Home > Current Events, Food for Thought > Robbing Marvin to Pay Horace

Robbing Marvin to Pay Horace

October 6th, 2009

pickpocket~s600x600 The truth is I don’t know any Marvin or Horace. I just used their names because robbing Peter to pay Paul is so commonplace it doesn’t attract any attention any more.

But I’m thoroughly confused at this point. Perhaps someone out there can help me out.

Didn’t we suffer the economic Tsunami we did in large measure because the government (meaning “those folks we sent to Washington because they’d make the tough decisions for us that we wouldn’t”)—in the interest of giving the less fortunate a break—put pressure on the lending institutions to lend money to those folks who couldn’t afford homes that weren’t worth what they were borrowing on them and were obligating themselves to make payments they could barely afford even before the rates they accepted were adjusted to make them totally unaffordable? Or did I miss something? [Yes, I know it’s a run-on sentence! I did it for effect.]

And, in the interest of turning this country back around economically, are we not putting pressure on the lending institutions to do it again—only with us taxpayers helping those lenders recover much of the money they lose by swallowing the upside-down collateral?

I just read in the newspaper where our erstwhile Fed Chairman was lamenting the fact that the problems are far from over. If I read it right, it was because there has been an alarming increase in the number of failures and foreclosures by those who had been able to work out a deal with their banks to amend their loans but who couldn’t make the payments on the revised mortgages. Duh!

If they couldn’t afford it to begin with, and if the lenders aren’t holding a higher standard to those to whom they lend than they did before, aren’t we just postponing the inevitable and increasing the size of the impact?

If you can’t afford to own a home, then maybe you should rent one from someone who can! My bad for being heartless?

Current Events, Food for Thought , , , ,

  1. Gary Simms
    October 6th, 2009 at 10:51 | #1

    The Ascent of Money/PBS:

    http://www.pbs.org/wnet/ascentofmoney/featured/watch-the-two-hour-the-ascent-of-money/24/

    House of Cards/CNBC:

    http://www.cnbc.com/id/15840232?video=1145392808&play=1

    It seems the government forcing banks to make house loans caused an unpresidented increase in home values and then an entrepreneur issued second mortages on this artificial increase in home value.

    He further secured these loans by purchasing bond default insurance, in effect turning junk loans into AAA bonds until the insurer went under.

    Gary

  2. Lisa
    October 7th, 2009 at 22:36 | #2

    You are right about the lending institutions repeating the problem. Shame on them! Additionally what contributed largely to the collapse was the greed of Wall Street. They packaged mortgage-back securities and sold them without adequate analysis of the risk. When the underlying mortgages failed, the securities became worthless and thus the world wide collapse of economies. It was a chain reaction of government, lenders and Wall Street acting together to bring about the collapse. Oh and lets not forget how the insurance companies and Wall Street invented Credit Swaps ie. insurance against failure of the mortgage-back securities. The joke was that there were no reserves behind the insurance. And so when the securities failed, no insurance payment was available. –just one person’s opinion

  3. October 10th, 2009 at 10:10 | #3

    Lisa,

    You’re absolutely right! That whole bowl of alphabet soup, beginning with the CDSs, were innovations to cloak bad investments in credible-sounding securites.

    Don’t let’s forget the culpability of the firms like Moody’s that rated those “new” securities so highly either.

  4. October 15th, 2009 at 16:31 | #4

    I dont know If I said it already but …Great site…keep up the good work. :) I read a lot of blogs on a daily basis and for the most part, people lack substance but, I just wanted to make a quick comment to say I’m glad I found your blog. Thanks, :)

    …..Frank Scurley

  5. October 16th, 2009 at 17:43 | #5

    Awesome blog!

    I thought about starting my own blog too but I’m just too lazy so, I guess Ill just have to keep checking yours out.
    LOL,

  1. No trackbacks yet.
Clicky Web Analytics