Friday, November 14, 2008

Greed is THE Problem...

But how successful the settlement will be remains to be seen. The New York law firm Grais & Ellsworth is organizing a coalition of mortgage investors to contest and possibly sue Bank of America over the plan. The plan, the law firm said on its Web site, "will violate the rights of the investors in the securitizations of (Countrywide's) loans."

Greed. Greed. Greed.

I have stated the bail out is not going to work and this is why. Humans are naturally greedy. They want what is "theirs" despite the potential problems associated with that GREED.

While I think everyone should pay what they owe on their mortgages, and they need to be held accountable for their actions and this includes signing on the dotted line for a mortgage, there is some value in working with them to get the mortgages paid and keep them in their houses.

Having a million people default on their mortgages is WAY bad all around. It is bad for local communities (hello the down side of property tax being the financing method for state and local government and school distracts.)

It is bad for real estate professionals - who pay big time taxes for each sale they are paid on.

It is bad for communities because if people lose their homes a good number of them will enter the ranks of the homeless.

I could go on and on.

I admit the bailing out of these people, some of whom did not qualify for a traditional mortgage is egregious, but the alternative is unpalatable also.

For the folks who are now going to get reduced payments out of their CMOs - the people you should sue is not the banks trying to work out a payment arrangement, which sure cuts into the return of your investment, but it creates cash flow nonetheless. The people you should SUE is the jackass who sold it to you and the dishonest guy who packaged the bad debt right along with the good debt!

These mortgage pools - are a nothing more than packages of crap and I still do not see anyone getting carted off to jail because they committed fraud and let's all be honest - it is fraudulent to sell pools of mortgages in which the top line items are clean A rated paper and the rest of it is not even worthy of being toilet paper. They who bundled it, organized it, sold it, rated it and so forth need to spend some time in a dark hole, with the prospectuses they printed for the CRAP as their only source of toilet paper and then I might feel vindicated. I might be motivated to say that their punishment was sufficient. MIGHT!

As always the rats on Wall Street, those who played fast and loose with the rules are laughing all the way to their bank in the Caymans and that my friends - is the real shame of it all. We pay so they can continue to play.


carolynn said...

oh, i was just talking about this mess just this morning. Then, there are those of us, who continue to pay our bills, cut back on our discretionary spending, more expensive healthy foods, maybe sell something we have of value in the exchange. All the while we are feeling the pinch yet no "bail out" or assistance will come our way. We, who are just one job loss away from default and bankruptcy ourselves because we have spent our savings trying to keep up with the ever rising cost of gas, energy, and food. Oh,oh,oh, and the kicker...we pay our bills, have outstanding credit, yet the credit card company becomes scared, so they decide to start declining charges and will "send a letter" stating why. i could just go on and on...

Susan said...

I so agree. The honest everyday law abiding debt paying citizens always get the short end of the deal. The real shame of the bail it - you and I - will be paying for years to come.

I know by stringing up the idiots who thought up this mortgage mess will not get the money back, I think it would send a message - so the next round of idiots will think twice about committing fraud and I would at least feel better as I refrain from shopping and pinch my pennies for say the next 5 years.

There is nothing fair about any of this - the credit crunch, the bail outs, the resulting fall out and we should get off our apathetic asses and begin to demand accountability.

Our children will be paying for this bail and the war in Iraq - even after we are gone and that IS the worst part of it all...

Marlin said...

So now the domestic auto industry wants to get their filthy hands on some of the pie. I'm sure that we all saw this coming from a mile away though. As soon as Uncle Sam decided to give money to one greedy mismanaged company (industry), all of the other greedy mismanaged companies (industries) are going to line up wanting their share of our tax dollars.

I can't even put into words how angry all of this makes me. The American automotive insustry. It's not as though they just realized that they were in trouble a month or two ago, oh no, their demise has been looming for years, and is a result of decades mismanagement. What do they think they are going to do with $25 billion (I believe that's what they are asking for). That won't last them 6 months, and they'll be right back where they were, or worse. Ford, GM, Chrysler, you want a bailout package, well here it is: First, grow some balls and stop agreeing to these horribly unfavorable union contracts. The average line worker at these companies make $28 an hour - that's about $60k a year. Tack some overtime on to that, and pretty soon your factory workers are making about $80k a year. I certainly don't begrudge a man or woman their salary, but give me a break. I busted my hump in night school for nearly 10 years in order to earn a degree that has allowed me to get the job that I have (auditor), and I'm not making anywhere near $80k a year. I probably should have just spent my time and efforts trying to get hired by one of the Big 3. In addition to paying their employees too much money, their legacy costs (pensions, post retirement healthcare, etc.) are out of control. Short of bankruptcy, I don't see how they can get out of this aspect of their predicament, and I think it will ultimately causes them to fail. Just like with Social Security, there simply is not enough money in the till to cover all of the obligations. A few years ago I heard that ~ $1500 of every car that they sell goes to cover expenses for people who are retired. That's a steep mountain to climb, and it's only going to get worse as more and more people retire.

Anyway, this whole thing is just a huge mess, and I fear that we are going to be suffering for their ineptitude for generations to come. Lets assume that all of these companies fail (because they will) and go bankrupt, what happens then? Basically a company has two options when it goes bankrupt, either liquidate and go out of business, or reorganize, shed some debt / expenses, and continue to operate. I have to think that in these cases, they would all look to reorganize, which means that they are going to need to get rid of whatever it is that is killing them (inflated wages, sky high pension / health care costs). What's going to happen to all of the retirees that are drawing pensions, are they just going to be S.O.L? Not likely. What will probably happen is that Uncle Sam will step in, and they will get some kind of a, you guessed it, bailout.

Maybe I'll just move to Canada and wait 9 months when I need an MRI.

Susan said...

Thanks for stopping by Marlin!

It is a huge mess. If you read back for over a year now - Here on the edge I have been commenting on the economy and the fact that our entire economy is a house of cards. Where is the honor? The personal responsibility and all of that???

Wanna know what I think about the US health care system - well that is coming up in a week or so!

Marlin said...

Good to read you Susan. I have been slowly making my way back through your posts as I have time. They have been very entertaining thus far.

Hope you're feeling better soon. I'm suffering from the nasty cold / sinus issues too right now. :(