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Friday, August 31, 2007

"Surprise event": Bush bailout

Posted by Mark at 8:44 AM TweetThis
Well here is an external type of surprise event that can alter ones portfolio. Bush is supposed to speak this AM about proposals for bailing out homeowners in subprime. I am sort of shocked that it already has come to this, and will keep my opinions about this type of action by the federal government to myself.

News sources say this will only affect 80,000 homeowners, but with that said, the psychological effect off this should be very positive for financials, at least in the near term.

Posted by Mark at 8:44 AM Comments (2) | Edit This Post | Create A New Post

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2 comments:

Rybu said...

I want to know what you think of the Bail out. If you don't want to post it here come let me know what you think of my take on subprime.

http://councilofnicea.blogspot.com/2007/08/busting-predatory-lending-myth.html

August 31, 2007 5:05 PM  
TraderMark said...

Rybu I looked at your site. I am a fellow Wolverine by the way. My thoughts could fill about 10 blogs; we have the best country in the world in many ways, but the corruption here (as in many countries) causes so many issues; I agree with some of the things you wrote - everyone is at blame here but the bottom line is some regulation is needed to save humans from themselves. I find it ironic that this party of free market is fine with free markets when things are going well, but when the free market turns against you, then the free market needs help. Some regulation is needed - if one argues no regulation is needed, then we should give everyone a gun and take away the police force. Yes in the LONG RUN the FREE MARKET would solve things (we'd be seperating into local clans fighting for land and resources, akin to the 1200s?) but what about all the damage to get to that point. And is the end result of that free market a good thing? No. Some regulation (a police force) is a good thing. Just like in this case; just like in the NASDAQ bubble, just like in Katrina, so many cases. We are a country that is not preventative, we are reactive. Until a problem reaches epic proportion we do not act. As long as people are making money when a bubble is inflating we ignore it. These problems were obvious back in 2004; but no one did anything. No regulators, no politicians... essentially all these bubbles do is transfer weatlh to the select few - trust me all these 'poor mortgage brokers' going under have owners at the top who aquired great wealth during the boom times of 2003-2006, enough to live fine - it's their employees who suffer; it's the home owners they got loans for (who are not fault less themselves), who will suffer, its the innocent guy plugging away and seeing 4 foreclosures on his block from people doing idiotic things who will suffer (home values) etc. This is not a political thing - if you got 30 of the top minds in this country, of any political persuasion, of any religion persuasion and let them come up with moderate regulations in many areas we would be better off. Why these loans were allowed to be created in the first place or at minimum sold to people without incomes of the top 5% (many of these instruments sold to people with 40K income were supposed to be for very well off investors, not average Joe) in the first place is beyond me. Now instead of preventing a mess by not allowing it in the first place, we have to go through pain. Just like the investors who pulled their money out of savings account to chase NASDAQ stocks and many lost 80% of their life savings - when simple things like increasing margin requirements on brokerage accounts, about 1/3 of the things that are now in Sarbanes Oxley were enforced pre-1998, etc - could of stopped these things. But again, great wealth was created and transfered into a few hands during that era just like now ( a few hedge managers made > 1 billion a year last year, for what? moving paper) Its not like Rockefellers who actually created something of lasting value. But with politicans livlihood being financed by the very well off, this pattern is only increasing. With the wealth gap happening in this country I truly wonder what it will be like 30-40 years from now, and what 'revolution' might happen - all these things happen very slowly over time, so people don't notice or are too uneducated about it, to really see it, but wealth concentration which was already top weighted, only gets more so every year. When people with 2 professional incomes will be struggling to own a starter home and pay for basics of life in 15-25 years, I wonder if that will be enough. Until then, I just plan on trying to be one of the have's, and create enough wealth to stay away from this morass that our "2 America's" (with apologies to J. Edwards) is creating. And no, I am not a Democrat, just an independent shocked by things I read every day happening in this country. It's principles are being stepped on in many ways and its turning into a country very similar to some of the worst in the world in terms of wealth concentrated in extreme few at top, even since the 70s its been a seismic shift.

So thats about 1% of my thoughts on it, so I will leave it at that. I don't begrudge the top, nor do I feel there should not be that carrot to become ultra rich, as its a great incentivizer (sp?) but the process that has been created and favoritism, by those connected and who pay for our politicians, is amazing. Look to CA for the future. You drive there and you see gated community after gated community - have's and have nots side by side. I see that spreading nation wide in next 20-30 years. It is quite sad.

August 31, 2007 7:40 PM  

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