OT: another long off-topic economics thread

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Finance is the art of passing money from hand to hand until it finally disappears.

Robert W. Sarnoff

Looks these started in 1968 [ Government National Mortgage Association ] for government bundled, and backed by the full faith and credit of the US taxpayers....

It appears the need by the Resolution Trust Corporation to rapidly resolve the S&L mess in the late 1980s and early 1990s spawned the commercial MBS.

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4)
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2002 but with good information -- note how the more exotic/leveraged products "prospered")

some background

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my head hurt to read ...]

From scanning some other sites it appears that there are huge numbers of subtle, nuanced and arcane types of MBS, a few with actual real property as collateral (which may now be grossly overvalued, but is still *SOMETHING* concrete as backing) and many more with "mark to myth" derivatives for backing (largely underwritten by "The Left Bank of the Mississippi" and other established financial powerhouses).

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

Reply to
F. George McDuffee
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(slide 4)

Well, good, and accurate but not residential. That was something new. Home mortgages, especially FHA franked versions, were different. You got security through insurance without paying the points. In fact, without even scrutiny. The beat goes on....

Reply to
John R. Carroll

=========== Te "do-do" just keeps getting deeper.

Yet more "stuff" keeps floating to the surface, like a rotting fish, as I continue searching on the internet, and the reporters keep digging, getting better numbers.

The CDO [collateralized debt obligations] WHICH ARE A GENERALLY SEPERATE CLASS OF DEBT, although derivatives such as CDS[credit default swaps] are involved, is now seen to total at least 28 trillion $US at the end of 2006. Much of this is bundled credit card debt, car loan debt and student loan debt. Given the trend line [which you can see in the link below] most likely the CDO notational debt now exceeds 31-32 trillion US dollars. see

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While there are several estimates, the US GDP, that is the TOTAL VALUE OF ALL GOODS AND SERVICES PRODUCED in the US in 2007 appears to be about to be 13.9 trillion $US, give-or-take.
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Thus *JUST* the CDO notational debt is 200% of national GDP. This is in addition to the total governmental debt of 450% of GDP, and the debt generated by the current accounts trade deficit now running about 2 billion dollars a *DAY*.
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I want my mommy!!!!! BWAAAAAAAAAAA---

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

Reply to
F. George McDuffee

CATD is still over 2 billion *PER DAY*, but there is later data available

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(I still want my mommy)

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

Reply to
F. George McDuffee

I know of a nice little island you can buy in the Bahamas. 'You like fish?

-- Ed Huntress

Reply to
Ed Huntress

You get it back when the country doesn't have a total economic meltdown. No one knows exactly what might happen if all the millions of people who could lose their homes go into foreclosure. Banks lose about 50,000 every time they have to foreclose on a property. Figure out their losses times two million. It could cause a catastrophe not seen since 1929. Better to not chance it and at least try to figure out a way to ease the fall. Letting the chips fall as they may could just cost you a lot more than spending or borrowing now to avoid it. It's managing the problem rather than letting it fester.

Hawke

Reply to
Hawke

Well, that's something isn't? If I could come up with the entire truth about anything I don't think I'd be here. Now would I?

I can't argue with that. But then new ideas are hard for anyone to come up with. You know what they say, there is nothing new under the sun. If that is true then nobody can be faulted for not having any new ideas. At least the Democrats try. All the republicans do is look back for old ways of doing things.

It's in the DNA of conservatives not to ever try anything new or have a new idea. Looking back to some better time is what life is all about for them.

This is true and it's why I don't belong to a political party, and haven't for a long time. But you can't blame them because they are just part of a corrupt and decadent political system. They only reflect the system they are part of. It's the corrupting influence of money that has broken the system. The misallocation of financial resources that has occurred in America over the last quarter century is what has allowed this to happen. When the middle class was strong it wasn't like this. With a weak middle class and a mighty aristocratic elite it's inevitable that the wealth of the upper class will come to corrupt any democracy. Too bad that is where we now are.

And like them they will probably not be long for this world. To me, it is looking more and more like the current two party system is coming to an end. It may be the rise of new parties or the end of the old fashioned party system altogether, but since the partys are not doing the public any good any more they may be on the way out. I think it's high time something new comes along to replace a system that is hundreds of years old. It's outlived it's usefulness. Time to turn the page.

Hawke

Reply to
Hawke

=============== This indeed may be the case, but what is to be done to prevent this from happening again and again and again. Even if we dodge the bullet this time, at some point the system will go into terminal overload.

==> At some point the assumption of incompetence and ignorance must be replaced with the assumption of criminal intent.

Reply to
F. George McDuffee

"Hawke" wrote in news: snipped-for-privacy@corp.supernews.com:

We are a long way from a meltdown. We've survived plenty of recessions in the past. This one, if it materializes, doesn't look all that much different.

What I'd like to know is how did people putting down less than 20% on a house get a mortgage without mortgage insurance? I doubt that they did. So if the insurance is in place, how are banks on the hook? Short term maybe, but in the end after foreclosure proceedings, their claims will be paid. Ok, so they lost their potential profit but their principal should be intact.

Who is really on the hook? Some reinsurance company? And if they find being on the hook less than satisfying they should be reminded that it's their business to be prepared to pick up the tab.

It seems to me that if it were the banks on the hook they would be eager to sit down and renegotiate the terms of the loan with the debtor given the current prospects for recovering the money by auctioning the property.

In the short term the devaluation of real estate is going to affect consumers in that they will have less equity to borrow against. A slowdown in consumer spending will surely lead to a recession. But in the long run consumers staying out of debt will be better for the economy and the country as a whole.

Reply to
D Murphy

Reply to
F. George McDuffee

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