A large Chunk of Sub-Prime Mortgages is Expected to See Interest Rates Reset in The Coming 6 Months »
Posted By altnrg 8 months, 3 weeks ago in NewsAnother large chunk of mortgages in the sub-prime sector is to see the reset of interest rates to rather higher rates in Seattle over the coming six months.
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altnrg8 months, 3 weeks ago
I'm not sure that it is so simple, lowering the rates has other impacts like weakening the dollar which mean increasing inflation which mean an increase of cost of daily products.
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The issue is when necessary steps are not taken on the right time the price is much higher.
I'm not saying that lowering the rates is not the solution or at least part of the solution but when there is a crisis in this caliber it is never simple. -
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altnrg8 months, 3 weeks ago
There is at least one case in the history that succeeded when government took control but it has to be more than just taking a control. In 1983 there was a financial crisis in Israel and the government took control of banks, only in 1985 there was a comprehensive plan in order to stabilize inflation and the market, and only after many years they privatized entirely the banks. So it is a long process and every case is a bit unique and might require different action but it must be a comprehensive plan.
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nostalgia8 months, 3 weeks ago
Less than a month ago Paulson insisted over and over to the Senate and House that injecting capital into financial institutions was not the right approach.
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Paulson told the Senate Banking Committee: “There were some that said we should just go and stick capital in the banks, put preferred stocks, stick capital in the banks. And that’s what you do when you have failures. You know, that’s what happened in Japan. That’s what happened in other spots. And we have dealt with some failures. And we’ve dealt with them where there’s capital. But we said, the right way to do this is not going around and using guarantees or injecting capital, and there’s been various proposals to do that, but to use market mechanisms.”
Two days later, he told the House Financial Services Committee: “There are a number of plans which say, ‘Let’s go to the root of the problem. Let’s just put capital in those institutions which we think are troubled.’ And that is one about dealing with failure, OK? And when you put capital in, that’s the Japanese solution. They were in a very long recession for many years, but what they did is they came in — you know, you put capital in the banks and then the government is essentially, in many ways, running them. So you’re sticking preferred stock in. What we are trying to do, we’re trying to take a different approach, which is, this is a different situation than anything you can find historically.”
http://blogs.wsj.com/economics/2008/10/14/the-evol...
Why did Paulson change his mind and infuse cash into the banks?
As I recall, Japan was in a recession for a decade after trying this
Paulson was right a month ago.
Now we are using the same approach Japan did but expect different results?
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shruti1Comment removed: User banned.
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nostalgia8 months, 3 weeks ago
AMY GOODMAN: You were told that Barack Obama did not want this in the bill?
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REP. DENNIS KUCINICH: That he didn’t want the bankruptcy provisions in the bill. Now, you know, that’s what we were told. And I don’t understand why he would say that, if he did say that. And I think that there is a—the fact that we didn’t put bankruptcy provisions in, that actually we removed any hope for judges to do any loan modifications or any forbearance. There’s no moratorium on mortgage foreclosures in here. So, who’s getting—who’s really getting helped by this bill? This is a bailout, pure and simple, of Wall Street interests who have been involved in speculation.
REP. DENNIS KUCINICH So, you know, we’re getting stampeded here to vote for something that doesn’t help homeowners, that doesn’t do anything about foreclosures, that doesn’t help those people who have been in bankruptcy and are looking for a way out. As a matter of fact, it made sure they can’t get out
But what this bill does, unfortunately, it just kind of helps things keep going until the next trillion-dollar crisis, which is coming in a few months when the Alt-A or jumbo mortgages, which are being reset in ’09 and 2010, will find their maximum financial stress on marketplaces. So I think that you have to realize that this—what we’re doing today is not going to forestall a recession, it is not going to solve the problem of a collapse of mortgages, it’s not going to help homeowners.
http://i2.democracynow.org/2008/9/29/is_this_the_u... -
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ADAGUY8 months, 3 weeks ago
I think I'm gonna go buy an elaborate house, quit my job and vote for McCain.
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