Signs that a collapse is under way.

[Hydrosun]

How about the fact that its unethical and unmoral. And it perpetuates and accelerates the problems facing our economy, country, and citizens. People just don't care because their share of the problem get divided up and spread out so thin, but they are still literally pounding one more nail into our fragile ass economy's coffin each time they do this.

If it were unethical or immoral the economic actor would bare the cost associated; unfortunately the legal system in the USA is no longer ethical or moral. Because of the immoral and unethical legal system unethical bankers made immoral loans to potentially unethical borrowers.

The bankers don't give a shit because they got paid a huge origination fee and shifted all financial risk to investors (foreign funds, pension funds, etc.).

Sure some people took advantage of easy credit and a housing market that went up every year and never down; but the bankers could have prevented 100% of the mess by not making shady loans.

All of us who own / pay for real estate have seen huge declines in the value of our assets. The blame lies with the politicians and bankers NOT the maid who was given a $500K mortgage with ZERO down. Sure she should have known that she couldn't pay monthly for 30 years AND she MIGHT not be able to sell the house a year later for a $100K profit; however it is the bankers responsibility to make sure the borrower is credit worthy. Caveat Emptor works both ways.

 

[tr1ck_]

If it were unethical or immoral the economic actor would bare the cost associated; unfortunately the legal system in the USA is no longer ethical or moral. Because of the immoral and unethical legal system unethical bankers mad immoral loans to potentially unethical borrowers.

I feel you are dodging the issue, its unethical and immoral because it accelerates the problems facing our economy and citizens RIGHT NOW.

Strategically Defaulting is selfish, it takes your personal problems and it passes it on to the country as a whole.

While I agree the legal system is not ethical or moral, the people who have the ability to pay a mortgage but are chosing not to are doing something so similar to the bankers they are bitching at.

Using someone else's money to buy an investment, and then walking away when the investment doesn't do well. Is something a wallstreet guy or banker would do, and is exactly what everyone bitches about.

This is fighting fire with fire and only making the situation worse. That's why its unethical

 

[SpasticGramps]

The moral hazard debate can quickly turn heated. It's hard for me to really come down on one side of the argument. On one hand it's not something I think I could do, but I own everything I have. I'm not leveraged at all. When I enter an obligation I consider it mine to bear no matter the consequences. At the same time looking at the institutionalized fraud and looking into the blackhole that we are headed I can't really blame everyone for saying fuck it. That's what moral harzard does though. It's the expected reaction. In the final conclusion I will always blame the banks. They are by in large the greatest threat to humanity IMO.

 

[Hydrosun]

I feel you are dodging the issue, its unethical and immoral because it accelerates the problems facing our economy and citizens RIGHT NOW.

Strategically Defaulting is selfish, it takes your personal problems and it passes it on to the country as a whole.

While I agree the legal system is not ethical or moral, the people who have the ability to pay a mortgage but are chosing not to are doing something so similar to the bankers they are bitching at.

Using someone else's money to buy an investment, and then walking away when the investment doesn't do well. Is something a wallstreet guy or banker would do, and is exactly what everyone bitches about.

This is fighting fire with fire and only making the situation worse. That's why its unethical

I don't believe in "Our Economy" or "Our System" and I am no part of "Our Citizens". I am a libertarian and individualist.

Stratigic default is selfish but does that make it immoral? Does the economic actor owe any duty outside the four corners of the contract? Defaulting on a contract does NOT pass the problem onto third parties, if it did than the US Tax payers would have bailed out EVERY repoed car and house since the invention of auto / home finance.

Deciding to not pay on a $200K mortgage because the house is only worth $100K may make the situation worse and may encourage a neighbor down the street to do the same thing; but I can't say that the unemployed guy NOT paying for his house is ETHICAL while the frustrated and financially raped investor who could but chooses not to pay is UNETHICAL.

The defaulter and the banker may be similar in many respects, but the banks originated billions in toxic loans while having a fiduciary duty to the investor and a legal duty to the borrower (no fraud, predatory lending, etc.). The defaulter maybe got a loan or three for some real estate; however the borrower had no duty to the bank, investor, or neighborhood beyond the four corners of the mortgage contract. If the contract or laws allow for default and establish the ramifications of a default, then default is an anticipated event with financial ramifications. Default in my view is a right in contract and the law has remedies.

Even if default were immoral and unethical it is legal. It is very hard for me to have anger at defaulter because the bankers and regulators should have been able to prevent the moral hazard. If the banksters / fraudsters hadn't caused a bubble with questionable lending the economy wouldn't be suffering the costs associated with foreclosures and defaults. And the potential defaulter wouldn't be facing the "Moral Hazard"

Why should one borrower care that the situation gets worse if he can make his personal situation better? That is the moral hazard, while it sucks to see housing values further depressed the quicker all defaults are worked through the system, the sooner rational economic markets can return.

 

[robbiedublu]

So you think if everyone "Strategically Defaulted" on their loans, problems would be fixed quicker? Wow. Go America.

First off, I never called YOU a name. I called names to a demographic. Your the one who mentioned your unethical immoral plan to continue accelerating the crippled economy. Its your fault you associated your name with that plan if you didn't want them connected.

"Strategic defaulting DOES hurt your neighbor you moron." H'mm. My bad. I could have sworn you called me a moron.
Go smoke another bong load and let the adults here discuss the problems sonny. We'll let you know what we decide.

 

[Plant Early]

 

[SpasticGramps]

Looks like the European and the US rehortic is heating up. I guess the PIIGS are tried of getting picked on.

The Unwind Begins: Eurogroup President Juncker Redirects From A Broke Europe By Throwing US And Japan Under The Insolvency Bus: "The Debt Level Of The USA Is Disastrous"

The first rule of media (especially when dealing with an idiot audience that has a 7 second attention span): when all else fails, redirect. That's precisely what Eurogroup president, and certified, sanctimonious, pompous liar, Jean-Claude Juncker just did today, as it is becoming increasingly clear that nobody in Europe has any clue just what the Greek bailout #2 will look like now that the ECB and Germany are at polar opposites on how to proceed, the ECB thinks it is a rating agency and can dictate what an Event of Default is, and German bankers are willing to cede to private involvement in the bailout, but in a way that is voluntary. The problem is that these three are very much mutually exclusive. So what does Juncker go ahead and do - he redirects to highlighting the problems of the US: "The debt level of the USA is disastrous," Mr. Juncker said. "The real problem is that no one can explain well why the euro zone is in the epicenter of a global financial challenge at a moment, at which the fundamental indicators of the euro zone are substantially better than those of the U.S. or Japanese economy." That may well be the defining moment: by now everyone knows that the global economy is a massive pyramid scheme. Yet to this point, those in control have at least kept their mouths shut. However, when in order to explain one's insolvency, those at the very top of the control pyramid have no other choice than to point out just how broke others are (when in reality it is all one big, interconnected, "globalized" and truly insolvent Ponzi), then the unwind has begin.

The WSJ explains the latest developments in Greece:
Highly indebted Greece needs a "soft, voluntary restructuring" of its debt, said Jean-Claude Juncker, the head of the group of countries using the euro as a common currency, in a radio interview Saturday.

Backing proposals by German Finance Minister Wolfgang Schäuble, Mr. Juncker told Inforadio Berlin Brandenburg that private lenders need to participate in a fresh aid program for Greece, but only on a voluntary basis.

Also, any such move has to be made in a way that credit ratings agencies don't interpret as a credit default, he said. And it needs to be done without the "danger of infecting" other euro-zone members.

That the proposal as set forth at this point is completely unworkable (as Zero Hedge predicted) apparently is irrelevant:
The euro group president didn't explain what exactly such a voluntary, soft restructuring should look like, but he said there won't be a full restructuring of Greek debt.

Finally German banks are starting to realize that the BS-factor of the latest "plan" is becoming more see thru than the clothing in Paris Hilton's latest MTV show.

Meanwhile, Michael Kemmer, head of Germany's BdB banking association, cautiously accepted the participation of private lenders in a rescheduling of Greek debt as proposed by Mr. Schäuble. But, in a radio interview Saturday to Deutschlandfunk broadcaster, he said such a move needs to be done in a voluntary way, so that credit rating agencies don't see it as a default and financial markets don't get unsettled. The BdB represents commercial banks such as Deutsche Bank AG and Commerzbank AG.

However, as Trichet indicated in his latest press sppearance, the ECB is now on a different page entirely:
Mr. Juncker called for an agreement with the European Central Bank on the issue. The ECB so far has rejected any kind of restructuring, be it a "haircut" on the principal of Greek sovereign bonds, or just an involvement of private lenders in an extension of Greek debt maturities via a bond swap, as Mr. Schäuble has suggested.

"We can't push through a private lender participation without and against the ECB," Mr. Juncker said.

In exchange for any fresh program, Greece needs to make sure it reaches its 2011 fiscal targets, Mr. Juncker added. "If Greek policies continue as they have in the first six months [of this year], then they won't reach the budget target," he said, adding that any additional aid would be linked to very strict conditions.

Also worth nothing, is that Juncker has finally learned that keeping silent is actually better than lying outright:

The euro group head declined to give a possible amount of fresh aid, but said figures circulating in the media were right.

Asked whether that could mean anything between €60 billion and €120 billion ($86 billion and $172 billion), Mr. Juncker said he doesn't believe that euro-zone countries will have to come up with such a sum.

Yet here is the punchline:
Not withstanding the euro zone's problems, Mr. Juncker said that both the deficit and overall debt in the U.S. and Japanese economy are substantially higher than in Europe.

"The debt level of the USA is disastrous," Mr. Juncker said. "The real problem is that no one can explain well why the euro zone is in the epicenter of a global financial challenge at a moment, at which the fundamental indicators of the euro zone are substantially better than those of the U.S. or Japanese economy."

Translated: "why are you picking on us?" and "Have you looked at the US and Japan recently?" Translated even more: the Nash equilibrium of the mutually assured avoidance of the topic of global insolvency is now broken. Next up: the US and Japan bash Europe and confirm that Europe's PIIGS are actually far risky than the US and Japan, plus they can't print their money etc. Then Europe retaliates. And so forth.

The blame game avalanche has officially started.

 

[tr1ck_]

"Strategic defaulting DOES hurt your neighbor you moron." H'mm. My bad. I could have sworn you called me a moron.
Go smoke another bong load and let the adults here discuss the problems sonny. We'll let you know what we decide.

Don't be bitter just because I pay for things such as houses and cars up front instead of being leveraged. I was taught to save for years and buy when you can actually afford it, rather than living above my means.

You deserved to be called a moron, you said strategic defaulting only hurts the government and the banks, yet we all know they will just pass all of the liability back onto the citizens.

I don't believe in "Our Economy" or "Our System" and I am no part of "Our Citizens". I am a libertarian and individualist.

I feel you on this, but unfortunately I make good money on paper, therefore I pay lots of taxes, and therefore this problem directly affects me and my family. It also affects tons of great and IMO underpaid people in this society like many of the wonderful teachers I have had throughout my life.

If people make a bad investment, that's their problem to deal with IMO.

If you lost your job and do everything you can but still default, that's another story. But purposely defaulting to take advantage of a poor situation.

 

[dagnabit]

read the article there...

i didn't see where anyone alleges force?

i see greedy people (who wanted to buy when they shouldn't) going to greedier (granted evil and fraudulent)businesses and SIGNING THE PAPERWORK

i will not post pictures of my surveyors licenses(had to be at any closing involving a boundary,wetland delineation,protected species,imminent domain,reclamation,elevation,easement ect... that i worked on)
or my real estate licenses for the states...

just another dishonest debate tactic to call into question the integrity of the arguer...

this is your only revolver

the "victims" are victims of themselves...

the true victims of the derivative trading lunacy are you and I not the idiots who bought homes WITH A.R.M.s and or NO MONEY DOWN!!!

i mean FFS do diligence on the part of the purchaser would have prevented most of those who got foreclosed on from buying in the first fucking place!!!

i was offered an arm after the storm,salesman pushed nice and hard...
all that kept me from buying an overpriced house in an inflated market with a ridiculous mortgage????
common sense overrode my need for instant gratification..

i love how the people who chose to do otherwise are somehow blameless in their current situation....

 

[SpasticGramps]

How about the hackers? Same group that attached the IMF are going after Uncle Benny.

Old story.
I.M.F. Reports Cyberattack Led to ‘Very Major Breach’ New York Times

WASHINGTON — The International Monetary Fund, still struggling to find a new leader after the arrest of its managing director last month in New York, was hit recently by what computer experts describe as a large and sophisticated cyberattack whose dimensions are still unknown.

Several senior officials with knowledge of the attack said it was both sophisticated and serious. “This was a very major breach,” said one official, who said that it had occurred over the last several months, even before Dominique Strauss-Kahn, the French politician who ran the fund, was arrested on charges of sexually assaulting a chamber maid in a New York hotel.

New Story.
Ctrl+Alt+Bernanke: Operation Empire State Rebellion Resumes Attack On Fed Chairman Video in link.

Operation Empire State Rebellion is back. Perhaps in the aftermath of the IMF "very major breach" by anonymous hackers, it is really time to make sure all external access points to FedWire and FedLine are truly safe and sound. It will be very sad if it is uncovered that this source of externally accessible portal to hundreds of billions in emergency Fed funding has been somehow compromised. Just imagine the loss of confidence in the system... Why, a global distributed attack would really stretch the Fed's 1,200-strong police force quite thin.

 

[DiscoBiscuit]

I normally agree with most things you say, but this... not so much.

If I buy ANYTHING its MY obligation to pay! EVERYONE knows houses go up and down. If you buy a house right now, its a risk, it might be a great investment, it might be a bad investment, but its YOUR investment.

You cant just turn and walk away whenever your investment doesn't pan out. If I decided to buy 1000 shares of amazon stock for 20000$ and then the market went down, and it was worth only 10000$, you cant just walk away.

You sign your name and your reputation and your credit on the dotted line for a housing mortgage. If you walk away from a home at this point, it puts the problem onto the bank, which just wrecks the market even more-so. Then all of the people who didn't take out dumb mortgages above their means get fucked. When the banks do bad the economy seems to follow.

Sure the banks made a lot of really dumb loans, and everyone should be bitching at the, however the people still walked in the door asking for the loan, promising and swearing they could pay them back.

If you aren't willing/cant take the risk of home ownership, than rent for the love of god. All these poor fools living above their means fucked us once the moron bankers started giving them what they wanted.... Jumbo ARM mortgages so they could live WAY above their means... GO AMERICA!

I like the way you reason your principles. Reasoning helps societies work together wherever possible, rather than segregate by default whether it's intellect and or geographic.

Reasoning also helps others offer their own reasoning. Not necessarily as alternative. Engagement helps folks see each other where 20/20 vision may fall short of acceptance that alternatives do exist.

I admire your responsibility. Obligation is the fundamental basis of credit. The more people play by the rules, the more you and I benefit

Where you and I might disagree is the limit of personal austerity that's sometimes necessary to fulfill one's financial obligations.

IMO, there's something more fundamental than obligations. It's the ability to accept whether austerity or some other form of personal management better sustains our long-term economic viability.

Management in the form of default is easily understood as irresponsible. Default has credit implications so it isn't free of consequences. This temperament of credit implications fosters responsibility. The personal humiliation of default also fosters responsibility. On one hand, folks might responsibly take-on austerity measures to fulfill their debt.

In contrast, one might weigh more than credit implications or even default. I'm sure there's a gambit of reasons that folks walk out on their obligations and many are irresponsible. These folks would benefit from better personal-finance practices.

In a way, default is not unlike bankruptcy.

Business has the benefit of bankruptcy when viable alternatives don't exist. Rather than society bleeding the defunct business and it's personal element dry, bankruptcy offers the opportunity to regroup and reenter the business community.

You have a great point with the Amazon analogy. Losing that much money might indeed prevent walking away, at least until losses are less substantial. We also know that Amazon could recover and we might even net a profit. Maybe even better than Barnes & Noble (who recently went out of business.)

Examples of irresponsible, even fraudulent mortgagees exist. Unfortunately, irresponsibility and or fraud doesn't have the means to avoid foreclosure. I'm not condoning either case.

However, the housing bust exposed institutionalized fraud that lenders perpetuated. Adding insult to injury, foreclosures have been automated (robosigners etc) where the potential mortgagee may have otherwise refinanced and avoided foreclosure.

Some folks are actually going to counseling for pre-foreclosure depression. Some can't sleep at night because their conscience forbids them to do the right thing, where the right thing might be fortifying themselves the best way possible to pick up and move on.

I'm in this category. I got married, bought a house and lived within my means the best way I knew how with a spend-thrift wife. Even though I lost my job through employer bankruptcy, I drew assistance to help gain the subsequent, competitive salary.

I won't bore you with the details but I got a divorce. Consultations with my lawyer involved whether to default of persevere through more personal austerity measures.

I was stunned when the lawyer immediately advised to default on my mortgage. I couldn't face that humiliation nor the credit consequences. I went another two years paying that god forsaken mortgage before I couldn't do it anymore.

By the time I had sunk another $24,000 into the home and still lost it, I realized that $24k would have gone a long way toward making myself financially solvent once more.

That $24,000 wouldn't have financed a ginormous party that folks often equate with walking out on their obligations. The far lion-share of that money would have gone back into the economy in the form of rent, transportation and living expenses.

My lawyer was also a psychologist and attempted to reason that foreclosure isn't the end game I made it out to be. IMO, she's right. I'm single, happy and solvent. I no longer look at rent money as thrown away because the potential perils of ownership have their consequences.

But from an economic perspective, I'm long since the responsible contributor that you and I want me to be.

 

[Hydrosun]

If people make a bad investment, that's their problem to deal with IMO.

If you lost your job and do everything you can but still default, that's another story. But purposely defaulting to take advantage of a poor situation.

That I agree with. That is their problem and a problem for the contra party none of my fucking business.

If you default you default, judging levels of default or effort is a collectivist, bull shit game. Defaulting on purpose or by accident or by death, don't make no difference to the universe so I could care less to morally grade it.

 

[DiscoBiscuit]

So you think if everyone "Strategically Defaulted" on their loans, problems would be fixed quicker? Wow. Go America.

Obviously everyone defaulting would rock the world. But economists have been saying for some time we have to hit solid ground to know what real home values are. So long as the banks are mandated to minimize lending fraud, AAA quality mortgages will return to AAA quality investment vehicles.

Don't forget that it's always been the lenders responsibility to due-diligence the potential borrower. They have the wherewithal to practically guarantee that a substantial amount of mortgage default doesn't occur. Credit default swaps meant lenders could sell mortgages rather than hold them until payoff. This fostered greed in the system. Buyers were actually recruited where lenders would market loans instead of oversee who qualifies.

This bubble was more than mortgage fraud. We're replete with lending fraud, investment fraud and to-big-to-fail. It's so comprehensive, one really has to wrap their head around it to really comprehend. You don't have to accept though.

Morals are relative. Not necessarily in importance but we all decide where to draw the proverbial line. In times of economic peril, morals are often tempered by economics.

 

[Hydrosun]

"... lenders would market loans instead of oversee who qualifies."

This is a gospel truth and how a maid could get a 500K mortgage with zero down. It wasn't the maid creating the fraud she was a sought out tool of the bankers. If this weren't so there would be the occasional crazy smart maid every so often getting 500K, or say no money down no doc loans for cannabis cultivators?

Ain't so fucking easy to get free money now, only when the interests of the elite say it should be.

Please don't blame loan qualifying difficulties of a new applicant on the mortgage fraud of the past. Prior to this fraud bubble, you actually did have to be able to pay your mtg bill and you did have to have a down payment, and when push came to shove those that died, lost jobs, or otherwise defaulted the bank had clear documented chain of title for their foreclosure.

Blaming the recruited victims is only helping the real pigs.

 

[DiscoBiscuit]

read the article there...

i didn't see where anyone alleges force?

Where did you pick up the word force?

i see greedy people (who wanted to buy when they shouldn't) going to greedier (granted evil and fraudulent)businesses and SIGNING THE PAPERWORK

Two things going on here - mortgage fraud (mortgagee) vs lending fraud (bank)

i will not post pictures of my surveyors licenses(had to be at any closing involving a boundary,wetland delineation,protected species,imminent domain,reclamation,elevation,easement ect... that i worked on)
or my real estate licenses for the states...

I guess all those closing meetings you sat in on weren't enough to see lending fraud. One doesn't have to see everything with their own eyes to acknowledge. Or half-acknowledge in your case.

Kinda interesting you cop the surveyor papers, then detail SURVEYING. Last time I checked, the surveyor wasn't in on my closing.

Oh yeah, and not to mention (or barely mention) your multiple real-estate licenses. If you're that involved in real estate, (particularly closings) one wouldn't have to mention lender fraud.

just another dishonest debate tactic to call into question the integrity of the arguer...

That's your word and your defensive reaction to an honest question speaks to your one sided nature.

this is your only revolver

I like that. You ask for data, I bring it and you bring baloney.

the "victims" are victims of themselves...

the true victims of the derivative trading lunacy are you and I not the idiots who bought homes WITH A.R.M.s and or NO MONEY DOWN!!!

i mean FFS do diligence on the part of the purchaser would have prevented most of those who got foreclosed on from buying in the first fucking place!!!

i was offered an arm after the storm,salesman pushed nice and hard...
all that kept me from buying an overpriced house in an inflated market with a ridiculous mortgage????
common sense overrode my need for instant gratification..

i love how the people who chose to do otherwise are somehow blameless in their current situation....

Not gonna waste time on hurt feelings and denial.

 

[robbiedublu]

Obviously everyone defaulting would rock the world. But economists have been saying for some time we have to hit solid ground to know what real home values are. So long as the banks are mandated to minimize lending fraud, AAA quality mortgages will return to AAA quality investment vehicles.

Don't forget that it's always been the lenders responsibility to due-diligence the potential borrower. They have the wherewithal to practically guarantee that a substantial amount of mortgage default doesn't occur. Credit default swaps meant lenders could sell mortgages rather than hold them until payoff. This fostered greed in the system. Buyers were actually recruited where lenders would market loans instead of oversee who qualifies.

This bubble was more than mortgage fraud. We're replete with lending fraud, investment fraud and to-big-to-fail. It's so comprehensive, one really has to wrap their head around it to really comprehend. You don't have to accept though.

Morals are relative. Not necessarily in importance but we all decide where to draw the proverbial line. In times of economic peril, morals are often tempered by economics.

He doesn't want to wrap his head around it. He just wants to make value judgements. In his little mind strategic default = evil/bad. If you're a homeowner anyway. Businesses do it all the time though. Is it ok for them?

 

[dagnabit]

feelings?

LOL

 

[DiscoBiscuit]

You're like a post fairness-doctrine pundit on one of those cable debates

until you go clown

 

[DiscoBiscuit]

He doesn't want to wrap his head around it. He just wants to make value judgements. In his little mind strategic default = evil/bad. If you're a homeowner anyway. Businesses do it all the time though. Is it ok for them?

I'm no moral judge but I do think that strategic default can be ethical. Sometimes takeovers blur the lines between solvent/insolvent to buy up somebody cheap.

But I do think business should be able to belly up because of the economic potential to restructure and become viable again.

I might not have felt that toward homeowners in the past because I wasn't aware that lenders sometimes rip off buyers and the housing bust exposed their substantial shenanigans.

Things have changed and the individual shouldn't take the fall for fraud if the home isn't worth the note.

I bought my house in '92. There was a home across the street that previously defaulted before I moved in. I asked about the "for rent" sign and the neighbor said the bank rented it.

I asked why the bank didn't list it for sale and the neighbor said the bank didn't know who owned it.

Even my FHA was shoddy. The broker told me I didn't have the credit rating for fixed conventional but I did qualify for FHA.

The truth was I had the necessary down payment for conventional but the broker made a little bit more on the FHA commission.

I was somewhat mislead that I didn't qualify (credit-wise) for conventional when the aspect was down-payment amount. If I'd know I could have socked more into the (true) fixed conventional, I would have depleted more of my savings to get a better interest rate and overall deal.

While I was told the FHA was fixed, it was a fucking ARM. But back then, the differential was $50/ month every other year, not a balloon in the thousands designed to get me in and subsequently out.

And to the gentleman er agent who judges the buyer, legal mumbo is legal mumbo. Fucking lawyer and broker both said fixed but it turned out to be adjustable. Fortunately the 90s interest rates didn't roll like a coaster.

 

[High Country]

Don't get angry.....get even