Thanks, Daphne..I didn't notice that.

Did anyone notice Daphne's ghost flitting past?

Sound like he just told it like it is. Do you have a problem with facts ?

When did 'conservative' = Usurer ?

Noel: LOL. (She told me on another thread to turn comments on).

Don’t believe me?

Correct.

Think I’m just partisan?

Pretty much.

Maybe it would help to clarify why those statements mean he's not a conservative. Sounds like fiscal responsibility and patriotism, and I think if you were asked in a different context you'd claim those as conservative values.

Conservatives are anti-capitalist and anti-business? Nuh-uh!

This is poor stuff from McCain, no doubt. He's a keen advocate of the military and the current surge, the war in Afghanistan, etc. Well, where does he think the money for those troops & their equipment comes from?

However, Romney should have responded to point three by saying that he didn't cost jobs, he saved them. Turning around a company often entails laying off some employees in order to save the business and the rest of the jobs. Better that a company should go bankrupt?

As for lending to people who can't repay, well, okay fine. But, then let's not have complaining when poor people can't get mortgages. Yes, the banks and other financial institutions put together an intricate and suspect system of tools to enable lending to high risk borrowers, but let's also face the fact that the banks were responding to criticisms that they didn't lend to people who were poor, etc.

> the banks were responding to criticisms that they didn't lend to people who were poor, etc

You don't think they were actually looking to turn a buck by balancing usurous rates of interest against the higher debtor default rate ?

From Instapundit:

But I heard a typically sad-toned NPR story on subprimes tonight, and despite their best efforts to evoke the Joads it was a story of people who "used their houses like ATMs," taking out home equity loan after home equity loan when they started with a subprime mortgage, only to wind up owing far more than their houses were worth and unable to make the payments. Boo hoo. Shouldn't there be a price for being an idiot? And -- despite not being on Wall Street -- a greedy idiot? Why does McCain want to bail these people out? Why does he want to put Wall Street people in jail?

>did he say jail ? maybe he wants them to lose their dough, and not get bailed out.

He called people on the lending side of the housing market “greedy.”

Pretty obvious surely, or was the sub-prime debacle created by the wicked lefties rather than the greedy stupid bankers?

"I do hope the people on Wall Street listen to the people on Main Street." -famous lefty Ronald Reagan.

Good comments Neal/Orlando/Peter

Peter and Orlando: You are obviously not business men.:

Let me explain how free market lending/borrowing in the housing market works:

People borrow money from a lender who charges an interest rate. Borrowere effectively "buy money from a lender and the price of the money is called an interest rate. Because the borrower has years to pay back the loan there is risk involved.( The borrower might get sick, lose his/her job, decide not to pay etc.) So, the lender has to charge enough to cover this risk. But - because it is a free market - there are many lenders competing for the same loan.. So, the lender can't charge too much or the borrower will go elsewhere.

What we are seeing now is a situation where banks made poor decisions regarding the risk of many loans. They gambled that the price of homes would continue to go up, up up - and they are losing money because of this. And borrowers made poor decisions regarding borrowing - gambling on the same premise that the value of homes would rise forever - and they are losing their houses because of this.

It's called a "market correction" and those who took the risk, and made stupid decisions, both the borrowing and lending risk are the ones who should suck it up and take the loss.

Patty -out of curiosity since you've pegged our friends Peter and Orlando as obviously not business men, what is your profession?

I'm a housewife now but I have a blue chip education in business (after messing around in Comparative Lit.) and I had a career in business on the numbers side. That's about all I feel comfortable saying over the internet.

And you, Mahons? Do you work in law? Or journalism?

patty the banks never get involved in anything that would seriously jepordise their system. banking is a closed loop and while some may fall off the wagon most will be quids in regardless. sub prime was no accident and neither is the reduction in personal savings or the increase in personal debt.

Patty: Not to worry, ATW isn't some dating service (though I note the love that dare not speak its name comes through in many of Allan@Oslo's tributes to Al Gore).

I only ask as I was curious as to the basis of your authority in the business world.

I work as a lawyer until my lottery ticket comes in.

Daisycutter: Are you in academia?

You speak such rubbish about business.

Patty -but the poor risk was sold off as fair to good risk, resulting in problems across the board for all of us.

You can tell someone is losing an argument when they have to resort to distorting someones blog name in their responses.

But at least Patty you haven't adopted the stupid name Troll used to use for daytripper.

>So, the lender has to charge enough to cover this risk.

Thanks for the education. Actually the loan is secured against the property, and is almost risk-free. What the interest is for, is to give the lender a return similar to what the lender would get investing in other risk-free ventures, like government bonds.

This is why mortage interest is much less than unsecured loan interest, not much above the bond rate (surprise !).

For 'sub-prime' obviously they put the rate up, mostly because these people can't get the loan elsewhere (ie. it's a shark's market). The loan will still be secured on the property so almost risk-free.

And we haven't touched on the securitization of the US mortage market - which passes any risk onto securities holders (and away from the banks)

But thanks for the lesson, Housewife ;)

Patty,

"Daisycutter"

Looks like he touched a nerve...

"They gambled that the price of homes would continue to go up, up up - and they are losing money because of this. "

"You speak such rubbish about business."

It's always when you're at your most supercilious that you project the most. The irony is always priceless.

(though I note the love that dare not speak its name comes through in many of Allan@Oslo's tributes to Al Gore).

Thursday, January 31, 2008 at 07:37PM | mahons

What?

Mahons: "the poor risk was sold off as fair to good risk,"

You're putting all sorts of value judgement into risk. Stop.

There is only high risk and low risk. High risk might be "good" risk for someone who can afford it. (and who therefore stands to make large profits) Or, high risk might be "poor" for someone who can't absorb any loss.

For example, an individual in their 20s should distribute their retirement savings over a portfolio which INCLUDES higer risk investments than an individual in their 60s. They stand to gain much more than they stand to lose and because of their age the losses will be offset over time.

Orlando: "the loan is secured against the property, and is almost risk-free."

This is nonsense.

Banks aren't in the property business. THey don't loan money to take over properties. THey lose on their deals when they have to foreclose.

Why do you think mortgage lenders are having problems right now..due to their tanking loan portfolios???? According to you, banks should be sitting pretty foreclosing on all of these properties, absorbing all of these "risk free" loans.

Frank: Glad to amuse you. You've got to admit, "daisycutter" was clever. And, yes, "daytripper" does get to me. He reminds me of the linquist, Chomsky, and he gets to me in the same way.

And we haven't touched on the securitization of the US mortage market - which passes any risk onto securities holders (and away from the banks)

indeed, i was going to touch on thjat myself. you know things have gone mad when companies can extract further liquidity by selling their bundled debt onto others. interestingly on that front a couple in the states won their forclosure case in court because the original lender couldnt locate the original agreement in the tangled web of securitization.

(hopefully on-topic-ish), I am disgusted at the news this week that our UK government is now putting plans in place to SECRETLY bail out any more banks that run out of cashflow. What the hell right do this shower have to use our taxes to prop up failing businesses, without even telling us!

He reminds me of the linquist, Chomsky, and he gets to me in the same way.

lol,ill ponder that on the way to my folks house. cheers.

Tom: Exactly. And what arrogance of those in government to pretend that they can run business better than those in business.

Businesses should stand or fall on their own merits without government bailouts.

Allan -just a jest based on your lack of fondness for Al Gore.

Patty: That Comparative Lit you took, was that See Spot Run as compared to The Little Engine That Could?

Seriously, you are all over the shop.

Mahons:"All over the shop?"

I guess you don't understand how investment risk can be neither "good" nor "bad" but has to be evaluated in context?

What are they teaching in school these days??

Patty, they can't even run the public sector, never mind businesses!

Mahons: I'll explain to you in simple terms:

Both the banks and the borrowers GAMBLED that the housing market bubble would never burst.

Why should the government step in and bail people out for gambling against the historical odds?

>This is nonsense.

Hey, maybe on your planet they don't secure then on the property.

> According to you, banks should be sitting pretty foreclosing on all of these properties,

Yes, this is true. Why do you think they require to hold the deeds and fire-sale them after they forclose ? It's because they get the money back straight away. Doesn't matter if they sell it for 1/2 price, that's the borrower's loss .

Any anyway as we know, most of the banks dump the loan on the securities market. So they merely provide an interface between the borrower and the bond markets. But unlike a bond dealer, they aren't content to take a commission, they take 25 years worth of interest as well.

Patty: WHere did I say the government should bail anyone out.

Having said that, though, I do think there can be case made for a degree of state regulation in some areas. I don't think profiteering is wrong in itself, but consumers should have protection against untempered and extortionate greed, at least where basic essential commodities are concerned.
Say for example that Tescos took 100% control of the entire food production, distribution and retail markets in the country, so that all our food had to be bought there, and then they decided to raise the cost of all groceries by 1000% - that would be completely wrong, and I'd support regulations to protect people against that sort of thing.
On the other hand, this principle also applies to the state. At the moment, garages are charging us about 38p per litre for petrol, and the government is charging us an extra 65p per litre on top of that. Same scenario, in reverse!

Tom: I agree that there should be regulation against monopoly. In the US, at least, there is.

UK government is now putting plans in place to SECRETLY bail out any more banks that run out of cashflow.

in reality tom this is a demonstration of where the power really lies in modern politics. contrary to what most people would assume, central banks are far from public institutions. so what we are seeing is banking excess from top to bottom and then when the wheels come off the wagon the tax payer is asked to take up the burden. so not only do they absorb most real value through interest, but when they make a hash out of that goldmine they force us to shell out again.
put even more simply, we are edging towards recession yet can anyone claim its lack of effort that has put us in this position. nope, what we are witnissing again is the collective fruits of the majority being corralled by people who provide nothing to any nation. actual free market economics do not need this type of speculation and manipulation, which can only thrive because most people dont understand how it all truely functions. i include myself in the latter group.

will it change? no, it will adapt, as it always does. Why? because the city of london and wall st rule, not washington and westminster.