Christy posts this morning about the billionaires’ bailout to be voted upon this morning, while looking at our impoverished condition.
In response, I said,
You know what bothers me about this entire mess?
The mortgages in or approaching foreclosure.
In a conference call earlier this spring, George Soros said that another 5 million foreclosures were expected inside the next 2 years. We’ve already had at least that many. I hear nothing at all about helping fend off these foreclosures, which will surely happen if the economy continues in a clump and fuel costs continue their inexorable rise.
If the faltering price of underlying assets and inherent risk that ultimately comprised CDOs (collateralized debt objects) and CDSs (credit default swaps) is driven by the market being flooded with properties, why not put a halt on the foreclosures and demand every mortgagor renegotiate rates with any mortgagee that made an attempt to pay something on their mortgage?
It would slow down the collapse of property values, offer stability to mortgagors and mortgagees alike in terms of their corporate and personal finances, and it would potentially boost the return on any equity we took in this through our taxpayer-funded bailout…
It’s as if all those smart guys suddenly forgot how supply-and-demand worked — you know, that first and fundamental relationship any of us business majors learned in Econ 101. They can manipulate the supply of housing and risk by removing the reasons why the supply escalated, yes?
The more I think about it, the lack of effort to deal with a fundamental issue like this, to resolve the excess supply of housing in the market due to past, current and impending foreclosures is confirmation that this is all one big scam, or as Michael Moore suggested, a coup by the rich.
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Law of supply and demand says..supply goes down, price goes up.hmmm? Supply of gasoline goes down and price of gas goes down right before election. Just like Gore said before 2000 election..up is down, down is up and Republican flowers and coffee smell like shit.
i4u2bi — yeah, how convenient the cost of gas is going down right now. What changed since July?
Oh, right, that changed.
Just wait, though…there’s investigative work in the pipeline that will show how connected all of these things are, from bad mortgages to presidential candidacies. And it’s going to be ugly.
I guess that chart came directly from the Ministry of Energy Information. *g*
Couldn’t possibly have anything to do with the price of oil coming down due to demand destruction?
No,must be the psychology of the market – if people think we’re getting more oil, prices go down, right? Kinda like Tinkerbell.
Moore is right.
Awfully steep curve for demand destruction — was the psychological trigger the $4.00 per gallon mark? Or did speculators have no reason to game the system any longer once they got what they wanted from the decider?
I suspect both were triggers, but one more so than the other. I always ask, “Where do you put the money?” when evaluating these situations. Where were investors going to put their money after the maximum point in the curve? What change so dramatically that they decided to put their money someplace else? It sure wasn’t the real estate market.
Of course, it is a scam. The current financial system is a house of cards. Paulson talks about stabilizing it. But if you could stabilize a house of cards it wouldn’t be a house of cards. His plan had nothing to restructure the system, to place limits on derivatives, or to shore up the housing market by helping distressed homeowners. It perfectly reflected his priorities and these were to work a short term bailout of banks on terms favorable to them.
If Jose loses his house in Oxnard, his family suffers, his neighborhood suffers a bit, and nobody else notices. If BigBankInc can’t raise cash, it’s big news and a whole lot of important people lose their shirts.
So it’s supply and demand of the money of the Important People. But not Jose in Oxnard.
The thing that has bothered me is that there are *so* many non-rich people in this dire situation and it still doesn’t rate a government program. Yet now that there’s a bunch of rich folks in dire straights, we’ve created a program.
Remember when people were saying that anyone dumb or greedy enough to sign up for a sub-prime mortgage deserves what they get? What’s up with the same thing on Wall Street? If you were stupid or greedy enough to change your whole business model to rely on derivatives based on the shitpile, we need to bail you out?