| Re: Bailout puts the class war back in business with a vengeance; gamblers take advantage of speculating investment banks merged with commercial savings and deposits banks & the consequences of the defeat of the Glass-Steagall act. |
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Group: alt.philosophy · Group Profile
Author: Fred WeissFred Weiss Date: Sep 18, 2008 12:09
On Sep 18, 1:13Â am, Immortalist yahoo.com> wrote:
> ... to make it impossible to
> write down the debts of the four million homeowners that are expected
> to default this year, impossible to write down the debts of companies
> that have issued junk bonds, impossible for the country to get rid of
> this excess of debts that can’t be repaid.
I don't understand. Much of this debt has in fact been written down.
That's precisely why these firms I previously mentioned either went
under or are being bought for a fraction of their value - and
certainly substantially less than they were valued just a year ago.
> These are people who’ve gambled, derivative trades, billions of
> dollars of bets on which way interest rates will go, billions of
> dollars of bad loans beyond the ability of debtors to
> pay and the speaker asks why on earth would you want to bail out these
> creditors?
I agree but keep perspective. Some of the companies are being salvaged
but the equity in most of them was either completely wiped out, e.g.
Fannie and Freddie, Lehman, etc. or it's being sold for a small
fraction of their previous value.
There is no bonanza here - except perhaps for the better managed banks
and shrewd investors who are picking up great bargains.
> ...you
> would save these four million homeowners from defaulting and being
> kicked out of their houses. Now they’re going to be kicked out of the
> houses. The houses will be vacant....
You mean the creditors should be punished but not the debtors? Many of
these people should never have gotten mortgages in the first place and/
or they never should have paid the inflated prices they did. Isn't
that the whole point, the source of the current mortgage debacle?
Btw, the loss to these homeowners will not be that great. Very few of
them put anything down. They can walk away mostly intact financially,
altho' with a bad credit rating for a number of years. The loss is
primarily dumped on the creditors - and in fact that is exactly what
is happening.
But it is also my understanding that banks wherever they can are
trying to do work-outs with mortgagees behind in their payments.
You're right in one important respect. Foreclosed/vacant houses are a
considerable expense and burden to mortgagors and if they can
reasonably avoid it, they will. For the homeowner however it's a
dilemma when the house is worth far less than what they paid for it.
What would you do?
Fred Weiss
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