Black monday coming up?

[billf]

Welcome to Black Monday today!   

Dow is screaming downhill - As I type this, its down over 500, around 9800.   

[Level42]

The worst thing about this is that now the crisis also hits Europe, the euro-dollar rate is going the WRONG way (for me).

[shardian]

The worst thing about this is that now the crisis also hits Europe, the euro-dollar rate is going the WRONG way (for me).

Woo Hoo! The Pascal board I need from France just keeps getting cheaper and cheaper. 

[ChadTower]

The worst thing about this is that now the crisis also hits Europe, the euro-dollar rate is going the WRONG way (for me).

Woo Hoo! The Pascal board I need from France just keeps getting cheaper and cheaper. 

Nah... the dollar is falling faster, so it still doesn't help.   

[SithMaster]

The worst thing about this is that now the crisis also hits Europe, the euro-dollar rate is going the WRONG way (for me).

Woo Hoo! The Pascal board I need from France just keeps getting cheaper and cheaper. 

Nah... the dollar is falling faster, so it still doesn't help.   

Your wrong Chad, all things fall at the same rate.

[ChadTower]

Your wrong Chad, all things fall at the same rate.

This is the New World Order... American stupidity seems to have a gravity all its own these days.

[shardian]

Price shipped has fallen $10 since Pascal quoted me a few weeks back.

[ChadTower]

That's only because Europe started its crash later than we did.  It's not going to stay that way.  Things are going to get far far worse in the near future.

[Level42]

I fear Chad is right.

The thought that keeps going through my mind is that what Al-Qaida tried to make happen on 9-11 failed, but now a number of unbelievably greedy people succeeded: a collapse of the Western world financial system.

[ChadTower]

I fear Chad is right.

The thought that keeps going through my mind is that what Al-Qaida tried to make happen on 9-11 failed, but now a number of unbelievably greedy people succeeded: a collapse of the Western world financial system.

Greedy people at all levels.  It takes two parties to create a bad loan.

[patrickl]

I fear Chad is right.

The thought that keeps going through my mind is that what Al-Qaida tried to make happen on 9-11 failed, but now a number of unbelievably greedy people succeeded: a collapse of the Western world financial system.

9/11 had nothing to do with the stock crash or economic problems. That had set in months before that already. With dot com bubble burst.

[shmokes]

Greedy people at all levels.  It takes two parties to create a bad loan.

It takes two parties for someone to be raped too. 

What you are saying is intuitively appealing, but it's utter ---That which is odiferous and causeth plants to grow---.  By and large the people taking out loans were dumb and deluded.  They convinced themselves of what they wanted to be true.  The guy on the other side of the table was not for one second deluded.  He knew exactly what was going on the whole time.  One of those two deserves more blame than the other.

[shardian]

So your saying the person too stupid to take personal responsibility for their actions deserves a free pass? Sorry, but that is the ---That which is odiferous and causeth plants to grow---.

[ChadTower]

So your saying the person too stupid to take personal responsibility for their actions deserves a free pass? Sorry, but that is the ---That which is odiferous and causeth plants to grow---.

troof.

People who don't understand a contract should not enter it.  The truth around here is that the housing crash really hasn't hit MA all that badly compared to other places.  Why?  Because the people here getting screwed aren't getting screwed because they were naive.  They are getting screwed because they felt entitled to a McMansion they couldn't even come close to affording with a fixed 30 year.  There actually aren't all that many 1000sqft starter houses getting foreclosed on here.  It's all the $500,000 2600sqft houses that look just like the 15 others on that street.

[Level42]

I fear Chad is right.

The thought that keeps going through my mind is that what Al-Qaida tried to make happen on 9-11 failed, but now a number of unbelievably greedy people succeeded: a collapse of the Western world financial system.

9/11 had nothing to do with the stock crash or economic problems. That had set in months before that already. With dot com bubble burst.

I didn't say that, I said that they TRIED to reach that goal and did NOT succeed.

Screwing the guy on the other side of the table is one thing, but bank people should have known that it would back-fire on them. But those who did this are out for the quick-buck, not long-term profits.

This makes them the bad guys in this story. Yes, people who get mortgages 10 times their year-salary are insane. But being insane is not a crime, what the bank guys dis WAS a crime IMHO.

[ChadTower]

Screwing the guy on the other side of the table is one thing, but bank people should have known that it would back-fire on them. But those who did this are out for the quick-buck, not long-term profits.

Yet the guy at the table made his money.  He wrote up a loan, signed it, received his processing fees.  Then his boss packaged it up with 150 other loans and sold it for a profit.  Then that package got packaged with 1500 other loans and sold to someone bigger.  Then that package got packaged with 15000 others and sold to someone bigger.  This is why the biggest fish are the ones that are dying and not the middle or small fish.

There is still some accountability for the person who bought a house with a loan they did not sufficiently comprehend.  Victim isn't the right word here - victimization usually implies lack of consent or outright deception.  There just wasn't enough of either in most cases.  All parties are at fault.  I will never be convinced that someone making $3000/month had trouble understanding that a $2200 mortgage payment was a bad idea.  They took gambles that certain things would happen and it failed.

[SavannahLion]

There is still some accountability for the person who bought a house with a loan they did not sufficiently comprehend.  Victim isn't the right word here - victimization usually implies lack of consent or outright deception.  There just wasn't enough of either in most cases.  All parties are at fault.  I will never be convinced that someone making $3000/month had trouble understanding that a $2200 mortgage payment was a bad idea.  They took gambles that certain things would happen and it failed.

To my chagrin, there are a suprisingly large number of people I've encountered earning at least twice what I earn with a third of the brain power. It's rarely ever what you know, it's who you blow, that puts morons into high paying positions with no understanding how to manage that disposable income.

So when you take a person(s) with such income, combine it with a society currently built upon instant gratification and educated with ever lowering standards (it's not their damnit!!), you're bound to get someone falling off that bad loan bandwagon.

[ChadTower]

That eliminates their personal accountability how, exactly...?

I work with some people so stupid I suspected at one point one of them is tommy.  Doesn't mean they aren't responsible for their decisions.

[shmokes]

People who don't understand a contract should not enter it. 

You know who else shouldn't have been entering those contracts?  The people who do understand them.  Knowledge is not irrelevant.  It is the difference between manslaughter and murder.  Between negligence and battery.  Which brings me nicely to . . .

So your saying the person too stupid to take personal responsibility for their actions deserves a free pass? Sorry, but that is the ---smurf-poop---.

There's just no way that you could have interpreted my post to mean that after a fair reading.  You either misread my post or decided to respond with a straw man.    Manslaughter carries serious penalties.  But the murderer gets slapped harder.

[shardian]

I re-read your post, and see your point.

Rape is not an appropriate word though. Let's go with "unexpected rough sex". Much more appropriate since one person knows what's going down, and the other also knows what's going down...but not in the way they expect it to. 

[ChadTower]

You know who else shouldn't have been entering those contracts?  The people who do understand them.  Knowledge is not irrelevant.  It is the difference between manslaughter and murder.  Between negligence and battery.  Which brings me nicely to . . .

I have never excused the people who did understand them.  In fact I specifically included them in my scope if you go back and read my posts.  Note I did mention the people who bought McMansions they couldn't afford.  In general those people did understand and they thought it was acceptable risk.  The people who didn't get it, usually, were the lower income folks stretching to buy a house at all.  That is the story around here, anyway.  Every low income foreclosure story you read here begins with "They didn't tell me it was risky" and ends with "another example of a victim of predatory lending."

What I'm saying is that the borrowers are just as accountable as the lenders.  I'm tired of people blaming only the lender end of this dual sided equation.  Your example, BTW, is about liability, not accountability.  We're not talking about who the law says is liable.  We're talking about who is literally accountable and we both know they don't overlap in this situation.

[shmokes]

I disagree.  I see no reason why a person who is no more accountable should be more liable.  In my mind accountability means explain yourself and accept punishment.  The accept punishment part doesn't differ from liability.  If you want to strain at gnats I suppose you might argue that there's less of an explain yourself component in liability, but that doesn't change anything here.  The person who does something evil has more explaining to do than the person who does something stupid.  The person who does something calculated to hurt others has more explaining to do than the person who does something that only hurts himself.

The borrowers are not just as accountable as the lenders.  They both are accountable.  They both are to blame.  But the lenders are a damned sight more of each.

[ChadTower]

I disagree.  I see no reason why a person who is no more accountable should be more liable.  In my mind accountability means explain yourself and accept punishment.  The accept punishment part doesn't differ from liability.  If you want to strain at gnats I suppose you might argue that there's less of an explain yourself component in liability, but that doesn't change anything here.  The person who does something evil has more explaining to do than the person who does something stupid.  The person who does something calculated to hurt others has more explaining to do than the person who does something that only hurts himself.

The borrowers are not just as accountable as the lenders.  They both are accountable.  They both are to blame.  But the lenders are a damned sight more of each.

Liability is individual - accountability is not.  Stop thinking like an attorney.  Am I really liable for Joe Smith's bad mortgage?  Why, then, should I share the punishment?  Joe Smith, his mortgage holder, and all of the investment bankers who traded it are accountable for the garbage economy we now have to operate in.  I didn't take out an irresponsible mortgage and yet here I am smack in the middle of their punishment.

[patrickl]

Liability is individual - accountability is not.  Stop thinking like an attorney.  Am I really liable for Joe Smith's bad mortgage?  Why, then, should I share the punishment?  Joe Smith, his mortgage holder, and all of the investment bankers who traded it are accountable for the garbage economy we now have to operate in.  I didn't take out an irresponsible mortgage and yet here I am smack in the middle of their punishment.

Because if you don't share the "punishment" then the damage might be even greater.

Suppose your neigbour builds a house and it's not up to code. Even so bad that it might tip over and fall on yours. He can't afford to fix the house or tear it down in a safe way. You can either help him break it down or wait for it to tumble on your house.

[ChadTower]

Suppose your neigbour builds a house and it's not up to code. Even so bad that it might tip over and fall on yours. He can't afford to fix the house or tear it down in a safe way. You can either help him break it down or wait for it to tumble on your house.

That isn't any different.  Dude did a stupid thing and everyone pays for it.  I don't understand your point.  Is it that the innocent should share the punishment of those guilty of massive negligence? 

[shmokes]

Chad, you're not even making sense.  Are you really accountable for Joe Smith's mortgage?  You are exactly the same as "smack in the middle of their punishment" whether it's the lenders or borrowers being punished, whether they're punished equally or disproportionately, whether they're held accountable or liable.  Anyway, you're the one who brought up liability and keeps bringing it up.  I'm talking about accountability.  I'm talking about where the blame ought to rest.  I defined exactly what I mean by accountability in my previous post.  If what you mean by accountability is different than that, explain it to me so we can be on the same page.  

I can't even guess at what you mean by liability being individual while accountability is apparently not.  This conversation started out by my disagreeing with you about who was more to blame, lenders or debtors.  And you've been saying things like, "personal accountability," and, "responsible for their decisions."  

[ChadTower]

The difference is that I'm talking morality and you're talking law.  The two have little in common.

I am sharing in the punishment for Joe Smith's mortgage.  See that trillion dollars being tossed into the toilet by the feds?  Where do you think that came from?  It came from everyone - not only us but millions of people who haven't even been born yet.  Legally, until now, I was not liable for his problems.  Suddenly I am.  So are my kids and their kids.  Those ---uvulas--- are morally accountable for what they have done and no discussion amongst attorneys is going to change that.

I'm tired of paying for the negligence of others.  Hell I can't even plant bushes on the edge of my yard.  A couple weeks ago for the second time a drunk driver hopped the sidewalk and drove right through my bushes.  Didn't get caught this time either.  At least this time it wasn't a snowplow.

[shmokes]

Is it that the innocent should share the punishment of those guilty of massive negligence? 

I think his point is that you shouldn't cut off your nose to spite your face.  You should act in your own best interest, even if that means that someone else doesn't get what's coming to him.  I don't mean to start a debate over whether this bailout is in your best interest or not.  That's beside the point.

Also, he is definitely not saying that they should share the punishment, but rather that there are consequences that the innocent are stuck with whether they like it or not, so they should do whatever they can to minimize the consequences.  Obviously they aren't being punished.  They're just victims who need to do the best with what they've got.  Coming out unscathed, innocent or not, is simply not an option.  I don't know how you can get around that fact.

[shmokes]

The difference is that I'm talking morality and you're talking law.  The two have little in common.

I am sharing in the punishment for Joe Smith's mortgage. 

I'm not talking about the law.  You said it takes two to tango and I said ---fudgesicle--- that one of these groups is far more culpable than the other.  Hell, I even described it as one person doing something evil while the other did something stupid.  If that's not talking about morality, I don't know what is.  I brought up the difference between murder and manslaughter to illustrate the importance of knowledge, not to suggest that creditors or debtors are going to be prosecuted for murder or manslaughter.

Anyway, your characterization of laws being divorced from morals is absurd.  We didn't just randomly decide to make a bunch of arbitrary rules.  Knowledge is relevant to murder precisely because of its moral aspect.  If Jimmy's walking down the aisle and trips over my foot because he wasn't watching where he was going, I'm not the same as accountable as if I see him coming and deliberately stick my foot out to trip him.  Regardless of legal liability, in one case I have done something morally wrong, and in the other I have not.  Same result, but totally different accountability analysis and it hinges on knowledge -- accident vs. deliberately trying to hurt others.

I don't even know why we're talking about whether you deserve to be punished.  That has absolutely nothing to do with the accountability that either of us were talking about.  We were talking about who was more blameworthy between the lenders and the debtors.  But just to move things along why don't we just get it out of the way right now?  I agree with you 100% that you do not deserve to pay for either the lenders' or the debtors' bad behavior and the fact that you have to is atrocious. 

[ark_ader]

Wow Chad, look like you pressed Shmokes microswitch there.   

I think it time for a change, a global change.

I think a reset should work after all the panic is gone, and markets start to stabilize again.

I was born in Los Angeles, and would like to have a house there, but pay $90,000.00 for it instead of $300,000.00.  House prices, fuel,  food and arcade parts is getting more expensive.  Now we have to bail out the banks who made you feel small when you went for a loan.  Yeah sure.

Change is a good thing, even if it hurts.  Especially the banks. 

[SavannahLion]

I just had a conversation with an ex lender who bailed out of the industry a few years ago. The process by which a loan is done behind the scenes is eye popping to say the least. It explains a lot of the behavior some of our lenders were doing and pretty much shatters the commonly accepted concepts.

Based on that particular discussion, I don't believe that this whole business is as black and white as either shmokes or ChadTower makes it out to be.

One interesting aspect is how the lender (or the manager or whomever) will process the loan application. Upon review of the application the lender will note that the application has zero chance to qualify. Rather than kicking the application back with a, "so sorry." The lender will alter the application (without knowledge of the borrowers apparently) to guarantee the loan. This would explain why we (actually my not yet girlfriend. I was just along for the ride) would get amounts of 20% or more over what we were asking, or able to even afford. The lenders we were dealing with tweaking the numbers!

To be fair, he has told me stories where the borrowers would put pressure on the lenders to tweak those numbers as well.

For every borrower who is culpable, I'm sure there's a matching number who are not.

[patrickl]

Just came across some charts.



(chart from page 21 in this report)
So apparently wether the mortgage was ARM or Fixed isn't the biggest issue. It's more caused by lending money to bad creditors.

and then probably mostly in area's where house prices were going up a lot:

[HaRuMaN]

^^ your chart there only goes to Q1 2006.  Foreclosures have spiked since then.

[patrickl]

Well the chart shows more the difference between prime vs sub prime. I doubt a few months more would have made a difference there.

Actually I saw a newer chart too. It showed that recently (thus after the spike you mentioned) foreclosures were decreasing but reposessions were now increasing. I think you can find it on the site you get by clicking on the foreclosure map.

[patrickl]

NEW YORK - In a sign of the times, the National Debt Clock in New York City has run out of digits to record the growing figure. As a short-term fix, the digital dollar sign on the billboard-style clock near Times Square has been switched to a figure — the "1" in $10 trillion. It's marking the federal government's current debt at about $10.2 trillion.

NYC National Debt Clock runs out of digits

[patrickl]

Warren Buffet manages to increase his wealth by $8 billion during one month of stock turmoil   His total worth of $58 billion makes him the richest American (Gates down to $57 billion in second).



Forbes revised their list from the one based on August 29th stock price to the prices of October 1st.

[3dfxGHOST]

Really nothing new about paying for others mistakes or misfortune's . . Ive seen my insurance rise everytime the insurance company has to pay out large sums of money because of their own bad investments have lost them the money they should have had in reserve to pay their own debts and all the while the government demands we have insurance so we have no choice to be gouged and raped. . Look at anyone who lands in jail because of their mistakes and has to pay for it but really we pay and its as high as 30,000 a year per inmate, higher than the average wage where i live. Who gets that money? the corporations who make the things it takes to keep ppl locked up such as sheets, cloths, food, hosing. . So really if you live in the United States of America you should be used to this treatment . . Our government has been screewing us since the day they formed it, that's when being free ended. I don't feel sorry for younger ppl in this country, if your under 50 i think you should have seen the writing on the wall, but those older ppl who believed the crap the government was giving them and how they would be taken care of when they retired, those ppl i do feel sorry for.

Just a side note, if any of you live in a large town you might have seen this. On a government holiday(one only the government employees get off) look at the freeway, in San Diego California it looks to have about 10% normal traffic on it, ever wonder how in the hell we can pay for all those jobs lol, sooner or later this is going to have to all come falling down.

[shmokes]

Warren Buffet manages to increase his wealth by $8 billion during one month of stock turmoil   His total worth of $58 billion makes him the richest American (Gates down to $57 billion in second).

And guess where all that money goes when he dies?  To his kids?  Nope.  He doesn't believe in aristocracy.  He's a vociferous proponent of the estate tax.  His fortune has already been irrevocably earmarked for charities. 

[sel]

is money market still any good or is there any good "CD's" to buy/invest in at the moment?

I am in college and looking to save or invest in something... if anyone has any helpful tips even a good stock i could try and buy a share in let me know.....^^

[ChadTower]

Take more classes.  There isn't a better investment than a quality education.