A must read

[Ronnie]

And, the scam comes in when half the population of this country is convinced to get in on the game and then a very predictable collapse occurs.  Someone made off with all that cash and you can be sure it wasn't you or me.

I was me. and others like me.  We sold our home in 2005 just before the peak.  Now, I'm ready to buy.  It doesn't take much insight to understand when a market is hot or cold.  Sell in the hot market and buy in the cold.  Not too complicated is it?

What I don't like is the idea of underwriting greed, not just on the part of Wall Street, theirs was minor compared to the many real estate speculators on main street who thought they could be professional house flippers...maybe even quit their jobs to drink the kool-aid peddled on the late night infomercials. 

I will be okay with the bail-out if Paulson indeed buys the paper cheap and then sells later at a higher price and the profit comes back to the taxpayers, even if indirectly.  Then I'm okay with it.  However, I'm not sure that's the way it will happen once the rubber and road meet.

[kievstar]

I think housing will continue to decline in future for houses over $1M.  Bi homebuilders are going to over build again.  Rich generation is retiring. Younger generation makes less money or has different interests in making money. But the housing market is hot in certain markets for high priced condos over $1M.  Just depends where the jobs are moving.

[Sculpto]

Buy low sell high.. its normal..

You know what.. I really have a lot of very harsh things I want to say about this topic.. but.. I am going to just hold it back.  I have written a lot and erased it all.  We are here to discuss Russian ladies and topics that are relevant to finding, marrying and staying married to them. 

This topic could turn toxic and is not really relevant anymore.

[Ronnie]

Sculpto,

It happens every time in a thread like this that someone eventually makes a comment like yours. Remember that each thread falls under a category and the topic is set by the OP.  If felt the need to make "toxic" comments on what is really a benign subject then I would probably ignore those and move on to others.

[Ronnie]

May I also add concerning the current perceived financial crisis that there is a very fundamental explanation.  There is a segment of every society, including American, that wants to give the Marxist theories a try.  When we hear them tell us that American needs a fundamental change in our economic system as I have heard one presidential candidate say, what do you think that "fundamental change" is?  What is the fundamental alternative to capitalism and free enterprise?

I agree with those who assess the current circus in Washington as an effort to instill fear and even economic disaster, or at least the perception of one. 

Karl Marx believed that the workers would eventually become so downtrodden and desparate that they would revolt.  It didn't happen because the workers became better off during the industrial revolution. 

Lenin saw this and realized Communism could not come about in the way Marx envisioned.  He saw that revolution must be done by professionals and so it was.

The socialists in the American society realize a professional, violent revolution is out of the question.  They are returning then to the Marxist notion that if the workers are so desparate and frightened they will favor a fundamental change away from capitalism and toward the alternative of Socialism.

Last week the Senate Leader, Harry Reid made a strange announcement.  He said that during a committee meeting that it was revealed that a major insurance company was close to bankruptcy.  He said the name of the company was household name in America.  The next day the stock values of Metlife, Hartford and others plummeted.  When pressed for the name of the company to which he was referring, he admitted there was not a specific company, essentially admitting he concocted the statement.

This same Senate Leader, announced that the war is Iraq was lost.  Is he so fundamentally ignorant or is the another purpose to his statements?  Consider the comments of Jeremiah Wright to his congregation.  Is he so crazy or is there another purpose?

I have been in sales almost all my life, mostly trying to get a prospect to change their status quo over to me.  I learned you can't get people to change if they are happy.   If you want to sell someone then, you must first help them to be unhappy with the present situation.  But what do you do if the present situation is not so bad and peoples' lives are good? 

Perhaps this will help explain why those in power, who want even more power over people have an incentive to try to inject fear, discontent and economic uncertainty into the lives of the masses.

[oldernotwiser]

May I also add concerning the current perceived financial crisis that there is a very fundamental explanation.  There is a segment of every society, including American, that wants to give the Marxist theories a try.  When we hear them tell us that American needs a fundamental change in our economic system as I have heard one presidential candidate say, what do you think that "fundamental change" is?  What is the fundamental alternative to capitalism and free enterprise?

I do not think that that is what they are saying, I think that most believe in the fundamentals of capitalism.  I think the idea is that even capitalism needs some oversight.  This is what I believe they are talking about when they say fundamental change (among other things that don't necessarily deal directly with the economy). I think we learned a long time ago that unchecked capitalism could be dangerous, can lead to unreasonable inequities in the distribution of goods and services.  As an example of unchecked capitalism, if I had a monopoly on a product, I could charge what I wished, even if it was a basic need.

[Sculpto]

I like how the connotation of socialism somehow gets mixed up with the image of totalitarianism. 

By definition a society, if it is organized, is in fact a social community.  People agree to associate with each other which makes things social.  Social society can have many different forms of economic distribution and commerce that range from a planned economy such as the former USSR, or a deregulated free for all economy such as we have just experienced in the USA, or is currently highly operational in supposedly communist China where we can observe the complete lack of regulation, with profit as the only motive, we can witness the complete breakdown of the social and community contract, which has resulted in powdered milk killing babies.  Social societies have laws and rules that are designed to protect the society from anti-social elements like powdered milk producers and greedy bankers and real estate speculators.

I find that anti-social people tend to have the strongest negative reaction to the concept of social society.  There is a difference between being an outcast and being a rebel or even a revolutionary.  Civilization and culture depend on social society for their existence.  Without civilization and culture, society can not exist. 

Though I am a rebel, an activist, and on some rare occasions a tiny bit visionary, I have always rebelled with the idea that society, culture and civilization can be improved and made better for ALL the members of the society.  Changing the dialogue of society and the method by which the conclusions of dialogue are made part of the civilization is something that is desperately required at this turning point in the history of the society most of us live in. 

The difference between people who are part of society and the despots who prefer totalitarian control is very simple.  People who live in the community of civilized society understand that we all have a responsibility to do our part for the greater good, whereas, those who believe in totalitarian control only understand that what must be done is only a benefit for themselves seflishly excluding the others and seeing others only as units of production and threats to be contained, controlled or killed.

I am in no way an apologist for Wall Street.  However, given the de-regulated system the bankers functioned under what has happened was normal and to be expected.  The only reason it has come as a shock to most of us is simply because we do not participate in the shifting around of paper because most of us are actually engaged in doing something productive with our lives instead of maintaining a parasitical existence at the expense of those with less access.  I categorically hate what the government has done in reaction, (dumping 700 borrowed billions) however, given the simple fact that we consider ourselves a civilized social community the actions this week of the congress and President were in fact the correct decision because they have protected our cultured and civil and social community.

So, I proudly state that I am civilized, socialized and communalized and I stand firmly opposed to those who would subject us to a system of personality cult, or any other form of totalitarianism. 

[Erwin]

Go to http://www.energybulletin.net/node/23259 and it will make you think. I would like to know from any Russians if what he said is true and most Americans will agree with me 100% that what he says about America is true.  If the US collapses, the Russian one will look like nothing even happened.

I am assuming every Russian here lived through at least a part of the collapse, I am curious what it was like. I try to research it and it only talks about the macro not the people, except for the shortages and a few riots.

I remember reading this article in December 2006.  I specifically remember reading this particular Orlov's statement: "From what I've seen and read, it seems that there is a fair chance that the U.S. economy will collapse sometime within the foreseeable future. It also would seem that we won't be particularly well-prepared for it. As things stand, the U.S. economy is poised to perform something like a disappearing act...."  And, I remember wondering whether Orlov's foresight on the U.S. economy would ever come true.

Look where the U.S. economy is now and what the Senate and the House just did; they have just passed the law mandating the use of up to US$700 billion of US tax payers money to bailout wallstreet and those who took big risks and lost ...Welcome the United Socialistic States of America and Salute to Comrade Paulson!!!!!!!

[Ronnie]

Look..  The capitalistic system is not the villain, though there are certainly people with a strong motivation to make it out to be.  The so-called "change we need" has been specifically stated to be a change in our economic system...a fundamental change.  That can only be interpreted, in context of other actions and statements by those who have repeated this motto, as being a change away from capitalism and into the tenets of communism.

Sculpto, Socialism gets mixed with totalitarianism because that has been the past and the past is prologue as they say.  The Nazis were socialists, the Leninist/Marxist/Stalinists were socialists.  Socialistic Utopia has been proven to be the lure used by power hungry elitists.  And remember, elitist are not the rich - some are not.  Elitists believe they're world view is superior and therefore should be the only one that matters. 

The Communist party, whether in the USSR, China, Cuba, Vietnam or N. Korea fancy themselves as the elite.  Their healthcare, homes, jobs and overall living conditions are superior to the rest because they deserve it.  Look at the elitists here in the states, ridiculing religion, persecuting scientist who don't go along with global warming, making every effort to label their idealogical opponents as dumb, uneducated and backwards.  Look at the attacks on Sarah Palin and the tremendous efforts being made to portray her as not qualified while ignoring the lack of qualification of those who agree with them idealogically.

I remember Hillary Clinton once got the label, "smartest woman in the world" until she revealed in her own biography that she failed the DC bar exam.  Sarah Palin is pilloried by the elitists by mispronouncing the name of General McKierney as McClelland, while ignoring Biden's reference to Bosnians as "Bosniacs".

This struggle going on inside America, between one side that wants to reform certain problems that have cropped up and the other side who wants to use those problems as an excuse to throw out the entire economic and political system that has performed in away that has proven to be far superior to all others and replace it with a system that has failed the people of every country it has been tried in while serving only the political elites who set it up.

America has not resisted Communism for these past 90 years just to have overtake us from within under the guise of community organizing or economic fairness.

Banks did not make bad loans on the basis of greed.  Losing money is not the stuff greed is made of.  They made the loans because congress mandated they do so, in the interest of helping the underpriviledged.  This new wave of buyer, combined with the speculators, pushed prices up beyond sustainable levels.  Despite warnings by many conservatives the neo-communists in our Congress insisted that all was well and accused the whistle blowers of incompetence.

Fannie Mae chairman Franklin Raines, the darling of the neo-communist faction in Congress, cooked the books to earn $90 million bonuses over 4 years for himself and insisted that mortgages were riskless investments.  Now Bush, Cheney and Paulson, neo-communists from the right have pick up the cue and have taken measures to drive down the value of every American's paycheck and erode our buying power further.

It's time for change all right, that change must start by a thorough house cleaning in congress, throwing out every congressman and senator who voted for this so-called rescue bill.  Unfortunately one of them will be put in the white house in January.  That's our greatest shame as a thinking nation.

[Erwin]

Look..  The capitalistic system is not the villain, though there are certainly people with a strong motivation to make it out to be.  The so-called "change we need" has been specifically stated to be a change in our economic system...a fundamental change.  That can only be interpreted, in context of other actions and statements by those who have repeated this motto, as being a change away from capitalism and into the tenets of communism.
......

Fannie Mae chairman Franklin Raines, the darling of the neo-communist faction in Congress, cooked the books to earn $90 million bonuses over 4 years for himself and insisted that mortgages were riskless investments.  Now Bush, Cheney and Paulson, neo-communists from the right have pick up the cue and have taken measures to drive down the value of every American's paycheck and erode our buying power further.

It's time for change all right, that change must start by a thorough house cleaning in congress, throwing out every congressman and senator who voted for this so-called rescue bill.  Unfortunately one of them will be put in the white house in January.  That's our greatest shame as a thinking nation.

Didn't Teddy Theodore Roosevelt once say that unfettered capitalism leads to corruption?   

Didn't wallstreet call this "innovation" instead of "stupidity"? 

Treasury Secretary COMRADE Henry Paulson, at a meeting last month, had shocked congressional leaders into action by warning of pending economic collapse without immediate federal intervention.

I have just finished reviewing the so-called rescue bill that the Congress has recently passed. Unfortunately, I do not see any sweetner provisions attached to or included in this bill that would send any and all of these corrupt perpetrators to jail at the Guantanamo Bay detention camp as enemy combatants for economic terrorism. 

[Ronnie]

Erwin,

I agree with you on so many points and TR is a personal hero of mine.  Industry must be regulated but it must also be regulated in ways that protect consumers from abuse while keeping the door open to competition.  It was the corruption of monopolistic robber barons that aroused the ire of TR. 

Businesses must compete with their competitors not buy them out or merge.  There is no such thing as too many competitors, yet for the past many years our government has abandoned TR's views and succumbed to the enticements of lobbyists who tell them that bigger is better.  How many times have we heard the nonsense that the merger will benefit the consumer?

Incentives should be given to new start ups.  Barriers should be dropped and fees mitigated while a company is in start up mode.  Once established the enterprise should be watched by our regulators like a hawk and more should be expected in the way of oversight.

[Sculpto]

I would be LMFAO if the idea that somehow the congress, and a moronic president, being labeled neo-communists, wasn't so completely ridiculous, misinformed and frightening.

I spent three years living in Mexico under single party rule by a party that considered itself Marxist in its ideaology.  The conditions that existed in that country after 70 years of Marxism can in no way be connected to the actual reality of what is happening in our country at this time.  Nor can any concept of modern socialism as it exists in many parts of Western Europe with higher standards of living than ours be corresponded to the actual economic reality of this bailout.  What you are trying to call socialism are in fact just good business principles.  I refer to regulation as opposed to de-regulated markts and industries.

What happens in places where despotism exists is brutal and our constitution and system of checks and balances, no matter how much damage the current administration did to our civil rights, guarantees remedy and protection.  The economic system is not subject to the same considerations.

All you have to know is who de-regulated the banking system.  That is the beginning and end of the actions that have taken place.  Yes, the bankers are bad people, they took advantage, but, the law allowed them to do so.  You can not clamor for de-regulation and then cry foul when people did exactly what they were allowed to do.  That is kind of like hitting a baby for crying.. babies cry.. you can't stop them from crying so you just learn to adapt to their crying and move on.  

Yes, we need to change our economic system.  We need to make decent housing accessable to everyone,  (and since it has been proven over and over that public housing does not work we need to provide housing in a way that also includes basic human dignity) we need basic healthcare to be affordable to everyone, we need an energy policy that protects our independence, we need a system of commerce that creates and keeps jobs here rather than in China, we need a foreign policy that cooperates rather than dictates, we need an educational system that actually educates.  

(Not to knock the military, but, I believe the dumbing down of America was specifically designed to provide the volunteer army with a sufficient supply of cannon fodder of yong men mostly so desperate to escape the poverty they grew up in that they will march off to war without ever questioning the legality or rightousness of the war)  

If we continue to allow an unregulated market control all of these important issues our standard of living and way of life will cease to exist and our country will be divided into haves that live behind gated communities to keep them insulated from the misery that actually, and already exists in most of our inner cities.

The law says we must drive 65 mph on the freeway and if we did not have this law the number of people killed on the freeways would increase exponentially.  But, why is that we allow corporate and financial organizations to function without a speed limit?

I have one last example that I think is highly relevant.  Currently Ford, GM and Chrysler are all laying off thousands of workers because of slow sales.  Toyota on the other hand has stopped production at the Tundra factory but instead of laying off even one worker they are using this slow time to retrain, and innovate new and better ways to produce better trucks.  When things pick up again who do you think will have the advantage?  Toyota will haev a factory full of loyal and well trained workers who are being paid "scale" where the American makers will struggle to re-hire, if the former workers will even still live in Flint, and those same workers will be upset because they suffered during the slow time.  Game OVER!  Toyota wins, AGAIN!  I would say Toyota in their wisdom is the MOST socialist company in the auto business and they are kicking the rear ends of the American competition.  WHY?  Not only because of their socialist policies, but, because when times are tough it is not only the highest paid executives that get to keep their jobs but the whole company.  

I would work for Toyota but I would never work for an American auto maker because at the end of the day the most important thing is my security, my family, my food on the table and my roof over my head.  I will choose to provide my skills and talents to the employer who gives me the best deal.  I will choose not to support the highly paid executives that will toss me to the wind at the first sign of danger.

As the world moves into the future with more and more people on the planet and fewer and fewer resources to share we must find ways to minimize the disparity between those who have and those who do not.  If we do not, it is not only our own national way of life that is at risk but the entire ability of the planet to support itself.

Wild West cowboy politics and economic systems are no longer functional and must evolve.  

[Ronnie]

(Not to knock the military, but, I believe the dumbing down of America was specifically designed to provide the volunteer army with a sufficient supply of cannon fodder of yong men mostly so desperate to escape the poverty they grew up in that they will march off to war without ever questioning the legality or rightousness of the war) 

Ridiculous, misinformed, Frightening?
You take the words right out of my mouth.  Oh, I also like the one about Marxist Mexico.  That's a good one.  Oh, what goes on in Karl's name!

So the financial crisis is due to deregulation of banks?  Really?  Are you familiar with the Community Reinvestment Act of 1977?  Here's an excerpt.

The CRA requires that each insured depository institution's record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution's application for deposit facilities, including mergers and acquisitions

In 1977 the Senate and House of Representatives were both dominated by the Democrat party and there was a democrat running the executive branch. 

Banks do not make stupid lending decisions because they allowed to.   That's pure nonsense. They've always been allowed to be stupid.  But when the federal government mandates the making of stupid loan decisions, what can they do?

No, it has not been a wild west of uncontrolled capitalism that has brought on the foreclosure epidemic.  It was the micromanagement of banks by politicians and community groups that precipitated the present situation.

America needs to return to idea that Wal-Mart and Costco are not the backbone of America, nor are they the best place to shop.  In the days of the mom and pop hardware store customers were treated to the utmost in customer service and mom an pop worked the store, sponsored local little league and made a comfortable living for their families and the business was operated without a corporate jet and millions of dollars in stock options.  The myth that bigger is better needs to be busted.

Maybe you're right Sculpto.. Maybe I'm misinformed.  I hope I am.

[Ronnie]

Sculpto, I have just now reviewed your profile in which you list your home city as San Francisco and your country as Mexico Ocupado

As a native Californian and resident for most of my 60 years, I don't know whether to be offended or amused by your claim of Mexican sovereignty over my state. 

Obviously you have little or no knowledge on the subject of California's history.  Mexico has no legitimate claim on California.  This land was occupied for 16,000 years by migrants from Asia and Siberia, claimed by Spain and lightly settled by Spanish monks and ranchers for 300 years, taken from Spain by Mexico in the war for independence and held my Mexico for a mere 25 years declaring in the meanwhile that the Spanish settlers were "illegal immigrants" and ordering them expelled. 

Within days after the onset of the war between the United States and Mexico, the Mexican General Castro and Governor Pico fled from Los Angeles and abandoned California to the Americans and the Californios.  After a few skirmishes with the Americans, the Californios capitulated at Cahuenga.  Nearly all the Californios voluntarily became United States citizens after the signing in Texas of the Treaty of Guadalupe Hidalgo, the treaty in which Mexico formally relinquished all claims over California, though again, the Mexican government had abandoned California almost two years prior without a shot being fired.

If Spain wants to reassert a claim on California on the basis that Mexico had no right to sell it to the Americans since it was stolen from the Spanish king, the we can talk.  But California belongs to Mexico?  No.  Only ignorance of facts and heavy drinking of Mexican Kool-aid can explain that bizarre idea.

I'm disappointed really because I thought there might be an opportunity for intelligent dialogue with you but I guess I was putting the carro before the caballo - Adios muchacho!

 

[SANDRO43]

I'm not an economist, but with a few years' perspective I think that RR's deregulation drive had a number of unexpected (?) side effects, with the free-for-all economy that it engendered.

It gave us cheaper flights with low-cost airlines (except for Alitalia, which is being bailed out of its chronic semi-bankruptcy at the tax-payers' expense ), but also the mirage that any 'innovative' idea could make people rich overnight - remember the Internet start-up/Dot com bubble of some years ago ?

It took a smart investigative TV journalist to reveal months ago the fact that a number of medium-to-large Italian municipalities had heavily invested in financial derivatives not really knowing what they were in for, still convinced they were reaping easy profits while actually being in the red because they had not devoted some time or brains to look carefully into the contracts they were signing with some banks and other financial institutions.

I believe that the myth of heavily-promoted, unregulated creative finance has seduced too many 'greedy' suckers. A few years ago we had the case of the Argentine 'Tango' bonds, and other semi-junk Italian company bonds, that ruined many investors also due to the fact that banks that held them had sniffed the unsavoury smell of their issuers' impending default and were quickly unloading them to their customers . As we say, l'ultimo che prende il cerino acceso si brucia, referring to our old kids' game of passing a lighted match along, the loser being who eventually gets his fingers burnt as it gets shorter and shorter .   

Now the bills have finally come home. That the US citizenry should ultimately bear the burden of trillions of $ to bail out paper-economy innovators sounds like adding insult to injury, IMHO.

Just my 2 Liras (€ .001) .

[Ronnie]

My son and I were talking not long ago and he mentioned he would going to refinance his home and pull out $50k and put it in an investment.  I thought this highly unusual that he would do this as he has virtually no investment experience and only a little knowledge as can be gleaned from growing up in a home headed by a investment adviser.

When he told me about the "investment" I told him that when he was a small boy I became aware of the same scam and knew people had gone to jail for promoting the same thing.  I then googled a few key words and came up with court cases that were brought against people doing the same scam.

Lack of experience and understanding of financial instruments and other investments is the number one reason people and organizations lose money.  Those Italian municipalities that invested entrusted funds in a shaky scheme clearly didn't understand what they were doing as financial dilettantes and probably wanted to do good for their city's treasury.

I had a friend who joined his pastor in getting stung by a Nigerian 419 scam because they wanted the money to build a new church. 

Three months ago the chairman of the House Finance Committee (you'd think he's know something about investments) declared Fannie Mae to be a solid investment going forward.  Unfortunately he refuses to even admit he said such a thing.

Making mistakes with one's money is embarrassing.  Making mistakes with other peoples' money can be criminal.  That's where government needs to exert it's oversight and regulatory powers, not in telling banks or other enterprises how to run their business when they themselves have no clue what their doing.