…

Had Paulson and the White House stuck with the original TARP plan…The credit markets would have eventually stabilized and the credit would have been forthcoming.

I suspect that this would not be the case. The reason for this is the same reason I suspect they have been so secretive about the whole thing and did the bait and switch on capitol hill… They’re terrified of the reaction when people realize the two ton guerilla is still in the room.

Much of the problems are being caused by the non-fixed rate mortgages that were created with no thought on neither the borrower nor the lender’s side. These loans have resets that can occur at different times: 1, 3 , and 5 years. That means in 2008 we had loans hit the crisis point from 2007, 2005, and 2003. 2007 shouldn’t have been too bad as with a 1 year horizon, most people should have understood they were going to get hit. 2003 is on the early side of the bubble and would have been a minor problem. The 2005 loans would have been the real problem.

That brings us into next year. The loans that will be resetting will be from 2008 [not a problem], 2004 [moderate/severe problem], and 2006. The 2006 loans will be a BIG problem as this is when the market was in full inflation, meaning the prices were much higher and the loans given out much more freely.

I think the reason for the secrecy is that the banks have needed to shore up their balance sheets to prepare to write off losses that will make this year seem trivial. Worse, in 2010, the 2007 loans will first come due in a big way. Then in 2011 the rest of the 2006 loans will reset followed by the 2007 loans in 2012.

Basically, the banks are looking at potentially 4 CONSECUTIVE YEARS of massive write-offs. Once that fact sinks in, there is a real risk of runs on the banks. In my opinion, this is why Paulson & Co. are in panic mode and are keeping everything hush-hush.

I don’t want a turn. Stop the ride, I’m feeling nauseous already.

Count to 10 on December 22, 2008 at 1:46 PM

Stop the World, I want to get off…

I’m sorry for my somewhat intemperate response. There’s a bit of a bunker mentality now in Michigan in response to all the Detroit hating that’s going on.

When do we get our turn?

Our turn comes when they send out the bill

How to fix it – there’s the rub. No amount of ideologically-pleasing rhetoric will save us, Captain Ed.

No doubt debtors can always rely on a bank’s lawyer to act in their best interests, not the banks. Just wondering, if that small businessman comes in with a competent attorney who’s a tough negotiator are you as inclined to preserve the debtor’s dignity and personal assets?

No, bank counsel act in the bank’s best interest. But banks aren’t vindictive by nature. If the guy’s business is failing and he doesn’t have a huge pile of money hiding somewhere that he is refusing to apply to his indebtedness, it doesn’t do anybody any good to chase the guy into bankruptcy.

The problem is that a lot of people hire lawyers who don’t really know what they’re doing, who come in and “act tough” by filing frivolous motions and pulling silly crap to delay and irritate the bank. They think they are sending the message “I’m tough Mr. Bank and you better give me a good deal or we’re going to make your life hell.” To their chagrin, the bank receives the message “I’m hiding huge assets and am trying to screw the bank,” at which point I get told to chase them to the ends of the Earth.

Boo frickin’ hoo. Like I said elsewhere, lawyers are a major reason for the high cost of medicine and our economic mess. *** I’m sure you care more about your fellow Bar members ***.
rokemronnie on December 22, 2008 at 1:39 PM

I intended those remarks to be tongue-in-cheek. You’re right that out-of-control trial lawyers are responsible for all kinds of social harm. I actually support tort reform, even though I know it means less work for me. The message I was trying to convey is that the reason trial lawyers aren’t asking for a bailout is they know that Obama’s substantive policy preferences will result in more lawsuits and more chaos, which will result in more fees for lawyers. I did not mean to suggest that was a good outcome, only that it was a somewhat likely outcome.

America as we knew it is gone. That pain is the fork.
patrick neid on December 22, 2008 at 12:56 PM

More people will catch on to that truth. There is no going back.
Take a look at Norway, Sweden, Holland and you see our future but with the added twist of more special interest to be served.

50 to 70% tax rate for the mid to higher earners. Entrepreneurs will be discouraged by high taxation. Remember Obama caught on video admitting to Joe The Plumber we have to share your wealth. That is from the heart of Obama.

Time to consider bunking up, bringing mom and dad into the family home. Young people will be forced to learn how to cook instead of eating every meal out.

Concerning lawyers, good time to be in law school. Under Obama opportunities for lawyers will proliferate.
Environmental law, real estate law, bankruptcy, corporate, litigation and especially criminal law will be big.

This sucks. When do we get our turn?

drjohn on December 22, 2008 at 1:44 PM

I don’t want a turn. Stop the ride, I’m feeling nauseous already.

Or too wealthy to fail?

This sucks. When do we get our turn?

I suspect everyone will get a bailout…except trial lawyers..damn it!

HawaiiLwyr

One reason why so many industries need bailouts is because of those very same trial lawyers.

GM spends more money on product liability than on UAW hourly wages.

Developers are difficult debtors for me to deal with. Most of my clients’ small business customers are easy. They come in, they say “my business is failing,” and we work together to liquidate or restructure their business while preserving the small businessman’s dignity and personal financial condition to the extent possible.

No doubt debtors can always rely on a bank’s lawyer to act in their best interests, not the banks. Just wondering, if that small businessman comes in with a competent attorney who’s a tough negotiator are you as inclined to preserve the debtor’s dignity and personal assets?

After tort reform passed in our state, a lot of good lawyers on both the plaintiff and defense side of the bar lost their jobs or had to retool in other areas. The med mal, products liability, and personal injury cases dried up almost overnight.

Boo frickin’ hoo. Like I said elsewhere, lawyers are a major reason for the high cost of medicine and our economic mess. First thing we do, let’s tax all the lawyers.

I’m sure you care more about your fellow Bar members than about retired salaried employees of GM that no longer have medical coverage.

I know doctors and dentists that do pro bono work. What percentage of your work week is pro bono? The difference between doctors and lawyers (other than the fact that doctors are smart enough to do science and don’t mind getting their hands dirty) is that doctors can’t accept or reject a patient based on the potential profit to the doctor. Doctors don’t get referral fees – in fact, fee splitting is considered unethical for physicians.

Lawyer, heal thyself.

dinobalz on December 22, 2008 at 1:21 PM

Yes but,

There’s only one word that describes a Depression.

And I think, that’s what we should try to avoid.