Cnbc "Ron-Paul-a-Holics"

[NoDrama]

I've yet to hear anyone dispute any of the logic or evidence I posted. Only people pronouncing me wrong with no explanation for why what I said that was false.



If you eliminate the FED from the equation altogether these loans would have been slightly less attractive for buyers, but banks would have still be handing them out like candy because they were not liable if people defaulted on them. People would have still been buying up bundled bad mortgages because they would have still had the misleading AAA rating.

So no, you're incorrect. The FED made the problem worse, but they were not the root cause of the problem since the problem would have still existed with or without these low interest rates.

Now if you take the deregulation of the financial services industries that happened in the late 1990s-2004 out of the equasion, then it would not have been possible to bundle these mortgages and give them an AAA rating. If they were not rated as safe investments then the banks would not have been able to sell them off. If banks would not have been able to sell them off, then they would have been responsible if the loans defaulted rather than passing off the risk to investors. If the banks were liable for bad loans they would not have handed out loans to people who couldn't afford them. Without these loans defaulting, the crisis would not have been possible.

Basically, you can point to the fed for making the problem worse. But they were not the ones who allowed banks to hand out loans risk free nor were they responsible for regulating for allowing these loans to be bundled and sold off as safe investments.

Do you know who was responsible for regulating that? No one! We deregulated that market! That's how this whole thing happened and no one noticed. It's also why no one went to jail. When you deregulate these things then Wall St is allowed to regulate themselves so they can pull these scams without committing a crime.

So please tell me, how did deregulating that market work out for us?

Sorry charlie, but unfortunately you have forgotten one thing. In order to entice PEOPLE to BUY THE LOANS with which to make a bundled security out of you needed the really low low interest rates to make the payments possible. Without low interest rates there are no buyers, with no buyers the bubble could never have happened in the first place. Thanks for playing common sense economics, there are some consolation prizes waiting for you at the door.

Edit: I see Parker already addressed this issue.

 

[Dan Kone]

Sorry charlie, but unfortunately you have forgotten one thing. In order to entice PEOPLE to BUY THE LOANS with which to make a bundled security out of you needed the really low low interest rates to make the payments possible. Without low interest rates there are no buyers, with no buyers the bubble could never have happened in the first place. Thanks for playing common sense economics, there are some consolation prizes waiting for you at the door.

You talk about common sense but you don't show any evidence of having any.

No, you don't NEED low interest rates to entice people to get loans to buy properties when the price of an average home goes up by over 50% in 15 years. I'm sure we can all agree that even without the fed interest rates wouldn't be over 50% right?

So no, you're wrong. That wasn't necessary part of the equation. It made the problem worse, it did not cause the problem. What caused the problem was the fact that banks were not financially responsible when the loans they handed out defaulted so they didn't care if the people who they were giving a loan to couldn't pay it off.

Before accusing someone of not having common sense you should probably make sure you have your facts right otherwise it makes you sound like the fool.

 

[sync0s]

You talk about common sense but you don't show any evidence of having any.

No, you don't NEED low interest rates to entice people to get loans to buy properties when the price of an average home goes up by over 50% in 15 years. I'm sure we can all agree that even without the fed interest rates wouldn't be over 50% right?

So no, you're wrong. That wasn't necessary part of the equation. It made the problem worse, it did not cause the problem. What caused the problem was the fact that banks were not financially responsible when the loans they handed out defaulted so they didn't care if the people who they were giving a loan to couldn't pay it off.

Before accusing someone of not having common sense you should probably make sure you have your facts right otherwise it makes you sound like the fool.

Actually, you would, because low interest rates would also lower the what? oh yeah, the monthly payment. These loans were meant to qualify people who had bad credit, non provable income, as well as low income at that. So in order to get someone interested you had to dangle in their face a payment they can afford and the only way the bank can do it is by lowering interest rates and/or stretching the length of the loan. Seeing as mortgages are generally 30 years, they lowered the interest rates and offered ARMS. Then when shit hit the fan and the interest payment quadrupled, so did the homeowners payments. Affordability went out the window, and people started giving up. People in these situations looking for loans weren't thinking about 50% maturity rates. They were thinking about their dream home with affordable payments, come on.

Also, as for your comment about only one variable taken into a count, the study was done using a multitude of statistics that are provided in table and chart form following the entire paper.

 

[deprave]

I've yet to hear anyone dispute any of the logic or evidence I posted. Only people pronouncing me wrong with no explanation for why what I said that was false.

Right so for the 4th or 5th time how about you respond to my post asking how you equate opposition of regulations to promoting corporate fraud, you've yet to explain this, and its not the first time your ignored a post of mine, please do tell....Also please give one example of a time from the past 20 years that regulations prevented fraud or convicted a criminal and you can't use Bernie madoff (not that he would necessarily count anyway)...regulations are only good for big corporations who hire expensive lawyers to get around shit, The Microsofts and the Wal-Marts.

 

[sync0s]

Right so for the 4th or 5th time how about you respond to my post asking how you equate opposition of regulations to corporate fraud, you've yet to explain this, and its not the first time your ignored a post of mine, please do tell....

Did it to me too, then claimed he "missed the post"

 

[Dan Kone]

Actually, you would, because low interest rates would also lower the what? oh yeah, the monthly payment

And they got around that with adjustable rates.

fail

These loans were meant to qualify people who had bad credit, non provable income, as well as low income at that.

and the only reason they could do that is because they didn't care if people paid off these loans or not. How were they able to do that? A deregulated market for bundled loans.

So in order to get someone interested you had to dangle in their face a payment they can afford and the only way the bank can do it is by lowering interest rates and/or stretching the length of the loan.

Or you could start them off with low payments and dramatically increase them over time, which was very common. Many people's payments doubled or more after a few years.

So no, wrong again.

Look, I know you guys really want the fairy tales Ron Paul is telling to be true, but they are not. I think I've proven that sufficiently here.

 

[Dan Kone]

Did it to me too, then claimed he "missed the post"

wtf? so if I don't read every post every day then I'm trying to dodge an argument?

I did respond to your post when you brought it to my attention. So stfu and quit making shit up.

You guys are obviously following Ron Paul with religious devotion and there is no level of proof high enough for you to accept. So go ahead, follow this pied pipper off a cliff like a bunch of lemmings. Best of luck to you.

 

[NoDrama]

Actually I don't get my economic sense by listening to RP, you must be deranged to think you can sell a product without a customer. But hey the Fed buys treasuries when the USA has no customers so why not right?

 

[Dan Kone]

Right so for the 4th or 5th time how about you respond to my post asking how you equate opposition of regulations to promoting corporate fraud, you've yet to explain this, and its not the first time your ignored a post of mine, please do tell....Also please give one example of a time that regulations prevented fraud and you can't use Bernie madoff or Martha Stewart (not that they would necessarily count anyway)

No. I've explained it in great detail several times in this thread. Unfortunately your little hamster brain couldn't bother to read those posts because they were more than a paragraph. Don't blame me for you're short attention span and inability to comprehend information. I've gone over this several times. It's on you for not getting it.

 

[budlover13]

wtf? so if I don't read every post every day then I'm trying to dodge an argument?

I did respond to your post when you brought it to my attention. So stfu and quit making shit up.

You guys are obviously following Ron Paul with religious devotion and there is no level of proof high enough for you to accept. So go ahead, follow this pied pipper off a cliff like a bunch of lemmings. Best of luck to you.

Don't dodge the argument Dan. Accept it and enjoy it. If i'm wrong i'll stroke you, but the conversation is the important part imo.

 

[sync0s]

And they got around that with adjustable rates.

fail

Yes, an ARM has to start somewhere moron. You can't dangle an affordable payment in someone's face with a 20% interest rate to start with, now can you (unless it's a smaller form of credit, a mortgage, good luck)?

You have not provided proof. There is no real concrete proof as to whether regulation or deregulation really works over the other. It's all political jibber jabber which is fine. It's not the theory of gravity here. If you can provide two statistical proofs of two different nations with exact same population, economies, land masses, etc, with one in which is regulated, and the other in which isn't, and it still favors your way. I will believe your opinion as fact. Stop saying you are throwing proof at us, because even you know it isn't actual scientific proof and would not hold up in a scientific community.

So, until you can provide statistical evidence of two countries under the controls mentioned above, you need to stop calling it proof and admit what it is like a sane logical person. A statistically backed political ideal. Even that's a stretch, but I'll accept it

Oh, and they could get it because our government was pushing subprime mortgages. This is what a mortgage with a buyer that would not be qualified in a normal market was, sub-prime.

 

[Dan Kone]

Actually I don't get my economic sense by listening to RP, you must be deranged to think you can sell a product without a customer. But hey the Fed buys treasuries when the USA has no customers so why not right?

seriously? My post was too hard for you to understand? It was like 5 sentences....

grrrrr. ok. one more time, if you don't get it, that's on you.

There was still a market for those loans even with higher interest rates because the average price of a home was on pace to more than double over the life of the loan.

What is it about this that you don't understand?

There was still a large profit in taking these loans even with higher interest rates because of the rate the value of homes was increasing by.

How is that complicated?

 

[NoDrama]

seriously? My post was too hard for you to understand? It was like 5 sentences....

grrrrr. ok. one more time, if you don't get it, that's on you.

There was still a market for those loans even with higher interest rates because the average price of a home was on pace to more than double over the life of the loan.

What is it about this that you don't understand?

There was still a large profit in taking these loans even with higher interest rates because of the rate the value of homes was increasing by.

How is that complicated?

Your post isn't hard to understand, its just as wrong as it can possibly be. I assume you have never owned a home.
They only let you miss 3 consecutive payments on a home before they foreclose. If you make $2500 a month and your house payment is $3,000 a month, how long before you foreclose? Do you have any idea?

 

[Dan Kone]

ok. You're now intentionally ignoring the post as is everyone else in this thread. It's clear people are going to believe what they believe no matter how clear the evidence.

Good luck sipping the koolaide.

 

[NoDrama]

ok. You're now intentionally ignoring the post as is everyone else in this thread. It's clear people are going to believe what they believe no matter how clear the evidence.

Good luck sipping the koolaide.

Im not intentionally ignoring anything, I am destroying your argument is all. segue into more ad hominem, it makes you look weak.

 

[Dan Kone]

I am destroying your argument is all.

No actually you're not. You're just stating something as fact that is untrue. Not surprising from a Ron Paul supporter.

Answer me this.

Would banks be handing out loans to people who were likely to default on them if those banks were financially responsible for the loans defaulting?

Would investors buy bundled bad loans in large quantities if they had been told the truth about what they were?

 

[sync0s]

No actually you're not. You're just stating something as fact that is untrue. Not surprising from a Ron Paul supporter.

Answer me this.

Would banks be handing out loans to people who were likely to default on them if those banks were financially responsible for the loans defaulting?

Would investors buy bundled bad loans in large quantities if they had been told the truth about what they were?

Would the government be giving out loans to people who were likely to default on them if they were financially responsible for the loans defaulting? I think yes.

 

[NoDrama]

No actually you're not. You're just stating something as fact that is untrue. Not surprising from a Ron Paul supporter.

Answer me this.

Would banks be handing out loans to people who were likely to default on them if those banks were financially responsible for the loans defaulting?

Would investors buy bundled bad loans in large quantities if they had been told the truth about what they were?

Who creates the credit in this country that makes loans possible? Hmm? Banks don't give out loans, customers come into banks and ask for credit and they sign a legally binding contract promising to pay back the money plus some fees and interest. If customers do not ask for the loans, the banks cannot make them. Understand how this whole demand/supply thing works?

 

[Dan Kone]

Who creates the credit in this country that makes loans possible? Hmm? Banks don't give out loans, customers come into banks and ask for credit and they sign a legally binding contract promising to pay back the money plus some fees and interest. If customers do not ask for the loans, the banks cannot make them. Understand how this whole demand/supply thing works?

I noticed you couldn't answer my questions because you know if you do your whole argument falls apart.

That's what I thought.

 

[Dan Kone]

Would the government be giving out loans to people who were likely to default on them if they were financially responsible for the loans defaulting? I think yes.

Explain the relevance of that.