John Preston

No One Saw This Economic Crisis Coming?

Jeff

The term "liars loans" actually originated in the 1980's...but you knew that, I'm sure...

Actually, most of what transpired during the last 5-7 years in mortgage lending actually dates back to the 1980's...which is one of the anomolies in the current crisis...thee actually was a knowledge base available for review and guidance....

The real delta was the changes in agency underwriting, and development of overly complex and risky (yet highly profitbale) ways to manage the mortgage investments at the back end of the system......


On Jul 12 02:19 PM Jeff Nielson wrote:

> As User353732 (and others) correctly point out, this was a "surprise"
> which could not possibly have been missed by anyone with their eyes
> open.
>
> The author's suggestion that this was simply a case of "good" people
> with "bad" models who made an "honest" mistake is UTTER NONSENSE.
>
>
> U.S. home prices TRIPLED while real incomes were falling. Not ONE
> DOLLAR of those price-increases was sustainable, and EVERY dollar
> of that price-appreciation will be lost (and more) - meaning a total
> price-decline in the U.S. housing market of greater than 67%.
>
> Putting aside that ONE totally obvious indicator, NO ONE (with their
> eyes open) could POSSIBLY have failed to see the rampant mortgage-fraud
> in the U.S. Many of those loans had already received the nick-name
> of "liars' loans" a YEAR before the bubble burst.
>
> Is there anyone with an I.Q. greater than their shoe-size who could
> NOT understand how writing HUNDREDS OF BILLIONS OF DOLLARS in fraudulent
> mortgages, and then LEVERAGING that fraud by a MINIMUM of 30:1 would
> implode in a very short period of time?
>
> As Swaps pointed out in his comment, the only reason why this multi-TRILLION
> dollar Ponzi-scheme lasted as long as it did was that the U.S.'s
> corporate propaganda-machine (i.e. the "free press") was preaching
> Wall Street propaganda 24/7 (rather than INFORMING people about what
> was REALLY going on).
>
> The author is nothing more than another Wall Street apologist looking
> to explain-away (through specious arguments) the largest corporate
> crime-wave in global history (see "U.S. bank-fraud SYSTEMIC and INTENTIONAL
> - William Black" www.bullionbullscanada...;view=article&...
>

No One Saw This Economic Crisis Coming?

You all know that all 6 "lookouts" on board actually survived the sinking....

like the lookouts of todays crisis, all of those screaming to be heard by the masses that" they made the call".... they will all also survive....

However, like the Titanic lookouts, who were too late to save the ship, out modern day lookouts were way to late to save the economy.

Perhaps we should not pay as much homage to our modern day wannabe seers as we do.....after all, we did hit the damned iceberg....


On Jul 12 08:53 PM User 357705 wrote:

> Titanic. Good metaphore. USA today is exactly where the Titanic was
> after the stern section broke away from the forebody.

No One Saw This Economic Crisis Coming?

4 years ago was too late.....this mess began 14 years ago..at a minimum..


On Jul 12 08:15 AM doc tari wrote:

> Anyone with half a brain saw it coming 4 years ago..and the smart
> people were writing about that. Where were you.

The Truth About Jobs

Berrnard...

There are places...not in Detroit...where employers have found enough poor soluls to lay off...

Take Yuma, AZ for instance....Unemployment is this area is 24% at last count.....

The fact that respected economists have, for several years now, written on the relationship between housing/wealth effect (See Shilller..see Bostic...just google "housing wealth effect"...)...and consumer spending...and all those who have championed the fall of home values seem to have ignored this realtionship....why should we be surpised that unemployment has gone up.

I wonder if the headlines read "Another 2 million 'customers' were sidelined this month due to the economy", if there would be a different attitude and different solutions suggested....

I do believe that the economy can get a lot worse....if enough poorly formulated thought and rhetoric become the rule ofr the day.

The mindset of those who cheered for housings demise, and the collapse of new home construction.... and chanted "down...down..down" as the CS index fell..were actually laying a large portion the foudation for the current mess....

When we needed proactive solutions...we got destructive attitudes...

When we needed rationale thought, we get headless banter..

Yes, things can and will get worse, if we keep up the wrong behavior.....

By the way, good analysis....


On Jul 10 11:35 PM Bernard Thomas wrote:

> I don't think it could double. Could layoffs continue? Sure, but
> at a slower pace as the economy slows to replacement rate activity.
> I have a decidely negative view of employment and believe we will
> see more job losses, but at a slower pace. I am not saying that the
> slower pace is a sign of an approaching turnaround, but that we are
> beginning to sette in at the bottom of an economic crevasse.

The Current Economic Crisis: Hell, Meet Handbasket

Where is the plan to fix....there are plenty of weathermen and reporters telling us what jsut happened....this is a great report...but, after all of the reporting....what is the plan to fix it?????

Why Lending Standards Did Not Fall

In some cases, subprime lenders actually had higher average FICO scores than did Fannie and Freddie....and certainly higher than FHA, during the period from 2001-2007.

Investors and speculators found it easy to pay a rate premium when they were getting a yield premium...through rampant appreciation....

That said, the fact that lending standards expanded, and have now contracted, is at the core of the issue for lenders...this arbitrary, greed/fear driven cycle of accordion-like expand-contract-expand is manipulation...not market action...