Why Should The American People Trust Bush/McCain

[DC Tom]

Isn't it about getting the "toxic stuff" off of the balance sheets?

 

I thought "toxic" in this case refered to the liquidity of the securities, not the viability of the underlying mortgages.

 

GG's right - the tranches relate to priority of payment, not to the mortgages directly. Mortgage bonds aren't backed by mortgages directly, at their simplest they're backed by a trust that contains the mortgages and pays out cash to the bond holder. I'll have to ask around here, but I'm pretty sure that the holder of of a mortgage bond has no legal claim to the properties underlying it.

 

And I raise that issue because of this:

DBank

 

DB wasn't the bond holder, they're the bond issuer (or servicer). (Actually, it looks like DB holds the mortgages, but DB Trust - the trust that contains the mortgages - didn't have them). If those foreclosures were to go through; DB Trust would liquidate the property, the money goes in to the trust and gets paid out to the bond holders based on priority of the tranches. But the foreclosed homes themselves do not relate directly to the tranches.

 

Interesting case...DB has a point about "legal compliance". The court has a stronger one in "bull sh--. Where's the document?" I can think of about eight different ways that gets screwed up (hell, DB should theoretically be able to pull them out of the county land records...but land records in most counties are so screwed up I wouldn't be surprised if they slid under someone's desk at the county court and went unrecorded). But the court is entirely correct in its ruling, regardless. If a bank tried that crap with me, foreclosing without proof of mortgage, it wouldn't even get to court. I'd just laugh 'em off my property.

 

And, in fact, the link near the end of the article basically confirms what I just said: somebody never filed the paperwork with the county transferring the mortgages to DB Trust. Either the deed of trust or - most likely - the transfer of such to DB Trust never made the books in the land records office. There's nothing sinister about this, no "EEEEEEVILLLL" corporations trying to screw the little guy. Somebody just !@#$ed up - and it's just as likely the land records office as DB Trust.

[erynthered]

His "credit problems" are a function of his inability to sell trucks and SUVs. It's a bit disingenuous to blame this on the credit crisis.

 

 

Not really. It relates to the highlighted part of Toms post. Credit is tight. They pulled his floor plan.

[ExiledInIllinois]

Tom-- I know this a side issue in this thread... But, like I said my in-laws are moving for the first time in 60 years! And now this crisis... Supposedly they have something BEING built and will move in a few months from now... They made this choice right before this mess. They are pretty much set... Are the gonna be in deep doo or would it have been better if they just waited a touch longer?

 

I should have probably PM'd you.

 

??

[GG]

On the flip side of that coin, why would banks extend (mortgage) credit in markets where housing prices are still falling? No one knows if a mere $700 billion is enough to bail out Wall STreet. In each case the bailout Bandaid gets bigger and bigger. As long as housing prices continue to fall, and delinquencies and foreclosures increase, you haven't solved the root of the crisis.

 

Despite the attempts to blame democrats, republicans, lax lending standards, or the push for increased homeownership, the blame for this crisis lays at the foot of Wall Street.

 

The goal is to unclog the capital so the banks can make loans to ALL industries, not just double down on housing.

[DC Tom]

Tom-- I know this a side issue in this thread... But, like I said my in-laws are moving for the first time in 60 years! And now this crisis... Supposedly they have something BEING built and will move in a few months from now... They made this choice right before this mess. They are pretty much set... Are the gonna be in deep doo or would it have been better if they just waited a touch longer?

 

I should have probably PM'd you.

 

??

 

Dunno. I do know that I've seen quite a bit of work - construction and remodelling - halted because of lack of credit (and not even recently, this has been going on for about nine months. Our HELOC was frozen a year ago. Homeowners down the road were in the midst of remodelling when their HELOC was frozen - they had equity available, but the bank wouldn't let them draw on it. They ended up - no sh-- - torching the house for the insurance).

 

The problem, despite my anecdotes, isn't even necessarily the homeowner's credit. Contractors and builders need credit to work. It's a cash-flow business, but the work involves bulk purchases of material, so typically contractors (of any size) will draw on a line of credit for material, which they pay off when they get paid. No credit means no materials, means no work gets done regardless of the homeowner's financial situation. So even if your in-laws are fine, financially, it doesn't mean their house will get built. And though I'm using home construction as an example, it scales up. I know of at least one (and maybe a second) large development - multi-story condo - that's currently held up because of credit issues. The builder isn't carrying $100M in cash to blow on materials (or anything else), and no one's extending credit because there simply isn't any to extend. That means they're not buying cement or steel, not renting equipment, not employing people...now Joe Blow (or, in this area, Jose Blow) is out of work.

 

And though I use construction as an example...lots of industries work the same way, leveraging credit against cash flow. The aircraft industry must...the Boeing unions picked a wonderful time to strike.

 

That's why illiquidity in the credit markets is a BIG deal, and why, although I'm a believer in free-markets and government non-intervention, I accept the bailout of the credit markets as a necessity, and I don't want a whole lot of bull sh-- issues tacked on, debated, and delaying it. This isn't just about Wall Street or the banks (if it were, I'd be saying "!@#$ 'em. Caveat !@#$ing emptor, bitches.") It's potentially a failure of the money supply.

[Chilly]

Because EII likes to poke at Republicans with a pointy stick. Duh.

 

Of course I know thats why he did it. I wanted to see what he would say when I asked him to justify it.

[DC Tom]

Of course I know thats why he did it. I wanted to see what he would say when I asked him to justify it.

 

Now why would you want to see that, when you know that

1) his answer would be wrong,

2) his answer would make no sense, and

3) I'm the only one here that speaks fluent EII anyway.

[finknottle]

Granted... I am all for being generous, but why should anyone trust Bush? We bought the farm when he sold us the Iraq War... We needed to act fast back then because "Iraq possessed WMD's" we were told. We didn't find a single weapon. Why should we trust Bush's bailout plan? Bush is a pathalogical liar.

 

Fine. Why do you call this the Bush/McCain plan, and not the Bush/Obama plan? As far as I can tell, it is Obama and his apologists that think the proper role is to sit back and support whatever comes out.

[TPS]

Not really. It relates to the highlighted part of Toms post. Credit is tight. They pulled his floor plan.

The article states that "bad auto loans" were responsible. Once they started having problems with their loans, GMAC pulled out last summer. As it further states, GM's sales are down some 2 million cars, and that the number of dealerships will decline. His problems were NOT caused by lack of credit. Could he have survived if GMAC stayed in? I highly doubt it.

[ExiledInIllinois]

Dunno. I do know that I've seen quite a bit of work - construction and remodelling - halted because of lack of credit (and not even recently, this has been going on for about nine months. Our HELOC was frozen a year ago. Homeowners down the road were in the midst of remodelling when their HELOC was frozen - they had equity available, but the bank wouldn't let them draw on it. They ended up - no sh-- - torching the house for the insurance).

 

The problem, despite my anecdotes, isn't even necessarily the homeowner's credit. Contractors and builders need credit to work. It's a cash-flow business, but the work involves bulk purchases of material, so typically contractors (of any size) will draw on a line of credit for material, which they pay off when they get paid. No credit means no materials, means no work gets done regardless of the homeowner's financial situation. So even if your in-laws are fine, financially, it doesn't mean their house will get built. And though I'm using home construction as an example, it scales up. I know of at least one (and maybe a second) large development - multi-story condo - that's currently held up because of credit issues. The builder isn't carrying $100M in cash to blow on materials (or anything else), and no one's extending credit because there simply isn't any to extend. That means they're not buying cement or steel, not renting equipment, not employing people...now Joe Blow (or, in this area, Jose Blow) is out of work.

 

And though I use construction as an example...lots of industries work the same way, leveraging credit against cash flow. The aircraft industry must...the Boeing unions picked a wonderful time to strike.

 

That's why illiquidity in the credit markets is a BIG deal, and why, although I'm a believer in free-markets and government non-intervention, I accept the bailout of the credit markets as a necessity, and I don't want a whole lot of bull sh-- issues tacked on, debated, and delaying it. This isn't just about Wall Street or the banks (if it were, I'd be saying "!@#$ 'em. Caveat !@#$ing emptor, bitches.") It's potentially a failure of the money supply.

 

 

Thanx... Awesome post!

[erynthered]

The article states that "bad auto loans" were responsible. Once they started having problems with their loans, GMAC pulled out last summer. As it further states, GM's sales are down some 2 million cars, and that the number of dealerships will decline. His problems were NOT caused by lack of credit. Could he have survived if GMAC stayed in? I highly doubt it.

 

If credit wasnt so tight he could of got floored at a higher rate. Thats how it works.

Here's some related articles. More dealerships are going to fail and its related to the credit crunch.

 

http://www.ft.com/cms/s/0/d6564d02-8038-11...?nclick_check=1

 

 

http://www.ft.com/cms/s/0/83bfe68c-8a8f-11...00779fd18c.html

[ExiledInIllinois]

Of course I know thats why he did it. I wanted to see what he would say when I asked him to justify it.

 

And did I meet your expectations? If so please take a few seconds to call and take this brief survey:

 

1-800-328-7448

 

 

Almost forgot:

 

That is 1-800-EAT-SH*T

 

[DC Tom]

And did I meet your expectations? If so please take a few seconds to call and take this brief survey:

 

1-800-328-7448

 

 

Almost forgot:

 

That is 1-800-EAT-SH*T

 

 

 

Did I say "Republicans"? I meant "everybody".

[TPS]

If credit wasnt so tight he could of got floored at a higher rate. Thats how it works.

Here's some related articles. More dealerships are going to fail and its related to the credit crunch.

 

http://www.ft.com/cms/s/0/d6564d02-8038-11...?nclick_check=1

 

 

http://www.ft.com/cms/s/0/83bfe68c-8a8f-11...00779fd18c.html

There's no doubt that credit is tight and it is trickling down to main street, that is how credit crunches work. So I'm not denying that reality. However, your original article/example seems to be more a consequence of GM's reliance on truck and SUV sales back-firing in a slowing economy with $4/gal gas. As that article states, many dealers will go out of business since they don't sell what consumers now demand. I simply disagree with your assesment on that ONE.

 

The 'Big Three" are paying the consequences of relying on sales of gas-guzzlers when $4/gal gas prices hit in the middle of a credit crunch. So you get a double whammy--falling sales and inability to raise funds.

[Chilly]

Now why would you want to see that, when you know that

1) his answer would be wrong,

2) his answer would make no sense, and

3) I'm the only one here that speaks fluent EII anyway.

 

Because its fun to see what comes out.

[DC Tom]

Because its fun to see what comes out.

 

You look in the toilet before you flush, too?

[GG]

There's no doubt that credit is tight and it is trickling down to main street, that is how credit crunches work. So I'm not denying that reality. However, your original article/example seems to be more a consequence of GM's reliance on truck and SUV sales back-firing in a slowing economy with $4/gal gas. As that article states, many dealers will go out of business since they don't sell what consumers now demand. I simply disagree with your assesment on that ONE.

 

The 'Big Three" are paying the consequences of relying on sales of gas-guzzlers when $4/gal gas prices hit in the middle of a credit crunch. So you get a double whammy--falling sales and inability to raise funds.

 

But that's the point. The economy is full of companies that are retrenching and cutting off credit means a certain death, instead of an opportunity to turn around.

[Chilly]

You look in the toilet before you flush, too?

 

Indeed.

[ExiledInIllinois]

Because its fun to see what comes out.

 

See... You are catching on! Would you rather deal with the other drones here? Let's make it fun!

[TPS]

But that's the point. The economy is full of companies that are retrenching and cutting off credit means a certain death, instead of an opportunity to turn around.

Of course, that is how the system has always worked--the weak are weeded out in downturns. I know this is no typical downturn (it's the "perfect storm" of downturns), and I have not argued against this latest phase of bailing out Wall Street; I just don't think it is the be all end all either--I do believe you need to do something to stop the downward spiral in real estate, otherwise those assets that aren't purchased and look good now, won't be later. As I said, each time the bandaid gets bigger. Do you think this will end it?