Lending Crisis

1 October 2008

Donald Duck loses $700 billion in bad mortgages: [image of Donald Duck, sick with worry] That's right: $700 billion, in bad mortgages.

Considering that Donald Duck doesn't generally wear pants, it's especially bad when he loses his shirt.

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10 Responses to Lending Crisis

  • BigTigerMonkey says:

    OK, a new finance thread, so I can be on-topic (finally) ...

    Scrooge McDuck and myself are not the only ones hoarding!

    "Interbank rates have soared as financial institutions hoard cash to meet future funding needs amid deepening concern that more banks will collapse."

    "The Libor- OIS spread, the difference between the three-month dollar rate and the overnight indexed swap rate, widened to a record 260 basis points today. It was 197 basis points a week ago and 79 basis points a month ago."


    • Daniel says:

      Yeah, you really need to set-up your own 'blog or BBS for open letters, and otherwise just use e.mail to send your declarations to me. I'm typically going to toss the OT comments into limbo.

    • BigTigerMonkey says:

      Heark! Brave news from tax-defender Chris, the Dodd-Damned Idiot:

      "`Very few Americans have ever heard of something called the Libor,'' said Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, on Oct. 1. He defined the term, then said, ``Libor jumped over 400 percent in just one day.''

      Actually, overnight dollar loans rose 168 percent on Sept. 30, to a record 6.8 percent from 2.6 percent. Dodd was probably referring to the increase in basis points, or hundredths of a percent."

      Emphasis, mine. Chutzpah, congressional Leadership


      • BigTigerMonkey says:

        "Americans' lack of financial sophistication is a cause, not just a symptom, of the credit crunch, said James Bowers, managing director of the Center for Economic and Entrepreneurial Literacy, a nonprofit group in Washington. It may be a reason people are willing to take out loans for homes they can't afford or add to credit card debt at adjustable rates.

        ``When we go to a mechanic, we trust them to fix our problems,'' he said. ``But right now, the mechanics on Wall Street can't get their own cars to start.''


        Damn skippy.

        • BigTigerMonkey says:

          "For 1996, HUD required that 12% of all mortgage purchases by Fannie and Freddie be "special affordable" loans, typically to borrowers with income less than 60% of their area's median income.

          That number was increased to 20% in 2000 and 22% in 2005.

          The 2008 goal was to be 28%.

          Between 2000 and 2005, Fannie and Freddie met those goals every year, funding hundreds of billions of dollars worth of loans, many of them subprime and adjustable-rate loans, and made to borrowers who bought houses with less than 10% down."

          From the WSJ: "How Government Stoked the Mania".

          Dodd-Damned Idiots, and Paulsons of B!tches ...

  • BigTigerMonkey says:

    The barbarian hoard is growing. I've canceled all forms of direct deposit, and am not generating any automatic flows (of the economic kind).

    But, when I look at decreasing stock prices, I become hungry (like the wolf), so I am tempted to not want any financial bail out -- because I welcome deflation and bargains, like the Scrooge.

    So, if anyone wants me to, I'll tell my people in the House, to vote against the bail out package - just send word by 11:59 PST Thurs 10/2/08.


    • Daniel says:

      You've already gone onto standard time?

      I was away from the computer between the time that you posted this message and 10:59 PDT. In any case, I am convinced that the bail-out bill will do more harm than good.

      As to investment urges: The problem for persons with relatively little political power is that we don't know just how the politics is going to play-out, and cannot much affect them. The simple fact is that the ruling class is going to seize as much as they can of the assets of those peasants who have otherwise best weathered this storm, by new taxation or by some other change of the rules.

      • BigTigerMonkey says:

        Ahahaha! Watch the peasants run! Oh, sorry, did I say that out loud? Oops. Never mind, nothing to see, move along... sorry, sorry, terribly sorry. Just doing my best Al Franken impression.

        But, in all pseudo-pseriousness, (setting aside the issue of icky peasants), one can recall the actions of the $300 billion bail-out back in the late 80s/early 90s. E.g., what does that $300 billion translate to in the value of today's dollar? (~$3 trillion?). And, given that the Savings & Loan crisis precipitating that bail-out consisted of financial underpinnings not too different that that of those today, one can recall the rapidity and ease of which that bail-out happened, the rough order of magnitude, and the degree of acceptance on the part of the taxpayer -- all of which do not appear that much fundamentally different than their corresponding analogues today; one key word being appears.

        The bail out will probably do more harm than good, even for those who can shield their tax liabilities to a greater degree than the proletarians -- or, as the wikis call the salaried among them, the salariat -- but it's not certain this is entirely a matter of the seizure of more political power. If it is, it may be a very risky method at this time, due to an increase in the efficiency of market operations in another kind of market; the kind that does not involve do-overs, take-backs, or bail-outs. E.g., the costs of biological commodity replacement have dropped to very low levels -- Mexico provides increasing anecdotal evidence -- affordable now to even the common folk.

  • BigTigerMonkey says:

    For the above post, I thought I had hit the reply button, it was my intention to use the reply button.

    • Daniel says:

      The menu below the text area will show the parent of the comment, and you can select a different parent from that menu if you've clicked the wrong thing.

      I have hacked the dB to put the other comment into the proper thread.

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