Morality of Wealth Redistribution

[manifold]

So stupidity... especially when Salesmen try to spin it so it makes good sense... is worthy of kicking families out of their homes while the people that had already made a fortune on this crazy ponzi scheme get bailed out by US taxpayers.

You guys are all heart.

I'm not saying that at all. And I think the banks that made those loans bear more of the blame, since they should have known better. Just like the bank (and real estate agent) that tried to talk my wife and I into paying over 50% more for a home than what we calculated we could afford. If we borrowed up to what we were approved for, we wouldn't have two nickels left over to rub together. That said, what I'm trying to get you to understand is that securitizing mortgage loans in the secondary market does not have anything to do with the terms of a borrower's original loan, nor the borrower's ability to pay it down.

 

[bripat9643]

If you give business incentives to create jobs in the economy and they end up just keeping the money...

Is it moral to continue giving them the money?

Who is giving businesses money?

 

[editec]

The part I bolded is 100% horsefeathers, no offense. A homeowner's ability, or lack thereof, to make their own mortgage payments has ABSOLUTELY nothing to do with how many times that mortgage is bought and sold in secondary markets.

No, I'm afraid you're minfinformed on that point, Mani.

Without that secondary mortgage system banks would have had to hold the paper. The mortgages they were holding would have not be capitalized, and therefore they wouldn't have been able to lend out more money.

Hence on the macro scale, there'd have been less money available for people to buy homes.

Less money in that RE market would have resulted in lower home prices overall.

Since banks knew they could pass off the debts to bondholders, they invented more and more dubious mortgages like NINJA loans.

As these loans qualifed more people, people who really were not qualified to repay those mortgages, they created an artifical demand.

Had banks STUCK to the 20% down 30 year fixed mortgages, median housing prices would have stayed roughly in line with the meadian income ratios that existed post WWII.

In that case median housing prices would have stayed at roughtly 1-2 years median family incomes.

The median price of a home would have been roughly $100,000.

Instead the median price of homes in the USA climbed to over $200,000.

The contraction in pricing you see now is the market correcting to the more appropriate pricing that would have existed if but for that secondary mortgage market.

Where is the fact that the market WAS OVER BUILT in your analysis?
The fact that there are and were far more houses on the market than demand BEFORE the collapse also played a major part in this and the pricing.

It became overbuilt precisely because the builders realized that the demand was there.

It was NOT overbuilt and THEN the banks changed their policies.

And FWIW, the banks started creating NINJA loans waaaaaaaaaaaaaaaay back in the late 80's.

I know THAT for sure because I happened to be a mortgage broker in Connecticut when that happened.

 

[editec]

Where is the fact that the market WAS OVER BUILT in your analysis?
The fact that there are and were far more houses on the market than demand BEFORE the collapse also played a major part in this and the pricing.

Editec is talkin' manipulation, far and away more than simple supply/demand Gadawg

for your perusal, the perps are being outed

well after the damage done, and $$$ made, Unfortunatly>


This investigation has the potential to be a Mother of All Nightmares situation for the banks for a couple of reasons. For one thing, the decision to go after the securitization process is a total prosecutorial bullseye. This is the ugly heart of the wide-scale fraud scheme of the bubble era. Again, the business model during this time was a giant bait-and-switch scam. Sleazy lenders like Countrywide and New Century first created huge masses of bad loans, committing every conceivable kind of fraud to get people into loans (from doctoring income statements with white-out to phonying FICO scores to engineering fake appraisals). They then moved the bad loans quickly to the big banks, which pooled them and chopped them up (this is the “securitization” process), sprinkled hocus-pocus math on them, and them sold them to suckers around the world as AAA-rated securities.

A New Wall Street Investigation: Is the Hammer Finally Coming Down? | Rolling Stone Politics | Taibblog | Matt Taibbi on Politics and the Economy

Manipulation is not being downplayed in any argument I make but to single it out as the only and primary factor is not valid.
Personal responsibility of buyers and the market demand played a large part.
No one forced anyone to buy a home anywhere that they could not afford.

That's true.

Nobody with a lick of sense denies that fact.

But then too, it was the BANKSTERS who had to made the loans, not the people getting them.

The people getting those dubious loans are NOT finance PROFESSIONALS.

 

[Care4all]

Gerrr..

Do you not understand that if you own a home you can get credit and buy all kinds of rims and shit for your 89' Caprice... Yeah you can get blastin sound systems and nice paint jobs too.

You know why?

Because if you own a home your credit limit goes from 500.00 to 5,000 if not more.. BECAUSE YOU OWN A FUCKING HOUSE...

What don't you understand about that????

Owning a house is a lot different than renting one...

Do you really believe renters get 5,000 dollar limits? no they get 500 dollar limits at 18%

no, it's YOU Nick that just doesn't get it.

Buying a home does not give you MORE spendable credit....not if your mortgage is taking up a good deal of your monthly income....a mortgage could make it more difficult to buy a car and get new credit cards, if you are mortgage strapped.

Yes, after you have paid your mortgage for a few years, and some equity has been built in to your house where your house is now worth more than the loan you had originally taken out to buy it. you can take out that equity and borrow on it.

And yes this was a problem this past decade BECAUSE we were in a Bubble.... a Bubble driven by the "easy Money" the banks loaned out and they loaned out this "easy Money" down to the homeless or unemployed man towards the end of their ponzi scheme because the only way to keep the prices going up on homes was to sell more mortgages....sell more homes. they got their easy money to sell to us for free or near free from our lovely Fed.

sooooo, because home prices were (artificially) rising leaps and bounds, the banks were able to then sell the community home equity loans, and second mortgages and they advertised with billboards and radio ads and tv ads and newspaper ads directed towards homeowners to take out home equity or second mortgages to buy all their coveted goodies..when homes started to slow down in their sales and there were no more homeless that they could sell 1st mortgages to, the banks pushed the second and home equity loans....

as long as home prices kept going up, everybody was happy....

Humpty dumpty came falling down when some of those people that were sold an adjustable mortgage could not get refinanced in to a conventional fixed rate mortgage and when the economy began to slow and people began losing their jobs....then losing their homes, then more homes on the market, slowed the home market, then this caused more layoffs in the construction industry and the mortgage loan industry, then more homes were not being sold and so on and so forth....the Bubble busted.

Well said and that happened. The banks fucked themselves no doubt.
However, I was given a 250K additional line of credit in 2008. I never drew a penny on it.
Why?
Discipline and personal responsibility. I knew maybe I could not pay for it.
No one forced anyone to buy any home or borrow any $$ they could not afford.

We refinanced our home in 2002 to an adjustable rate/balloon mortgage for about 4% points lower than our original fixed morgage....it ballooned in 7 years or automatically converted to an adjustable rate mortgage....we knew we wanted to move in 5 years, so we were not concerned with the 7 year balloon.....when I had applied for the new mortgage, they kept trying to get me to take out more money than the balance on the original mortgage, but we said, no way, Jose! and only refinanced the balance on the mortgage and reduced our monthly mortgage payment by near $400 a month via the lower interest rate. 4 years later we sold our home, made a profit, moved to maine and bought our home here....with the cash and we have no mortgage now.

we, like you did not buy in to the offers from the many banks that tried to give us money to buy gadgets with....we own our cars outright as well....we owe no one, anything.....

 

[Samson]

If you give business incentives to create jobs in the economy and they end up just keeping the money...

Is it moral to continue giving them the money?

Who is giving businesses money?

I think he means, "let businesses keep the money they have earned."



then they "just end up keeping the money."

I assume rightwinger imagines there's a huge matress that every business has under which they suff dollar bills: Such is the gross ignorance of the socialist.

 

[bripat9643]

I think he means, "let businesses keep the money they have earned."



then they "just end up keeping the money."

I assume rightwinger imagines there's a huge matress that every business has under which they suff dollar bills: Such is the gross ignorance of the socialist.

Well, no, he actually didn't mean that. Libs think cutting your taxes is giving you money. In their view your net income is a gift from the government. I just wanted RightWinger to admit it.

 

[Care4all]

if you give some sector a tax break and you do not give all the other sectors of tax collection an equal tax break, then you ARE GIVING that "business" as an example, money. Money that other tax payers still have to pay out of their income....and you are putting more of the tax burden on to these other sectors of the tax base with the higher deficits being accumilated due to giving SOME tax breaks.

 

[bripat9643]

if you give some sector a tax break and you do not give all the other sectors of tax collection an equal tax break, then you ARE GIVING that "business" as an example, money. Money that other tax payers still have to pay out of their income....and you are putting more of the tax burden on to these other sectors of the tax base with the higher deficits being accumilated due to giving SOME tax breaks.

No, you aren't giving them money. That's like saying if a thief steals $1000 from all your neighbors but only steals $500 from you, then he has given you $500.

Not taking your money is not giving you money.

 

[Care4all]

if you give some sector a tax break and you do not give all the other sectors of tax collection an equal tax break, then you ARE GIVING that "business" as an example, money. Money that other tax payers still have to pay out of their income....and you are putting more of the tax burden on to these other sectors of the tax base with the higher deficits being accumilated due to giving SOME tax breaks.

No, you aren't giving them money. That's like saying if a thief steals $1000 from all your neighbors but only steals $500 from you, then he has given you $500.

Not taking your money is not giving you money.

if you are NOT "giving them more money" to use, via giving them a tax break, then why bother giving them a tax break?

 

[bripat9643]

if you are NOT "giving them more money" to use, via giving them a tax break, then why bother giving them a tax break?

You aren't giving them money. Not taking money is not the same as giving money. I can think of a lot of reasons why I wouldn't want the government to take my money. However, I don't put some Orwellian label on it and call it something it isn't so I can make it sound sinister.

 

[Samson]

if you give some sector a tax break and you do not give all the other sectors of tax collection an equal tax break, then you ARE GIVING that "business" as an example, money. Money that other tax payers still have to pay out of their income....and you are putting more of the tax burden on to these other sectors of the tax base with the higher deficits being accumilated due to giving SOME tax breaks.

.

Is your point that....

You got 6 Pack of Mike's Hard Limonade for your B-day.

 

[manifold]

Absolutely James... Good point about the foreclosures. And I love how the Conservative Spin machine paints all those who lost their homes as people who "bought too much house". There are hundreds of thousands of these foreclosures that had absolutely nothing to do with people overextending themselves and everything to do with these mortgage companies reselling the mortgages over and over and over again until things fell apart.

The part I bolded is 100% horsefeathers, no offense. A homeowner's ability, or lack thereof, to make their own mortgage payments has ABSOLUTELY nothing to do with how many times that mortgage is bought and sold in secondary markets.

No, I'm afraid you're minfinformed on that point, Mani.

Without that secondary mortgage system banks would have had to hold the paper. The mortgages they were holding would have not be capitalized, and therefore they wouldn't have been able to lend out more money.

Hence on the macro scale, there'd have been less money available for people to buy homes.

Less money in that RE market would have resulted in lower home prices overall.

Since banks knew they could pass off the debts to bondholders, they invented more and more dubious mortgages like NINJA loans.

As these loans qualifed more people, people who really were not qualified to repay those mortgages, they created an artifical demand.

Had banks STUCK to the 20% down 30 year fixed mortgages, median housing prices would have stayed roughly in line with the meadian income ratios that existed post WWII.

In that case median housing prices would have stayed at roughtly 1-2 years median family incomes.

The median price of a home would have been roughly $100,000.

Instead the median price of homes in the USA climbed to over $200,000.

The contraction in pricing you see now is the market correcting to the more appropriate pricing that would have existed if but for that secondary mortgage market.

I don't agree with your 'macro' argument, but I will concede that it's at least reasonably deduced. But my original point is still correct. The terms of one's mortgage loan, and in turn their ability to pay for it, remain unaffected by that loan subsequently being bought and sold in secondary markets. That's a simple, logical, legal and unassailable fact.

 

[Rodack]

Where ever there is a Democrat in control, there is brutual punishing poverty

See Obamanomics for food Stamp references and debt totals

 

[boedicca]

if you give some sector a tax break and you do not give all the other sectors of tax collection an equal tax break, then you ARE GIVING that "business" as an example, money. Money that other tax payers still have to pay out of their income....and you are putting more of the tax burden on to these other sectors of the tax base with the higher deficits being accumilated due to giving SOME tax breaks.

And this is why we should simplify the tax code and get rid of loopholes, favors, punishments, social engineering, etc for everyone.

 

[Rodack]

LINK please.

Lazy liberal


No handouts here

Then i guess i will just say, what you said is simply NOT TRUE.

Democrats would die in the streets ( see Katrina for reference) if they didnt have other people to sponge off of in life

See: "A Renewed Crackdown on Redlining" - BusinessWeek

 

[CountofTuscany]

they were sold a bill of goods....

they were told that when the loan kicked in to the adjustable stage, they could refinance with a conventional mortgage and for a while they did get the refinancing....but when the time came on the later groups of subprime adj mortgages, the banks were not lending out for too many conventional mortgages for these people....they could not get the refinancing in to a conventional mortgage as they were told they could....it was all downhill from there....prices stopped going up on home values with the foreclosures, less money avail to loan, more and more foreclosures....bubble bust, Pyramid scheme by the banks came to its end, homeowners screwed, banks bailed out by homeowner's and our taxes.

They bought the bill of goods.

Lot's of people get fooled in to Ponzi schemes....it happens all the time, especially with senior citizens or the uneducated....but guess what? They are the victims....

We're all the victims becasue we are the ones footing the bailout. To big to fail means we have to pay to keep them alive. With nothing in return to show for it.

 

[Political Junky]

"Too Big to Fail" is a new HBO film, should be good.

 

[rdean]

Why is wealth redistribution something that the right wing thinks is going to happen?

It's already happened.

 

[Political Junky]

Middle class conservatives love giving it all to the top 1%.