Chavez says crisis-hit U.S. needs new constitution

reply to post by Gateway



Since when was rates 1% in 2002?

If your talking about the option arm or negative amortization product that was created by the lenders themselves and blew up because it was profitable at least back then. It was a minimum payment, which was less than the actually interest amount owe; therefore, the remaining interest was added back to the principle. In no way does this mean interest rates were 1% or even close, it's the same concept as the credit cards minimum payments.

The market failed because of investors aggressive products that were on the market. When the market was on the tipping scale. The feds raise the interest rates to slow down inflation. This back fire along with the increase amount of foreclosures and created an unstopable domino effect. The investors were scared and pulled back their aggressive products and people couldn't refi no more because they couldn't get the same products that got them their homes in the first place. People then went into foreclosure because they couldn't refi out of their adjustable rates and home prices drop causing homeowners property to go upside down.

And if all the financial institutions go down, expect the markets to get even worse. And be prepare to buy homes and cars with cash.

How did Washinton force the banks to lend to people who couldn't afford homes?

It was the lenders that came up with the stated stated income documentation products. It has nothing to do with the goverment. It has more to do with greed because they were making so much money with these products and not thinking of the concequences. On top of that it didn't help when the rest of the world were pouring in money to invest in these products.

Originally posted by amfirst
How did Washinton force the banks to lend to people who couldn't afford homes?

It was the lenders that came up with the stated stated income documentation products. It has nothing to do with the goverment. It has more to do with greed because they were making so much money with these products and not thinking of the concequences. On top of that it didn't help when the rest of the world were pouring in money to invest in these products.

The problem we face is much bigger than a few bad loans. This is the first thing u need to understand. This is a government who has spent us into bankruptcy. A government who has pushed a corporatism consumerism agenda to the people saying to the people dont save your money that is not American you need to "spend" us out of these bad situations. The problem is the people dont have the money. Wages over the past 20 years have really gone no where when you factor in inflation they actually went down. The FED is a huge part of this for doing what they do in credit extension then retraction to form the financial calamities we have and have had. They do this for power consolidation and thievery of a nations wealth. Look up monetary policy and youll see how this scam works. Washington also looked away while these banks ravaged the people and then pay very little in taxes meanwhile the normal people pay around 30%. Oh man I can go on and on but Washington is in this and this bailout is really the final straw.

Originally posted by amfirst

Since when was rates 1% in 2002?

Fed Funds Rate on 12/1/2002 = 1.24%

Source:St. Louis Fed

If your talking about the option arm or negative amortization product that was created by the lenders themselves and blew up because it was profitable at least back then.

Nonsense, all interest rate related products move in unison and have roots on the market, particularly with FF generated rate. When the Fed steps-in and interferes in the Market and sets interest rates at "unprecedented" new lows a chain of events occurs in the lending and capital markets.

Interest rates don't fall out of the sky, they are manipulated by the FED.

It was a minimum payment, which was less than the actually interest amount owe; therefore, the remaining interest was added back to the principle. In no way does this mean interest rates were 1% or even close, it's the same concept as the credit cards minimum payments.

All interest rates move in unison. That does not mean credit card interest rates would be decreased to 1%, but it does mean interest rates for credit cards on the average decreased for this period of time.

The market failed because of investors aggressive products that were on the market.

Markets don't fail. Goods and services and prices more specifically reflect the wants and needs of consumers. When the FED artificially lowers interest rates, it distorts prices across the economy. As interest rates drop, prices of assets go up, inverse relationship.

A good example of this is the assets known as HOMES. Prices were driven artificially up, causing a speculative bubble in housing. The market is simply reacted to what the FED caused. If the FED never decreased the rates we would not be here talking about the HOUSING BUBBLE.

When the market was on the tipping scale. The feds raise the interest rates to slow down inflation.

The FED caused the inflation by increasing the money supply due the artificial manipulation of the FED funds. Knowing that they sent us into inflation, the FED put the brakes and raised the INTEREST RATES.

This back fire along with the increase amount of foreclosures and created an unstopable domino effect. The investors were scared and pulled back their aggressive products and people couldn't refi no more because they couldn't get the same products that got them their homes in the first place. People then went into foreclosure because they couldn't refi out of their adjustable rates and home prices drop causing homeowners property to go upside down.

Again, nonsense. When RATES began to climb because of the FED, people that had purchased ARMS just a few years ago faced the inevitable adjustment of having to pay the new market rate of interest. This new rate made payments on mortgages more difficult for people on the margins, and thus began the foreclosure rate climb.

And if all the financial institutions go down, expect the markets to get even worse. And be prepare to buy homes and cars with cash.

Credit markets will not disappear, despite what Bernanke, Paulson, or Bush claim. Banks are in the business of lending, they generate profits through lending. What will happen and what should happen is that the Banking industry will reconsider certain type of lending. The days of easy credit are OVER, and this is good for everybody, because it limits lending and wasting investment into non-productive endeavors, which would probably not yield a return to investors anyway. What's happening is a correction of malinvestment that took place during the FED's false generated boom.


[edit on 28-9-2008 by Gateway]

Originally posted by cbass
reply to post by yellowcard

 

So much for itelligent debate. "Put a bullet through his head" "you're an idiot" .......If only there were a way to split America down the middle and let the ones who call people names for not agreeing with them/ people who suggest blowing peoples heads off for speaking their minds, live on there half and the rest of us could live in PEACE!! I measn are you folks serious? "Name calling"& "Put a bullet through his head" am I having a flaskback....are we still in kindergarten? AuntieEmm is that you? Toto?
Where are you.

I'm not calling you names, and you misspelled "intelligent"...how ironic. I'm tell you the truth, if you agree with Chavez on this particular issue, you're an idiot, that's not name calling, that's fact. You can go live in peace with Chavez, if you honestly think he's right...but good luck with that, let's see how socialism works for you. You can live peacefully oppressed. Excuse my disdain for your idiocy, but I find standing up for the Constitution, to be quite patriotic, I won't blindly follow my country into War, but I will stand for it's founding principals.

[edit on 28-9-2008 by yellowcard]

Originally posted by amfirst
How did Washinton force the banks to lend to people who couldn't afford homes?

Here's an example of one of the laws which forced the Banking institutions to lend to less than safe PRIME borrowers.

The Community Reinvestment Act:

The bill encouraged mortgage lending through two government sponsored enterprises ("GSEs"). The Federal National Mortgage Association, commonly known as Fannie Mae, enables mortgage companies, savings and loans, commercial banks, credit unions, and state and local housing finance agencies to lend to home buyers. The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, buys mortgages on the secondary market and sell them as mortgage-backed securities on the open market.

Source:en.wikipedia.org...

In his April 26 New York Post article on the CRA entitled "The Real Scandal," Professor Liebowitz explains how the government's Fannie Mae Foundation singled out one bank in particular as the role model for all other banks in America in terms of its commitment to CRA lending: Countrywide, the nation's largest mortgage lender, had committed to $600 billion in low-income or "subprime" loans as of 2003. Today, Countrywide is essentially bankrupted and has been merged with Bank of America.
Source:NYPOST

You are being fooled by the Bush administration into thinking that they were not the culprits behind this mess, when in actuality IT was BIG-GOVERNMENT ALONG WITH THE FED, that sent us down this path.




[edit on 28-9-2008 by Gateway]

Yellowcard, you honestly make me sick. Your little idea of Socialism is completely ignorant and if anyone here is ignorant, it would be you. Capitalism IS the culprit in this economic situation of the United States and the only way to go for this nation is to either embrace Socialism or resort to Fascism. Sadly, it seems you Paulie-Libertarians would surely take the latter.

Originally posted by QuetzalcoatlAlien
Yellowcard, you honestly make me sick. Your little idea of Socialism is completely ignorant and if anyone here is ignorant, it would be you. Capitalism IS the culprit in this economic situation of the United States and the only way to go for this nation is to either embrace Socialism or resort to Fascism. Sadly, it seems you Paulie-Libertarians would surely take the latter.

I'm a Chicago School Libertarian actually, Ron Paul is an Austrian School Libertarian; Don't worry, I'm sure you can look that up. Everyone is ignorant, but frankly you're an idiot, and you've been tricked into thinking that there are only two ways out. I frankly think the government needs to pass a bill quickly, or the credit market is going to freeze, and we will end up with super-banks, like JP Morgan and Bank of America. However, you seem to ignore that the government intervention into the market is what caused this, so we must tread carefully in a balance of government and market forces, so that we can get back to Capitalism and not give the government more power. So before you get sick and puke on our Constitution, go take and a few economics courses,, legal courses, government courses and history courses and learn just how stupid you sound.

[edit on 28-9-2008 by yellowcard]

post by yellowcard So before you get sick and puke on our Constitution, go take and a few economics courses, government courses and history courses and learn just how stupid you sound.

I have to say, I don't usually agree with the Friedmanites on many issues, but I'm afraid yellowcard is right on this one.





[edit on 28-9-2008 by Gateway]

Originally posted by yellowcard

Originally posted by QuetzalcoatlAlien
Yellowcard, you honestly make me sick. Your little idea of Socialism is completely ignorant and if anyone here is ignorant, it would be you. Capitalism IS the culprit in this economic situation of the United States and the only way to go for this nation is to either embrace Socialism or resort to Fascism. Sadly, it seems you Paulie-Libertarians would surely take the latter.

I'm a Chicago School Libertarian actually, Ron Paul is an Austrian School Libertarian; Don't worry, I'm sure you can look that up. Everyone is ignorant, but frankly you're an idiot, and you've been tricked into thinking that there are only two ways out. I frankly think the government needs to pass a bill quickly, or the credit market is going to freeze, and we will end up with super-banks, like JP Morgan and Bank of America. However, you seem to ignore that the government intervention into the market is what caused this, so we must tread carefully in a balance of government and market forces, so that we can get back to Capitalism and not give the government more power. So before you get sick and puke on our Constitution, go take and a few economics courses,, legal courses, government courses and history courses and learn just how stupid you sound.

[edit on 28-9-2008 by yellowcard]

It's pretty sad that you can only resort to personal attacks such as calling people stupid and idiot. No, it was not government intervention it's merely the nature of Capitalism. Do you know what it is to be in the working-class situation? Losing your home? Barely being able to pay for gas? I highly doubt it. Libertarians lack any sort of credibility, since you all think Ron Paul is the savior of Earth.

Why are people slamming Chavez? I think this US vs Them mentallity this country seems to breed needs to end. We need to realize we are all essentially one, in connection with the world and the universe. We should not be fighting each other, but loving each other as fellow human beings. But there always needs to be someone for us to fight or something to be against or at war with!

Chavez is right, the elite zionist banks rule our country and want to rule this planet and are pushing towards one world government. If Chavez is yet just another puppet like Bush and Cheney to the bankers and OIL Cartels (including the Rockefellers) he sounds pretty similar to any normal american who understands the current US government is a sham. We need to reinact the constitution and make it better by GIVING MORE INDIVIDUAL RIGHTS TO PEOPLE, not take them away. We need to repeal some drug laws, get rid of the IRS and corporate/government greed, and we need to make life a little more easier for us all instead of it being difficult everyday of your life because of these overbloated glutonous and powerdrunk bankers/corporations making money on our broken backs. Down with Corporate America and up with America for the people by the people, not for the corporation by the corporation.

I am thinking we need to be all like modern day robin hoods, bleed the rich while clothing and feeding the poor.

reply to post by Gateway


Fed rates may be 1%, but loan rates are never that low. I hope u know lenders charge a spread. Even when the feds lower the rates, the lenders would up the spread to keep the loans rates the slightly the same as before. Example when the feds raise the rates a year ago, the avg 30 fix was around 6.1%. Now that they lowered the rates, the avg is around 5.6%. Whoo woo, yea u really save a couple of twenties a month, like that would really help.

The market is in a bad condition because most of the orginal investors pulled out taking with them all of the aggressive loan products. Now the people who originally got into the stated income products can't refinance because the products are not around no more, creating a unstopable foreclosure effect. Believe me the stated income products very very popular.

Home prices drop because people can't get the financing no more. Homes were already over price in the the first place. Most homeowners don't have the income documentation to prove that they can pay for the homes. Now, people refuse to pay for a property,when it is selling for less than they owe, so they let it go to foreclosure.

Yea sure, we all know the fed is a fraud, but everybody had their hand in this failure.

Wow so much love in this thread. It almost makes me warm and fuzzy inside.

Originally posted by QuetzalcoatlAlien
t's pretty sad that you can only resort to personal attacks such as calling people stupid and idiot. No, it was not government intervention it's merely the nature of Capitalism. Do you know what it is to be in the working-class situation? Losing your home? Barely being able to pay for gas? I highly doubt it. Libertarians lack any sort of credibility, since you all think Ron Paul is the savior of Earth.

Again, it's not a personal attack, it's the truth, if you want to get rid of the U.S. Constitution, then you're an idiot. I'm not going to call a fire an ocean of water because you think it's personal. I don't agree with Ron Paul 100%, as again, I have said I'm a Chicago School Libertarian and he is an Austrian School Libertarian. There are stark differences between the two and if you would use your brain or your mouse and keyboard you could easily find the differences. You lack any sort of credibility as you are using your 1st Amendment rights yet want to dismantle the very document that provides you that right. Socialism or Fascism? No thank you, I'll take Capitalism.

[edit on 28-9-2008 by yellowcard]

reply to post by yellowcard


Hey any school against Keynesian style intervention is good by me. I dont care if its a Chicago School or Austrian School. There isnt a huge difference between the two I think one is more for hard money than the other. Maybe Im wrong.

Originally posted by amfirst Fed rates may be 1%, but loan rates are never that low. I hope u know lenders charge a spread. Even when the feds lower the rates, the lenders would up the spread to keep the loans rates the slightly the same as before. Example when the feds raise the rates a year ago, the avg 30 fix was around 6.1%. Now that they lowered the rates, the avg is around 5.6%. Whoo woo, yea u really save a couple of twenties a month, like that would really help.

Here you are talking about long-term spread. Since when are ARMS fixed 30 years?

We are talking short term rates, which is exactly what ARMS are. The people that took out these ARMS are the ones that opted for the cheaper rates, and are also mostly the same sub-prime borrowers.

The market is in a bad condition because most of the orginal investors pulled out taking with them all of the aggressive loan products. Now the people who originally got into the stated income products can't refinance because the products are not around no more, creating a unstopable foreclosure effect. Believe me the stated income products very very popular.

What good is it to try to refinance someone who can't pay the market rate? You are arguing here that interest rates should be decreased, to the ridiculous low levels again, thereby re-inflating home prices.

Home prices drop because people can't get the financing no more.

No, home prices have dropped because they are an overvalued asset. The MARKET, has deamed them overpriced. As interest rates were increased by the FED, the price of the assets decreased. Again inverse relationship. When the prices fell and as they will continue to do so, it is unwise for the market and investors to refinance a home that has been "OVER-PRICED" to begin with.

They can't refinance because rates have increased, making these ARMS too risky to exist. Hence they have disappeared. Nobody in their right mind would wants to provide FUNDS to risky consumers, to purchase assets that have decreased in value and will thus continue to do so. It is unwise to do so.

Also, if people have defaulted on loans that have adjusted to the current market, how are they going to pay a 30 fixed. 30 year fixed rates are higher than shorter term lending, thereby more expensive. Again, because the lowered interest rates encouraged lenders to lend and consumers to borrow and take on debt they should not have taken in the first place, due to artificially FED lowered rates.

Homes were already over price in the the first place.

You mean DEMAND for homes inflated the prices for them. Again, the FED deceptively created this demand, by lowering the rates, giving investors incorrect market signals.

Most homeowners don't have the income documentation to prove that they can pay for the homes. Now, people refuse to pay for a property,when it is selling for less than they owe, so they let it go to foreclosure. Yea sure, we all know the fed is a fraud, but everybody had their hand in this failure.

Don't be fooled. Every cent that was loaned out by banks was created by the FED, they created this bubble, and then they raised the rates to stop the inflation. Which sent the rates above what these sub-primers could refinance at.


[edit on 28-9-2008 by Gateway]

reply to post by mybigunit


No, there's a big difference. Austrians don't believe in a Central Bank, Chicagoist do believe in a Central Bank. Chicagoist don't think monetary policy is behind the business cycles, the boom busts. They think those occur in a vacuum.

They have no problem with the FED's manipulation with interest rates, they also tend to see statistics and dogmatic models as appropriate tools to predict future consumer/producer outcomes. (think Long Term Capital Management and what happened to those so-called economists, who were Nobel Prize winners no less)

Chicagoist also loathe commodity backed money, they also see nothing wrong with fractional reserve banking.

Everybody, except the Austrians claim they know better than the Market.


[edit on 28-9-2008 by Gateway]

Originally posted by Gateway
reply to post by mybigunit

 

No, there's a big difference. Chicagoist don't think monetary policy is behind the business cycles, the boom busts. They think those occur in a vacuum.

They have no problem with the FED's manipulation with interest rates, they also tend to see statistics and dogmatic models as appropriate tools to predict future consumer/producer outcomes. (think Long Term Capital)

Ahh Ok thanks for the heads up. I guess Ill read up so I can know the difference. I think from what you say then that I am more Austrian. Ima read up though so I dont sound like a fool Self Education BabY!!!

He's right. The United States is a constitutional republic and that's how the founding Fathers wanted it to be and that's what the constitution states. It's not a democracy, it's a republic that is for the people by the people. For EVERY person by EVERY person. Not for the majority and oh well minority.

The United States was created to escape democracies and communisms.

This democracy is for the majority of the people by the majority of the people and the presidential and governmental powers are an autocracy in disguise.

The only Democratic aspect of this Republic is supposed to be the elections of office. Other then that we are free to live our lives with no government intervention. We don't go to war because the president says so, and the draft is unconstitutional! Research, people!

LIBERTY!

[edit on 28-9-2008 by LastOutfiniteVoiceEternal]

Personally, I think this new FED induced "Depression" will spell the end for the Friedmanites. The Chicago school is on its last throes. The Ron Paul movement and the spreading of Mises, Boehm-Bawerk, and Rothbard's ideas about sound money, the business cycle, and liberty will create a new renaissance of the "Austrian School".

Long live the "Austrians"!!!

RIP = Chicago

[edit on 28-9-2008 by Gateway]