How much further down can it go!

Hows it going folks -

Im back in the land of sobriety after a crazy weekend - then again looking at the headlines so far today - Maybe its time to go back to the Pub - the view from there was a hell of a lot better.

http://www.guardian.co.uk/business/2008/mar/17/creditcrunch.marketturmoil


http://www.slate.com/id/2186547/


http://business.timesonline.co.uk/tol/business/markets/article3566164.ece


http://www.rte.ie/news/2008/0317/bearstearns.html


http://www.independent.co.uk/news/business/comment/bear-stearns--what-does-it-mean-for-you-796947.html


How much more of this can we take? - I know the Gold boys are probably as happy as piggies in the proverbial - but Gold is an investment of last resort - when you 're sh*t scared everything else in the world.

The worrying thing seems to be the Yanks are under the impression that they can export all their problems . Back on P.ie I was firmly in the middleground between the bears and the bulls - but these flippin Bankers could drag the whole lot of us down (ie the rest of us in the normal economy) - my pension portfolio has taken such a beating - I dont want to look at it -all the companies are earning good profits - but this contagion is getting worse and with inflation and energy we are getting into a perfect storm

Next question is - are we reaching that FDR moment - where its time for the adults to go back into the playroom and take the toys off the financial community - After all the regulation and supervision has been progressively stripped away - the financial community has shown itself to be completely irresponsible and has pissed the inheritance of generations up against the wall and as usual its us - the Joe bloggs taxpayers who are having to foot the bill as per usual

Free market me arse

I've been trying to work out how bad things could be in Ireland.

If there are 300,000 empty houses-

if 100000 of these with loans of 100000 associated with them get into difficulty then that's a loss of up to 10 billion for the banks/building societies

if 200000 of these with average loans of 200000 associated with them get into difficulty then that's a loss of 40 billion for the banks/building societies.

Maybe I've been visiting the propertypin too much since p.ie disappeared.

Did I hear on Drivetime (good programme on today about Bear Stearns and all - I'll attempt to get a podcast or something later - an analyst was on it and he was nearly crying !! ) that the price of oil is dropping because of this? Investors are not putting their cash on petrol. It's an ill wind. Then again, maybe I didn't hear that as I was driving.

Now, JPMorgan bought all the good assets left in BStearns - the rest was ... written off? Does that mean that a rake of loans now get erased and people get free houses etc.? Or do those debts go to bounty hunters now?

JPMorgan seems to have been given billions to take over Bear Sterns at a price about a quarter of the value of the Bear Sterns headquarters. JPM got out of property in 2006. The "financial products" are so complex and the lender so remote from the borrower that not even the people buying and selling them seem to understand them.

Edo wrote:

Hows it going folks -

Im back in the land of sobriety after a crazy weekend - then again looking at the headlines so far today - Maybe its time to go back to the Pub - the view from there was a hell of a lot better.

http://www.guardian.co.uk/business/2008/mar/17/creditcrunch.marketturmoil


http://www.slate.com/id/2186547/


http://business.timesonline.co.uk/tol/business/markets/article3566164.ece


http://www.rte.ie/news/2008/0317/bearstearns.html


http://www.independent.co.uk/news/business/comment/bear-stearns--what-does-it-mean-for-you-796947.html


How much more of this can we take? - I know the Gold boys are probably as happy as piggies in the proverbial - but Gold is an investment of last resort - when you 're sh*t scared everything else in the world.

The worrying thing seems to be the Yanks are under the impression that they can export all their problems . Back on P.ie I was firmly in the middleground between the bears and the bulls - but these flippin Bankers could drag the whole lot of us down (ie the rest of us in the normal economy) - my pension portfolio has taken such a beating - I dont want to look at it -all the companies are earning good profits - but this contagion is getting worse and with inflation and energy we are getting into a perfect storm

Next question is - are we reaching that FDR moment - where its time for the adults to go back into the playroom and take the toys off the financial community - After all the regulation and supervision has been progressively stripped away - the financial community has shown itself to be completely irresponsible and has pissed the inheritance of generations up against the wall and as usual its us - the Joe bloggs taxpayers who are having to foot the bill as per usual

Free market me arse

the problem is that a lot of the free market proponents are blaming regulation for the current mess (its crazy I know) They still believe that if it wasn't for the central banks and government interventions, the bankers would all behave themselves and we would never have gotten into this kind of mess

Auditor #9 wrote:

Now, JPMorgan bought all the good assets left in BStearns - the rest was ... written off? Does that mean that a rake of loans now get erased and people get free houses etc.? Or do those debts go to bounty hunters now?

not a chance in hell will these loans be written off lightly.
The banking sector are desperate to keep people paying their debt. If loans start getting written off, then it will be a disincentive for people to pay their mortgages and credit cards (they might just get a free house)

There will be lots of people evicted from their houses and the buildings boarded up. The U.S. government will rather have millions more homeless and hundreds of thousands of derelict houses (that will probably cost cities and states billions to knock down in future urban renewal programs after they become magnets for crime... if they even bother)

Of course, in a better world, governments would use this as an opportunity to reform the banking sector, nationalise the banks that are in trouble and renegotiate the mortgages (even if it means writing off some of the value of the mortgages and lowering repayments, even as far as giving people houses if they can't afford any repayments (America has a ludicrously low percentage of social housing provision anyway, this would be a kind of natural justice)

It is much better to have people living in houses than to have empty buildings and families on the street.

Akrasia wrote:

The banking sector are desperate to keep people paying their debt. If
loans start getting written off, then it will be a disincentive for
people to pay their mortgages and credit cards (they might just get a
free house)

Yes there will be a stand-off between the banks and the customer for this reason you say but consider the following ...

Sidewinder god bless him posted a link on p.ie to a case highlighted by the NY times where a couple in the states couldnt' have their house repossessed because the court didn't know who the creditor was, the loan being sub-prime.

As far as I understand it, the mortgage lender takes your 10% or 12% sub-prime loan and puts it in Paddy Powers* for people to bet on whether or not you will pay it off - that's how they raise the money. If you pay it off then those betting people get a lot more return than they would if they had bet on Mary and John with their 5% mortgage with the two children.

The trouble is, if you don't pay it off then those betting people simply lose their money like Mary and John lose their €8 per week in the lotto and think nothing of it. Unless pursuit of such money is written somewhere into law (which seems to be the issue) then these 'exotic' financial packages - CDOs and whatever - should be open to class-action cases in the states where repossession. I'd love to see it.

And your point about banks getting nationalised and the mortgages changed to a longer term with more human interest (god help some of those people paying 10 and 12% on huge sums) is something that should and could well happen yet ...

*a section of the international stock market in reality