It was the market that cause the failures

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If the bad MBO's are going to come back, then why don't private investors buy them up.

I do see the logic of if the MBO's gain value, the government could actually sell them for more than they paid for them and the interest paid on the increased national debt.

I see that.

It's just that I don't trust them. If these banks are trying to sell them, it's got to be junk they don't want. If it's going to start making money in the future, one would think there WAS a market for this stuff.

So that's all I'm asking, for every dollar provided by the Fed/Federal Government to buy out these MBO's that there be a REAL dollar of private money out there buying as well. Let the banks who want to sell find a private investor and the Federal Government will match that investor.

That way it's not just OPM that being used, but for every dollar of OPM there is a dollar of someones money, and ideally who is running the bank's PERSONAL fortune in play.
 
At this point, from what I've read, your average bank is doing just fine, even the larger banks like C and BAC that in fact were in sub prime as well.

The fear is exactly that: FEAR. PANIC. As we slide into or more into recession and earnings drop even more, the stock market drops even more, all this talk of bank failures and loss of money market funds etc. etc. etc., well then you get sheep in line at every bank demanding their money. Then the shat has officially hit the fan, even though fundamentally it might not have needed to happen.
 
Originally Posted By: javacontour
If the bad MBO's are going to come back, then why don't private investors buy them up.

I do see the logic of if the MBO's gain value, the government could actually sell them for more than they paid for them and the interest paid on the increased national debt.

I see that.

It's just that I don't trust them. If these banks are trying to sell them, it's got to be junk they don't want. If it's going to start making money in the future, one would think there WAS a market for this stuff.

So that's all I'm asking, for every dollar provided by the Fed/Federal Government to buy out these MBO's that there be a REAL dollar of private money out there buying as well. Let the banks who want to sell find a private investor and the Federal Government will match that investor.

That way it's not just OPM that being used, but for every dollar of OPM there is a dollar of someones money, and ideally who is running the bank's PERSONAL fortune in play.


I understand your point, but there is no private institution that is big enough to be able to "prime the pump" (oh lord, I sound like Hank Paulson...) enough - ie suck the bad debt out of the system long enough for the housing market to bottom and hopefully come back. Private investors (in a macro sense) are the ones currently holding the bad MBOs and there is literally no buyers for them.

The overwhelming "IF" with the entire deal is if and when the housing market comes back. Without that, we're [censored].
 
You know, I think back to as recently as two years ago when anyone who said that we had a problem was called a "bubblehead".

I have a report from two years ago stating that in Manassas Park, VA, where I live, 36% of the home loans made in 2005 were sub-prime.

No wonder now that property values in this area have tanked due to the foreclosures. (A side-effect is that the city is now in some financial trouble because they went on a spending-spree when the assessments started going up).

How do you get 36% subprime loans in an area? This used to be a normal middle-class city. What happened? I've got some ideas..I think there was a whole lot of mortgage fraud taking place, for one thing. The FBI just recently indicted someone in the next county over for defrauding banks to the tune of $2.5 million by using straw buyers. I bet that's just the tip of the iceburg.
 
Originally Posted By: demarpaint
I think the short sellers just uncovered a bunch of fundamentally poor [censored] and made money as it fell apart. They didn't cause the problems, they capatalized on them!


They are doing the job of good journalism if they are not naked short selling. Uncovering a house of card when 1000 people are on it is bad, some people will die when everyone trying to get out, but it is better to uncover that so that they won't all die when the house of card collapse.

If the institutes are leveraged to death and will not be able to sell the bad loans below book value, then we should confiscate the institutes rather than buying the loans above book value. Hurting a few foreign investors (sovereign funds)are OK as they know what they are getting into. Using our tax payers money to bail our foreign investors are bad. Sure they might leave, but they would leave if we are in recession anyways, so might as well grab their money first.
 
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I've mentioned once before that it has less to do with your predictions and more to do with delivery style


Oh, sure. I'm an "rub it in your face" type of guy who can surely P-U-OFf. That's my editorial style ..and it surely can't stand being ignored or dismiss/trivialized. Its very nature is designed to provoke the very visceral response (a Voight-Kampff for humans) that you and someone like Pablo or Tempest routinely produce. I'm sure if you placed me under some microscope ..you could trace its origins to all kinds of things ..under achievement, sexual frustration..not being nursed as an infant ..what have you.
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And btw, when it comes to predictions, it would be much more useful to give us an ETA for your predictions. Just saying something will collapse isn't enough.


Hey, pal. When you see something is "unright" and there's a party going on, and no one appears to care about what you're sensing, is it "socially responsible" to just watch them go over the cliff as though you didn't know? Keep in mind that I'm in the same box car ..maybe with not quite as good a seat as you have ..but when the bridge is out, as we clearly see NOW, how can I not feel like I'm the victim of the fools ..and the fools that followed them?

Hey, I wish I had the economic moxie to best this challenge unscathed ..or to capitalize upon things in a manner that would have left me less hurt, but in the past 7 or 8 years I've been drained of every resource that's available to me ..and I've seen it well in advance of its terminal event. Yet learned and knowledgeable people ...authorities and those empowered ..did nothing to stop it where I could do nothing myself.

So, when I see some "burden" to bear, I think that I've already done my part. If any more suffering is to occur, then EVERYONE needs a piece of it. Many of you will cite wealth redistribution doesn't work ..and I'll submit that cost redistribution is just as flawed a notion ..that's if you're truly "honest" in your expression.

Take care of your pets.
 
Drew99GT,

Who says it has to be ONE institution?

If there are NO buyers of them, isn't that the market sending a loud and clear message?

If no one wants to buy them at the pennies on the dollar prices the bailout is allegedly going to pay, then even those prices are too high.

Having private money in there with government money will ensure that there is some vested interest at trying to value these things.

I understand that it seems impossible to value them today. Fine, so why have the government do that.

If the bailout is needed, and that's a subjective call, I believe there should be as much private money buying the bad MBO's as there is federal funds. If one cannot find a private investor to buy at the price being offered to the Fed/Federal government, then the government should not be buying at that offer price.

Keep the market in there to have some semblance of establishing a value.

If the government is buying, and ONLY the government, won't that just inflate the values of the securities?

But if others have to put their own money and not OPM into the game, I think a more realistic valuation will occur.
 
Originally Posted By: Drew99GT

I understand your point, but there is no private institution that is big enough to be able to "prime the pump" (oh lord, I sound like Hank Paulson...)


Let's see. China, Singapore, Dubai, Japan (well, maybe not Japan), Arabs, Canada, Australia, Korea.....
 
Ah..a 50% subsidy to bad paper... a bargain, I'd say.


Now let's hear the downside and why it would be "unfair" to buy worthless goods @ 50% discount for the private sector ..but it's a good idea for the "cost redistibutor" to buy them @ 100% of worthless.
 
Originally Posted By: PandaBear
Originally Posted By: Drew99GT

I understand your point, but there is no private institution that is big enough to be able to "prime the pump" (oh lord, I sound like Hank Paulson...)


Let's see. China, Singapore, Dubai, Japan (well, maybe not Japan), Arabs, Canada, Australia, Korea.....


Ummmmmmmmmmm, China's federal reserve bank has a ton of MBOs and is now also in a small liquidity crisis. Private equity in the middle east has a ton of MBOs they want to get rid of. See the scope of the problem now? All the places you mentioned ALREADY HOLD THE BAD DEBT!!! They're not going to buy it.
wink.gif


http://www.thestandard.com.hk/news_detail.asp?pp_cat=1&art_id=71445&sid=20506072&con_type=1
 
Last edited:
Originally Posted By: Drew99GT
Originally Posted By: PandaBear
Originally Posted By: Drew99GT

I understand your point, but there is no private institution that is big enough to be able to "prime the pump" (oh lord, I sound like Hank Paulson...)


Let's see. China, Singapore, Dubai, Japan (well, maybe not Japan), Arabs, Canada, Australia, Korea.....


Ummmmmmmmmmm, China's federal reserve bank has a ton of MBOs and now also in a small liquidity crisis. Private equity in the middle east has a ton of MBOs they want to get rid of. See the scope of the problem now? All the places you mentioned ALREADY HOLD THE BAD DEBT!!! They're not going to buy it.
wink.gif


http://www.thestandard.com.hk/news_detail.asp?pp_cat=1&art_id=71445&sid=20506072&con_type=1


That's the shear genius of this orchestrated shake down. It automatically sucker punched the entire functional globe in the scope of it. We're a junkie parasite and they can't cut us loose.
 
So these are the folks who stand to BENEFIT if the government suddenly creates a market to buy these "worthless" MBO's.

While we are at it, let's start a government program to buy back losing lottery tickets. Anyone who played the lottery can submit their tickets to the FED for $0.40 on the dollar gamble... er I mean invested.
 
Originally Posted By: Drew99GT

Ummmmmmmmmmm, China's federal reserve bank has a ton of MBOs and is now also in a small liquidity crisis. Private equity in the middle east has a ton of MBOs they want to get rid of. See the scope of the problem now? All the places you mentioned ALREADY HOLD THE BAD DEBT!!! They're not going to buy it.
wink.gif


http://www.thestandard.com.hk/news_detail.asp?pp_cat=1&art_id=71445&sid=20506072&con_type=1


Then why would you think WE (the US tax payer) should buy them ourselves? Do you think they will buy more when we buy some ourselves? Dream on. If I were them I would cash out and hide the money under the mattress (their reserve fund).
 
They're not going to benefit. They bought debt and will now be forced to sell it at a HUGE discount. ie a HUGE loss. And once things get going again and there are solid mortgages behind the bonds that can pay the coupons, the interest rates these MBOs pay will be big time for anyone willing to step up and buy in.
 
Originally Posted By: javacontour
So these are the folks who stand to BENEFIT if the government suddenly creates a market to buy these "worthless" MBO's.

While we are at it, let's start a government program to buy back losing lottery tickets. Anyone who played the lottery can submit their tickets to the FED for $0.40 on the dollar gamble... er I mean invested.



That's fair, right? Oh ..sorry, that would insert money too low in the economy. Too many would benefit from the cost redistribution that weren't the intended recipients.

crackmeup2.gif
 
Originally Posted By: PandaBear
Originally Posted By: Drew99GT

Ummmmmmmmmmm, China's federal reserve bank has a ton of MBOs and is now also in a small liquidity crisis. Private equity in the middle east has a ton of MBOs they want to get rid of. See the scope of the problem now? All the places you mentioned ALREADY HOLD THE BAD DEBT!!! They're not going to buy it.
wink.gif


http://www.thestandard.com.hk/news_detail.asp?pp_cat=1&art_id=71445&sid=20506072&con_type=1



Then why would you think WE (the US tax payer) should buy them ourselves? Do you think they will buy more when we buy some ourselves? Dream on. If I were them I would cash out and hide the money under the mattress (their reserve fund).


OK, what is your solution then.
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You're darn right they'll buy them back after selling them as the market interest rates on them will be enormous compared to what they got initially.
 
Last edited:
Originally Posted By: Drew99GT

OK, what is your solution then.
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We (the government) take over a few more institutes' and frauds' (fraud loan initiators, loan initiators that intentionally divert people into sub prime loan, banks with over leverage, fraud credit rating agencies, etc) assets AIG style. Use that to pay off national debt and fix national infrastructures, social security, medicare, etc. Probably also wave labor related tax like social security and medicare for a few years to encourage employment.

The government will profit handsomely, and that should help us out at the time of war and budget crisis, by at least reducing its burden on tax payer.
 
Originally Posted By: Drew99GT
They're not going to benefit. They bought debt and will now be forced to sell it at a HUGE discount. ie a HUGE loss. And once things get going again and there are solid mortgages behind the bonds that can pay the coupons, the interest rates these MBOs pay will be big time for anyone willing to step up and buy in.


Everyone cannot own MBO's. Some do, and are heavy into them. I understand this.

But not everyone owns MBO's. So to say, or to even hint that all the money in the market is tied up in MBO's is silly.

There are other investments out there. If these MBO's are going to increase in value from their unrealistic low current values, then we'd see money moving out of other investments and buying these for pennies on the dollar, or deep discounts.

But the only buyer that we seem to have is Uncle Sam.

If these things are being sold for such deep discounts and we think the citizens should buy them, let's blow them out at Dollar General and see who wants 'em.
 
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