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Thread: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by AdamT View Post
    FF were no more of a moral hazard than Bank of America, Countrywide, and all of the private lenders. FF's share of the mortgage market was shrinking rapidly at the height of the bubble.
    And how is a business transaction between two private companies a "moral hazard" ? If you walk into a store and pay too much for a product, what "moral hazard" do you blame ?

    The "moral hazard" is when government underwrites your risk, therefore enabling you to take risk that you would not take, and such that the taxpayer is now absorbing your risk. IE: You can make a "mistake" and its not your problem. There may have been poor decisions made by many people throughout the housing bubble, from the poor sap who paid too much for a house, to such entities as Merrill Lynch who ended up holding too many MBS's. Those were not "moral hazards". Just bad business decisions. Spare me the nonsense about FF losing some market share. The bubble was well entrenched then, and they then changed their own friggin rules to then recover their share of the BS.

    Nonsense. Did you forget about the dotcom bust? Large tax cuts almost always lead to asset bubbles, and this was no exception.
    BS. The "dot-com" bubble was due to the creation of the internet, and folks having computers.

    Well that was certainly a completely lame non-refutation.
    Yup.

    I was thinking specifically of the people and institutions that purchased mortgage backed securities. In many cases the underlying assets were hugely risky, but the credit rating agencies nonetheless gave them AAA ratings -- as safe as can be. Given the fact that the derivatives market was -- by law -- unregulated, that was all invstors had to go on. Without investors willing to by all that worthless MBS, the bubble would not have occurred.

    In addition, however, many unsophisticated home buyers were also misled as to the terms of their contracts. That was facilitated by the OCC which specifically preempted the states from enforcing their own consumer protection laws in the mortgage market.
    The oldest rule is "buyer beware". You, the buyer, are ultimately responsible. There were people saying it was gonna pop. There were investment firms that got out of MBS's in time. I have a good friend who bought a house for sale on his street in 2006 so as to rent it out for 3-4 years, then flip it, and "make a bundle". Well, he lost his shirt.

    Q: Whose fault is that ?
    A: His own.

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by iliveonramen View Post
    Via AIG the companies that had insurance on their CDO's are getting those payments. You make it seem as if very low interests loans of billions from the government is no big deal. It's a huge deal. Having access to a bottomless treasury during an economic downturn means that you don't have to worry about insolvency. Not worrying about insolvency means that you aren't compelled to worry about the risk of over leveraging.
    In at least two posts I have identified cheap money from the Fed as one of the three components of the "perfect storm" that enabled the bubble, so maybe you ought to read more before you say such uninformed things.

    Let's also talk about the profits made from that free money pumped into those companies. Go figure, when they have 10's of billions in capital pumped into their coffers they come back with billions in profit. They purchased competitors. Now instead of a super bank with 6% of GDP we have banks that have 14% of GDP. What ever problems we had before (moral hazard, too big to fail ect) are magnified.
    I am not arguing pro or con bailouts. If you ar going to consider bail outs, you have to include GM and Chrysler as well.

    Ok...that sounds rational. You worry about some government takeover while financial institutions run our political and economic system.
    Yes, and more government is not the solution. Big government brought us the housing mess. The bailouts. The debt. Liberalism favors big government.

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    In at least two posts I have identified cheap money from the Fed as one of the three components of the "perfect storm" that enabled the bubble, so maybe you ought to read more before you say such uninformed things.
    Cheap money is different than a bailout. It's a pretty large distinction.

    I am not arguing pro or con bailouts. If you ar going to consider bail outs, you have to include GM and Chrysler as well.
    The car company bailouts ended up with Shareholders losing their money and the management forced out. The Wall St bailouts ended up with their management making record level bounases and their sharholders retaining their stake in the company. Very different things and very different bailouts.
    Yes, and more government is not the solution. Big government brought us the housing mess. The bailouts. The debt. Liberalism favors big government.
    Yes yes, evil big government representing the people....good big corporate monstrosity, evil liberal good conservative.
    Last edited by iliveonramen; 01-12-12 at 06:13 PM.
    “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” John Maynard Keynes

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by Eighty Deuce View Post
    And how is a business transaction between two private companies a "moral hazard" ? If you walk into a store and pay too much for a product, what "moral hazard" do you blame ?

    The "moral hazard" is when government underwrites your risk, therefore enabling you to take risk that you would not take, and such that the taxpayer is now absorbing your risk. IE: You can make a "mistake" and its not your problem. There may have been poor decisions made by many people throughout the housing bubble, from the poor sap who paid too much for a house, to such entities as Merrill Lynch who ended up holding too many MBS's. Those were not "moral hazards". Just bad business decisions. Spare me the nonsense about FF losing some market share. The bubble was well entrenched then, and they then changed their own friggin rules to then recover their share of the BS.
    First of all, I guess I should remind you that F&F WERE PRIVATE COMPANIES -- not government agencies. They received no government financing or backing. Their securities were not guaranteed by the government. Of course they were quasi-governmental and because of that people ASSUMED that the government would bail them out if necessary. That's the moral hazard you're talking about, and it was exactly the same for giant banks like Citi and BOA, as people ASSUMED that they were too big to fail. As it turns out, people were absolutely right in both instances.

    And of course F&F didn't *just* lose some market share. They were getting their clocks cleaned by the private lenders who were sucking up all of the oxygen in the mortgage area.


    BS. The "dot-com" bubble was due to the creation of the internet, and folks having computers.
    WTF? It was a classic asset bubble.

    The oldest rule is "buyer beware". You, the buyer, are ultimately responsible. There were people saying it was gonna pop. There were investment firms that got out of MBS's in time. I have a good friend who bought a house for sale on his street in 2006 so as to rent it out for 3-4 years, then flip it, and "make a bundle". Well, he lost his shirt.

    Q: Whose fault is that ?
    A: His own.
    No, it wasn't entirely his fault. He had no reason to think that the entire mortgage/finance industry was a ticking time bomb. The expected risk was that the market might stall, or even lose some value, but even the most sophisticated investors didn't understand the true risks involved.
    Last edited by AdamT; 01-12-12 at 07:05 PM.

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by AdamT View Post
    First of all, I guess I should remind you that F&F WERE PRIVATE COMPANIES -- not government agencies. They received no government financing or backing. Their securities were not guaranteed by the government. Of course they were quasi-governmental and because of that people ASSUMED that the government would bail them out if necessary. That's the moral hazard you're talking about, and it was exactly the same for giant banks like Citi and BOA, as people ASSUMED that they were too big to fail. As it turns out, people were absolutely right in both instances. .........
    Oh my. We have some learning to dish out. GSE's. Government Sponsored Enterprises. Federal backing was implicit in their charters. Such was only changed "after" the bubble burst, however, we are still bailing them out. Virtually all the other "banks", such as Citi and BOA, have paid back their TARP loans. FF have paid back nothing, and will not pay back one penny. They are still being bailed out.

    They are most certainly "not the same".

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by Eighty Deuce View Post
    Oh my. We have some learning to dish out. GSE's. Government Sponsored Enterprises. Federal backing was implicit in their charters. Such was only changed "after" the bubble burst, however, we are still bailing them out. Virtually all the other "banks", such as Citi and BOA, have paid back their TARP loans. FF have paid back nothing, and will not pay back one penny. They are still being bailed out.

    They are most certainly "not the same".
    Indeed you do have some learning to do. The GSEs were privatized in 1968. Do you know what implicit means? It means not explicit, as in, not in the charters, as in, merely assumed.

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by AdamT View Post
    Indeed you do have some learning to do. The GSEs were privatized in 1968. Do you know what implicit means? It means not explicit, as in, not in the charters, as in, merely assumed.
    Then call your Congressperson !! We're still bailing them out !!

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by Eighty Deuce View Post
    Then call your Congressperson !! We're still bailing them out !!
    Yep, them and several hundred banks and GM and Chrysler and AIG and etc. etc.

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by AdamT View Post
    Yep, them and several hundred banks and GM and Chrysler and AIG and etc. etc.
    TARP was loans. Most of them now paid back. The money to FF is not a loan. And they got far more than any other. And they are going to get more.

    This is pathetic.

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    Re: U.S. Payrolls Gain More-Than-Expected 200,000; Jobless Rate Falls to 8.5%

    Quote Originally Posted by Eighty Deuce View Post
    TARP was loans. Most of them now paid back. The money to FF is not a loan. And they got far more than any other. And they are going to get more.
    TARP was not loans, TARP was asset purchases. Yes, most all have been paid back WITH dividends and warrants (net profit to the US taxpayer). FF and AIG remain the only major losses with FF receiving more funds from the federal government than all the other banks combined.
    "There is an excellent correlation between giving society what it wants and making money, and almost no correlation between the desire to make money and how much money one makes." ~Dalio

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