First!Ho humm

Boring World

m,open your eyes and ears, nose and heart.hellen keller was just honored witha bronze statue in the capitol. i wouldlink a video but our australian friendswould have to pay some ungodly amount ofwhatever paper fiat shit they have down thereto see it and i have made a stupid commitment.this is how the world works, or does not!?so boring is the wrong word. but….i think i know what you might mean.?bullshit!misdirected? stupid! crazy! unappreciated?full of shit! depleted! toxic! but….we have life and energy! yes. obama will notfix, we will fix! [|;-).=.****—.( experimentwith available keyboard symbols/characters ? )song required here, i will search.ps.it is all about the breath and silence.

Asia steps in to support dollarBy Kevin Brown in Singapore, and Peter Garnham and Chris Giles in LondonPublished: October 8 2009 15:09 | Last updated: October 8 2009 20:43Asian central banks intervened heavily in the currency markets on Thursday to stem the appreciation of their currencies against the US dollar amid fears that their exports could be losing ground against China.http://www.ft.com/cms/s/0/1e894c54-b40f-11de-98ec-00144feab49a.html

Medic, this one’s for you!‘Secret’ life insurance triggers suitsThe right-wingers have been telling us all along that our high costs of medical coverage is largely due to litigation. They were right! They should know, as they are the biggest culprits! The audacity of these hypocrites never ceases to amaze me.

Ben is Gold Bull’s best friend.

Professor Roubini,Good argument about the disconnect between asset prices and what is happening in the real economy. At least cite me when you use more than seven of my words!

Not! It’s not checking with my registers!Sorry, but I cannot validate your clamor!You can try again in another opportunity.Fellows of this thread, I’m so proud to annouce for you: the “FIRST” is still OPEN!Run and clame your ‘FIRST’!Mis besos

Professor is in a different world then mine!Whart about Japan, Germany etc? The USA is the question! And guy above (Guest on 2009-10-08 22:30:22) is right when he ask professor to refer to the concret situation of real economy in this days: public debt, risk rising, labour market, price/earning, Dollar, Gold, commodities etc! The economy is again facing the plein desaster! Professor needs come to the actual moment. I think that we are, AGAIN, on the eve of important events in the world monetary markets! The US$ is on the brink of the abyss. What can it happen to save the US$? I don’t know! And more, what can it happen to substitute the US$? I think that the world doesn’t know! I think that the time factor acquired the absolute importance, because forthe ideas, if they already exist, the time remaining is only one for one successful implementation! There is no time for two attempts! It’s all terminal! I think, in my fellings, that Professor Roubini knows very well about all this!Please, forgive my very poor English.Mis besos

Blindman,thanks for the offer but too much trouble – The Telecommunication / Internet Industry is a huge sanctioned scam – call it Organized Crime by Algorithm – there are no tricks that they do not pull on their victimsI see a total breakdown in the socio-economic structure of the whole World – mileage will vary – v. Hayek is correct – the real economy is morphing as it has been killed by the politico-central banking community on behalf of “Wall Street”.Which means that the real economy will change itself and the Wall Street economy will collapse on its own sword.Life is interesting and I ( voluntary frugality)or, I have learned to do without many things – the World of slicks is in a state of desperation and extremis as little men only exacerbate that which comes at their own hands.Unfortunately as the US collapses, it will drag much of the World down with it (mileage will vary) and then onto the Dark Age – albeit for some.To see this one only needs to look for sanity and to find that it nowhere can it be found. Chaos is pervasive and little men leap up and down like organ grinders and their monkeys.sad but exciting to observe,Ho hum

He who says that a phenomena is too complex to explain (to you) does not have a comprehension of that which is the context of the discussion at hand.Here is the current status of the economic situation: It is in a state of total collapse being primarily due to the fact that those in control have no idea what is happening as it is just too complex (to explain) – in their opinion.”They” can manipulate all they want but in the end, the collapse will be had. Too bad.Organized Crime is an Effect.Ho hum

Krugman, Gore, Greenspan (OBE) and now Obama – LOL – there is no place to go but down – this is just so sick!Ho hum

First, you hijack the language. First, you take the word ‘commons’ and remake it into the word ‘resources’. You can’t “own” what is naturally given to all humans in common. You can “own” ‘resources’. Get everyone to accept refering to what is inherited by all humans in common as ‘resources’Now you can hijack the world’s wealth.

The world needs a Savior – Bamelot talks the talk; the Audacity of Hope!At least you still have the aborigines – they can help you enter DreamTime down under. That is a lot better than Hopium!

Hey, Earthlings – How’s that billions to one inequality wealthgap plan working out for you?

Bloodbath ? Bloodbath…Schizophrenic Market?Icahn: Risk of Double Dip, Investor ‘Bloodbath’There is a real risk of a double-dip recession and the market is acting in a “schizophrenic” way, which could cause a “bloodbath” for investors, billionaire investor Carl Icahn told CNBC Friday.http://www.cnbc.com/id/33238210#

blindman -I just finished Jon Krakauer’s new book, “Where Men Win Glory” about Pat Tillman and the cover-up and politicization of his death.Pick it up. It’s a must read.Orwell was all to well aware of how people can be and are manipulated by TPTB – and always have been.

Remember that most of the dollars that have been pumped into the system are just replacing other dollars that were destroyed by the debt pyramid collapse. The pryamid is still collapsing.. Maybe even faster than it was when the crisis was first announced… Stop the inflow of dollars to replace those being wiped off the books by collapsing debt and all of a sudden dollars are again in demand.The only way that the *recovery* is being touted as a success is by expanding public debt to replace the private and commercial debt that is collapsing all around us. This is NOT a true recovery but a false one. We all know this.So the question is, will the money pumping into the false economy, or into the black box trading systems of Wall Street, actually be able to fix anything? Or will it just cause the system to roll over and collapse upon itself…If you believe that the economy will be fixed, even for a while, by the machinations of TPTB then the real out come will be a collapse of the dollar because the only way they can pay for the debts they are piling up is not with actual real income from productive work but from their printing presses….But IF private and commercial debt collapses faster than TPTB can issue new debt to cover it, OR interest rates climb, then dollars will be again in demand and the value will reverse and go back up…I suspect that the later will be the next course as the FED and the government pull back from their *printing* with words of recovery.Then when the dollar has strengthened somewhat, and the stock market has declined, while they take profit on both accounts, they will go back to their massive injections of public debt to try again to save the un-save-able.

Housing Overhang/Shadow Inventory =Enormous Problemhttp://matrix.millersamuel.com/wp-content/3q09/Amherst%20Mortgage%20Insight%2009232009.pdf

Ilargi: Turns out, Timothy “Disaster” Geithner has a list of 4 friends that take up a very large segment of his time on the phone. They’re the CEO’s of Goldman Sachs and JPMorgan Chase, as well as both the Chairman and the CEO at Citigroup. Apparently, these 4 men are his only close friends. Reading through the AP report on Geithner’s appointment calendars, you get the distinct impression that the US Treasury Secretary stops just -but only just- short of putting the president on hold when he calls. Members of Congress are not that lucky.What does Geithner talk about with his buddies-of-yore? Well, one thing we know they must have discussed a lot is how to make sure the Federal Reserve and Geithner’s own Treasury could shove $1.2 trillion into the housing market, as reported by the Federal Housing Finance Agency, mainly through Fannie Mae and Freddie Mac, but increasingly also through the FHA and Ginnie Mae. FHFA acting director Edward DeMarco claims there’s $750 billion more (!) “available if necessary” for the same purpose.The [Federal reserve] has paid $885 billion for mortgage securities, most of them issued by Fannie or Freddie, and also has given the GSEs $131 billion to buy up their debt obligations. DeMarco called these infusions a “considerable backstop” and said they empowered the firms to play “a critical role in bringing some measure of liquidity to the mortgage market.Of course, most of this money flows towards the biggest mortgage lenders, which apart from Geithner’s speed-dial cronies include the likes of Bank of America, which is, if they know what’s good for them, looking, as we speak, for a new CEO who’s close to Geithner, to replace Ken Lewis who was not, and Wells Fargo, the remaining giant mortgage lender in the field. That should about cover it.Still, at least part of the almost $2 trillion is also used by Fannie and Freddie to prop up independent mortgage banks , by committing in advance to buying up any loans that “meet certain standards”. What is achieved by this is an ongoing semblance of a free market. And as long as the taxpayer pays for and guarantees that semblance, that’s fine with the big boys.The independent banks that are artificially kept alive through these programs have found ways to add to their stroke of luck.The Mortgage Bankers Association recently announced that independent mortgage lenders made an average profit of about $1,100 per loan originated in the first quarter of the year, an astonishing 635 percent increase from the previous quarter.Nine big mortgage lenders, representing about two-thirds of the market, made about $9.1 billion in the first six months of the year off loan originations [..]. In 2008, those lenders made about $3.3 billion for the whole year.”There’s been a return of fees — originating fees, underwriting fees, processing fees — fees you haven’t seen in years,” says Guy Cecala, publisher of Inside Mortgage Finance. “There are roughly 12 to 20 fees you wouldn’t have seen as recently as two to three years ago. But lenders can charge them, so they’re charging them. “This is the greatest period in recent memory for generating income,”Then there’s the issue of the massive government subsidies designed to spur lending, resulting in low interest rates for mortgages.[..] Ironically, the fact that government-supported mortgage giants Fannie Mae and Freddie Mac now back four out of every five new mortgage loans has made the process for lenders much easier. “We live in an automated mortgage processing environment,”[..] Fannie- and Freddie-backed loans require little more than a few clicks of the mouse on the part of the lender. “If you type in Fannie or Freddie, the system will tell you whether it’s a go or not,”Inevitably, in an environment where a government and central bank are so eager to hand out public funds to keep a long-dead skeleton of an industry “alive”, what’s left of that industry will try to drive an ever harder bargain. So when the government shows its fear of a coming wave of Option ARM foreclosures, you get this:Lenders and government officials are searching for ways to head off a wave of defaults on pay-option adjustable-rate mortgages, which are threatening to become the next storm to hit the U.S. housing market. ARMs aren’t easy to modify because of the risky features of the loans and their concentration in states where property values have plummeted the most.Administration officials have been talking to mortgage investors and servicers about ways to help option ARM borrowers avoid foreclosure, but the parties don’t appear close to a solution. A major sticking point: whether lenders need to forgive loan principal to help the borrowers stay in their homes.The major mortgage servicers — J.P. Morgan Chase & Co., Wells Fargo & Co. and Bank of America Corp. — also hold large portfolios of option ARMs acquired through purchases of other banks. Investors suspect that they are reluctant to forgive principal on option ARMs in their servicing portfolios because that could trigger write downs of the banks’ option ARM holdings.Now, first of all, loan modification programs initiated by the Obama administration have overall been miserable failures so far. And second, when a government offers truckloads of money to save companies, and the latter respond with entire lists of demands for the privilege of saving them, you have a real big political problem on your hands, so much so that you have to wonder about that government’s intentions. The public’s best interest would undoubtedly be served by saying something like “if you don’t want it, take a hike”. But that’s not happening. And with Tim Geithner’s phone pals in line to be the main beneficiaries of what does happen, that should perhaps not be too much of a surprise.To keep the mortgage money machine rolling, new tax credits for home buyers are about to be agreed on, this time for all buyers, and with more credit to be had. Calculated Risk points out that if you look at only those people who would not buy a home without the help, the overall cost of the newly negotiated credits would come to between $100,000 and $150,000 per home. That is the kind of thing you find in your thesaurus under perverse.While still stuck in the unbelievable mess they’ve created in the domestic real estate market, the same parties, the Fed and Washington, that have the political power to hand out your funds, are now turning their eyes towards commercial real estate. There is no reason whatsoever to assume that their adventures in that field will be any more successful, or any less expensive (to you) than what they’ve so far lost by intervening in the housing market. And lost it is, don’t you doubt it, all the trillions of dollars of it. A large chunk of it will go to the friends-of-Timmy banks, and the rest will simply evaporate as home prices keep plummeting. The trillions have achieved no more than a year, maybe 18 months, of respite. Not respite from falling, prices have kept on decreasing, but respite from falling much harder.There is nothing the government can do to stop this. Why not? Because consumer credit is plunging, and will continue to do so for some time to come. Because there are 10.6 million properties available, or 25 months worth of inventory at present market sales speed. Because prices have a long way more to fall before they fall into any realistic “affordable” scale. Because unemployment rises by between roughly 500,000 and 1 million people each month. Many more will lose their homes to the equally rapidly rising numbers of foreclosures, adding still more inventory to what’s already there.Obama, Geithner and Bernanke need to get the hell out of the mortgage market, or they will squander more and more taxpayer money on lost propositions. And all this is so obvious that it’s impossible not to wonder why they do what they do. The answer to that question can be found in Tim Geithner’s rolodex.The number of homeowners who are underwater is getting bigger all the time. Another 10-15% drop in prices will see well over half of them owing more than they “own”. And while that process is in full flight, the government induces the next batch of hapless dreamers to become part of the American nightmare, apparently not hindered by any moral compass.——————————————————————————–Feds Spent $1.2 Trillion to Keep Fannie, Freddie, Others Afloat in FY 2009The U.S. Treasury and Federal Reserve pumped a total of $1.2 trillion in investments into the U.S. mortgage market in fiscal 2009, according to a report by the government last week. The Federal Housing Finance Agency gave a full accounting of the infusions so far – most of them to the troubled government-sponsored mortgage enterprises Fannie Mae and Freddie Mac.But in a speech at the New England Mortgage Bankers Conference in Providence, Rhode Island, the agency’s acting director, Edward DeMarco, argued that another three quarters of a trillion dollars was available if necessary. The amount already spent remained impressive, however. By the fiscal year’s end on Sept. 30, the Treasury Department had given Fannie and Freddie $96 billion in cash for preferred stock shares, and another $181 billion to purchase underperforming mortgage-backed securities from the firms.The lion’s share of the outlays, though, came from the Fed’s coffers. The national bank has paid $885 billion for mortgage securities, most of them issued by Fannie or Freddie, and also has given the GSEs $131 billion to buy up their debt obligations. DeMarco called these infusions a “considerable backstop” and said they empowered the firms to play “a critical role in bringing some measure of liquidity to the mortgage market.In a separate development, Freddie Mac warned prospective buyers of its foreclosed properties that bids needed to be in by Oct. 30 to collect on an offer that would cover part of the sale’s closing costs. Freddie has 34,700 in real estate owned properties. Buyers also must close on their homes by Dec. 31 to qualify for the closing cost discount. “Every home shopper should know there are only 30 days left to save potentially thousands of dollars in transaction costs when they buy a HomeSteps home,” Freddie vice president Chris Bowden said in a statement.——————————————————————————–Fannie and Freddie to Aid Mortgage BanksFannie Mae and Freddie Mac are preparing to introduce a program aimed at helping independent mortgage banks acquire the short-term credit they need to make home loans, according to people familiar with the plans. The two government-backed mortgage companies, the main providers of funding for U.S. home loans, plan to provide advance commitments to purchase home mortgages that meet certain standards. The goal is to reduce risks faced by independent mortgage banks so they can obtain short-term credit.Spokesmen for Fannie and Freddie declined to discuss details of the plan, and the companies’ regulator, the Federal Housing Finance Agency, declined to comment. But other people briefed on the situation said Fannie and Freddie plan to build on a previously undisclosed pilot program that Freddie has with Provident Funding Associates LP, a large national mortgage lender based in Burlingame, Calif., and with NattyMac, a so-called warehouse lender based in St. Petersburg, Fla., that provides short-term funding to mortgage companies.Under that pilot program, these people said, Freddie makes commitments to purchase loans made by Provident Funding that are financed by NattyMac. NattyMac is responsible for ensuring that the loans meet certain quality standards set by Freddie. The commitments from Freddie reduce the risk that NattyMac or Provident will be stuck with loans that are rejected by Freddie or Fannie and can be sold to other investors only at a huge discount. Provident Funding officials couldn’t be reached for comment. A spokesman for NattyMac’s parent company, Guggenheim Partners LLC, a New York-based financial-services concern, declined to comment.Many independent mortgage banks have gone out of business or reduced their lending in the past two years because they have been unable to get enough funding from warehouse lenders. Wall Street firms and some big banks have withdrawn from the business, partly to conserve capital for other purposes. As a result, independent mortgage banks are losing market share to better-financed banking giants. In this year’s first half, the three biggest mortgage lenders — Wells Fargo & Co., Bank of America Corp. and J.P. Morgan Chase & Co. — accounted for 52% of new home mortgages, according to Inside Mortgage Finance, a trade publication. In 2007, the top three had a 37% share.——————————————————————————–U.S. Government, Lenders Seek Ways to Head Off New Mortgage-Default WaveLenders and government officials are searching for ways to head off a wave of defaults on pay-option adjustable-rate mortgages, which are threatening to become the next storm to hit the U.S. housing market. Option ARMs aren’t easy to modify because of the risky features of the loans and their concentration in states where property values have plummeted the most. Once the rage in Florida and Nevada, the loans catered to creditworthy borrowers who had to stretch a great deal to buy a home in an overheated market.Administration officials have been talking to mortgage investors and servicers about ways to help option ARM borrowers avoid foreclosure, but the parties don’t appear close to a solution. A major sticking point: whether lenders need to forgive loan principal to help the borrowers stay in their homes. “All sides are talking,” said Laurie Goodman, a senior managing director of broker/dealer Amherst Securities Group. “The servicers and investors have different solutions to the problem. Servicers are more reluctant than investors to forgive principal.”Mortgage investors contend that forgiving loan principal is crucial because so many option ARM borrowers are underwater, owing much more than their homes are worth. Meanwhile, servicers favor taking other measures before writing off any loan principal. The government risks a backlash from borrowers who are paying off their loans in full if it takes steps to encourage principal forgiveness.The major mortgage servicers — J.P. Morgan Chase & Co., Wells Fargo & Co. and Bank of America Corp. — also hold large portfolios of option ARMs acquired through purchases of other banks. Investors suspect that they are reluctant to forgive principal on option ARMs in their servicing portfolios because that could trigger write downs of the banks’ option ARM holdings.Delinquencies and foreclosures of option ARMs are climbing and the problem is expected to get worse. In the second quarter, 15.2% of option ARMs were at least 60 days past due, compared with a 5.3% delinquency rate for all mortgages, the Office of the Comptroller of the Currency said in a report analyzing 34 million U.S. mortgages. Meanwhile, 10% of option ARMs were in the process of foreclosure, more than triple the 2.9% rate for all mortgages, the OCC said.The poor performance partly reflects the loans’ heavy concentration in the four states that have seen the sharpest price drops. Option ARMs represent nearly 40% of loans at least 60 days past due in Florida and in Nevada and 28% of such loans in California, according to First American CoreLogic. One in five delinquent mortgages in Arizona is an option ARM. Making matters worse, more than a million option ARMs are due to reset over the next four years, according to First American CoreLogic. When that happens, borrowers who were making partial interest payments will have to make fully amortizing payments reflecting a larger loan balance.Option ARMs aren’t good candidates for the government’s loan-modification program. Borrowers with such loans are often already struggling to make already very low payments, leaving little room to cut the payments further. Some borrowers are so deeply underwater that lenders would have to write off or defer huge amounts of loan principal to achieve a sustainable modification. That could trigger a failure of the net present value test required to complete a modification under the government’s program.Mortgage servicers are seeking changes to the program to make it work better for option ARMS. They propose forgiving deferred interest, converting the loan to one with an interest-only period and increasing the loan term before any principal is written off. By contrast, investors favor refinancing borrowers who qualify into a Federal Housing Administration-backed mortgage after the loan principal has been cut.Wells Fargo, which values the Pick-A-Pay loans it acquired when it bought Wachovia Corp. at $90.45 billion, says it has been successful in modifying them on its own or through the government’s program. “We continue to work with the administration on industrywide solutions that address the unique nature of option ARM and negative-amortizing loans,” Wells Fargo spokesman Kevin Waetke said.Investors argue that slashing monthly payments or forbearing principal — when portions of the loan balance is deferred — won’t help many option ARM borrowers because they are so upside down on their mortgages. The concern with principal forbearance is that people may still owe much more than their house is worth, said Michael Henriques of Magnetar Capital, a mortgage investor. “There’s no material incentive to maintain or take care of it,” he said. That deterioration drags down the property values of the neighboring houses as well, prolonging the housing recovery, Mr. Henriques said.Bank of America valued the pay-option loans it acquired when it bought Countrywide Financial Corp. at $23.2 billion as of December 31, 2008. Meanwhile, J.P. Morgan holds nearly $40 billion of option ARMs from its acquisition of Washington Mutual last year.

Disagree. The major players in the rest of the world are organised enough that they might take a hit from the collapse of the US but they would not implode with it. The first Dark Ages occurred in Western Europe while Byzantium, China, and a number of placed carried on. What makes you think it would be so different now? So-called interdependency?

Go Ahead, Walk AwayThere is nothing immoral about ditching your mortgage.By Mark GimeinPosted Thursday, October 8, 2009 – 6:18amA solid two years into the housing bust, the national foreclosure wave doesn’t show the least signs of abating. Banks that had called a foreclosure moratorium are now back to the business of taking back properties, and the foreclosure numbers are again at record highs. As the foreclosures rise, so too does the criticism of “walkaways” who hand the keys to their drastically devalued houses back to the bank.Last month a study from the credit reporting agency Experian and consulting outfit Oliver Wyman estimated that close to a fifth of troubled mortgages involved borrowers who were “strategically” defaulting—walking away from mortgages they could pay but decided not to because they owed more than their houses were worth. Self-assigned guardians of financial ethics see the willingness of borrowers to abandon their mortgage debts as a sign of the “erosion of social and moral standards.” The aim of these critics is to shame debtors into sticking with their mortgages. That’s something debtors should take with a grain of salt. There are many good reasons to keep paying your mortgage and avoid the black mark of foreclosure, but the immorality of sticking the bank with a loss isn’t one of them.Some observers, like Zubin Jelveh of the New Republic, have taken issue with the Experian-Wyman study’s methods, arguing that it was too broad in defining “strategic” default. But unlike some other reports that play up the number of deadbeat debtors, this study uses a fairly narrow and defensible definition to arrive at its conclusion that 18 percent of mortgage defaults are “strategic.” (Experian showed the report to The Big Money, but asked that it not be posted.) The study focuses on borrowers who, once they hit 60 days late, roll straight through to foreclosure without ever making another payment and manage to stay current on all their credit cards.These are pretty good signs that someone could try harder to pay the mortgage—an idea supported by the fact that the borrowers who fit the model often had higher credit scores (and so probably more financial knowledge) and tend to live in states such as California, in which banks can’t keep pursuing them for more money after taking their houses.So let’s say the Experian/Wyman study is right in its assessment that there are a fair number of strategic defaulters. Those who use this study and others like it to argue that the foreclosure problem is one of moral failure among borrowers are still wrong. Borrowers who walk away from mortgages calculating that they’re better off taking the risk of not paying aren’t abusing the system. They’re using it the way it’s designed to be used.“Strategic default” is generally seen as an issue arising from laws in some states—including California, the reeling giant of the housing bust—that make traditional mortgages “nonrecourse,” meaning they don’t allow lenders to pursue any shortfall after foreclosing on a house. This is a bit of a simplification, as the actual rules are complicated, especially if multiple mortgages or refinancing is involved. In California, for instance, mortgages that have been refinanced are technically no longer “nonrecourse.” They remain subject, however, to the state’s “one-action rule,” which forces banks to choose between a relatively quick nonjudicial foreclosure and a much longer and more involved process of suing for all the money they’re due. As a practical matter, walking away from your mortgage is a more involved process than it might seem and not, as the critics sometimes imagine, simply a matter of living in a nonrecourse state.Still, as the Experian/Wyman study convincingly shows, a meaningful number of debtors do calculate that they are better off walking away from a deep underwater house instead of exhausting their savings in the effort to “fulfill their obligations,” as the mortgage moralists like to put. Some of these, though not the majority, are investors who have mortgages on several properties. Others are ordinary folks, though often reasonably well-off (judging by the credit scores), who are financially savvy and want to protect their other assets.The most vociferous critics of the walkaway phenomenon paint every debtor who abandons a mortgage before spending every possible dime to repay the bank as an abuser of the system. This is pure nonsense. Folks who lecture debtors pile on the ethical frosting with statements about how a mortgage involves a “promise” to repay and is so somehow inviolable. But one good way of judging whether a contract has the straightforward moral character of a “promise” is to check whether it is accompanied by many pages of fine print. Nonrecourse rules exist in the first place because some states saw more subtle gradations of what makes a promise—and decided that keeping people out of debt slavery was a higher public priority than assuring that banks get repaid.But if those who are choosing between quitting their homes and flat-out penury are clearly not abusing the system, what of those who don’t let it get to that point—the folks who calculate that having a foreclosure on their credit report is a better option than continuing to pay off their debts? In the telling of the moralists, letting these people walk away from mortgages creates a “moral hazard,” rewarding those who are willing to speculate with the bank’s money. In real life, things are rarely this clear-cut—when it comes to the house they live in, few have so purely calculating a view. It is to some extent true that home buyers who can’t be pursued for all their assets can make riskier choices. But that’s not nearly the whole story.The history of the recent mortgage boom is one of bankers racing to outdo one another in lending more money on the basis of ever-flimsier collateral. This is not a new phenomenon. It is a speculative mania, as has appeared in real estate time and again, and one reason for the restrictions on banks collecting the full face value of busted mortgages is to make it less common. These restrictions on banks are not some newfangled innovation. California’s one-action rule, for instance, dates back to 1860, a period during which ranchers bid up the price of land, thanks to easy backing from lenders who encouraged speculation in the hope of quick returns. Even the term walkaway is by no means new—it appears in this nearly 50-year-old (and lecture-free) story from Time, which cautions bankers that if they keep making careless mortgages they’ll have to deal with debtors who abandon them.That old news story has things exactly right. It’s banks, not home buyers, that are in the better position to judge the real estate market and how much their collateral is really worth. The bank approves the assessment and decides how much equity a home buyer will be required to put up. All the mechanics of mortgages are designed to let a lender avoid the situation in which it is owed more on a house than it is worth. The limits on banks’ ability to collect on badly underwritten mortgages places the responsibility for judging the sanity of real estate loans in the hands of lenders.Clearly in the last few years all these mechanisms failed utterly. They failed, not because of morally bankrupt borrowers who go back on their “promises,” but because bankers decided to count on a perpetually rising real estate market to absolve them of the necessity of responsible lending. Far from misusing the lending laws, borrowers who use the rights the law gives them to walk away from mortgages merely place the risks of insane lending where the law intends them to lie. What they do is not dishonest; on the contrary, a key reason we give borrowers the ability to do that is to keep bankers honest and responsible.In periods of market insanity, this doesn’t work. But don’t blame the walkaways for exercising their rights. Blame the bankers who didn’t worry about lending a whole lot more than they could get back in a foreclosure. The lesson of watching debtors walk away is a harsh one (not least for the taxpayers, who now effectively guarantee most mortgages), but the more bankers pay attention to it now, the better their chances of steering clear of the next bubble.

My goodness. What has he really done to deserve this honor?To Paraphrase Hillary Clinton in last year’s election, “He gave a speech.”We had the first Affirmative Action Presidential election and now we seem to have Affirmative Action Nobel Prizes?

As I have been saying for the last 2 years, if our leaders had told the bankers to allow all homeowners who can demonstrate hardship to refinance at 3%, then 90% of foreclosures and declining home values would have been avoided and taxpayers would not have to guarantee 23 trillion dollars at essentially 0% interest to bailout insolvent, reckless institutions from thier highly leveraged gambling fiascos.

More hijacking of the language. Only labor earns money, only labor makes money.Money rakes and takes money. “Interest”ing.

you a moron, if homeowner already in hardship, you think refinance at 3% will help? best medicine is foreclosure to cleanse out those who cant afford home ownership and for bank to reverse decades of loose/cheap money mortgage financing.

Blaming the victim is a hallmark of psychopathology. Psychopaths reliably engage in blame the victims.

“President Barack Obama won the 2009 Nobel Peace Prize on Friday in a stunning decision designed to encourage his initiatives to reduce nuclear arms, ease tensions with the Muslim world and stress diplomacy and cooperation rather than unilateralism.”"The Norwegian Nobel Committee countered that it was trying “to promote what he stands for and the positive processes that have started now.” “Those are the parts that stood out to me. Since when are huge honors bestowed upon those who are being encouraged to cultivate the behavior expected prior to receiving the honor after receiving it. Odd. I always thought prizes were given to those who had already achieved something, not to those who merely talk about it.

“Fixing our problems should not be that hard “I’m not so certain about that…The consequences of 3 decades of credit led growth, over consumption and exponentially growing global imbalances won’t get solved in a few years.There are no quick fix solutions to our chronic over leveraging.1. Or Govt intervenes heavily in order to slow down the unavoidable process of deleveraging and we’ll have the Japanese style 2 or 3 decades of no growth scenario (actually multiple Ws, a shortened business cycle).2. Or Govt lets the economy collapse within the next 4 to 5 years and if we have manage to avoid a revolution or a civil war, there will be a recovery faster.Scenario 2. is highly unlikely as no Govt wants to be in charge when the economy collapses, therefore it will always try to intervene as much as possible in order to slow down the process.

The housing bubble still would have burst even with ultra-low rates. Homeownership was the highest in history (69%), speculation was rampant, so who was left to buy and help sustain prices? Home prices became out of reach for many unless, of course, poor underwriting standards continued. I think most of us here understand supply and demand, demand was shrinking and supply was increasing, and lenders had already created every possible exotic mortgage under the sun. The only way home prices could have kept going up is if we’d opened up the floodgates to more immigration, more buyers and more population were needed.

and selling out your own countrymen and countrywomen. there’s a place in hell reserved for these sorts of folk.

Dr. Roubini,your well intentioned advice will fall on deaf ears. Your friends in the community and at the fed want to blow more bubbles, not prevent them. it is our way of life now. Until the dollar collapses.