Capitalism...A love story

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howboutshoeshine's picture
Joined: 2010-01-29

I never watched this because I don't think much of Michael Moore. That said,
 
This is a GREAT movie!!!! And this is what we have to work off.
 
That said, poor complain about the wealthy, but if they had the opportunity, they would do the same. Very sad that this is what we've come to.

suspended's picture
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I thought your speed would be more like "Barney and Friends"

howboutshoeshine's picture
Joined: 2010-01-29

No thoughts?

Moraen's picture
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I hate the movie.  Michael Moore twists facts and only uses items that fit his story.  If they don't fit, he doesn't put them in.And then freely admits that he doesn't, because, "It wouldn't be what I'm trying to show, would it?".He's a piece of sh1t. 

howboutshoeshine's picture
Joined: 2010-01-29

Moraen wrote:I hate the movie.  Michael Moore twists facts and only uses items that fit his story.  If they don't fit, he doesn't put them in.And then freely admits that he doesn't, because, "It wouldn't be what I'm trying to show, would it?".He's a piece of sh1t. 
 
I thought it was a great overall example of how we have changed as a nation. The story of how a father had his home paid off before his kids were out of pre-school and then to having a loan that realistically you will NEVER pay off. A terrific example of the excesses that I see. I've been saying forever that Goldman owns the "world" I never knew that I meant it literally.  This is why capitalism has always failed. Citigroup said it best in their memo's. Just like anything.....take it with a grain of salt.

Moraen's picture
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Pure capitalism never fails.  It wouldn't fail if we didn't try to bail people out.  Capitalism is a bit like a forest.  When fires occur, they are a natural part of rebirth and growth.  You may have to lose hundreds of acres before it stops, but when it does, the ground is more nutritious, the trees healthier and stronger.  THAT's how capitalism is supposed to work.Companies fail, industry consolidates, we get stronger, more profitable.  But we're afraid to let things fail in this country.  The foundation of success is a bedrock of failures. 

Wet_Blanket's picture
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Pure capitalism never fails, because it never existed.  I used to be more partial to the liberterian way of thinking, then I majored in Economics and that went out the window.
 
But yeah, Moore is an idiot as far as thinking goes - but that fat bastard can make a movie...although the last one of his that I saw was Bowling for Columbine.

howboutshoeshine's picture
Joined: 2010-01-29

I couldn't agree MORE! The problem is that the wealthy gain the money, power and clout. They will not relinquish it easily. The "big" trees get to decide wether or not the forest burns. I wonder what they will do?? I believe the "big" trees can't stop the fire, just slow it down. It picked up major speed in 08' and the wind is picking up again for the hot ambers to spread. The old 150ft trees need to heat up before they burn to the ground. In addition, the "big" trees have somehow convinced the rest of the forest that saving them is a GOOD idea?????

Moraen's picture
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Wet_Blanket wrote:Pure capitalism never fails, because it never existed.  I used to be more partial to the liberterian way of thinking, then I majored in Economics and that went out the window.
 
But yeah, Moore is an idiot as far as thinking goes - but that fat bastard can make a movie...although the last one of his that I saw was Bowling for Columbine.True - how about it wouldn't fail?

B24's picture
B24
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We no longer have capitalism in the U.S.  You live and die by capitalism.  In our country you only live by Capitalism.  The Socialist side of our country always bails you out.
 
I grew up in the 70's.  In the 70's, times were hard.  I was very middle-class.  My Dad worked hard, my Mom worked part-time 3rd shift.  I remember the days of my Mom stopping to get gas for the car and asking for "$3 worth of regular".  That would get us until the next paycheck.  Eating out was a once a month treat, not once a day at the drive-through.  We ate those home-cooked burgers taht Bill Cosby made so famous (you know, the ones with onions and green peppers mixed in and served on Wonder Bread).
We had the 20 year-old B&W TV.  Our first color TV was used from my grandfather.  We had our "school shoes", or "school sneakers", our "play sneakers" (last year's school sneakers), and a pair of snow boots.  We had one coat.  Our car was a 15 year-old piece of crap.  I think we had one new car growing up.
 
Contrast that to today.  Families barely getting by are buying Lexus', living in 2500 sq ft "starter" homes, eating out 5 nights a week, playing every sport and activity, and owning every electronic gadget known to man.
 
Yet, the "rich get richer"?  Might it be that many of the "ordinary" people can't fathom the thought of not living like the "rich"?  You know, some people just don't have it in their DNA to be successful and wealthy.  They don't want to work hard, they don't want to make sacrifices, they aren't creative (business owners), they just want to work 9-5, and come home.  Yet, they b1tch about the rich getting richer.  The "rich" don't coach their kid's little league teams.  The "rich" don't stay home with their kids when they are sick.  The "rich" don't get out of work at 4:30 every day and be able to spend time with their families.  The "rich" don't get to walk away from the problems at their companies.
 
I'm not trying to sound elitist here, but the "rich" give up a lot to get what they get.  Most people would NEVER be willing to do what most CEO's et al do in order to get that wealthy.  I FIRMLY believe that we have struck an imbalance in terms of pay the past decade or so.  Corporate CEO's and bankers are making WAY too much money for the value they bring to the table.  But as long as boards keep approving their pay, and we as shareholders keep them in power, that's the deal.  It's starting to come around.  Takes time.  But like politics, these things have a way of fixing themself.

Wet_Blanket's picture
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Moraen wrote: Wet_Blanket wrote:Pure capitalism never fails, because it never existed.  I used to be more partial to the liberterian way of thinking, then I majored in Economics and that went out the window.
 
But yeah, Moore is an idiot as far as thinking goes - but that fat bastard can make a movie...although the last one of his that I saw was Bowling for Columbine.True - how about it wouldn't fail?
 
I guess that would depend on your definition of failure.  If you prefer a Mad Max style existence, then yes it would succeed.
 
There are forces within Capitalism that would work wonderfully if allowed, but there are also forces and characteristics of Capitalism that do not work so well with us humans.

howboutshoeshine's picture
Joined: 2010-01-29

B24 wrote:We no longer have capitalism in the U.S.  You live and die by capitalism.  In our country you only live by Capitalism.  The Socialist side of our country always bails you out.
 
I grew up in the 70's.  In the 70's, times were hard.  I was very middle-class.  My Dad worked hard, my Mom worked part-time 3rd shift.  I remember the days of my Mom stopping to get gas for the car and asking for "$3 worth of regular".  That would get us until the next paycheck.  Eating out was a once a month treat, not once a day at the drive-through.  We ate those home-cooked burgers taht Bill Cosby made so famous (you know, the ones with onions and green peppers mixed in and served on Wonder Bread).
We had the 20 year-old B&W TV.  Our first color TV was used from my grandfather.  We had our "school shoes", or "school sneakers", our "play sneakers" (last year's school sneakers), and a pair of snow boots.  We had one coat.  Our car was a 15 year-old piece of crap.  I think we had one new car growing up.
 
Contrast that to today.  Families barely getting by are buying Lexus', living in 2500 sq ft "starter" homes, eating out 5 nights a week, playing every sport and activity, and owning every electronic gadget known to man.
 
Yet, the "rich get richer"?  Might it be that many of the "ordinary" people can't fathom the thought of not living like the "rich"?  You know, some people just don't have it in their DNA to be successful and wealthy.  They don't want to work hard, they don't want to make sacrifices, they aren't creative (business owners), they just want to work 9-5, and come home.  Yet, they b1tch about the rich getting richer.  The "rich" don't coach their kid's little league teams.  The "rich" don't stay home with their kids when they are sick.  The "rich" don't get out of work at 4:30 every day and be able to spend time with their families.  The "rich" don't get to walk away from the problems at their companies.
 
I'm not trying to sound elitist here, but the "rich" give up a lot to get what they get.  Most people would NEVER be willing to do what most CEO's et al do in order to get that wealthy.  I FIRMLY believe that we have struck an imbalance in terms of pay the past decade or so.  Corporate CEO's and bankers are making WAY too much money for the value they bring to the table.  But as long as boards keep approving their pay, and we as shareholders keep them in power, that's the deal.  It's starting to come around.  Takes time.  But like politics, these things have a way of fixing themself.
 
They don't want to work hard, they don't want to make sacrifices, they aren't creative (business owners), they just want to work 9-5, and come home. Agreed.
 
 The "rich" don't get to walk away from the problems at their companies.  Untrue.
Merrill Lynch, Countywide etc etc etc
Most people would NEVER be willing to do what most CEO's et al do in order to get that wealthy. Disagree
Sounds like you come from humble beginnings. I know I did. I layed block, landscaped, worked in restoration, drywall etc. All of this to get through college. These silver spoon fed p*ssies wouldn't have lasted a day in my world. 2 hours of sleep for years on end. I can name as many names as you want, but this world is now predominately blocked to the middle class.  Cost of education, ability to get into ceratin schools ( which loans and grants don't cover ) For me....education is our starting point. As far as hard work.......If you gave anyone I grew up with 1-100 million to do a job, they would KILL for you.
 
 

suspended's picture
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howboutshoeshine wrote: B24 wrote:We no longer have capitalism in the U.S.  You live and die by capitalism.  In our country you only live by Capitalism.  The Socialist side of our country always bails you out.
 
I grew up in the 70's.  In the 70's, times were hard.  I was very middle-class.  My Dad worked hard, my Mom worked part-time 3rd shift.  I remember the days of my Mom stopping to get gas for the car and asking for "$3 worth of regular".  That would get us until the next paycheck.  Eating out was a once a month treat, not once a day at the drive-through.  We ate those home-cooked burgers taht Bill Cosby made so famous (you know, the ones with onions and green peppers mixed in and served on Wonder Bread).
We had the 20 year-old B&W TV.  Our first color TV was used from my grandfather.  We had our "school shoes", or "school sneakers", our "play sneakers" (last year's school sneakers), and a pair of snow boots.  We had one coat.  Our car was a 15 year-old piece of crap.  I think we had one new car growing up.
 
Contrast that to today.  Families barely getting by are buying Lexus', living in 2500 sq ft "starter" homes, eating out 5 nights a week, playing every sport and activity, and owning every electronic gadget known to man.
 
Yet, the "rich get richer"?  Might it be that many of the "ordinary" people can't fathom the thought of not living like the "rich"?  You know, some people just don't have it in their DNA to be successful and wealthy.  They don't want to work hard, they don't want to make sacrifices, they aren't creative (business owners), they just want to work 9-5, and come home.  Yet, they b1tch about the rich getting richer.  The "rich" don't coach their kid's little league teams.  The "rich" don't stay home with their kids when they are sick.  The "rich" don't get out of work at 4:30 every day and be able to spend time with their families.  The "rich" don't get to walk away from the problems at their companies.
 
I'm not trying to sound elitist here, but the "rich" give up a lot to get what they get.  Most people would NEVER be willing to do what most CEO's et al do in order to get that wealthy.  I FIRMLY believe that we have struck an imbalance in terms of pay the past decade or so.  Corporate CEO's and bankers are making WAY too much money for the value they bring to the table.  But as long as boards keep approving their pay, and we as shareholders keep them in power, that's the deal.  It's starting to come around.  Takes time.  But like politics, these things have a way of fixing themself.
 
They don't want to work hard, they don't want to make sacrifices, they aren't creative (business owners), they just want to work 9-5, and come home. Agreed.
 
 The "rich" don't get to walk away from the problems at their companies.  Untrue.
Merrill Lynch, Countywide etc etc etc
Most people would NEVER be willing to do what most CEO's et al do in order to get that wealthy. Disagree
Sounds like you come from humble beginnings. I know I did. I layed block, landscaped, worked in restoration, drywall etc. All of this to get through college. These silver spoon fed p*ssies wouldn't have lasted a day in my world. 2 hours of sleep for years on end. I can name as many names as you want, but this world is now predominately blocked to the middle class.  Cost of education, ability to get into ceratin schools ( which loans and grants don't cover ) For me....education is our starting point. As far as hard work.......If you gave anyone I grew up with 1-100 million to do a job, they would KILL for you.
 
 

Your such an elitist and IDIOT it amazes me. You talk so much sh*T and you make 120k?? WTF dude.....news feed.....you aint setting the world on fire.   Your a tool. Get some real production and THEN come back and bark as loud as you want.   Jesus, some people don't get it.

san fran broker's picture
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Moraen wrote:Pure capitalism never fails.  It wouldn't fail if we didn't try to bail people out.  Capitalism is a bit like a forest.  When fires occur, they are a natural part of rebirth and growth.  You may have to lose hundreds of acres before it stops, but when it does, the ground is more nutritious, the trees healthier and stronger.  THAT's how capitalism is supposed to work.Companies fail, industry consolidates, we get stronger, more profitable.  But we're afraid to let things fail in this country.  The foundation of success is a bedrock of failures. 
Nail = Head

san fran broker's picture
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The real estate market bubble formed for four reasons1. The mortgage interest tax deduction2. The growth of Fannie Mae and Freddie Mac, continually pushing down interest rates with their "moral obligation of the US government" credit rating while purchasing mortgages to riskier and riskier borrowers.3. The Community Reinvestment Act pushing lenders to extend credit to people who were poor credit risks4. Everybody wants a bigger and nicer house than they can afford.The Democrats, through the US government were responsible for the first three and the last is human nature. The Republicans screamed about Fannie and Freddie (so far the biggest sources of our losses in the credit crisis, only ahead of Detroit) for years and virtually every Democrat supported Fannie and Freddie to the very end. Any criticism of the exploding size of these companies was treated as a direct assault against minority home ownership.I am a Democrat and I supported Fannie and Freddie too. I think it's a great thing to help make housing more affordable to poor people and kids just starting a family. But what went terribly wrong was the decision to not just help the virtuous poor, but anyone who could get 3% down.

Moraen's picture
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howboutshoeshine wrote:B24 wrote:We no longer have capitalism in the U.S.  You live and die by capitalism.  In our country you only live by Capitalism.  The Socialist side of our country always bails you out.
 
I grew up in the 70's.  In the 70's, times were hard.  I was very middle-class.  My Dad worked hard, my Mom worked part-time 3rd shift.  I remember the days of my Mom stopping to get gas for the car and asking for "$3 worth of regular".  That would get us until the next paycheck.  Eating out was a once a month treat, not once a day at the drive-through.  We ate those home-cooked burgers taht Bill Cosby made so famous (you know, the ones with onions and green peppers mixed in and served on Wonder Bread).
We had the 20 year-old B&W TV.  Our first color TV was used from my grandfather.  We had our "school shoes", or "school sneakers", our "play sneakers" (last year's school sneakers), and a pair of snow boots.  We had one coat.  Our car was a 15 year-old piece of crap.  I think we had one new car growing up.
 
Contrast that to today.  Families barely getting by are buying Lexus', living in 2500 sq ft "starter" homes, eating out 5 nights a week, playing every sport and activity, and owning every electronic gadget known to man.
 
Yet, the "rich get richer"?  Might it be that many of the "ordinary" people can't fathom the thought of not living like the "rich"?  You know, some people just don't have it in their DNA to be successful and wealthy.  They don't want to work hard, they don't want to make sacrifices, they aren't creative (business owners), they just want to work 9-5, and come home.  Yet, they b1tch about the rich getting richer.  The "rich" don't coach their kid's little league teams.  The "rich" don't stay home with their kids when they are sick.  The "rich" don't get out of work at 4:30 every day and be able to spend time with their families.  The "rich" don't get to walk away from the problems at their companies.
 
I'm not trying to sound elitist here, but the "rich" give up a lot to get what they get.  Most people would NEVER be willing to do what most CEO's et al do in order to get that wealthy.  I FIRMLY believe that we have struck an imbalance in terms of pay the past decade or so.  Corporate CEO's and bankers are making WAY too much money for the value they bring to the table.  But as long as boards keep approving their pay, and we as shareholders keep them in power, that's the deal.  It's starting to come around.  Takes time.  But like politics, these things have a way of fixing themself.
 
They don't want to work hard, they don't want to make sacrifices, they aren't creative (business owners), they just want to work 9-5, and come home. Agreed.
 
 The "rich" don't get to walk away from the problems at their companies.  Untrue.
Merrill Lynch, Countywide etc etc etc
Most people would NEVER be willing to do what most CEO's et al do in order to get that wealthy. Disagree
Sounds like you come from humble beginnings. I know I did. I layed block, landscaped, worked in restoration, drywall etc. All of this to get through college. These silver spoon fed p*ssies wouldn't have lasted a day in my world. 2 hours of sleep for years on end. I can name as many names as you want, but this world is now predominately blocked to the middle class.  Cost of education, ability to get into ceratin schools ( which loans and grants don't cover ) For me....education is our starting point. As far as hard work.......If you gave anyone I grew up with 1-100 million to do a job, they would KILL for you.
 
 Shoe - you say that you think most people in the middle class would KILL to have a job, yet you come from humble beginnings and make over six figures.  You worked hard, studied hard to get where you are.I would guess there are a lot of people who did.  My father was an E-4 raising two kids, and my Mom didn't go back to work until I went to kindergarten.  They were able to scrounge up enough money to pay for one semester of my brother's school.  In college, I worked 48 hours a week and my last two semesters I took 21 credit hours each.  If people were willing to work that hard, they can have success.  But they aren't.  If someone wants to work as hard as you did, they can make the money that you have.  Maybe even more.

howboutshoeshine's picture
Joined: 2010-01-29

I agree with that 100% Moraen!  In fact, I would say that you also need to take some risk to be wealthy, on top of hard work. That being said, I'm not talking about a comfortable living......I am talking about WEALTHY. Kennedy wealthy. We can all name the entrepeneurs that have made a ton of money in one generation, but can we all just waltz in to Harvard and Yale where the garaunteed salary after graduation is 200k. No. ( and there are far more elitist schools than these) Even if you're smart enough......and I know I am because I watch these d*psh*ts on t.v.......you can't afford it! That is really my only gripe.  I don't believe in wealth distribution or any of the crap going on now, but there is a growing gap and this could be one way to close it.

san fran broker's picture
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howboutshoeshine wrote:We can all name the entrepeneurs that have made a ton of money in one generation, but can we all just waltz in to Harvard and Yale where the garaunteed salary after graduation is 200k. No. ( and there are far more elitist schools than these) Even if you're smart enough......and I know I am because I watch these d*psh*ts on t.v.......you can't afford it! That is really my only gripe.  I don't believe in wealth distribution or any of the crap going on now, but there is a growing gap and this could be one way to close it.Graduation from Harvard or Yale does not mean a guaranteed $200k income. Ask my HS biology or Economics teachers. Or for that matter, the Harvard MBA that's been asking me for advice on how to get into this business. (They're probably hopeless). It's also been a long time since Harvard was dominated by children of the elite. If you get into Harvard, and your parents make less than $100k, your tuition is free.The sad truth is that, yes, starting out with an important father (or mother), certainly helps, but it doesn't guarantee anything (or even make it likely). In the US, everyone has a pretty equal chance of making it in life. Ask Steve Jobs - who dropped out of Reed College. As much as I hate it, our failures are our own.I remember asking a successful venture capitalist (who went to a state school), what they most important thing he did to succeed. His answer - "Don't own a television." Most of us are less successful than we should be because we become distracted by things other than career. (Like TV, or more importantly, family).Oops, I have to go - American Idol is on...

howboutshoeshine's picture
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Oops, I have to go - American Idol is on...

  Funny!
 
Well....All I can say is that my experiences have been different. Richard branson is a better example. High school dropout.

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san fran broker wrote:The real estate market bubble formed for four reasons1. The mortgage interest tax deduction2. The growth of Fannie Mae and Freddie Mac, continually pushing down interest rates with their "moral obligation of the US government" credit rating while purchasing mortgages to riskier and riskier borrowers.3. The Community Reinvestment Act pushing lenders to extend credit to people who were poor credit risks4. Everybody wants a bigger and nicer house than they can afford.The Democrats, through the US government were responsible for the first three and the last is human nature. The Republicans screamed about Fannie and Freddie (so far the biggest sources of our losses in the credit crisis, only ahead of Detroit) for years and virtually every Democrat supported Fannie and Freddie to the very end. Any criticism of the exploding size of these companies was treated as a direct assault against minority home ownership.I am a Democrat and I supported Fannie and Freddie too. I think it's a great thing to help make housing more affordable to poor people and kids just starting a family. But what went terribly wrong was the decision to not just help the virtuous poor, but anyone who could get 3% down.
You are overlooking the securitization of mortgages, which in my opinion, played the biggest part in the RE bubble.  As MBS became more prevalent, loan standards went out the window.  Since mortgage originators weren't keeping these mortgages on their books (instead selling them to the banks who in turn chopped them up and sold them to investors), there was no incentive to ensure the buyer would be able to pay back the loan. Instead, the incentive became to originate as many mortgage loans as possible as quickly as possible since the banks were happy to buy them take on all the risk (since they were securitizing them, rendering them "AAA investments," and then selling them for nice fat fee).  Then, the buck got passed to the investor who bought AAA MBS as a safe income producing investment and we all know how that ended.    

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NYCTrader wrote:
san fran broker wrote:The real estate market bubble formed for four reasons1. The mortgage interest tax deduction2. The growth of Fannie Mae and Freddie Mac, continually pushing down interest rates with their "moral obligation of the US government" credit rating while purchasing mortgages to riskier and riskier borrowers.3. The Community Reinvestment Act pushing lenders to extend credit to people who were poor credit risks4. Everybody wants a bigger and nicer house than they can afford.The Democrats, through the US government were responsible for the first three and the last is human nature. The Republicans screamed about Fannie and Freddie (so far the biggest sources of our losses in the credit crisis, only ahead of Detroit) for years and virtually every Democrat supported Fannie and Freddie to the very end. Any criticism of the exploding size of these companies was treated as a direct assault against minority home ownership.I am a Democrat and I supported Fannie and Freddie too. I think it's a great thing to help make housing more affordable to poor people and kids just starting a family. But what went terribly wrong was the decision to not just help the virtuous poor, but anyone who could get 3% down.
You are overlooking the securitization of mortgages, which in my opinion, played the biggest part in the RE bubble.  As MBS became more prevalent, loan standards went out the window.  Since mortgage originators weren't keeping these mortgages on their books (instead selling them to the banks who in turn chopped them up and sold them to investors), there was no incentive to ensure the buyer would be able to pay back the loan. Instead, the incentive became to originate as many mortgage loans as possible as quickly as possible since the banks were happy to buy them take on all the risk (since they were securitizing them, rendering them "AAA investments," and then selling them for nice fat fee).  Then, the buck got passed to the investor who bought AAA MBS as a safe income producing investment and we all know how that ended.     I agree, I would just include that with Fannie and Freddie, which pretty much created the MBS and were the largest securitizers.

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san fran broker wrote: NYCTrader wrote: san fran broker wrote:The real estate market bubble formed for four reasons1. The mortgage interest tax deduction2. The growth of Fannie Mae and Freddie Mac, continually pushing down interest rates with their "moral obligation of the US government" credit rating while purchasing mortgages to riskier and riskier borrowers.3. The Community Reinvestment Act pushing lenders to extend credit to people who were poor credit risks4. Everybody wants a bigger and nicer house than they can afford.The Democrats, through the US government were responsible for the first three and the last is human nature. The Republicans screamed about Fannie and Freddie (so far the biggest sources of our losses in the credit crisis, only ahead of Detroit) for years and virtually every Democrat supported Fannie and Freddie to the very end. Any criticism of the exploding size of these companies was treated as a direct assault against minority home ownership.I am a Democrat and I supported Fannie and Freddie too. I think it's a great thing to help make housing more affordable to poor people and kids just starting a family. But what went terribly wrong was the decision to not just help the virtuous poor, but anyone who could get 3% down.You are overlooking the securitization of mortgages, which in my opinion, played the biggest part in the RE bubble.  As MBS became more prevalent, loan standards went out the window.  Since mortgage originators weren't keeping these mortgages on their books (instead selling them to the banks who in turn chopped them up and sold them to investors), there was no incentive to ensure the buyer would be able to pay back the loan. Instead, the incentive became to originate as many mortgage loans as possible as quickly as possible since the banks were happy to buy them take on all the risk (since they were securitizing them, rendering them "AAA investments," and then selling them for nice fat fee).  Then, the buck got passed to the investor who bought AAA MBS as a safe income producing investment and we all know how that ended.     I agree, I would just include that with Fannie and Freddie, which pretty much created the MBS and were the largest securitizers.
From a former insider's view, you both have hit the nail on the head.  If you have ever had to both originate a loan and service it after the fact, you learn very quickly how to avoid the bad ones, or you are out of a job.  Some of it is collecting good data, but there is also an art to it that has been lost lately in the retail mortgage business.  We used to have a system of predominately Mortgage Banks, who would originate loans and service them for a period of time, called "seasoning".  Only seasoned paper would then go into the securitization process.  Somehow that whole process got scrapped (my guess would be Fannie, Freddie, and Barney Frank had a hand in that), and paper now goes directly from a broker's hand into the mortgage pools.  Rampant abuse ensues, because the broker is cut off from the servicing end.

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joelv72 wrote:san fran broker wrote: NYCTrader wrote: san fran broker wrote:The real estate market bubble formed for four reasons1. The mortgage interest tax deduction2. The growth of Fannie Mae and Freddie Mac, continually pushing down interest rates with their "moral obligation of the US government" credit rating while purchasing mortgages to riskier and riskier borrowers.3. The Community Reinvestment Act pushing lenders to extend credit to people who were poor credit risks4. Everybody wants a bigger and nicer house than they can afford.The Democrats, through the US government were responsible for the first three and the last is human nature. The Republicans screamed about Fannie and Freddie (so far the biggest sources of our losses in the credit crisis, only ahead of Detroit) for years and virtually every Democrat supported Fannie and Freddie to the very end. Any criticism of the exploding size of these companies was treated as a direct assault against minority home ownership.I am a Democrat and I supported Fannie and Freddie too. I think it's a great thing to help make housing more affordable to poor people and kids just starting a family. But what went terribly wrong was the decision to not just help the virtuous poor, but anyone who could get 3% down.You are overlooking the securitization of mortgages, which in my opinion, played the biggest part in the RE bubble.  As MBS became more prevalent, loan standards went out the window.  Since mortgage originators weren't keeping these mortgages on their books (instead selling them to the banks who in turn chopped them up and sold them to investors), there was no incentive to ensure the buyer would be able to pay back the loan. Instead, the incentive became to originate as many mortgage loans as possible as quickly as possible since the banks were happy to buy them take on all the risk (since they were securitizing them, rendering them "AAA investments," and then selling them for nice fat fee).  Then, the buck got passed to the investor who bought AAA MBS as a safe income producing investment and we all know how that ended.     I agree, I would just include that with Fannie and Freddie, which pretty much created the MBS and were the largest securitizers.
From a former insider's view, you both have hit the nail on the head.  If you have ever had to both originate a loan and service it after the fact, you learn very quickly how to avoid the bad ones, or you are out of a job.  Some of it is collecting good data, but there is also an art to it that has been lost lately in the retail mortgage business.  We used to have a system of predominately Mortgage Banks, who would originate loans and service them for a period of time, called "seasoning".  Only seasoned paper would then go into the securitization process.  Somehow that whole process got scrapped (my guess would be Fannie, Freddie, and Barney Frank had a hand in that), and paper now goes directly from a broker's hand into the mortgage pools.  Rampant abuse ensues, because the broker is cut off from the servicing end.Interesting.  I wasn't aware of the seasoning process.  Thanks for the insight.

joelv72's picture
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Joined: 2008-11-28

NYCTrader wrote: joelv72 wrote:san fran broker wrote: NYCTrader wrote: san fran broker wrote:The real estate market bubble formed for four reasons1. The mortgage interest tax deduction2. The growth of Fannie Mae and Freddie Mac, continually pushing down interest rates with their "moral obligation of the US government" credit rating while purchasing mortgages to riskier and riskier borrowers.3. The Community Reinvestment Act pushing lenders to extend credit to people who were poor credit risks4. Everybody wants a bigger and nicer house than they can afford.The Democrats, through the US government were responsible for the first three and the last is human nature. The Republicans screamed about Fannie and Freddie (so far the biggest sources of our losses in the credit crisis, only ahead of Detroit) for years and virtually every Democrat supported Fannie and Freddie to the very end. Any criticism of the exploding size of these companies was treated as a direct assault against minority home ownership.I am a Democrat and I supported Fannie and Freddie too. I think it's a great thing to help make housing more affordable to poor people and kids just starting a family. But what went terribly wrong was the decision to not just help the virtuous poor, but anyone who could get 3% down.You are overlooking the securitization of mortgages, which in my opinion, played the biggest part in the RE bubble.  As MBS became more prevalent, loan standards went out the window.  Since mortgage originators weren't keeping these mortgages on their books (instead selling them to the banks who in turn chopped them up and sold them to investors), there was no incentive to ensure the buyer would be able to pay back the loan. Instead, the incentive became to originate as many mortgage loans as possible as quickly as possible since the banks were happy to buy them take on all the risk (since they were securitizing them, rendering them "AAA investments," and then selling them for nice fat fee).  Then, the buck got passed to the investor who bought AAA MBS as a safe income producing investment and we all know how that ended.     I agree, I would just include that with Fannie and Freddie, which pretty much created the MBS and were the largest securitizers.
From a former insider's view, you both have hit the nail on the head.  If you have ever had to both originate a loan and service it after the fact, you learn very quickly how to avoid the bad ones, or you are out of a job.  Some of it is collecting good data, but there is also an art to it that has been lost lately in the retail mortgage business.  We used to have a system of predominately Mortgage Banks, who would originate loans and service them for a period of time, called "seasoning".  Only seasoned paper would then go into the securitization process.  Somehow that whole process got scrapped (my guess would be Fannie, Freddie, and Barney Frank had a hand in that), and paper now goes directly from a broker's hand into the mortgage pools.  Rampant abuse ensues, because the broker is cut off from the servicing end.Interesting.  I wasn't aware of the seasoning process.  Thanks for the insight.
Not to say that they are not still around, we still have Mortgage Banks, its just that the Broker channel eclipsed the Mortgage Bank during the housing run-up.  Brokers have no skin in the game (capital at risk), like a MB does.

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Joined: 2006-02-25

It's interesting that nobody wants to discuss mortgage banks. Are they the way that we'll replace Fan/Fred when they eventually get put on the Federal Govt's balance sheet?

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