Homeowners foreclose on Bank of America

[Squirl]

Now that Fannie and Freddie are gov't owned,  and the profit motive of the directors is removed,  and underwriting standards are kept high like they used to be,  then they could function well indefinitely.

I heard on the radio this morning that there is a hearing because of people complaining.  That 90% that they are lending on is with a 20% down payment.  Certain people think that the government should keep the high lending standards, but lower the down payment, because the average borrower needs to come up with $40,000 cash at closing.

[archimedes]

When I started in mortgage lending,  ages ago, 20% down was the normal requirement.

The underwriter who trained me always said that,  to him,  the most important factor in determing the credit worthiness of a loan was that 20% down payment.  And that it should be the borrowers own money,  not a gift,  or a loan from some other source.  He wanted to see the blood sweat and tears of the borrower invested in the deal. 

Somehow over the years we moved away from that common sense principle - and that has made all the difference.

[rwanders]

Archimedes, absolutely right.

When we get stuff that is "free"-----What is it's value to us?  I think it will have no real value and many will act accordingly.

[OlJarhead]

I contend that the mindset of the Keynesian's (easy money) is at the root of the issue as well as the "I'm a free market person as long as we regulate it" people.

For example, the FED (a banking cabal instigated by banks and government and designed to fool American's into agreeing to do something they already did not want and knew was bad -- but that's a longer story then anyone could post) controls the money supply (therefore there is no free market) and the banks (we do not have free market banking) and ensures that banks can't fail (unless they want them too -- which was the case for small/rural banks etc back in the beginning).  Meanwhile, the Federal Government (note:  the FED is NOT government but rather private with a cool name that makes it sound Federal) pushes policies like the CRA which it can claim 'help the poor' but guarantees the Free Market isn't and gives them a tool to control banks in other areas.  For example if a bank wanted to open a branch in NM somewhere it was easy to tell them "well sure, but what is you CRA score?" -- thereby forcing them to play ball....if they didn't, they might not get that new license (Note to the confused:  FREE in FREE Market means the bank could bloody well tell them to shove off and open a bank anywhere they bloody well wanted) etc...then using GCE's be sure to buy bad paper from the banks to encourage them to loan more to anyone and everyone under the old axiom "everyone needs to own a home" and sooner or later things will go south.

What we really needed was no FED, no central bank what-so-ever and a truly FREE Market.  It is a historical fact that when we did not have a central bank that only regions were impacted by banking fiasco's while today, with the FED (central bank) we are assured of national impact.  Furthermore, when left to their own devices people are usually smart enough to figure out what they should or should not do and most learn.

By this I mean that some people will always get hurt by making bad decisions but when you allow the Free Market to well, be free, sooner or later people begin to wizen up.  In fact, today this seems to be evident with the large amount of people NOT getting into credit, the increased amount of 'preppers' (a relatively new term describing people who no longer trust the system and begin to build large pantries and save etc to protect themselves) as well as the large amount of people paying down debt etc..  Even in our decidedly NON Free Market system people figure it out and find ways to protect themselves.

So, blame the banks if you like, however they are not the main problem but rather a portion of it because I assure you that without the FED and Government bailouts they would be far far more conservative and this would not have happened.

Blame the citizens who did stupid things but in reality they aren't the problem either.  They have been poorly educated by a broken government education system and would not allow themselves to live so carelessly as they have (for the most part) if you removed the Government bailouts for them also (Food Stamps, Welfare, Unemployment Insurance etc etc etc).

Blame the Government if you will, however never forget that you were warned 230 years ago by some very wise men that Government was and is a necessary evil and must be kept small, but you allowed it to grow huge and well beyond it's legal means while demanding more and more bailouts for yourself.  Those politicians seeking re-election merely gave the people what the people asked for just as Ben Franklin predicted "When the people find that they can vote themselves money, that will herald the end of the republic."

History repeats itself and the only real question is whether or not you are willing to see it and realize it and do something about it.  This history has been in the making for over 100 years.

To that I make this claim:  those who do not believe that the free market (that means NO bailouts, NO FIAT money, NO government control of the banks, NO FED, NO social programs etc etc) will, does, did and can work are the problem.

The Austrians were right, the Keynesian's are wrong, the FED must go, all social programs must go and the American people must accept the FREE market in it's entirety or agree to be subjects to the huge and growing government bureaucracy that will forever create bubbles, take more, and drive the population into more and more subjugation.

"They that can give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety."  Ben Franklin.

[rwanders]

Jarhead, though my heart is with you and the Libertarian philosophy, it, taken to its extreme form will bring many problems. Just as the military (Ex-Army Officer) requires both discipline and leadership or it turns into an unpredictable mob, unfettered freedom in the civilian world can/will result in chaos and, like the jungle, a tyranny of the claw and fang.

While I think I have enough fang left to survive, I wouldn't really like to be forced to put it to the test against those with much younger and sharper ones.

[OlJarhead]

Jarhead, though my heart is with you and the Libertarian philosophy, it, taken to its extreme form will bring many problems. Just as the military (Ex-Army Officer) requires both discipline and leadership or it turns into an unpredictable mob, unfettered freedom in the civilian world can/will result in chaos and, like the jungle, a tyranny of the claw and fang.

While I think I have enough fang left to survive, I wouldn't really like to be forced to put it to the test against those with much younger and sharper ones.

But we may not be far apart actually.

You see I do not believe in anarchy and believe the founding fathers had it right the SECOND time.  With the articles of confederation they were too close to anarchy and the young nation would have torn itself apart had they not created the Constitution.  However, today, we no longer truly honor that and thus we've moved so far away from the Liberty it protects in the name of safety we've made Franklin a truth sayer or profit if you will.

I believe the answer is right under our noses if we care to look and it involves a study of history -- our own history, and seeing where we went wrong so we can fix it.

[rwanders]

I can certainly agree with that, Jar. The norms of our society do evolve--sometimes for the good and sometimes not. Revisionist history always seems to make villains of those who were previously our treasured role models and our descendants will, no doubt, view you and I as villains too. Human nature seems to be the only unchanging element on earth.

[archimedes]

Jarhead, how do you square your belief system with the fact that the current economic crisis that we are dragging ourselves out from was cause by a colossal failure of the free market to regulate itself.

The crisis was caused by the deregulation and unregulation of the financial industry,  promoted by the desciples of Ayn Rand et al.

[Squirl]

Archimedes, I don't want to speak for Jarhead, but I understand the economic argument even if I don't agree with it.  Some argue that the extreme swings of the boom/bust cycle of capitalism are just part of life.  There are winners and there are losers.  If you study history you can see these cycles through most capitalist industrial societies since the beginning of the industrial revolution.  My problem with the argument is it fails to take into account the human factor of these cycles.  As the cycles became more severe as our economy became more complex people decided they didn't want to ride that roller coaster anymore.  The argument also fails to account for the negative externalities, that a handful of individuals can create.  If and when a group or market can cause an entire currency collapse, it doesn't just affect them, it affects all of society.  If their choices can affect all of society, in my view, society should have the ability and desire to regulate that behavior.  When one person's freedom encroaches on another's, that is where the law and government come into play.

[OlJarhead]

Jarhead, how do you square your belief system with the fact that the current economic crisis that we are dragging ourselves out from was cause by a colossal failure of the free market to regulate itself.

The crisis was caused by the deregulation and unregulation of the financial industry,  promoted by the desciples of Ayn Rand et al.

Which free market would that be?  Please explain exactly what you think 'FREE' in Free market stands for.

[OlJarhead]

Archimedes, I don't want to speak for Jarhead, but I understand the economic argument even if I don't agree with it.  Some argue that the extreme swings of the boom/bust cycle of capitalism are just part of life.  There are winners and there are losers.  If you study history you can see these cycles through most capitalist industrial societies since the beginning of the industrial revolution.  My problem with the argument is it fails to take into account the human factor of these cycles.  As the cycles became more severe as our economy became more complex people decided they didn't want to ride that roller coaster anymore.  The argument also fails to account for the negative externalities, that a handful of individuals can create.  If and when a group or market can cause an entire currency collapse, it doesn't just affect them, it affects all of society.  If their choices can affect all of society, in my view, society should have the ability and desire to regulate that behavior.  When one person's freedom encroaches on another's, that is where the law and government come into play.

Ahhh....no.  Sorry but what you described is EXACTLY what has been happening since the creation of the Federal Reserve System.  In fact, my friend, the FED was sold to the American people on the basis that it would put a stop to any 'free market' cycles and in fact not only created more but bigger and bigger cycles (Boom, Bust cycles) in an ever increasing cycle.

Fact is, you do not have, can not have, will never have a truly 'FREE MARKET' as long as you have a central bank.  Now, if folks would read the history of banking in America they would learn that starting with Hamilton the idea of the 'central bank' was pushed to 'control' banking (thereby preventing it from being FREE) and while the first 'BOA was abolished (because it was a dismal failure) as well as the second (again a dismal failure) the last, the FED, has not been but continues to prove in the failure of governments to control markets -- again, a market cannot be 'free' if it is controlled, thus claiming the free market failed is akin to blaming little green men from capturing Elvis and taking him to planet Zion to live with the jabawacks of some such BS.

In the end it is nearly impossible for anyone to make an argument against the free market because it hasn't been allowed to flourish in any way since the creation of the FED and really, before then wasn't often allowed to be free.  To actually understand the concept one must accept first what liberty and freedom really are, then understand that anarchy isn't the answer anymore then socialism is (though anarchy is closer to the answer IMHO).

Liberty is the freedom to fail, and people will always fail.  It's simply nature folks and you cannot protect everyone from themselves.  Allow freedom to flourish and yes, some will fail however the vast majority will succeed.

Even under a free market people will be poor by the way, but this is because some people simply choose to be poor -- ya I know, you probably don't believe that but history shows that even when given all the opportunity in the world some people choose to sit on their rear ends and complain.  SO be it.  This is why Franklin made the statement about 'leading them out of their poverty or making them difficult in it' (paraphrasing).

Now, to those who like to make the claim that free market types fail to acknowledge or accept human nature and that human nature means that evil people will do bad things, ect I say this:  are you serious?  Have you actually heard yourself?  What?  Do you actually think human nature changes when you have socialism?  Are you really that naive?  Really?  That statement alone suggests someone hasn't been very objective or thoughtful.

The difference between a free people and socialism (etc) is that socialist countries produced the likes of Hitler (National Socialist Party of Germany), Mao (Communist Party of China), Lenin and Stalin (Russian socialists) etc etc etc...those guys killed millions.

Name me one leader of a truly free nation that has killed one tenth that of those leaders and I'll call you a liar.  This is your human nature, your evil people in power doing evil things (Killing tens of millions of people).  That doesn't mean bad people don't exist in freedom, sure they do, however they never attain the power the same evil people do in socialist (etc) countries do.  Think about that.

Furthermore, in a truly free society (I'm talking one that respects natural rights the laws that come from them) people are classless (something the left would like to see changed in their continued 'class' warfare) and the poorest of the poor may rise to achieve great wealth through hard work, innovation, entrepreneurial spirit, luck (yes even luck can play a part and often does), etc.  Carnegie is an example there as well I believe Levi, Webster (perhaps though I'd have to go back and check) and maybe even Rockefeller (original)...I think JP Morgan came from a rich background so couldn't be included though he attained great heights.  Not to mention that Washington, Jefferson, Franklin and others attained fame and fortune the same way (without privilege).

There is plenty of proof should someone actually take the time to read well documented history and original writings.

Anyway, I've gone long here but suffice to say that anyone that thinks the free market failed recently clearly doesn't have the same definition of 'free' that can be found in Websters and is only listening to the ideologues and partisans on the left who spout that nonsense.  As well as anyone who thinks controlling the markets is the answer (along with central banking) because they clearly haven't noticed the ever increasing booms and busts created by the fed -- even more so since the change to purely FIAT currency.

Liberty = Freedom to Fail.

Most American's are afraid of failure and unwilling to be free to do so.  I personally would relish the freedom to fail and believe that Franklin was spot on "They that can give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety.".

[OlJarhead]

BY the way, before you get lost in the whole 'I'm not talking about socialism' response consider this:

There is 'Freedom and Liberty' and then there is everything else -- which isn't that.

Thus is doesn't matter if you speak of socialism-lite, or progessivism, or communism, or fascism, or just plain old government control and regulation (which has been, by the way, moving slowly and painfully towards socialism).

You cannot have freedom and government control.  It doesn't work.

The founders had the answer, but today the American population in large part have no idea what that answer was or is and speak only from hearsay and rumor because of this.

Read and you will succeed, the answer is there and it means your freedom as well as a well ordered nation (actually Union of free states -- as in 'These United States'.  Remember that?).

[archimedes]

I think history completely discredits your ideological beliefs.

But you're entitled to your opinion.

[Native_NM]

I thought you would be interested in the following story from The Wall Street Journal.
Tighter Lending Crimps Housing

http://online.wsj.com/article/SB10001424052702304569504576405660006330644.html

The Wall Street Journal for iPad provides a new way to experience the Journal's award winning coverage, blending the best of print and online. Special features include:

[OlJarhead]

I think history completely discredits your ideological beliefs.

But you're entitled to your opinion.

Perhaps sir, you could then enlighten me.

[Native_NM]

The same congress who chastised the bankers for tough lending standards in the 70's leading to the "deregulation" of the iending industry by way of the CRA and the GSE's further chastised the bankers in 2008 when the bubble popped leading to additional regulation are again chastising the same bankers because the "new" lending standards are too stringent which prevents the poor and minorities from owning homes.  I think that about sums up the last 30 years.   

[rwanders]

 

So------let's keep on dancing.

[Sassy]

Freedom's just another word for nothing left to lose...  Janice Joplin

http://www.youtube.com/watch?v=rL44Z6B5X1Y

The Truth will set you free...  if you are willing to lose your life you will find it...