Friday Funnies

Your mortgage or your life

Chip Bok | August 17, 2007

Comments

|8.17.07 @ 8:43AM|#

Huh? Who's supposed to be whom? I haven't had enough coffee yet to understand this.

|8.17.07 @ 8:53AM|#

I don't get it either.

However...

Ron Paul came in 3rd in the Illinois straw poll, ahead of McCain and libertarian crusader Rudy Giuliani.

von Laue|8.17.07 @ 8:57AM|#

I wish subprime were the extent of the problem. The last two decades of continuous bubble-blowing by the Fed (with an assist from other central banks around the world, and an idiotic lending atmosphere) is going to pop permanently, and soon. This mess is probably going to be the biggest story of my lifetime. We will yearn for the days when we hand-wrung over the subprime mess.

It's going to be awful. A Republican-designed police state + Prez Hillary + an entire Congress unified in the idea that more spending can fend off the deflation and unemployment. I can't wait.

Fluffy|8.17.07 @ 8:58AM|#

I think that some old versions of this type of Snidely Whiplash image had the villain holding a property deed.

I think the joke is supposed to be that instead of a deed, which presumably has value, Snidely has only gotten his hands on a mortgage, which now presumably does not have any value.

I'm not sure, though. The attempt at humor here is very obscure.

Episiarch|8.17.07 @ 9:02AM|#

Why is Oil Can Harry about to commit suicide?

Chip Bok is too subtle, Bagge too obvious. Why can't we have Berkeley Breathed?

|8.17.07 @ 9:05AM|#

I think something just flew over my head. It must have been humour. You know, the really smart kind with the U in it.

SIV|8.17.07 @ 9:09AM|#

I'm curious as to who are the victims of the Fed's moves in response to the credit panic.

|8.17.07 @ 9:19AM|#

I'm curious as to who are the victims of the Fed's moves in response to the credit panic.

Everyone who has savings in US dollars.

Stephen the Goldberger|8.17.07 @ 9:27AM|#

huh?

SIV|8.17.07 @ 9:28AM|#

That would be me.

Glad to know I have a little grasp of these things. I woke up this morning,checked the business wires and suddenly felt a pain in my ass.

|8.17.07 @ 9:36AM|#

The idiots who borrowed more than they could afford aren't victims, and neither are the idiots who loaned them the money.

|8.17.07 @ 9:39AM|#

LoL, Mr. Bagge.

That's awesome.

"The deed to the ranch? You sure about that, Mister?"

|8.17.07 @ 9:40AM|#

Er, Bok.

|8.17.07 @ 9:47AM|#

The first thing I thought:

The idiot lenders will get a bailout. The idiot borrowers, not so much.

|8.17.07 @ 9:48AM|#

One class of victims are those who paid a higher price for their home because they were completing with all the idiots borrowing more than they could pay back from careless lenders.

I think it's the segmentaion of the industry that led to the problem. The loan originators didn't really have to worry that the borrower would pay the loan - they just needed to be able to sell the loan to a greater fool.

Then there's the government agency help:

Fannie Mae and the Housing Bubble
http://www.jerrypournelle.com/view/view479.html#Thursday

|8.17.07 @ 10:42AM|#

Lamar,

Depends on the political climate. Maybe both sets of idiots will win! Then the rest of us will be the idiots.

Overseas markets are dropping in fear of what this mess might do to the U.S. economy. Looks like we're having a commercial paper crunch, too, which could help to enhance the problem.

I think this will blow over in 18-24 months, but there are probably some bad days ahead of us.

SIV|8.17.07 @ 12:19PM|#

The Fed moves should dispel any notion that financial markets are in any sense "free" markets. Credit William Poole with a nice feint yesterday:

William Poole, president of the St. Louis Federal Reserve Bank, said the subprime mortgage rout doesn't threaten U.S. economic growth, and only a ``calamity'' would justify an interest-rate cut now.

via Bloomberg

atrevete|8.17.07 @ 1:07PM|#

But those "victims" who borrowed more money than they could afford, thought they COULD afford it at the time that they borrowed it. And so did the "victims" who lent it to them.

They just assumed that the value of their house would just keep going up and up. And when the mortgage payment went up, as it had to, they would either be making more money, or they could just sell - again at a profit, because the house could just NOT be worth less than what they paid for it.

Most people think when they have to default and/or sell at a loss that they're somehow victims, but if they make a profit when they sell, they are somehow geniuses who are entitled to that profit.

SIV|8.17.07 @ 1:18PM|#

They just assumed that the value of their house would just keep going up and up.

Well the value of the dollars they owe on it are going to keep going down and down.

atrevete|8.17.07 @ 1:30PM|#

Even under the deflation someone mentioned upthread?

|8.17.07 @ 5:05PM|#

They just assumed that the value of their house would just keep going up and up.

The financial markets refer to this as the "bigger fool" fallacy.

PL

I think this will blow over in 18-24 months, but there are probably some bad days ahead of us.

Definitely bad times, but I'm not sure about the "18 - 24 months" horizon. If Congress & the Fed try to "fix" the situation - which today's actions suggest they are - it could be like Japan in the 1990s, where the attempts to restore the economy prevent the fundamental corrections and wind up prolonging the resulting recession.

|8.18.07 @ 6:48PM|#

Pro Libertate: Lenders will either get a bailout or the won't. Borrowers will never, ever in this lifetime get a bailout. I'm not saying borrowers should get a bailout, but borrowers have to bite the bullet for their arrogant borrowing, whereas lenders need a bailout lest our economy turn the clock back to 1929 and satan is unleashed. Naive impression: why doesn't the fed bailout the borrowers so that they can make their payments and the lenders don't go into the shitter? It still stinks of market manipulation, but it would seem to achieve the same goal as bailing out the lenders with the added benefit that people aren't uprooted from their homes. Of course, stupid homeowners don't know enough to buy off congress.

Lola|8.20.07 @ 3:08PM|#

I do not understand why anyone can get a mortgage without any proof of income .I work for a big bank in Canada and you have to prove you can handle the mortgage you are asking.You have to show income confirmation, assets and amongst other things that you have to go through.