Rate freeze is bullshit

[mattp]

The one on our block sold. A family with two children bought a 4,500 square foot house with 4 1/2 bathrooms, built from crap materials with no craftsmanship or design. Its got granite countertops and a jacuzzi, though. I can see the plusses: they have a view, there will be little to maintain in the short term at least, and there's a lot of room. But for the money they spent they could have bought a nice home. They probably could have bought better neighbors, too. They've got a major snob two doors down.

[Jim]

That select group in this case is likely to be the occupants and/or owners of dwellings financed with ponzi-credit.

 

Stupid you for locking in at ~4% fixed. If only you had taken out a neg-am, I/O, payment-option ARM with a teaser rate you could have potentially scored a much better rate, underwritten by the German pension fund, CALPERS, or some other bag-holder.

 

No kidding. I read an article yesterday on how several towns in Norway took on some investments heavy into sub-primes. They were talked into it by an investment group they had worked with for years, and trusted. Now that group is belly up and the towns are up to their eyeballs in debt to the tune of a third of their operating budget for the forseeable future. Really kinda grim. Buyer beware but also is illegal to pitch these as risk-free investments.

[JayB]

If misery loves company, the folks in Norway will be feeling better shortly.

 

 

 

[JayB]

Good background info:

 

http://www.economist.com/business/displaystory.cfm?story_id=9033348

[matt_warfield]

Yes but Norway has all that oil money. I think they'll be okay.

[JayB]

If misery loves company, the folks in Norway will be feeling better shortly.

 

 

 

Exhibit A:

 

"Florida's Pension Fund Holds Same `Suspect' Debt as Frozen Pool

 

By David Evans

 

 

Dec. 4 (Bloomberg) -- Florida's pension fund owns more than $1 billion of the same downgraded and defaulted debt that sparked a run on a state investment pool for local governments and forced officials to freeze withdrawals.

 

The State Board of Administration, manager of $37 billion in short-term assets, including the pool, also oversees the $138 billion Florida Retirement System. The board purchased $3.3 billion of debt whose top ratings were reduced following the collapse of the subprime mortgage market, according to documents obtained by Bloomberg News through an open records request.

 

Like the hundreds of school districts and towns unable to access $14 billion frozen in the Local Government Investment Pool, Florida's 1.1 million current and retired state workers rely on the board's management to boost returns on the funds that pay their pensions. That has left them vulnerable to the same potential for losses. A state-created home insurer and the treasury are also at risk.

 

``These were highly inappropriate investments for taxpayers' money,'' said Joseph Mason, a finance professor at Drexel University in Philadelphia. ``This is the tip of the iceberg for pension funds. We know the paper is sitting there. There are substantial subprime-related losses that haven't shown up yet.'"

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=aEWz6lIRbqE4&refer=home

[hefeweizen]

latest

[tvashtarkatena]

latest

 

The current GOP's motto: Fucking the many for the benefit of the few.

[sexual_chocolate]

lame

 

I'd like to hear from the econ experts here because I don't understand this. WTF? You take out a loan you can't afford and the gov't steps in to save your ass? How is this different that the millions of idiots who charge up their credit cards too high and can't pay them off? When did it become expected or accepted that the gov't should bail people out?

 

you're just sore cuz there won't be as many foreclosures for you to scoop up.

[chucK]

I agree that this seems to be fucking many, and perhaps benefiting few, but I'm still not seeing how this plays to the standard GOP demographic (as portrayed by GOP haters anyway) of big money.

 

Who benefits: homeowners who got stupid loan who occupy said home. Everybody who owns property near aforementioned stupid homeowners.

 

Who loses: people who own mortgage securities (Citigroup stockholders, Florida pension fund beneficiaries, Norway, etc.)

 

 

[archenemy]

latest

 

The current GOP's motto: Fucking the many for the benefit of the few.

Sounds like something a bunch of guys would say.

[tvashtarkatena]

latest

 

The current GOP's motto: Fucking the many for the benefit of the few.

Sounds like something a bunch of guys would say.

 

except that this bunch of guys just seem to fuck each other.

[chucK]

Sound familiar?

 

Washington post article: Those Who Avoided Risk Call Plan A Raw Deal

[archenemy]

I completely agree with this. I think there are so many things like this and it pisses me off. Our acceptance of this type of shit is irritating even in small ways. For example, I hate it when people start meetings late because they are waiting for the late folks to show up. IOW: fuck you for being on time, I am not going to respect that. The rate hike is the same thing on a larger scale: fuck you for being thrifty and responsible, I am going to ignore that.

 

Folks have a right to be resentful of that--it's crap.

[Hugh Conway]

so remind me why increasing liquidity (with public money) for the big companies when they fuck up (and cutting rates) is a good thing, but orchestrating a bailout (with private money) for little people is a bad thing?

[Dechristo]

who says the "good" part of your premise is true?

[chucK]

I totally feel your pain with respect to people fucking you over by being late. It's really annoying and wastes everybody's time who is punctual.

 

However, I don't think it's that analogous to this "bailout" deal. In the late case, you are being impacted by someone's lack of respect for your time. In this bailout you are not being hurt.

 

This is a voluntary deal with the security holder peoples. I'm sure the only reason they are agreeing is that they are at risk to lose even more money if they don't band together like this. Thus, I think that even if you are a security holder (the only people I can think of possibly directly hurt by this deal) there is reason to do this.

 

There is no tax money going into this bailout, a la SoCal fire thing you bitched about previously, or Chrysler in 79 for a couple of examples. You are not being hurt here. It's seems like the main emotion going on could possibly be merely envy, getting pissed off that someone else is being helped even though they don't deserve it.

[chucK]

So it's sort of a weird mix of "envy/jealousy" (upset at someone else's good fortune) and "shadenfreude" (happy at someone else's misfortune); what do you call being upset that someone else is not suffering as much as they deserve?

[Dechristo]

marriage

[Hugh Conway]

who says the "good" part of your premise is true?

 

good means don't hear them bitching.

[chucK]

One thing I've noticed about this rate-freeze bullshit is that it passes the initial sniff test of being a reasonable thing. That is, everybody is bitching about it. Moral high-grounders are pissed, free-marketers are pissed, even nanny-staters are pissed because it doesn't wipe enough people's asses for them.

 

I'm not saying this proves that it's good government, but this "pisses off everyone" criterion usually indicates a reasonable proposal.

[Hugh Conway]

I'm not saying this proves that it's good government, but this "pisses off everyone" criterion usually indicates a reasonable proposal.

 

If 7 years have shown us anything it's W and cronies can piss off everyone and really fuck up everything

[archenemy]

I totally feel your pain with respect to people fucking you over by being late. It's really annoying and wastes everybody's time who is punctual.

 

However, I don't think it's that analogous to this "bailout" deal. In the late case, you are being impacted by someone's lack of respect for your time. In this bailout you are not being hurt.

 

This is a voluntary deal with the security holder peoples. I'm sure the only reason they are agreeing is that they are at risk to lose even more money if they don't band together like this. Thus, I think that even if you are a security holder (the only people I can think of possibly directly hurt by this deal) there is reason to do this.

 

There is no tax money going into this bailout, a la SoCal fire thing you bitched about previously, or Chrysler in 79 for a couple of examples. You are not being hurt here. It's seems like the main emotion going on could possibly be merely envy, getting pissed off that someone else is being helped even though they don't deserve it.

I didn't mean to make the late thing sound so much like and analogy--I knew it was a tenous one and mostly I just felt like ranting. I do that.

 

I don't remember bitching about the SoCal financial deal. You'll have to remind me what I said. I remember bitching about people who don't pay insurance insisting that the gov't pay their way was unacceptable. Essentially, people who pay for their insurance and pay their taxes get to cover thier own losses as well as their neighbors. That is unfair.

 

And I don't understand how the security holder is the only one hurt by this. We all are hurt by this. Absorbing other people's losses, even after those people assumed the risk in order to make money, is an unfair burden to put on folks. It is a bad message to send out there--"Do what you want and the gov't will cover your ass". It is unfair to not treat people like adults. You take the risk, you weather the outcome.

 

And it is sad that you think I believe these things because I think people should suffer. I believe these things because I believe in fairness. As for the envy comment--well, that is just absurd.

[Stefan]

Archy:

 

I am glad the government helps out in mountain rescues. Most of the time a rescue is issued becuase of poor judgement.

 

So I try to keep the same philosophy. Most of those people who have the bad loans did not want to be in this same predicament either. I am sure most feel terrible. They made poor judgement. And although it takes my money or reduces my equity I realize I live in a world where others and myself make poor judgements all the time.

 

I have a hard time with New Orleans. I think New Orleans should be abandoned becuase of the geographic location--Mother Nature is going to win the battle. But what do I do?

[archenemy]

No, people who took out "bad" loans were greedy in the sense that they were living beyond their means.