The coming financial crisis

[PoopyfaceMcGee]

I also sold a car for profit once after owning it for 8 months.  I can't remember the specifics, but because it was a lower end car I got a great deal on, I was able to "flip" it for a healthy percentage, although not real big bucks.  It is a cool feeling.  Congrats, FF.

The best part was that I had a handshake agreement and a personal check within 3 hours of posting on craigslist, and the car was gone with a cashier's check in hand only 3 hours after that.  I never had to leave my house to make the sale.  Easy money.

So, I guess the market thinks the bailout is happening now?

P.S.  My 401k was down 32% for the year as of this morning before market open.

[rjs246]

Personal accounts of financial transactions FTL.

[PoopyfaceMcGee]

How much is your monthly payment on the Prius in litres of semen?

[shorebird]

With the housing market going in the tank, I've been putting in applications all over the place. It's bad, specially on the Shore. People are scared to spend money and material prices have gone so high that a house 5 years ago cost almost twice as much today. Theres absolutely nothing out there. Guys who have been working steady for years have laid people off that have been working with them forever.

Going for an interview next week with a gubment organization not far from CF's own igy. I have an inside track with someone in the know. Man, I'd love to get a cushy government job to finish the rest of my working life with.

Paid holidays, sick leave, vacation time, overtime..........sounds too good to be true for someone like me whose been sweating it out on his own for the last 20 years.

[MadMarchHare]

Capitalism, like evolution, only works when the weak die and the strong survive.

Banks that over-exposed themselves to mortgages securities based on selling morons loans they could never repay need to become extinct.

[rjs246]

Capitalism, like evolution, only works when the weak die and the strong survive.

Except for the fact that this condition, left unchecked, leads directly to monopolies. So... Capitalism only works when the weak die and the strong survive, and regulations are put in place to ensure reasonable and ethical behavior in the name of level-playing-field competition.

[PoopyfaceMcGee]

New competition has to be encouraged.  The problem is that in banking, there are only two ways to make money: loans and fees.

God-fearing and government- and debt-hating host Dave Ramsey actually has a plan that makes some sense:

Common Sense Plan.

I. INSURANCE

A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.

B. In order for a company to accept the government-backed insurance, they must do two things:

   1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.
      a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.
      b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while working with the borrower—again limiting foreclosures and ruined lives.

   2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don't do their jobs.

C. This backstop will cost less than $50 billion—a small fraction of the current proposal.




II. MARK TO MARKET

A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.

B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.




III. CAPITAL GAINS TAX

A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.

B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down. This is not a time for envy, and it's not a time for politics. It's time for all of us, as Americans, to stand up, speak out, and fix this mess.

[rjs246]

True fiscal conservatives are the only ones with any hope of coming up with a reasonable solution to this mess that free-market, deregulation fiscal conservatives got us into.

[Cerevant]

I like #1 and #2, but #3 is bullshtein.  Eliminating capital gains does nothing but encourage the rich to pull their money out until things start to turn around.  His theory is pure trickle-down economics, which is a proven failure. 

Further, the capital gains tax is still in place, but that didn't stop the bargain hunters from pulling the Dow half way back to pre-crash levels.

[reese125]

#3 is not bullshtein if there is use with specific stipulations to control the fluctuation

get rid of it entirely..yes I agree with you...not the answer

[fansince61]

Capitalism, like evolution, only works when the weak die and the strong survive.

Banks that over-exposed themselves to mortgages securities based on selling morons loans they could never repay need to become extinct.

pretty sure that banks had to make a certain % of "sub-prime' loans to meet the Fed's (congress's) requirements. It was transfering the paper latter that brought most of the greedy down

[rjs246]

I just emailed my congressman.

Christ I'm a nerd.

[henchmanUK]

I earn almost twice the British national average wage and can't get a mortgage in London. Would be interested to hear an American's view on that

[rjs246]

nm

[SD_Eagle5]

Senate passes bailout bill, house coming around