The government should play no role in this crisis. Unscrupulous lenders + uneducated buyers = Disaster. Let the two entities that created the crisis manage the crisis.

If you read H's post he's not advocating a typical bailout.

 

 

A bail out is a bail out. Just as government intervention is government intervention. No matter if it is typical or not. JMHO

None.

 

When you enter into a signed contract, you need to live with the consequences.

 

Couldn't have said it better myself.

 

When I bought my house 3 years ago I could have taken an ARM and had smaller payments and a lower initial interest rate but like anyone who had done any amount of research I knew that rates were likely on the way up. If a person was uninformed enough to take an ARM not realizing what was going to happen I really don't feel to much sympathy for them.

The government should play no role in this crisis. Unscrupulous lenders + uneducated buyers = Disaster. Let the two entities that created the crisis manage the crisis.

 

 

If this thing were to spiral into a 1930's magnitude depression, would you still advocate no government intervention?

If this thing were to spiral into a 1930's magnitude depression, would you still advocate no government intervention?

 

I would.

I would.

Me too. However I don't see it as bad as the 30's. We'd take most of the world with us.

What role do you feel the government should have in many of the upcoming foreclosures and the overall "mortgage crisis" facing the nation?

 

Debtor's prison:D

If this thing were to spiral into a 1930's magnitude depression, would you still advocate no government intervention?

 

At what point would you want to government to intervene? Or should they have already done so?

At what point would you want to government to intervene? Or should they have already done so?

 

That's a very good question. I would expect the timing of government intervention to be based on something like the unemployment rate or the foreclosure rate. For example, if one or both of these measures deteriorated to levels that were between two and three standard deviations from their historic levels, I would view that as grounds for some type of centralized action on the part of the government. It's one thing for people who have gotten in over their heads with their mortgages to lose their homes, quite another for collateral damage to spill over and begin seriously affecting people who acted reasonably responsibly.

If our Founding Fathers had the attitude that too many Americans have today, thinking that the government should bail them out of every mistake they make, our ancestors would have never made it west of the Appalchians.

No role.

That's a very good question. I would expect the timing of government intervention to be based on something like the unemployment rate or the foreclosure rate. For example, if one or both of these measures deteriorated to levels that were between two and three standard deviations from their historic levels, I would view that as grounds for some type of centralized action on the part of the government. It's one thing for people who have gotten in over their heads with their mortgages to lose their homes, quite another for collateral damage to spill over and begin seriously affecting people who acted reasonably responsibly.

 

Then I want the government to cut me a check for what I have lost in interest-bearing bonds that is directly tied to congressional underfunding of government pensions, and I also want what I have paid in increased premiums that are directly tied to catastrophic foreign investments by the insurance industry in the 1990's. I also want to retroactively recover what my parents lost in the California savings and loans scandal in the 80's. Why should I pay for the mistakes of others?

Then I want the government to cut me a check for what I have lost in interest-bearing bonds that is directly tied to congressional underfunding of government pensions, and I also want what I have paid in increased premiums that are directly tied to catastrophic foreign investments by the insurance industry in the 1990's. I also want to retroactively recover what my parents lost in the California savings and loans scandal in the 80's. Why should I pay for the mistakes of others?

 

 

I'm not advocating government payments to people who have seen their investments in real estate plummet as a result of the mortgage debacle. One of the real strengths of the U.S. economic system has historically been our system of regulations imposing information transparency in the bond and equity markets. This encourages the free flow of capital and an efficient financial market. What we have now, as a result of the mortgage crisis, is a deterioration of confidence in the bond markets. There is a real possibility of a severe contraction in business investment activity, because lenders don't have confidence that they can properly evaluate the risk of certain investment types. I am suggesting government intervention to prevent the markets from over-reacting to the collapse of the mortgage-backed bond market by avoiding any and all bond instruments, regardless of whether they represent acceptable or unacceptable lending risk.

I'm not advocating government payments to people who have seen their investments in real estate plummet as a result of the mortgage debacle. One of the real strengths of the U.S. economic system has historically been our system of regulations imposing information transparency in the bond and equity markets. This encourages the free flow of capital and an efficient financial market. What we have now, as a result of the mortgage crisis, is a deterioration of confidence in the bond markets. There is a real possibility of a severe contraction in business investment activity, because lenders don't have confidence that they can properly evaluate the risk of certain investment types. I am suggesting government intervention to prevent the markets from over-reacting to the collapse of the mortgage-backed bond market by avoiding any and all bond instruments, regardless of whether they represent acceptable or unacceptable lending risk.

 

With regard to the bolded, I would ask you to illucidate why you believe we should rely upon government regulation because a private bank or equity underwriter is not properly evaluating risk?

 

With regard to your entire statement, why do you believe that collapse of the underwriting market and/or market overreaction to a burst of the real estate bubble is any different than any of the other myriad of times this has occurred since interest rates have been tied to the bond?

 

Just as the airline industry, the automotive industry, and several other industries are considered market cyclicals, when is everyone going to realize that the real estate bond underwriting market is too, just over a much longer curve?

 

Again, one man's foreclosure is another man's investment opportunity, the market will, in time, separate the wheat from the chaff and a whole new wellspring of investment will arise from the ashes. This is the cycle of life, folks.