Thursday, February 14, 2008

Desperately Seeking Scapegoats

New meme: the terrorists made us do it:

Is it possible that subprime loans and speculative building/buying were no more than tools, the equivalent of hijacked airliners? If so, the eventual economic cost of those attacks may run in the trillions of dollars. It may also help us find the unity to gird our country against the biggest threat since World War II.

Get back to me when we find minutes of Federal Reserve meetings and manuals on adjustable-rate mortgages buried in a Tora Bora cave.

Of course, if the housing downturn is the "biggest threat since World War II" then "finding the unity to gird our country" is a thinly-veiled call to shut up and accept the inevitability of massive taxpayer-financed bailouts. Ready to join hands, everyone?


Anonymous Anonymous said...

That theory is absurd.

What about mortgage brokers who raked in big, fat commissions and misled naive homeowners into taking on loans they could not afford? Mortgage brokers are not held accountable; there is no incentive for them to deny loans.

2/14/2008 6:39 AM  
Anonymous Anonymous said...

project hope, project lifeline...its all a crock. buried in the subtext yesterday was the fact that -- out of millions in trouble == 869 homeowners have been helped to date......

i'm with you. the banks are just dragging this along until the government agrees to pay for it all. and it will. after all, george is in charge, and what's good for the corporate elite and their bonuses, is good for america, right?

2/14/2008 6:39 AM  
Anonymous Anonymous said...

You know how we're always told that super rich people deserve all their $$ because they took risks and won?

The corollary is that people who don't take risks are safe but won't ever get super rich.

I'm ok with that. I'm not a risk taker, i'm more concerned with being safe than being rich.

With that in mind, i didn't buy a house the last few years because the prices were, to me, insane. People who i considered idiots (i.e., risk takers) were buying overpriced houses using incredibly stupid mortgage schemes. I kept my money in conservative, safe accounts.

Now the housing market is crashing, the risk takers aren't doing so well - what does my gov't do? It devalues my dollar while bailing out (with my money) the idiotic risk takers -

I guess I'm the idiot...

2/14/2008 8:40 AM  
Anonymous Anonymous said...

No, just naive.

2/14/2008 12:20 PM  
Anonymous goldhorder said...

Ready to join hands, everyone?

I'll be sitting on my pail...above my sack of gold...with a rifle in my hands. Don't come too close.

2/14/2008 12:30 PM  
Anonymous goldhorder said...

ummmmm...anonymous...shut up with the whining and start hording gold and silver. This mess ain't over yet and Bernacke is talking rate cuts as far as the eyes can see.

2/14/2008 12:41 PM  
Anonymous Anonymous said...

anonymous said....
"Now the housing market is crashing, the risk takers aren't doing so well - what does my gov't do? It devalues my dollar while bailing out (with my money) the idiotic risk takers -
I guess I'm the idiot..."

This is just a variation on saving for your children's education. When its time for college and you apply for financial aid, aid is reduced/denied because after all, you were smart enough to save. Those with the same income who spent it all and have no saved assets then get the more generous aid package...

2/14/2008 3:34 PM  
Anonymous goldhorder said...

Excellent analysis from Chirs Laird. Another guy who is way way way smarter than me.

2/14/2008 4:08 PM  
Anonymous Anonymous said...

Analysis is generally worth what you pay for it.

Gold may go up, or may go down. It's a risky investment, especially at the current price.

Sigh.. I long for just some interest rates that are above [real] inflation. That would allow me to save some $$ for retirement and also for some trips where i can take the sorts of risks i enjoy (physical rather than financial).

No, i won't buy gold. And if it continues to rise, you can laugh at me just as the "house flippers" laughed at me in 2005.

But they're right, the final joke is on me.

Have fun, and good luck to you.

2/14/2008 5:22 PM  
Anonymous Anonymous said...

We are talking about adults having taken out these mortgages, correct? How far are we from a nanny-state now that every risk will be taken care of by the government?

If I don't see double-digit gains in the market each year, can I also get a bailout?

Jumping in to help out lenders and those with ARMs just provides further disincentive to take responsibility for one's actions.

Whether or not he intended to, Bush has increased the size and scope of our meddling government - it will take true conservatism decades to unwind this mess.

Is Ron Paul still available? he really nailed this.

2/14/2008 7:55 PM  
Anonymous Anonymous said...

Anonymous at 7:55 --

This is not new, you know. Banks loaned lots of money to developing countries in the late 70s/early '80s, those loans defaulted en masse. The S&L crisis of the late 80s you may recall. The Asian/Russian crisis and the LTCM "bailout" of the late 90s followed.

Now, here we have a new debacle. The big difference this time is that, in some circles, it is popular to blame the people who bought houses for the problem. This is exactly the same as what has happened before -- large financial institutions engage in financially risky behavior to such a scale that, when it turns out that they have messed up royally, they need to be bailed out.

Privatize the gains, socialize the risks -- it is a game that keeps getting played.

Conservatism, at least as it has been practiced over the last 40 years, isn't going to help -- too many "links" between the bankers and the politicians.

Populism might be the only answer, as scary as that might sound.....


2/14/2008 11:16 PM  
Anonymous Anonymous said...

"Gold may go up, or may go down. It's a risky investment, especially at the current price"

it may go up, may go down, but it's the only currency that's no one else's debt. think about that while the cds debacle unfolds. i'm sure some think tanker can figure out how the terrorists caused all the banks to ignore counterparty risk too.

2/15/2008 12:21 AM  
Anonymous Sven said...

So everyone who bought a house in the past seven years is an enemy combatant now? How big is Cuba?

2/15/2008 3:14 AM  
Anonymous goldhorder said...

Gold is not a risky investment. In fact it is not an investment at all. Gold is money. Real money. It has been for thousands of years. Only the rich and the asians (who understand inflation better than the average American) have piled into gold so far. When the average investor starts moving in look out. The demand for gold has not reached its peak. It is slowly returning to its historical status as a store of value. If you ever bothered to study the history of money you wouldn't have the crazy concerns. Gold is going up in value and nicely printed paper is going down in value because this has always been the case...always...even if the paper is managed somewhat responsibly for awhile...the temptation is always there. The USD is still overvalued. Our goverment's solution to our current economic situation is not to encourage savings and reduce is to print money and go further in debt. What has driven gold to over $900? Have these policies changed? I don't need to wait to laugh at you...I'm already laughing at you. LOL. The only historical comparison that matters is after 1972 when the Nixon broke the dollar completely from Gold. From 1972 to 1980 Gold beats Dow. From 1980 to 2000 Dow beats Gold after some tough love administered by Fed chairman Volcker. That is what made Gold fall out of favor and the USD strong. From 2000 to present Gold beats dow. Not only that...but if you pay cash and take physical custody of your gold you can hide everything from the government. NO TAXES! Honestly if Bernacke grew a pair and raised rates we would go into a recession and the stock market would tank. I would suspect Gold would fall but not as much as the stock market as Gold is always a place where the smart money goes during bad times. If America ever starts saving again and if we ever get our politicians under control (near term a very unlikely prospect) I'll probably be the first one back in the stock market while everybody else is still too timid. Ahhhh the life of a contrarian. Gold did not go from a "barborous relic" and under $300 an ounce in over $900 an ounce in 2008 for no reason. Have those reasons changed? Have our political class looked at our economic situation and decided to take a different course of action? The answer is blatantly obvious of course...but do what you want...its your money...or lack of money. LOL

2/15/2008 8:11 AM  
Anonymous Anonymous said...

Goldholder (as can be seen by his name) has swallowed the cool aid.

Look, i'm not an investor, to me it's not between gold or the stock market.

I work for a living. I want to save my extra earnings in an acct or a security that will give me decent interest rates.

In the 1990s i read all the reasons why stocks are safe and never go down, i read the same about real estate in the 2000s and now i'm starting to see the same stuff about gold.

Lots of people will lose money in gold (ask people who invested in it in the early 1980s). I'd rather not be one of them even if it means losing the chance the "win big" in the gold "sure thing." And yeah, there's a good chance gold will continue to rise - or not.

Again, i'd rather take my risks surfing big reef breaks, than in speculating on stocks, real estate or gold.

So, yeah, i'm not buying it, but to each his own, good luck.

I'm certain if gold crashes, wage earners will be bailing you people out as well.

2/15/2008 9:52 AM  
Anonymous JackofAllTirades said...


I'm blaming everyone involved in the housing debacle - lenders, lendees, politicians who want to take care of everyone.

I see your point about 'privatizing gains', 'socializing risks'. What I'm saying is let everyone involved take the fall for this - I don't see why the American taxpayer should come the rescue of the housing industry as we did to the tune of $250+ billion for the S&L scandals in the late 80s.

Thanks to Bush, we're now facing a $52 trillion dollar deficit (when you take into account what we'll be paying out for Medicare and SS). We've already got a trillion dollar Iraq war to pay for (and probably another trillion dollars to extricate ourselves from the morass), let's not add to our debt.

2/15/2008 10:41 AM  
Anonymous goldhorder said...

hahahaha swallowed the kool-aid. I've been posting under this name a very long time. The only time in my life I've ever been "in" at the bottom. I am not part of the herd. I am a classic contrarian. When the dynamics change...I will change with them. What are those dynamics? Say the fed raised rates significantly...the economy takes a nose dive...the stock market takes a big drop...Americans start scrimping and saving again...goldhorder than changes his name to stockhorder...I was out of the tech market way way way before anyone else. I saw that house of cards. I saw Bush's reckless war and reckless spending and knew what was in store for us. LBJ style guns and butter followed by massive inflation to pay for it all...this didn't happen until after the war during Nixon and Carter's terms. It has already started and the Bush is still in office...hahaha. Gold's got a ways to go before its climb is over. Our debt problems aren't going to disappear on their own. You are a ship without a sail. Study is not isn't that hard to plot the trend when you understand historical patterns. All of the forces that have pushed gold higher are still in play. Gold is a fundamentally good buy...the masses are not invested in gold....Wealthy americans, asians, arabs have pushed the price up to $900 because they all are predicting bad things from the US goverment. I'm sure they are right. The only way they will not be right is if our political leaders start making better decisions. If they do I know exactly what to do!

2/15/2008 12:46 PM  
Anonymous Anonymous said...

"Gold's got a ways to go before its climb is over."

great - sounds like a sure thing there for you.

Look, again, you're an investor, no actually you're not, you're speculator. i'm neither.

I'm a worker and a saver. I wish the gov't would stop stealing my money to bail out people who "got a sure thing."

Yep, naive...

2/15/2008 12:55 PM  
Anonymous goldhorder said...

When I am investing in stocks I am a speculator. I do not speculate in stocks because they are way overpriced now. Instead I am saving money in hard currency gold. Gold 3000 year history as money. USD 35 year history unbacked by gold. See the difference? I do think gold is going to become more valuable. That is because the demand for gold as money will go up and the supply will roughly remain the same. But I am not concerned with it. Even at its low point after 1972 and the inflation of the 70s gold's value never went anywhere near zero. In the last 3000 years gold's value has never been zero. There is a long line of paper currencies that have hit the zero mark. No...I am not a speculator. I would like to be a speculator because I have the wealth to take calculated risks...I am not a speculator right now because market conditions do not permit me to take calculated risks.

2/15/2008 1:05 PM  
Anonymous Anonymous said...

Sure, buying gold right now is not speculating because it won't go to 0. Hey, buying that second condo in boca wasn't speculating as it won't go to 0.

Man, have fun with your gold or (lord help us) gold futures.... good luck to you.

2/15/2008 3:18 PM  
Anonymous George said...

The terrorists caused the mortgage meltdown all right; the terrorists in the White House, that is. When state Attorneys General wanted to do something about bad lending practices five years ago, the Bush administration didn't just "not help", they actively prevented the states from regulating the lenders! This little known info needs to be hung around the necks of the ideological GOP for all to see. I hope that the Republicans are crushed for at least a generation by the fallout from Bush's reign of error.

2/16/2008 2:00 AM  
Anonymous goldhorder said... is not specualtion because it is real money. Why is that so hard to understand. Currencies fluctuate. Gold is on the rise as a form of currency because people are losing faith in unbacked paper. The only thing preventing the dollar from going to zero is the honesty of our political and banking financial leaders. They haven't been doing a good job lately. And if you can't tell...they are seriously thinking about monetizing the bad debts on the books to bail out our banking industry. If that happens...look out.

2/18/2008 9:06 AM  

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