SPANISH MOSS

4 Comments

    • Leverage 101: The Real Cause of the Financial Crisis [view article]
      Great point, abuses are not so new, just highly leveraged, and likely emboldened by the cover of credit default swaps, but in a melt down, all the swaps cancel each other out.

      AND!!! Interesting post from earlier reflects a new mentality. Instead of buy a house, keep a house, the kids, the neighborhood, the schools... accept the pull backs cause it's home, not an investment... right? NOW the mentaility is that it is not smart to keep the house when it is underwater... damn the kids, damn the neighborhood, damn the schools... a house (evre since since COBRA of 1986) is an investment. Don't do the right thing, do the smart thing is apparently the new mantra.

      I agree about leverage, but the new mantra changes the math too... and not for the better. IMHO       Sep 25 02:39 PM
    • Is Buffett Buying American Express for Berkshire Hathaway? [view article]
      Would you please explain the Risk Based v. Economic Capital spreads in the link attached to the article. The two comparisons reflected: 1) RBC to EC and 2) BP spreads... seem to favor different Bank Holding Companies. EG, WFC has low RBC:EC and a high spread. Is the RBC:EC spread better than the spread in bps? These comparisons are not intuitive to me and I would appreciate some more discussion. Thanks Aug 26 11:54 AM
    • Bank of America Buys Countrywide - Who Gains and Loses? [view article]
      I believe you are spot on. Of course, I would rather you were wrong, but I'm not at all sure you are.

      On the Cleveland lawsuits, I think it would be nice to see the entities Cleveland has sued counter sue Cleveland for not providing police and fire protection to the vacant properties in order to perserve equity for the borrowers (yes, under Durand, lenders must return equity to borrowers). No equity you say, then also sue the borrowers, sellers, realtors, (oops Realtors) and appraisers for over valuing the properties securing the loans.

      Now I'm on my soapbox, but let's not allow the plaintiff's bar to add insult to injury by driving up the cost of everything in this country. Insurance, housing, pharmacuticals, health care, cigarettes, on and on ad nauseum...

      Thanks, I feel better now!       Jan 13 12:41 PM
    • Is Countrywide Financial the Next Enron? [view article]
      I don't doubt your conclusion regarding CFC, it is certainly a possibility, particularly with the falling real estate market and the huge volume of Option ARMs CFC (and others) wrote.

      However, I am less sanguine about your positioning borrowers as innocents. Most borrowers know a good loan from a bad loan, and it they don't they know financial lingo, the do know a) "there is no such thing as a free lunch", and b) "if it's too good to be true, it probably isn't true", etc.

      My take is that the vast, vast majority of borrowers were complicit in taking low payment options to acquire real estate at any cost lest they should not participate in the huge appreciation fueled by low cost payments in tandem with both cheap and easy money.


      Regardless as to whether we agree or disagree, about borrower complicity or innocence, there is plenty of blame to go around. In addition to borrower greed, there are lenders and mortgage brokers who offered the products, Realators who profited from them, regulators who ignored them, and investment bankers, hedge funds and credit reporting agencies who pushed them.

      At the end of the day, I think the old axiom, if you want to dance you have to pay the fiddler, is appropriate, and borrowers will be, and should be, paying along with lenders, mortgage brokers, Realtors, and all those the Wall Street schmoes.       Oct 29 02:15 PM
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