ronin001 (![[info]](http://l-stat.livejournal.com/img/userinfo.gif){kind=small} ronin001) wrote,@ 2008-09-23 15:29:00 |
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...and here's your 760 Billion dollar get out of jail free card...
I am seriously glad I'm not in the finance industry any more, though watching how things are unfolding in the Mortgage Bailout proposal, I can see how this will be lucrative, like Savings and Loan bailout lucrative, years down the line. It still just bothers me as to how reactive this entire debacle has become when rational thought should have prevailed years ago.
...and by rational thought I mean letting common sense dictate the course of business instead of sheer capitalist greed:
-how is it that the mortgage industry could promote with zero conscience the idea of interest only loans on huge, barely capitalized principal amounts?
-seriously, who in fucks sake thought that a retail 50 year jumbo loan was a good idea?
-what got into the mortgage industry's skull that refinancing based on absurd projected future values was a great idea?
-exactly who started eschewing the fundamentals of credit financing to underwrite for those that clearly shouldn't be borrowing such significant amounts of capital?
-why is it that the insurance industry, notorious in it's cutthroat risk analysis practices in the retail markets, contradicted itself for institutional markets in backing such high risk loans?
...but really, in the end, what pisses me off is that the only reason why these practices were allowed has been because the industry deemed it acceptable for institutions to fuck themselves over because interest rates seemed right and real estate markets seemed ripe for the picking. Years ago, any small business owner or individual home owner that would have tried to get a loan under any of the abovementioned circumstances would have been laughed at.
Only because the industry itelf decided to let itself go in the name of profit could people go out into the world and get a half a million dollars worth of refinancing for a house that shouldn't have been valued at more than 350k on a combined 150k salary while paying interest only in the hopes of flipping property for a profit before principal payments came due. Only because banks saw hardly any risk in this did they allow such to continue unabated. Only because the insurance industry also saw hardly any risk in this did they think they could make a profit offering insurance to hedge against the possibility of these loans turning bad.
So now everyone realizes, far too late, that these things were a bad idea, that the combined excesses of corporate greed and personal vanity truly had a cost, and now it's time to pay up; it's far worse than bad credit card debt only because of the amount of zeros behind it, and the fact that these mortgage debts ultimatey tied into Government backed securites, so many of which are held globally by international financial institutions and foreign governments.
Supposedly the actual value of this entire clusterfuck, bad morgtages backed by bad insurance, comes to somewhere in the vicinity of 60+ TRILLION dollars according to NPR; where they got this number I'm not sure, I can only imagine it's the same valuation that was used as mentioned above, with the idea of the 760 billion bailout being meant to lessen the burdeon on the banking and mortgage industry, allowing them to keep loaning money and maintain the economy, while the government takes the gamble on this bad debt, a practice not seen since during the Depression as their banking industry was failing.
...and though I support this idea fundamentally as opposed to destroying the entire planet in a wake of global debt, it still pisses me off because of the lack of responsibility that the proposed bailout legislation has yet to contain.
-there is nothing written in the current bailout that would prevent this from happening again.
-there is nothing in it's writing for accountability for those responsible.
-there is a possibility in it's writing that the management groups the Government can use to administer the bailout could be the EXACT same groups that caused it in the first place.
Ultimately, it hits me personally, because it seriously damages the ideals I place in Capitalism. I am, essentially, a greedy bastard, but I like to believe it's based in a profound respect in the idea of risk vs. reward, cheering when I watch people make huge winfalls, empathizing when it comes up snake-eyes on the opposite, knowing full well that playing high stakes games have significantly larger all-or-nothing yields. Either way, people should recognize they have it coming, though it's a hellofalot happier when things pay out.
It's one thing to see an individual whine when they lose; it becomes chalked up to experience, no one is really there to help, and responsibility is entirely their own, as are their solutions to undo the damage. But when an entire industry whines, considering how huge the combined management is for the Mortgage, Banking, and Insurance industries, I find myself enraged, only because the Capitalism they've upheld is now nothing more than wishful thinking, completely hypocritical in their own practices as they're about to pick up the biggest Get Out of Jail Free card with hardly any strings attached.
I am seriously glad I'm not in the finance industry any more, though watching how things are unfolding in the Mortgage Bailout proposal, I can see how this will be lucrative, like Savings and Loan bailout lucrative, years down the line. It still just bothers me as to how reactive this entire debacle has become when rational thought should have prevailed years ago.
...and by rational thought I mean letting common sense dictate the course of business instead of sheer capitalist greed:
-how is it that the mortgage industry could promote with zero conscience the idea of interest only loans on huge, barely capitalized principal amounts?
-seriously, who in fucks sake thought that a retail 50 year jumbo loan was a good idea?
-what got into the mortgage industry's skull that refinancing based on absurd projected future values was a great idea?
-exactly who started eschewing the fundamentals of credit financing to underwrite for those that clearly shouldn't be borrowing such significant amounts of capital?
-why is it that the insurance industry, notorious in it's cutthroat risk analysis practices in the retail markets, contradicted itself for institutional markets in backing such high risk loans?
...but really, in the end, what pisses me off is that the only reason why these practices were allowed has been because the industry deemed it acceptable for institutions to fuck themselves over because interest rates seemed right and real estate markets seemed ripe for the picking. Years ago, any small business owner or individual home owner that would have tried to get a loan under any of the abovementioned circumstances would have been laughed at.
Only because the industry itelf decided to let itself go in the name of profit could people go out into the world and get a half a million dollars worth of refinancing for a house that shouldn't have been valued at more than 350k on a combined 150k salary while paying interest only in the hopes of flipping property for a profit before principal payments came due. Only because banks saw hardly any risk in this did they allow such to continue unabated. Only because the insurance industry also saw hardly any risk in this did they think they could make a profit offering insurance to hedge against the possibility of these loans turning bad.
So now everyone realizes, far too late, that these things were a bad idea, that the combined excesses of corporate greed and personal vanity truly had a cost, and now it's time to pay up; it's far worse than bad credit card debt only because of the amount of zeros behind it, and the fact that these mortgage debts ultimatey tied into Government backed securites, so many of which are held globally by international financial institutions and foreign governments.
Supposedly the actual value of this entire clusterfuck, bad morgtages backed by bad insurance, comes to somewhere in the vicinity of 60+ TRILLION dollars according to NPR; where they got this number I'm not sure, I can only imagine it's the same valuation that was used as mentioned above, with the idea of the 760 billion bailout being meant to lessen the burdeon on the banking and mortgage industry, allowing them to keep loaning money and maintain the economy, while the government takes the gamble on this bad debt, a practice not seen since during the Depression as their banking industry was failing.
...and though I support this idea fundamentally as opposed to destroying the entire planet in a wake of global debt, it still pisses me off because of the lack of responsibility that the proposed bailout legislation has yet to contain.
-there is nothing written in the current bailout that would prevent this from happening again.
-there is nothing in it's writing for accountability for those responsible.
-there is a possibility in it's writing that the management groups the Government can use to administer the bailout could be the EXACT same groups that caused it in the first place.
Ultimately, it hits me personally, because it seriously damages the ideals I place in Capitalism. I am, essentially, a greedy bastard, but I like to believe it's based in a profound respect in the idea of risk vs. reward, cheering when I watch people make huge winfalls, empathizing when it comes up snake-eyes on the opposite, knowing full well that playing high stakes games have significantly larger all-or-nothing yields. Either way, people should recognize they have it coming, though it's a hellofalot happier when things pay out.
It's one thing to see an individual whine when they lose; it becomes chalked up to experience, no one is really there to help, and responsibility is entirely their own, as are their solutions to undo the damage. But when an entire industry whines, considering how huge the combined management is for the Mortgage, Banking, and Insurance industries, I find myself enraged, only because the Capitalism they've upheld is now nothing more than wishful thinking, completely hypocritical in their own practices as they're about to pick up the biggest Get Out of Jail Free card with hardly any strings attached.
