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That last may not apply nationwide but it's certainly the case here. - Peter. |
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I do know that people strip copper wire out of empty houses. |
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Santelli by comparison is a nobody, but he does give voice to the frustrations of middle-class Americans. That alone will earn him the scorn of the Left and the establishment media. They hate middle-class Americans. |
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http://www.cnbc.com/id/15837966/ |
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Right now, the bankers are sitting on our money, not loaning it to anyone because of one thing...
The current interest rates... They're too low... Here the government has given THEM (Loaned) money that they are suppose to loan out...but someone, somewhere didn't open up the door to the candy store and tell the bankers at what rate (or maybe they structured the rate) they can go up to... So, until someone, somewhere takes the stopper off the interest rates that the bankers can charge the idiots to borrow our money...and some other government entity enters the fray to guarantee those loans so the banks won't have to "pony up" out of their pockets 'cause the lendees might, again, default on the same loans once more... How long do we have to watch the same turd circle the bowl before someone gets it and takes the money back and says "Stop this F***ING MADNESS!!!" Obviously, "O" doesn't have a clue about this and neither does anyone else in DC...or they're trying to write it in somewhere where no one with an once of common sense will be able to catch it 'til it becomes law... Then we're officially screwed... |
Bankers don't make money on the interest rate, they make money on the spread. Every dollar loaned is tied back on their books to the money they themselves borrowed to make loans, say for example interest rates at the Fed were 4% on a given day, they know that if they loan out that money at 7.5%, they will get a profit of 3.5% on it for the next twenty years if everyone pays, usually in reality 2.8 to 3% after defaults, and it even gets sweeter if you can make the loan an ARM.
Since they are using your money to pay back the fed, they are raking off free money for the next thirty years essentially managing the paper work between you and the Fed. Now say along comes the Congress, which passes a law saying that a person has a right to re-negotiate his ARM, no matter that the underlying value of the real estate is in the crapper. In an up-real estate market, they would be falling all over themselves to do a re-fi, but in this market, well, it would take an Act of Congress to get them to do so. Now they got big problems. The value of the real estate vs. its original selling price makes the loan riskier. In addition, they may have originally borrowed the money themselves at 4%, and now they have to re-negotiate the loan to the current rate, and a fixed rate at that, of what is currently about 4%, meaning they will have to carry you for the next twenty or thirty years on the books at a 0% or less loss/gain. The solution? Remove the profit motive for a little while, nationalize the banks for a set period of time, allow people to purchase common stock in the nationalized banks, and spin it off to the stockholders when times become better, or, set up a "toxic bank" to specifically handle these mortgages. Or let the banks go broke. The reason banks are not lending money is because of those three alternatives, none has been chosen at this point. If they sit on their cash, they stay solvent. No one likes to loan money on uncertainty. If you want some good news, all of this makes it an excellent time to take a risk to perhaps make a fortune in the stock market. Once this central question is address, stocks will begin to rise again. I'm buying right now. GE at 9$ a share, that's one heck of a bargain. |
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And how are they going to renegotiate these loans? Those upside-down and sub-prime borrowers entered into binding contracts when they signed the papers and with the promise of spreading risk those mortgages have been sliced, diced, securitized and sold down the river. What about the CDSs that served as insurance on the default of those mortgages? Is the government going to renegotiate those as well or will they declare a new day in America and void all of the contracts? Good luck with GE at $9. Unless you've seen the books, I don't know how you can be sure that's a bargain. And the banks aren't lending, because they know what's out there hiding...mountains of BAD debt, leveraged to Doomsday and beyond. |
I hardly think Greenspan or Giethner have made themselves leaders of some "tea party", perhaps you can tell me what they have to do with the discussion at hand? My point is Santelli is just another fox looking to excuse the feathers hanging from his chin as he exhorts the chickens to join him.
Buying GE is like buying a divesified portfolio. I like their long term prospects. And the CDS's, what do you think you have been buying under Bush's TARP? What exactly do you think AIG is being bailed out for, writing too many motorcycle policies? |
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