Do You Suport the Bailout?

[AVG-JOE]

Regulation has it's place in the market, so long as its primary purpose is to prevent excess and panic and limit speculative instruments. A bank makes it's primary money by lending it's deposits out at a higher rate than it is paying depositors. I am VERY leary of allowing any financial entity that trades on top of those loans. The loans should be the ONLY financial instrument. No "mortgage backed securities". No secondary market in debt sales.

Daily trading limits. In commodities you also restrict the number of contracts so as to never have more than 10-15% of the total contract base being speculative. Basically enough to ensure liquidity and no more. This largely removes much volatility in the market by keeping a curb on raw speculation and making traders "sleep on it".

The days of complicated secondary trading instruments on Wall St is over. Investment houses are going to have to make money the old fashion way....good returns on basic investment, and fees.

And as much as I hate limiting executive pay, we are going to see a movement to pretty much eliminate or highly limit what boards can offer executives when their companies are losing money and probably nix a vast swath of parachutes. Executive pay has got to be wratcheted back to a more normal global and historical level of 25-50 times the average worker, not 275+.

And finally strict rules on loan qualifications and an end to marketing gimmicks like teaser rates and complex baloons. You charge the individual what his credit rating dictates, right up front and make them pay down whatever they have to. If the guy warrants a 20% rate, then so bit it. Means a lot of people aren't ever going to get a house, but tough. Get over it.

Until we hit the real bottom of the California real estate market, this crisis will not start to fix itself. Amazing how a new hundred thousand home sales in California and the Sun Belt in the USA has torpedoed the entire global banking system.....It's a panic now, at some time saner minds will take charge, establish the real bottom (if governments let that happen) and then we begin to recover.

I still want to know why the world financial system will be in disarray until the costs for shelter (housing prices) in the US return to bubble-peak levels...?

If the price for fuel, food and beer were to drop 20% in 18 months, everyone would cheer. Why is shelter so different? Why does more affordable housing suck?

-Joe

 

[Care4all]

I still want to know why the world financial system will be in disarray until the costs for shelter (housing prices) in the US return to bubble-peak levels...?

If the price for fuel, food and beer were to drop 20% in 18 months, everyone would cheer. Why is shelter so different? Why does more affordable housing suck?

-Joe

It doesn't suck to make housing affordable.

There are different ways to make it affordable though....one way is to make the payments for it affordable by having low interest rates such as a 5% fixed rate.

The other way is for prices to be low.

When more people were qualifying for mortgages with the lower interest rates, ALL was fine, people were making their mortgage payments and homeownership was increasing by the boatloads, only when those interest rates went up... when the variables came in to play on the adjustable mortgages, did we start having a problem...

just something to think about....

Care

 

[Zoomie1980]

I still want to know why the world financial system will be in disarray until the costs for shelter (housing prices) in the US return to bubble-peak levels...?

If the price for fuel, food and beer were to drop 20% in 18 months, everyone would cheer. Why is shelter so different? Why does more affordable housing suck?

-Joe

Actually fuel IS down over 20% now. Most food is down 10% and will be down almost 20%. Whole milk has declined 15% in two months now.

The system will be begin to recover when housing hits BOTTOM not back to peak. We may never see a 3br,2bath,two car gar house in San Jose sell for $1,000,000 in 100 years....nor should we.

 

[gonegolfin]

Dude,

Look up 'inflation' in the glossary of a decent American History book. Printing money has gotten the US out of a few jams over the years, and all it cost us is inflation.

Inflation is an increase in the supply of money (this is the classical definition). Mismanagement of the money supply (manipulation of the money supply via artificially cheap credit) is the cause of this crisis. It has been building for some time. The government is attempting to reflate our way out once again. It will eventually fail. And the longer the problem is not addressed, the harder the crash when it eventually comes.

I still want to know who you envision printing (coining) the money and setting the interest rates (value thereof), if congress and The Fed are not involved. I have looked over the thread and I don't see where you answered this question. Note that the 'free market...' doesn't count - an institution or organization with the ability to instill confidence in the currency is required.

For the final time, there is no printing (creation) of money in the system that I espouse (this is not what is referred to as coining). I am not in favor of a fiat based system. And the cost of money (credit) must be determined by the supply and demand of money (free market). Else you will have the same problems we do today. Confidence is instilled in the currency by virtue of the fact that it is backed fully by something tangible. Not by the government (this is utterly ridiculous).

As far as the interpretation of US Constitution, Section 8 - Powers of Congress... To coin Money, regulate the Value thereof,... , we are going to have to agree to disagree on this one. To me, for good or ill, the constitution gives the responsibility to congress. I am not alone in this interpretation... the Federal Reserve is living proof - created by an act of congress.

You need to go back and read your history. What was created in 1913 and what we have today is 180 degrees from what the founding fathers wanted and specified in the Constitution.

I am finished with this thread.

Brian