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Swordsman
| | Posted on Wednesday, December 08, 2010 - 04:02 pm: | 
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"Postman of eight years driving a route and making $60K base in Dallas? Amazing benefits to boot?"
Hot damn, I'm moving to Texas! Bet those postmen don't go nuts and shoot people...
...oh wait, it IS Texas we're talking about. 
~SM
(Message edited by Swordsman on December 08, 2010) |
Moxnix
| | Posted on Wednesday, December 08, 2010 - 04:50 pm: |
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This came today in a financial newsletter:
Mary is the proprietor of a bar in Dublin. She realises that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronise her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).
Word gets around about Mary's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Mary's bar. Soon she has the largest sales volume for any bar in Dublin.
By providing her customers freedom from immediate payment demands, Mary gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Mary's gross sales volume increases massively. A young and dynamic vice-president at the local bank recognises that these customer debts constitute valuable future assets and increases Mary's borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.
At the bank's corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then bundled and traded on international security markets. Naive investors don't really understand that the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.
One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Mary's bar. He so informs Mary.
Mary then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since Mary cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs.
Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in price by 90%. The collapsed bond asset value destroys the banks' liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.
The suppliers of Mary's bar had granted her generous payment extensions and had invested their firms' pension funds in the various BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds. Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.
Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion euro no-strings attached cash infusion from their cronies in Government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Mary's bar.
Now, do you understand economics in 2010? |
Reepicheep
| | Posted on Wednesday, December 08, 2010 - 05:35 pm: |
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Boy ain't that true... |
Sifo
| | Posted on Wednesday, December 08, 2010 - 06:03 pm: |
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Now it's true...
Mary is the proprietor of a bar in Dublin. She The government realises that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronise her bar. To solve this problem, she the government comes up with a new marketing plan that allows her customers to drink now, but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).
Word gets around about Mary's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Mary's bar. Soon she has the largest sales volume for any bar in Dublin.
By providing her customers freedom from immediate payment demands, Mary gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Mary's gross sales volume increases massively. A young and dynamic vice-president at the local bank recognises that these customer debts constitute valuable future assets and increases Mary's borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.
At the bank's corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then bundled and traded on international security markets. Naive investors don't really understand that the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.
One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Mary's bar. He so informs Mary.
Mary then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since Mary cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs.
Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in price by 90%. The collapsed bond asset value destroys the banks' liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.
The suppliers of Mary's bar had granted her generous payment extensions and had invested their firms' pension funds in the various BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds. Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.
Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion euro no-strings attached cash infusion from their cronies in Government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Mary's bar.
Now, do you understand economics in 2010? |
Buellbozo
| | Posted on Friday, December 10, 2010 - 09:12 pm: |
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Blake, (and) Sifo,
Once again, what seemed black and white turns out to be not so black and white. You mis-interpeted my remarks, that's all.
I overreacted and got snotty because your response gave me, at least, the impression of having words put in my mouth.
The meat of my post was intended simply to state my personal faith based beliefs about what has and is happening to our country. I have always considered the term "the administration" to be the province of the executive branch.
My disappointment is directed at BO and the incompetent twits he has surrounded himself with in the WH. He has proven to be a pisspoor communicator, capable only of reading carefully scripted texts prepared by the above mentioned twits.
From my side of the fence, he and the twits are directly responsible for enabling the loyal opposition to make the wasted majority he had look like a circus.
It may indeed be arrogantly presumptous of me to state this but, here goes...
I think we BOTH want honorable men like Sen. Coburn in BOTH parties to vote for. Honorable men for your team, and honorable men for my side. I refuse to accept the notion that one side or the other is by definition incapable of giving us honorable men. It hasn't happened because we as an electorate, haven't demanded it of them.
That is why I said I wasn't sure we actually do deserve better. I see no greater place for blame to be placed than on the American Voter.
That's my best effort at non-verbal communication. A lot of folks are better at it than I. |
Moxnix
| | Posted on Saturday, December 11, 2010 - 01:09 am: |
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From Economics in One Lesson, written by Henry Hazlitt in 1946--
• On taxes: “[T]he larger the percentage of the national income taken by taxes, the greater the deterrent to private production and employment.”
• On government housing lenders: “Government-guaranteed loans and mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably means more bad loans than otherwise.”
• On bailouts and subsidies: “It is as foolish to try to preserve obsolescent industries as to try to preserve obsolescent methods of production.” |
Blake
| | Posted on Saturday, December 11, 2010 - 04:53 am: |
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Thanks Don,
>>> I refuse to accept the notion that one side or the other is by definition incapable of giving us honorable men.
In my view, honorable men don't view the life of an unborn child as unworthy of protection. There are a number of pro-life Dems and also pro-abortion Republicans. But that one issue, more than any other, tells me most of what I need to know about the core and base of each party. |
Sifo
| | Posted on Saturday, December 11, 2010 - 01:49 pm: |
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Just for those that still don't understand that private lenders were pressured, even forced to make bad loans, here's how it happens. Sadly this doesn't come from the period of "ignorance" prior to the housing industry bringing our economy to it's knees, this is happening right now while we are still struggling with the effects of these bad decisions.
Here's what happens when you try to be a responsible lender...
Are banks unfairly denying certain loan applicants?
By Kenneth R. Harney
Friday, December 3, 2010; 11:32 AM
A national consumer coalition plans to file a series of landmark federal fair housing complaints beginning Dec. 6, challenging a widespread practice by banks and mortgage lenders: requiring borrowers who apply for FHA loans to have FICO credit scores well above the 580 minimum set by the FHA for qualified applicants with 3.5 percent down payments.
The complaints allege that the higher FICO requirements disproportionately discriminate against African American and Latino borrowers, many of whom have credit scores above the 580 threshold set by FHA but below the 620 to 660 minimums frequently imposed by private lenders. FICO scores run from 300 to 850, with higher scores correlated with lower future risk of default.
Because FHA insures lenders against losses from serious delinquency or foreclosure, there is "no legitimate business justification" for rejecting applicants solely on the basis of FICO scores that are acceptable to FHA, the complaints contend.
The identities of the 20-plus mortgage lenders who are expected to be the subjects of fair lending filings were not available in advance. But John Taylor, chief executive of the National Community Reinvestment Coalition, which plans to file the complaints, said they include "large, medium and small banks," all of whom maintain minimum FICO scores higher than what FHA requires. The coalition represents 600 local and regional consumer, economic development and civil rights groups and has long been an advocate of equal opportunity in mortgage lending.
According to a draft complaint that I obtained in advance, the coalition conducted what it calls "extensive" blind tests among lenders active in the FHA program. Testers presented themselves to loan officers as financially qualified applicants for FHA-insured mortgages, with FICO scores between 601 and 605. Loan officers routinely informed them that they cannot accept applicants with FICOs less than 620.
When applicants responded that they knew FHA is willing to insure loans for borrowers with credit scores as low as 580, often they were told the same: We require higher FICO scores on FHA loans than the FHA does.
Lenders with higher FICO policies "knew or should have known that African-Americans and Latinos disproportionately have credit scores between 620 and 580, both within the FHA portfolio" and within the lender's market areas. As a result, the complaint argues, these lenders' policies have "the effect of discriminating against African-Americans (and) Latinos."
In an interview, Taylor said "the insidious part of these policies" is "not simply that they discourage" minorities from purchasing homes, but they also are "cutting off refinancings" that might be available via FHA for current homeowners who need loan modifications to avoid foreclosures.
The FHA, which was created by the federal government during the Great Depression, traditionally has been a crucial source of mortgage financing for moderate-income, minority and first-time home purchasers.
Asked what he thinks about lenders' independent credit score cutoff limits, David H. Stevens, the FHA commissioner, said the current FICO 580 minimum standard is "based on pretty in-depth analysis of performance data" by borrowers, and represents an acceptable level of risk for the agency consistent with its mission.
In an interview that did not touch on the upcoming fair-lending complaints, Stevens said he has "concerns" about the negative impacts lenders trigger when they impose stricter credit-score standards on applicants than the minimum required by FHA. This is especially the case when borrowers' scores are low not because they are "habitual late payers," but because they've experienced unforeseen economic reverses such as recession-related job losses or uninsured medical bills.
One of the country's top advisers to FHA lenders, Brian Chappelle, a principal with D.C.-based Potomac Partners, said banks set higher credit-score limits for sound economic reasons: They are concerned about costly indemnification demands from the FHA and "reputational risk" in the investment community if low-FICO loans go sour. Also, Chappelle said, they don't want to lose valuable revenue they receive for servicing FHA-insured mortgages that are paying on time.
Terry H. Francisco, a spokesman for Bank of America, one of the highest-volume FHA lenders, confirmed that rationale and said the bank sets its own "credit standards based on our best analysis of an applicant's capacity and willingness to repay the loan."
Brian D. Montgomery, the immediate past FHA commissioner, agreed that the recent "stricter credit" limits have "some [people] asking if FHA is still serving [its] traditional type of borrower." But, he said, the potentially heavy "incremental expenses of managing delinquent borrowers" are the key drivers of rising credit score standards. |
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