no control over defaults in an environment of lawlessness and absolute stupidity ...

    GL,

    Terral
     
    Last edited: Aug 12, 2010
  3. uscitizen
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    uscitizen Senior Member

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    Vultureistic profits.
     
  4. william the wie
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    william the wie Gold Member

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    Well part of the problem with this thread is that the issuance of CDSs is coming to a halt as more and more insurers get out of the business.
     
  5. Truthmatters
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    Truthmatters BANNED

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    When you have money you can make money in any market.

    The 1% make money in the boom bust cycle and want it perpetuated.
     
  6. Oddball
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    Oddball BANNED Supporting Member

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    Stupid thread, with a link to an ignoramus author, who knows little to nothing about how the real R/E market works.

    Mortgage lenders would rather have the ongoing payments, than the REO property....Especially in a market that hasn't bottomed out yet.
     
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