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6 months in, GOP tax bill an utter flop

Vern said:
er uh phat, "monetary manipulations contributing" to the Bush Mortgage Bubble is your narrative to prove. I've disproven what you've posted to "prove" it. Your "look, interest rates went up as defaults went up" was easily disproven. It required you to "misinterpret" what a 5/1 mortgage was.

I'm still waiting for you to admit you "misinterpreted" what a 5/1 mortgage was. And I didn't "chop up" anything. I simply ignored your continued flailing at the facts.
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No, I didn't misinterpret them. ARMs had existed prior to 2004. While those mortgages didn't reset, those in years prior did reset, and if they had already taken out a HELOC, then they faced higher payments on both the original mortgage and the HELOC.

You tell me, would home owners have taken out a HELOC if rates weren't at 1%? Why did they rise when rates fell and why did they stop rising when rates rose? Didn't you tell me earlier that rates had no effect on loan demand?
 
phattonez said:
No, I didn't misinterpret them. ARMs had existed prior to 2004. While those mortgages didn't reset, those in years prior did reset, and if they had already taken out a HELOC, then they faced higher payments on both the original mortgage and the HELOC.

You tell me, would home owners have taken out a HELOC if rates weren't at 1%? Why did they rise when rates fell and why did they stop rising when rates rose? Didn't you tell me earlier that rates had no effect on loan demand?
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once again you have to ignore the facts I've posted. I showed you Early Payment Defaults for the years 2000 to 2007. Again, 2000 to 2004 mortgage defaults were steady. you don't get to post "those in years prior did reset." The toxic mortgages that caused the Bush Mortgage Bubble started late 2004. And resets would not have affected the 2005 and 2006 mortgages before 2007. The Bush Mortgage Bubble popped late 2006. Read this slowly and as many times as necessary.

Thus, the reports at the end of 2006 from lenders such as Ownit, New Century, and Novastar that an unusually high share of their loans were becoming delinquent almost immediately were a cause for alarm. This surge in early payment defaults is evident in our data

and Phat, we're not in a housing bubble. If two years of near zero interest rates caused the Bush Mortgage Bubble how come we didn't get another bubble after 7 years of zero interest rates?
 
Vern said:
once again you have to ignore the facts I've posted. I showed you Early Payment Defaults for the years 2000 to 2007. Again, 2000 to 2004 mortgage defaults were steady. you don't get to post "those in years prior did reset." The toxic mortgages that caused the Bush Mortgage Bubble started late 2004. And resets would not have affected the 2005 and 2006 mortgages before 2007. The Bush Mortgage Bubble popped late 2006. Read this slowly and as many times as necessary.

Thus, the reports at the end of 2006 from lenders such as Ownit, New Century, and Novastar that an unusually high share of their loans were becoming delinquent almost immediately were a cause for alarm. This surge in early payment defaults is evident in our data
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You continue to debate a strawman. I haven't argued that deteriorating lending standards were not a contributor. The point you need to make is that monetary policy did not contribute. Continuing to point out that deteriorating standards contributed is irrelevant since I'm not arguing against you on that.

Your point was that monetary policy didn't matter. I showed that HELOCs grew when rates fell and tapered when rates rose. Why do you continue to ignore that point?

and Phat, we're not in a housing bubble. If two years of near zero interest rates caused the Bush Mortgage Bubble how come we didn't get another bubble after 7 years of zero interest rates?
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The Fed tightening cycle began in the middle of 2004, yet home prices did not start falling until mid 2007. When did the Fed recently start raising rates? The end of 2015. I'd say we're going to start seeing shockwaves at the end of this year. Still, the tightening cycle has been gentler than the last, so perhaps it will take a bit longer.
 
phattonez said:
The point you need to make is that monetary policy did not contribute.
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There it is again, you telling me to disprove your narrative. Phat, read this as slowly as possible: "rising rates caused the defaults" is your narrative to prove. Interest rates had zero to do defaults of 2005 and 2006 loans. that was the period of "dramatically lower lending standards". Its not even arguable but you continue to ignore. These loans were so bad, they were defaulting before any reset. I showed you Early Payment Defaults for subprime loans were stable for 5 years, 2000-2004, then almost doubling in 2005. Then 2006 EPDs defaulted at double the 2005 rate. And I've already told you that "2005 defaults" refers to 2005 loans and 2006 defaults refers to 2006 loans. So you don't get to pretend that 2006 defaults in the graph were for any other year. And to continue to cling to your narrative in spite of the facts, you convinced yourself that 5/1 loans reset after the first year.

let me explain it clearly for you. The Bush Mortgage Bubble was people buying houses they could not afford even with introductory teaser rates. Hence Bush and the fed telling you "dramatically lower lending standards". This flood of unqualified buyers drove up prices. This flood of unqualified buyers could not exist without Bush preempting all state laws against predatory lending and Bush's regulators letting it happen.

Your point was that monetary policy didn't matter. I showed that HELOCs grew when rates fell and tapered when rates rose. Why do you continue to ignore that point?
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I have to chuckle, you complain I ignore your empty rhetoric but you ignore the facts I've posted that has disproven your "rising rates caused the defaults" narrative.

The Fed tightening cycle began in the middle of 2004, yet home prices did not start falling until mid 2007. When did the Fed recently start raising rates? The end of 2015. I'd say we're going to start seeing shockwaves at the end of this year. Still, the tightening cycle has been gentler than the last, so perhaps it will take a bit longer.
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Say this out loud. Home prices were still going up as overall mortgage defaults started going up mid 2005 and subprime EPD started shooting up. A flood of unqualified buyers causes that. Not the LIBOR rate, not the Fed rate and not the mortgage rate. And I'm pretty sure you've ignored that I've told you that the Bush Mortgage Bubble popped in late 2006. Remember, I've already posted "Thus, the reports at the end of 2006 from lenders such as Ownit, New Century, and Novastar that an unusually high share of their loans were becoming delinquent almost immediately were a cause for alarm." Now read this

The collapse of the subprime mortgage market in late 2006 set in motion a chain reaction of economic and financial adversity that has spread to global financial markets, created depression-like conditions in the housing market, and pushed the U.S. economy to the brink of recession.

The Heritage Foundation | The Heritage Foundation

Once the subprime market collapsed, the others followed. And any shockwaves we see will be from Trump crashing the economy with his trade war.
 
It is the first tax bill that cut taxes were the Republicans are running away from. It is strange, the tax cut was to get Republicans to the polls in November. Not, because the economy really needed a tax cut to prime the economy. It depresses me when both parties only think of a election then the best interest of the country.
 
phattonez said:
The point you need to make is that monetary policy did not contribute.
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er uh Phat, you're not going to that thing where you don't post for a couple of days and then come back and simply repost the same narratives again are you? Loans defaulting at an "alarming rate" before they even have time to reset proves your narrative false. If you do come back and refuse to admit I've disproven your "rising interest rate" narrative, please explain the connection between defaults and the LIBOR rate. Before you post, if you do, you should go back to the FRED graphs and look at the Libor rate, the federal funds rate, "30-Year Fixed Rate Mortgage Average in the United" and "5/1-Year Adjustable Rate Mortgage Average in the United States."

You'll notice that the mortgage rates don't track the federal funds or libor rate down to their lows at all. In fact they don't really track up either. you'll also notice that the Fed's data on 5/1 mortgages doesn't start until 2005. What do you think that means?
 
Vern said:
er uh Phat, you're not going to that thing where you don't post for a couple of days and then come back and simply repost the same narratives again are you? Loans defaulting at an "alarming rate" before they even have time to reset proves your narrative false.
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It doesn't, I agreed that the loans were toxic and standards fell. You continuing to bring up the point does not disprove that monetary policy contributed.

If you do come back and refuse to admit I've disproven your "rising interest rate" narrative, please explain the connection between defaults and the LIBOR rate. Before you post, if you do, you should go back to the FRED graphs and look at the Libor rate, the federal funds rate, "30-Year Fixed Rate Mortgage Average in the United" and "5/1-Year Adjustable Rate Mortgage Average in the United States."
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What happens to your HELOC payment when LIBOR rises? Why is it that HELOC loans rose when rates fell and fell when rates rose if interest rates didn't matter? You've ignored this question for multiple posts now.

You'll notice that the mortgage rates don't track the federal funds or libor rate down to their lows at all. In fact they don't really track up either. you'll also notice that the Fed's data on 5/1 mortgages doesn't start until 2005. What do you think that means?
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It means that LIBOR would have caused higher payments for ARM holders and HELOC holders, not traditional mortgage holders. It means that most of the delinquencies were caused by drops in home prices rather than rates, which is exactly what we see at the peak of the recession. Further, LIBOR increases revolving credit payments, which will put a strain on mortgage payments even if they're unchanged.

Finally, note that delinquencies increased exactly when HELOC loans decreased. Why do you think that happened? Do you think there might be a relationship between the two?

fredgraph.png


fredgraph.png
 
Conservative said:
Absolutely awesome and that impacts debt service how? Great, deficit down but when exactly did that happen? Hmmm, no sequester, no GOP Congress but more importantly 9.3 trillion added to the debt which is what taxpayers pay debt service on, not the deficit? still have a credibility problem, don't you?

How about posting legitimate sources blaming Bush solely for the financial crisis?
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Attorneys general: Banks regulator still blocking our way | Washington State

Bush & Co. knew exactly what was going on and actively used old federal jurisdiction over banks...to stop the states.
 
The Derp said:
Simply by not taking the actions they took in 2002-2004.

It was Bush who removed leveraging restrictions in 2004.
It was Bush who allowed the industry to self-police in 2004.
It was Bush who removed all state protections against predatory lending in 2003.
It was Bush who reversed a Clinton-era HUD rule that prohibited GSE's from counting risky loans toward affordable housing goals in 2004.
It was Bush whose regulators ceased the enforcement of lending standards in 2004.

What could have prevented it? NOT ELECTING REPUBLICANS.

The subprime market prior to Bush grew safely and steadily, with default rates hovering around 5-7%. By 2004-06, those default rates climbed to 21-23%. That's only because of the massive increase in subprime lending that came as a result of relaxed lending standards.
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Very good summation. I knew that Bush & Co. were quite aware of what was going on and my direct implication is that they still
want and got mods. to Todd-Frank very probably insufficient to stopping TRAP II. I wouldn't vote a repub in as dog catcher.

He'd probably try to sell my dog back to me...or charge me resort $$ for impound.
 
The Derp said:
This is laying the groundwork for a "No true Scotsman" defense.




TARP needed to happen and it needed to have conditions placed on it. But who are the ones who stripped out all the conditions? Conservatives who whined that it wouldn't be fair to the banks if their executive pay was capped and they were broken up.
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Wall street is the republican's greatest customer...er constituency.
 
Conservative said:
So Obama didn't raise taxes, wonder why? Also still waiting for you to post the TREASURY DATA showing that tax revenue dropped after the tax cuts were fully implemented, you haven't and you can't
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Both the OMB and US Treas. have the numbers on actual tax receipts and it shows that for both Reagan and Bush tax rate cuts, lowered federal receipts
and it took 4-5 years for actual federal tax receipts to come back to pre-tax rate cut levels. You can do your own homework here.

Obama had to create an economic recovery from the worse depression than any in 90 years with the most completely partisan and intrangident congress in my lifetime.
 
Conservative said:
Absolutely it is a lot better to have the federal bureaucrats take taxpayer money pay their administrative expenses and then send it out to 50 states rather than allowing the money to stay in their own state and community to let neighbor help neighbor. I hate keeping more of my own money because it forces me to make decisions as to what to do with it. I need you and the federal govt. to tell me. I have no business helping the poor in my community directly, or to feed the children in my community, or cloth those in need through local charities. All I have to do is go to the money tree in my backyard to refill my pocket
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Not even close.
 
Conservative said:
Yet you haven't posted any reputable economists, Democrat, Republican, Independent or any other source that blames Bush solely for the bubble and the crisis. Still waiting
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Your strawman. Don't see anybody here or elsewhere suggesting it was solely Bush's fault. But it was solely Bush's fault that the atty's general
were stopped by Bush's DoJ via the courts choosing (not truly ruling) that the OCC gives the feds the power.

Imagine the further outlandish right wing repub hypocrisy of denying states rights, and so wall street could walk away with billion$, [sic]
 
Getting more dreary everyday coming back here only to see far too many of those on the right, merely doubling down on what they...want to believe.
 
Pedestrian said:
Your strawman. Don't see anybody here or elsewhere suggesting it was solely Bush's fault. But it was solely Bush's fault that the atty's general
were stopped by Bush's DoJ via the courts choosing (not truly ruling) that the OCC gives the feds the power.

Imagine the further outlandish right wing repub hypocrisy of denying states rights, and so wall street could walk away with billion$, [sic]
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Then you haven't been paying attention which isn't surprising
 
Pedestrian said:
Getting more dreary everyday coming back here only to see far too many of those on the right, merely doubling down on what they...want to believe.
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As usual results don't matter as you buy what the leftwing marketing tells you. What I want to believe are results, what you want to believe is rhetoric. which one wins debates and pays bills?
 
phattonez said:
fredgraph.png
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Phat, I have a lot of problems with your posts. Pne of the big ones was you thought 5/1 mortgages reset after the first year. Another one was you not admitting that. But this graph has me puzzled. Can you please explain what you think it shows. thanks in advance.
 
Vern said:
Phat, I have a lot of problems with your posts. Pne of the big ones was you thought 5/1 mortgages reset after the first year. Another one was you not admitting that. But this graph has me puzzled. Can you please explain what you think it shows. thanks in advance.
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I wasn't precise about the 5/1 mortgages, but yes increased rates caused strain on those older mortgages and those who took out HELOCs. This is like 4 posts now that you ignore those loans.

Now about the graph. I already showed that HELOC loan growth was directly correlated with interest rates. Those loans stopped growing because rates were rising. When those rates rose, the HELOC payments became more unaffordable and mortgages became harder to pay, which eventually caused defaults. And I've the defaults started, everything fell apart.

Today home owner equity is at similar levels, there are still plenty of HELOCs, and home prices are again way out of line with income. We're set up just like 2007, but we didn't even increase home ownership in the process.

Sent from my HTC phone. Instaurare omnia in Christo.
 
phattonez said:
I wasn't precise about the 5/1 mortgages, but yes increased rates caused strain on those older mortgages and those who took out HELOCs. This is like 4 posts now that you ignore those loans.
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If you want to say you weren't "precise" that's fine. Its a start and way better than "No, I didn't misinterpret them". And yes Phat, I'm ingoring your "supposin" about Helocs because its just you "supposin". You've posted no data to support Helocs and "older mortgages" in any way contributing to the Bush Mortgage Bubble. 'causing a strain and maybe sorta adding to the problem" is just you "supposin" again. Here's the thing Phat, Helocs and "older mortgages" didn't allow a flood of unqualified buyers to bid on and buy houses thus driving up the prices. 2005 and 2006 mortgages did allow a flood of unqualified buyers to bid on and buy houses thus driving up the prices. 2005 and 2006 mortgages got progressively worse (remember, I showed the data for that so I'm not "supposin") and got so bad, large numbers of loans started defaulting almost immediately (again, I showed that). And this caused a panic (again, I showed that).

In case you're not understanding (and you aren't) you need to show how Helocs and "older mortgages" drove up home prices in 2004 and then added to the panic in late 2006. The key words you need to understand as try to explain are "that an unusually high share of their loans were becoming delinquent almost immediately were a cause for alarm".

Now about the graph. I already showed that HELOC loan growth was directly correlated with interest rates. Those loans stopped growing because rates were rising. When those rates rose, the HELOC payments became more unaffordable and mortgages became harder to pay, which eventually caused defaults. And I've the defaults started, everything fell apart.
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so you say Heloc loan growth stopped growing because rates were rising. Besides the fact that you've made no connection to the Bush Mortgage Bubble that statement is not even true. You posted this chart
phattonez said:
fredgraph.png
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Your graph was % change from the previous year. Until the Heloc line goes negative, it means "more Helocs than the previous year. " It didn't go negative until 2010. See the problem there. That's just you being "not precise" again.
Today home owner equity is at similar levels, there are still plenty of HELOCs, and home prices are again way out of line with income. We're set up just like 2007, but we didn't even increase home ownership in the process.
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this "supposin" is based on your previous "supposin" and some of your "supposin" which was "not precise". And Phat, I'm pretty sure you're still ignoring that I've disproven this statement "The first delinquencies were caused by increases in mortgage payments due to rates increasing".
 
phattonez said:
I wasn't precise about the 5/1 mortgages, but yes increased rates caused strain on those older mortgages and those who took out HELOCs. This is like 4 posts now that you ignore those loans.

Now about the graph. I already showed that HELOC loan growth was directly correlated with interest rates. Those loans stopped growing because rates were rising. When those rates rose, the HELOC payments became more unaffordable and mortgages became harder to pay, which eventually caused defaults. And I've the defaults started, everything fell apart.

Today home owner equity is at similar levels, there are still plenty of HELOCs, and home prices are again way out of line with income. We're set up just like 2007, but we didn't even increase home ownership in the process.

Sent from my HTC phone. Instaurare omnia in Christo.
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Hate to appear ignorant...but I am. what is a 5/1 mortgage?
Regards,
CP
 
concernedpuma said:
Hate to appear ignorant...but I am. what is a 5/1 mortgage?
Regards,
CP
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It's an adjustable rate mortgage. Your rate is fixed over the first 5 years, but then can adjust once per year thereafter based on LIBOR.
 
phattonez said:
It's an adjustable rate mortgage. Your rate is fixed over the first 5 years, but then can adjust once per year thereafter based on LIBOR.
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I had not seen it shown that way. I do have to say, I have a gut rejection of a change of rules in a contract and have probably paid a price, but never went that way.
I am having a devil of a time understanding the two opposing views here, but respect all.
Thank you for taking the time and information.
Regards,
CP
 
Vern said:
If you want to say you weren't "precise" that's fine. Its a start and way better than "No, I didn't misinterpret them". And yes Phat, I'm ingoring your "supposin" about Helocs because its just you "supposin". You've posted no data to support Helocs and "older mortgages" in any way contributing to the Bush Mortgage Bubble. 'causing a strain and maybe sorta adding to the problem" is just you "supposin" again. Here's the thing Phat, Helocs and "older mortgages" didn't allow a flood of unqualified buyers to bid on and buy houses thus driving up the prices. 2005 and 2006 mortgages did allow a flood of unqualified buyers to bid on and buy houses thus driving up the prices. 2005 and 2006 mortgages got progressively worse (remember, I showed the data for that so I'm not "supposin") and got so bad, large numbers of loans started defaulting almost immediately (again, I showed that). And this caused a panic (again, I showed that).
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Did mortgages actually get progressively worse? Because I've shown that there was a much higher pool of mortgages, but was it all fueled by deteriorating standards? No.

Urban-Institute-FICO-Score-distribution.jpg


Unless you think that tiny blip in 2004 was the bubble, you've got some explaining to do.

So your options are either a massively increasing debt load explaining the bubble, or a tiny blip in 2004 causing an entire industry to collapse. Your call.

In case you're not understanding (and you aren't) you need to show how Helocs and "older mortgages" drove up home prices in 2004 and then added to the panic in late 2006. The key words you need to understand as try to explain are "that an unusually high share of their loans were becoming delinquent almost immediately were a cause for alarm".
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I showed that HELOC growth coincided exactly with the drop in interest rates.

I also showed HELOC declines coinciding exactly with the rise in interest rates and coinciding with the plateauing of home prices.

You tell me why mortgages were going delinquent in 2006 if the distribution of credit scores wasn't massively altered. Or, you can just admit that this was a debt fueled bubble that was popped when we stopped adding more debt.

so you say Heloc loan growth stopped growing because rates were rising. Besides the fact that you've made no connection to the Bush Mortgage Bubble that statement is not even true. You posted this chart

Your graph was % change from the previous year. Until the Heloc line goes negative, it means "more Helocs than the previous year. " It didn't go negative until 2010. See the problem there. That's just you being "not precise" again.
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Oh come on, you don't think there's a tiny bit of difference between rates of 40% growth and about 4% growth (which seems just about in line with interest rates)?

this "supposin" is based on your previous "supposin" and some of your "supposin" which was "not precise". And Phat, I'm pretty sure you're still ignoring that I've disproven this statement "The first delinquencies were caused by increases in mortgage payments due to rates increasing".
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What do you call it when people get a mortgage, fixed or otherwise, then take out a HELOC with a variable rate, and then default because of rising payments in the face of rising rates?
 
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