Ezra I trade (retail) and saw the whole thing real time yesterday. Usually this guys analysis is pretty cogent but it's clear (at least to me) that his basis for the people being helped are the two families highlighted in CNBC documentary "House of Cards" He feels that people buying pools and dreaming of grandeur are representative of those in need. He is wrong.

What's more is he fails to see the nexus b/t the very traders he claims to speak for and the current crisis. To them it's ALL the lendees fault for being fooled by the money class.

And it's not just him, it's the whole CNBC crew who believe their hyperbole and inability to speak out against what they knew was going on.

To Rick I ask where was the outrage when the DOW was headed North to 14K? That would have been the time to call out both the lenders and the traders. But no you let the traders take their share, leave the working class with the bag and then scream about "our" tax dollars, as if your TAXES alone are responsible for everything.

If I didn't have to trade I would avoid these losers all together. They claim Obama is stoking class warfare but there the ones truly fanning the flames.

k1
ryanculver.blogspot.com

To me the richest moment was when this guys was talking about moral hazard and everyone started cheering. Seriously. How can anyone in the financial industry be speaking of moral hazard at this point, with their private profits and socialized losses.

We all understand that General Electric's largest division is a bank, right?

In all fairness Santelli was just as much against the bailout of the banks as he is against the bailout of homeowners.

But who really cares about any hypocrisy (especially from traders). It just acts as a diversion from a much more relevant and interesting political phenomenon. Clearly some "non-loser" homeowners and renters are going to be upset. The question is how much outrage and who from. If it's just WSJ trader types then it won't matter but my impression is this anger goes beyond party lines and could cause geographical disputes. It is definitely worth more consideration.

that fellow needs to keep a paperbag with him at all times.
he seems to be in imminent danger of hyperventilating when he gives his morning rant.
and jim "mad money bad karma" kramer has said for years now, that if you want to make money, forget ethics in the companies you support.
he will support almost any company, if it can make an investor money.
when i used to listen to his show, i thought to myself, people that think like he does are what is going to destroy our country.
most of their commentators cant even pretend to know what they are talking about....

"Dans ce pay-ci, il est bon de tuer de temps en temps un amiral pour encourager les autres."

Fuck Bubblevision.

lol

acrimony ftl

Santelli just wants Dow to plunge to 5000 so he can buy up.

If there's anyone who wants America to fail (in the short term) it's people with a lot of cash looking for a cheap investment.

Rob Mac has a great point. Many (most?) of those guys would have probably lost their jobs by now if it hadn't been for government intervention.

You know what? The most rational thing for a homeowner to do when his house is underwater is mail the keys to the bank. And heck, if he's feeling peckish, trash the place first.

If enough people do this, bankruptcy won't even be a barrier to getting future credit. Heck, if they organize a community to ALL do this, they could probably wipe out any number of banks.

These guys think they succeed because they're tough. They don't. They succeed because they are classic "cheaters" in the economy. Other people are decent, and they suffer greatly, taking on massive future risk to try and pay their mortgages even when they're underwater. Hell, there's stories of people who clean their house after they're evicted!

These guys DEPEND on regular people being better than they are. People who genuinely believe that when they owe the bank money, they have a problem, instead of thinking "okay, how do I leverage this to make it the bank's problem."

Ugh, I hate sleazebags like this dude. The self-righteousness is vile. These assholes took down the economy, trashed millions' of people's life savings, and now they're pissy that someone other than them is getting help.

It's like the economy is a store getting fewer and fewer customers each week and we're all the crazy manager running around screaming at those who are left:

- Hey you Mortgage-Holder, get out!
- Hit the door Banker, we don't serve your kind!
- Put down that wrench, Detroiter, you're not buying anything!
- Your money's no good here Mr. Government!
- You all suck! I hate you all!

- Hey where'd everybody go?

This guy better watch his mouth the next time he's out in public near "the masses." He's liable to get his ass kicked as fast as a Yankee fan in a Red Sox bar.

People like this asshole have basically destroyed the global economy and he still has the balls to rail against the middle class and Cuba(whatever the fuc that's supposed to mean).

This guy deserves a trip to the guillotine. Or at least being reincarnated as a black sharecropper.

Also, what Petey said- you can't trust anything GE media companies say about the economy.

Odd.

I heard right wing radio talker Mike Gallager saying this was a Wonderfull speech.

Did anyone else notice that Santelli asked for everyone in the room who agreed with him should raise their hands?

I didn't notice anyone doing that, which would have identified them individually, the cheering that happened allowed them much more anonymity!

I believe this reporter is echoing the frustration of all of us who have used common sense when taking out mortgages. Little things like can you actually afford the payments.

And it is frustrating for ALL those Americans, rich, middle class and poor alike, that played by the rules and now are asked to pay for the mistakes of those who used such poor, poor judgement.

Did anyone else notice that Santelli asked for everyone in the room who agreed with him to raise their hands?

I didn't notice anyone doing that, which would have identified them individually, the cheering that happened allowed them much more anonymity!

gordon gekko: In all fairness Santelli was just as much against the bailout of the banks as he is against the bailout of homeowners.

Ok, so let's be consistently capitalist. Let banks fail and have the banks's bondholders loose everything. In capitalism, that's what's supposed to happen when when buy bonds in a company that goes belly up. Let the bond defaults trigger CDS's, and we'll see what happens.

That isn't far from what I'd actually like to see happen. I wonder though how the folks at the CME cheering him on would feel when hundreds of billions in bonds are suddenly worthless and there has to be a CDS payout. I have a funny feeling the so-called capitalists would suddenly start feeling pretty socialistic.

listen to the experts.....

http://www.youtube.com/watch?v=hqER8iYpsMA

Traders are both people who lack anything resembling a job in the "real economy" while at the same time having no clue about any macroeconomic issues that someone at a higher level in finance would have to understand.

They're a bunch of loud-mouthed, easily replaceable people whose skills are easily replicable and replaceable. They're angry that America doesn't really give a fig about their ideological beliefs. What did they ever do to justify their resentment at the bailout plans?

"Responsible homeowners" probably have reason to feel a bit resentful right now, but even they, having a stake in the "real economy" know that it can't be good for them to have their neighbors up and down the street go into foreclosure and abandon their homes.

Some lenders made decisions that were profitable for a while and then, when conditions changed, unprofitable.

Some borrowers made decisions that worked great for a while but then, when conditions changed, not so much.

Some investors made decisions that were wildly profitable for a while and then, when conditions changed, bankrupt.

*****

Some voters and their elected representatives chose deregulation, economic stratification, and a minimal social safety-net. It seemed alright for a while but then, when conditions changed ....

Now, some of the people who benefited from the bubble-economics and from TARP are complaining about a modest effort to help others.

What if Drudge pushed a story, and no one came. This was headline of Drudge all day yesterday. No one bit, because this guy is an idiot, and clearly trying to be antagonistic. He can't even keep a straight face while he does it. I know this was posted to criticize it, but do we really have to give things credence solely because Drudge posts them.

P.S. Best part? When Santelli talks about how the people around him are the silent majority, representative of the rest of the nation. HAHAHAHA.

P.P.S Creedence is a great band.

Hobbes: Now, some of the people who benefited from the bubble-economics and from TARP are complaining about a modest effort to help others.

They're complaining about petty theft by others while ignoring the grand larceny by their own.

El Viajero, I think it's fair for there to be some level of frustration from those that played by the rules and are now suffering the consequences, both direct (i.e. mortgages worth more than the home's value) and indirect (i.e unemployment). HOWEVER, it's not fair to place blame for the economic crisis on borrowers (as a whole) when they weren't the ones holding the purse strings (banks and mortgage lenders). The borrower (let's say, even a bad faith or fraudulent borrower) can make whatever mortgage application s/he wants. The lender gets to approve or reject the application, and by a shockingly large number of accounts (e.g. WaMu) banks were just rubber stamping these applications "approved." And they were pushing mortgage instruments like hot cakes. It's not that borrowers are stupid or innocent or completely absolved of responsibility for their finances, but it's unfair to presume equality of bargaining power (or equality of information) between borrowers and banks (and mega-banks).

And, as to those in financial institutions that purchased mortgage-backed securities and crafted all kinds of weird debt instruments: It's completely unfair to blame borrowers as the root of the problem, particularly in light of the wide-spread abdication of responsibility for understanding the very instruments they were dealing in. Too many financiers saw dollar signs and didn't know (or didn't care) that they were dealing in fool's gold.

On a different point: Sirota's final line actually resonates with me: the need to channel the anger of the masses into something positive. Personally, I was somewhat surprised at the groups of protesters picketing outside the homes of corporate bigwigs in Greenwich, CT. (I say surprised, not that people are outraged at the times and circumstances we find ourselves in, but rather, surprised that they managed to organize in this fashion. I've just never seen it in my short lifetime. But, hey, as long as it's peaceful protesting, more power to 'em.)

Revolt of the traders? Are you out of your mind?

I'm not a trader I can assure you, and I am royally pissed off by this whole thing. Why is it that someone like me, who has been renting an apartment for EIGHT DAMN YEARS. Saving money and only taking on what I can afford, hoping to own a home someday, has to subsidize these people because they played fast and loose? Where's my damn house?

Don't give me any crap about how it will all come tumbling down if we don't save these people, I could give a damn. Think I'm worried about that? Hell no. I'd rather be dead then be a slave to spoiled cheaters the rest of my life, burdening my children with their and others irresponsible debts.

This isn't a game. What this plan will do it put even more people underwater. We can only work so hard for your brilliant ideas, eventually you've sucked everything out of the producing people of the nation and they have nothing left to give.

There's real anger out there, and it's not just traders. Keep taking money to give to those who don't deserve it long enough and you'll find out just how big the "silent majority" is.

"they didn't buy the mortgages and default. They just bought the packages that then defaulted"

I don't think the typical CME trader specializes in mortgages.

The Chicago Board of Trade is a global commodity futures exchange trading treasury bonds, corn, soybean, wheat, mini-sized Dow, gold, silver and more.

The Chicago Board of Trade is not Wall street.

Jim, you have to be a special kind of stupid to lend more money to a person than you know they can afford to pay back. As opposed to the normal kind of stupid of borrowing more money than you should, which people do all the time, for all kinds of stupid things. (I know a huge number of people who have car payments that are between $300-$400 a month, which strikes me as insane.)

It's not like poor people were forcing banks to lend too much money. I can't place the full blame on them.

When I bought, we borrowed well within our financial grasp, but since then, I lost a job and about $15,000 a year in income, and we're facing the possibility of both of us losing our jobs now. We bought before the housing bubble started rising, and we still might find ourselves out on the street at some point, because of the loss of jobs.

So even when you make the smart financial choices, you can find yourself in over your head. I don't begrudge any homeowner who needs to get bailed out.

Jim,

What about those who were laid off or afflicted with a debilitating illness? Are you going to say that they are irresponsible? There are many who were paying their bills and misfortune happened. Besides those who lied on their loan applications, speculators are not eligible for assistance.

The "irresponsible borrower" is the new boogeyman apparently for The People Who Always Defend Rich Crooks. I am old enough to remember when tricking people into bad loans was called loan sharking and we put people in jail for it. Now the loan sharks advertise on TV and get astoundingly rich.
Like anonymiss writes in the comments above, it is a mystery to me why more of these people don't just simply drop the keys into the mailbox and walk away. The credit card industry sure got served this way - after they got the caps on fees and penalties and interest rates lifted, customers found that they couldn't pay the monthly bill any more and just said to hell with it, I'll send them nothing! Consumer revolt.

Peter A. Basso wrote:

El Viajero, I think it's fair for there to be some level of frustration from those that played by the rules and are now suffering the consequences, both direct (i.e. mortgages worth more than the home's value) and indirect (i.e unemployment). HOWEVER, it's not fair to place blame for the economic crisis on borrowers (as a whole) when they weren't the ones holding the purse strings (banks and mortgage lenders).

The ones holding the purse strings where the investors. The investors who made bad agreements with bank management (and BTW with corporate managers - think CEO pay) encouraging short term gains at high risk, the investors who bought the packaged loans and who thought that they could pay mutual fund managers to invest for them etc.

We only blame the bankers because there were more capable than the investors.

As I have long said average people need to not invest in stocks and bonds. Instead thay should invest in local things like pay off mortgages, buying rental property, invest in things around the house that have pay back like insulation more efficient heating and air etc. Invest in family and friends to.

Most people are not savvy enough to own stock and bonds.

Ben Smith's got the link of press secretary Gibbs taking on Santelli.

Killer line: "I think we left a few months ago the adage that if it was good for a derivatives trader, that it was good for Main Street. I think the verdict is in on that."

Sorry, but was Santelli calling these guys out for what amounts to legalized loan-sharking back in 2004? Because, uh, I don't remember it. Caveat emptor was, iirc, the watchword.

That worked out well. I think we're about done taking his awesome advice.

Maurinsky and Hairy Reed shouldn’t we coin the term "irresponsible investor".

Micheline everyone that I know will be glad to anti up for afflicted with a debilitating illness?

For those who lost their jobs less so, they can get another job and can recover also the old idea was save enough cash to be able to live 6 months without a job. BTW IMO responsible people over 35 should not have a car loan and people over 45 should not have a mortgage on their primary residence. But people want to have their cake and eat it to for so long it has been assumed that inflation would bail out all foolish home purchases.

BTW for people to think that they can earn more than 3% above inflation per year in passive investing is stupid.

My favorite part is when he talks about how those losers should be foreclosed on so people can step in who can make a profit. Right. Like maybe some rich traders could use their pin money to pick up a few foreclosures and flip 'em in a few years, or use 'em for leverage, or...

"Responsible homeowners" probably have reason to feel a bit resentful right now, but even they, having a stake in the "real economy" know that it can't be good for them to have their neighbors up and down the street go into foreclosure and abandon their homes.

PROBABLY?!

A BIT?!

So let's go ahead and rescue irresponsibility, sending the message that when the masses of people and businesses fail to be prudent, never fear, the responsible will be here to cover their indiscretions because we don't want it to even get worse.

BULLSHIT.

ALL of the bailout is a travesty.

Let it get worse. That's the only chance that the careless and greedy will learn a lasting lesson.

...you have to be a special kind of stupid to lend more money to a person than you know they can afford to pay back.

No, you have to be greedy, lacking morality, not care because you know the loan will be sold, and believe (correctly) that when push comes to shove, there will not be the political will to let the chips fall where they may.

You do have to be a special kind of stupid and careless and greedy to borrow more than you know you can reasonably take on. Or to believe that the house you just bought is suddenly worth $250,000 more than when it sold 2 years ago (like in CA).

Lots of greed and stupidity all the way around. The borrower is just as responsible as the lender. It's called a voluntary contract and it takes two to have an agreement.

Guys- let's not misplace our anger here. First off, these are not "millionaire traders" They are, by and large, not trading their own accounts. They work for a trading firm and execute the orders that come in to them. They don't get huge bonuses. the avg pay for a block trader (incl bonus) is somewhere around 75k/yr. It's good money, but not exhorbitant, especially in a major city. A lot of these guys don't have college degrees. They've worked their way up from runner to trader, much like a foreman at a GM plant.

I know it's easy to lump anyone that works in finance together and blame them for the problem, it's incorrect, dumb, and dangerous. These guys are not the cause of the problem. Don't make every financial professional into a boogeyman.

Wes, that's precisely Why I have such a low opinion of the traders on this. I don't blame the traders for our current financial problems. Instead, I blame them for basically siding with the malefactors against their own class because of their belief that, simply because they're tall, loud, and got a job in "finance," that this entitles them to some level of moral self-righteousness against a lot of people who are suffering economically.

In short, they're being self-righteous tools deriding others as "losers" in order to make them feel better about their pointless, pointless lives and unimportant jobs being servile to the financial industry and their interests which caused so much destruction.

No matter how you feel about the borrowers, no one...NO ONE put a gun to their head and forced them to sign the mortgage agreement.

Blaming lenders for making bad lending decision is legitimate, but blaming lenders for not protecting borrowers from thier own stupid selves is not right.

It's not their job.

To Anonymous, who said "The borrower is just as responsible as the lender. It's called a voluntary contract and it takes two to have an agreement."

Again, even though I agree that individual borrowers (broadly speaking) aren't guiltless and innocent, it is intellectually dishonest to presume equal bargaining power and equal knowledge on both sides of a mortgage transaction. Sure, there are protections built into the system and lots of players who are supposed to help equalize bargaining power (i.e. real estate attorneys, one-stop-shopping real estate brokerages), but real estate transactions are not child's play. Who do you think understands how mortgages are supposed to work better, the first-time buyer or the lender who's job it is (and who is under pressure to) to churn out a couple dozen mortage applications a day?

Sure, nobody was holding a gun to any borrower's head, but to call this a "voluntary contract" when there's such a disparity in knowledge and power is inaccurate.

Tyro- calling them "pointless lives" is really unneccesary. they have a very specialized skill set that allows them to perform a specific function. Having functioning commodity markets is important.

And before anyone starts- commodity markets were not where any of the irrational speculation took place. They are relaitively small in the whole scheme of things. Their main use if for producers and consumers to hedge exposure to future price drift (in soybeans, for example) so that they can make intelligent budgeting decisions for their business. Having a man on the floor who can efficiently trade these things for you is important, no?

Sorry, these aren't multimillionaire traders in a stock exchange, they're grunts in a commodities pit in the middle of frickin' Chicago. If there's a Main Street of stolid Midwestern apolitical capitalism that's it, and if you dismiss this as a bunch of rich Ivy graduates bellowing at poor people it just shows you have no idea what you're talking about. They're pissed off because this plan, necessary as it may be, is going to take money from people who didn't buy houses they couldn't afford and give it to those who did, and I don't blame them a bit for being mad. And dismissing Santelli as some sort of Kudlow type is just the worst kind of cocooning.

Many of the people who are losing their homes, and who are living on the cold streets right now, are children. If a rich person dies of a heart attack at age 58, would we jump up and down and call him a "loser"? The government is presently trying to prevent the country from falling apart. Part of this is helping some people stay in their homes. How much rich / poor disparity can our society tolerate? It's very likely that within a decade or so, some of those people on that same trading floor will really need the help of a nurse in a hospital emergency room, a nurse who they may regard as a "loser".

Remember, every bailed-out mortgage-holder is one person less for Viajero to bleed dry for his own enrichment. No wonder he's pissed.

By definition if you gambled that house prices would appreciate enough to allow you to afford something you otherwise couldn't have, you're a loser. You lost a stupid bet. It's not a pejorative statement.

I'd also love to have some facts and figures on all these alleged children sleeping on the cold streets...

guys- at its most simple it's an incentive structure. Look at it-

The borrower wants to get the biggest house they can.

The bank wants to write and re-package as many mortgages as they can.

The foreign investor wants a low-risk, higher yielding mortrgage-backed security.

Where is the problem in this chain? It's between step 2 and 3. The bank was packaging MBS to largely foreign pools of capital who were told they were low risk. Who told them that? The ratings agencies. If the MBS's weren't AAA-rated then these funds couldn't buy them (their charters restrict them from buying anything too risky). And if the funds couldn't buy them the banks wouldn't write them. The banks can't keep these things on their own balance sheets- they don't have room. So as long as the securities were rated AAA the whole cycle kept churning. When the ftrst round of subprime ARM mortgages started resetting and people started defaulting, then the MBS started losing value and the ratings agencies had to admit they never should have been AAA.

I hate it in Philly. Daddy Brendan touches me when I have to stay there. Please Mommy, don't make me go!

they're grunts in a commodities pit in the middle of frickin' Chicago

Extending Wes's analogy, it would be like seeing a bunch of auto factory floormen cheering on management's fleecing of the assembly-line-workers' pensions.

Floor traders:Finance as Drug Reps:Pharmaceuticals.

They're people who've drunk the finance kool-aid, and I really have little interest in their opinions and hostility towards the rest of the country.

What makes most of you think that collectivism works? Please give me an example...
Individuals make their own decisions, what is best for them. So when I sign a loan for a home, the idea is that I have to actually pay it back at some point. Many Americans should NOT own a home. These people should rent because they have so much more freedom. If they lose their job, they can pull up their stakes and move. Mobility is a good thing for the lower income folks. Owning a home is not necessarily the American Dream as Barney Frank will tell you. Living freely to make your own decisions and succeed is. We should be for equal opportunity not equal outcomes. There are winners and losers in this world, that is the reality.
Right now most of these people should file for bankruptcy and have a fresh start. That is why we have bankruptcy laws.

They're people who've drunk the finance kool-aid, and I really have little interest in their opinions and hostility towards the rest of the country.

The problem for you is their rants ring true a large portion of the population in the US. If it didn't, this wouldn't be an issue for you.

People want to be treated fairly and this mortgage bailout for a portion of the population doesn't treat everyone fairly nor does it reward good behavior or punish bad behavior.

Wes brings up a good point that we all should heed about taking care not to over-generalize with labels and job titles, whether we're categorizing people into "irresponsible borrowers" or "THE BANKS." There is a difference between the commodities trader and the institutional investor.

That said, Wes, it seems like Santelli and the commodities traders here are guilty of a similar flaw. They're accusing "irresponsible borrows" and "losers" of seeking a handout at taxpayer expense without appreciating the nuances of the problem and the players. Even conceding that there is a subclass of borrowers whom we're calling "the big bad irresonsible borrower," Santelli and his cheering section are pointing the finger in one direction without similarly conceding the SYSTEMIC problems caused by a deregulated financial sector. He's pointing the finger in one direction --- and, in my view a fruitless direction when one compares the power of a single borrower to cause harm against that of a mega-bank/financial institution.

As Tyro says, it's all the more frustrating because these commodities traders are siding against their own interests.

p.s. Wes, this might be obvious, but it just occurs to me to add that another reason it's so easy for us to over-generalize about the
"financial sector" is that deregulation of the financial sector allows bankers to also be traders and insurance brokers. It's really confused who does what.

Viajero- We're so far deep in this mess that there's not much point in teaching anyone a lesson. The administration (and Bush's too, since mid November) has decided essentially to say "we'd rather avoid 20% unemployment than teach people about moral hazard". How you feel about that question is debatable. But that's the central argument. They'd rather have a slow recovery (with likely inflation) than a sharp, deep recession.

It's a valid argument, and there are good points on both sides. And it's much more interesting to have that debate than just rant about "wall street greed".

Right now most of these people should file for bankruptcy

You know, I don't necessarily disagree. The "rational decision" for a lot of people is simply to walk away from their homes. Really, when you're $200,000 underwater on your house, there's no way you can make that up. However, if everyone who's underwater on their house did that, then, as we've already experienced, we'll have lots of cascading financial consequences that hurt everyone.

Plus, under more normal circumstances, someone having trouble with their mortgage would normally be able to renegotiate the terms of the mortgage and possibly have the principal on the loan cut by the lender. Securitization has made that more difficult and less common, once again providing a greater incentive for people to simply walk away which, while beneficial for any given individual, can have bad conseuqences if everyone did it.

Contra ElV, most people outside the beltway who do not imagine themselves to be masters of the financial universe understand this.

The real problem was the politization of the mortgage standard setting.

Fannie Mae set the standards for the secondary market. Politicians, in this case Democratic politicians, set standards to achieve a social goal the fiancial goals a financial institution is supposed to achieve under the bus.

it is intellectually dishonest to presume equal bargaining power and equal knowledge on both sides of a mortgage transaction.

Equal knowledge is irrelevant! If you're not comfortable with what you are signing because you don't know enough, don't sign and get help. It's BS to complain that the lender understands the contract better. Ignorance is no excuse.

As for equal power, BS! The power is equal. The borrower can walk away. That's power. The borrower can shop around. The borrower can obtain a lawyer. The ability to say 'no' is considerable power. People didn't say 'no' because they were some combination of greedy, impatient, lazy, ignorant and overtrusting. That's human nature and it's ridiculous to downplay the responsibility of the buyer.

"we'd rather avoid 20% unemployment than teach people about moral hazard".

The problem with this argument is you believe that they have the power to do this.

They don't.

But this money *is* going to the banks. If they had to foreclose, they'd lose money. That's what it's all about.

Have you read today's NYT front page piece about how Obama plans to subsidize hedge funds and other "investors" in order to keep the loan securitization Ponzi scheme going? That should incite a few good rants.

Look I am as big a democrat as the rest of you, I just can't get on the wagon at this point. We need to find a bottom in the housing market. That bottom will come as soon as the economics of buying a house, either for investment purposes or living purposes, makes sense.

Obama is in a dream world if he thinks that throwing money at the problem will prop up housing values. This is a bottomless pit that will only correct itself when investors/homeowners are willing to spend their hard earned dollars to buy a home.

I don't even want to get into the welfare trap that we are creating. Believe me it is alot easier to sit on your stoop drinking malt liquor and collect checks from the government than it is to go to work for minimum wage. Yikes.

Hey, stocks are going down. People who bought stocks thinking they would go up are now in trouble.

Let's bail them out. It wasn't their fault.

They are victims.

Pete- I agree- the repeal of Glass-Steagall can now be called a huge disaster.

also- the floor traders may be cheering against their ultimate interest, but their immediate interest is in having a functioning market.

Anonymous- you may be right. And that's the problem.

Viajero's touchy about his motivation to see people driven out of home-ownership, isn't he?

What's the matter, Jimbo? Fewer people to rip off these days? Too busy shouting at the voices in your head?

Lefty- We have an oversupply of housing already. Prices are coming down just because of that. What Obama wants to avoid is the societal implications of having a million families (maybe 5 million people) thrown out of their homes in the next year*. At least that's the plan as I understand it. It's very difficult to thread the needle the way he's trying to. I'm not sure it's possible.

*this is a completely made up statistic, but not unrealistic

What is the incentive behind "keeping people in their homes" that they don't actually own and aren't making payments on? Huh...

Move your stuff, that you also bought with the bank's money, to an apartment.

"came from the trading floor rather than the Midwest"

A trading floor in Chicago.

that's a pretty big generalization. What if you were sold an option-ARM and can't afford it now, but could get by with a conventional mortgage at today's rates?

again, it's a tough thing to do, but if you can get people to repay most of these loans rather than walk away, then that's a win-win. It keeps people in homes, relieves the bank from having to foreclose, and delivers some value to the MBS holder.

And alternate proposal I've heard is to greatly streamline the foreclosure process. That one has merit too.

Isn't it great to read oracular pronouncements on the economy from someone who's apparently unaware that the capital of the Midwest is also a major global financial center?

David, I don't purport to absolve indiviudals from responsiblity for living beyond their means, but your comment is riddled with assumptions about who subprime borrowers are.

Sure, even a moderately sophisticated borrower should be able to do the things you describe: shop around, get a lawyer, or even walk away from a transaction.

Subprime borrowers, however, were by and large not sophisticated borrowers. They were first-time borrowers -- often minorities or inhabitants inner-city communities -- who couldn't qualify for "prime" mortgages, but who were targeted by subprime lenders. With the Bush admin's "ownership society" blessing, lenders were waving all sorts of incentives (e.g. zero money down) to borrowers who never thought they'd qualify for a mortage and own a home. Suddenly, large swaths of the population were green-lighted for loans, and when the banks are coming to you (as opposed to slamming the door in your face) home ownership might just have seemed like a viable option.

I don't know how many of those people are fairly characterized as greedy or just overly optimistic about their lot in life. Might some healthy skepticism have helped the situation? Perhaps.

But to suggest that subprime borrowers had a full understanding of subprime mortgages (and could comparison shop for more secure instruments) when the government and banks are trying to persuade you to sign on the dotted line is B/S. That's not equal bargaining power. That's the government/banks-as-optometrist helping the borrower try on rosey-colored glasses and then pushing a mortgage contract in front of the borrower for a signature.

You people need a come to Jesus. Our real estate problem, will not solve itself by "keeping people in their homes". That will lengthen the problem because most of those people will end up in foreclosure anyway. The housing market is illiquid and the bid/ask spread is wide. This means that we need to narrow the spread and increase the liquidity in the market. You do that by putting more homes on the market at reasonable, not inflated, prices. We really need the market to bottom by itself, i.e. put those homes on the auction block and get them sold. The sooner that happens the sooner people can rent or own those houses and we can move on. Prolonging the pain that is inevitable does no good except drain our pocketbooks.

Lastly, our society needs to focus on personal accountability and responsibility. When individuals take responsibility for signing their loan docs, instead of blaming the "big bad wall street" we will move in the right direction. Time for a little introspection.

I see that all of you went home from your government jobs and aren't using the internet on my time anymore.

OK let me make this really simple for you then: You will be buying my house in about a year, cause I'm about to go buy one and loophole this bitch. I'm sure I can find a way to hustle the system fairly simply, and now that I know the past eight years of my life were a waste of effing time (ain't I just a naive jerk), I'm done with this crap.

People who've lost their jobs and were responsible about their home purchase, maybe have some savings and can stay afloat with some help, I'm all for helping them. I have zero problem with helping people who ran into a patch of bad luck. These are not the folks I am talking about. You know that, why waste my time and your time bringing them into it?

Why is it so hard to differentiate between someone who fell upon hard times and will likely pull themselves out of it in, say, a period of six months, and someone who will NEVER be able to afford the loan they currently are in with their current salary AT THE TIME OF THE LOAN.

What about people flipping houses? Taking out loans over the amount of the house cost so they can pay the ridiculous monthly payments, intending to flip it six months later before it all caught up with them? What about people who lied on loan forms? What about people who are just plain dumb?

Want to help them get out of their homes without being in debt for the rest of their lives? Go for it. They can go back to renting like the rest of us, rents are down a ton now anyway. Renting is where they should have been anyway, send them back. Hell it's not so bad, I love my place. It's not huge, it's not gorgeous, but it's mine and it's home. It's all I need.

Yeayyy - Just what we need ... another drunken chain smoking BOT boy telling America 'just how it is'... 'We might have been part of f%^$!@g this up - but trust our over grown frat boy opinions now - Bush 2012!.'

I think the last time they collectively got mad about something is when the Metra line discontinued it's Bar Car service. No more Budweiser express to the burbs !

"This is America !" ... What a joke.

PulSamsara,

No one is keeping you here. If America is such a joke, head on out to Canada or Mexico. I thought so.

By the way the last time you got collectively mad at something was when your fat, lazy government bosses actually made you do some work.

Cheers, here's to the unions that are saturating our workforce with overpaid, underworked, slackers who only innovate new ways to apprear as if they are working, while playing freecell and solitaire.

You will be buying my house in about a year, cause I'm about to go buy one and loophole this bitch

Or you could just take advantage of the big tax credit offered to first time homebuyers. Seriously: the government will give you money as an incentive to buy a house (at least in the last revision of the stimulus bill I remember.)

You might also wish to study yourself Jim and realize that only a limited number of homeowners will be able to avail themselves of the program. Next time, channel your anger into knowledge and, for that matter, coherence.

Those aren't even floor traders. No one looks at the time stamp of the video (on the CNBC we site): 5:11 AM! Having worked on the floor of the CBOT, I know that traders rarely show up earlier than ten minutes before the markets open, and these men in the background were Assistants and Clerks who are working very hard in a stressful environment for little pay in the hopes of a better life. Most, as you see, are old and have no hope of upward mobility.

Criticizing them as Wall Street hypocrites could not be further from the truth.

You can help by buying one of these foreclosed houses at bargain prices and providing quality affordable housing to those who are hitting hard times. The number of renters is exploding and they need the housing.

*OR*

You could sit in some old dirty Eastern board city and criticize those who make the investment and pass all of the government inspections to provide housing to those who are not as fortunate.

Your choice.

Of course, to criticize this system would be to admit that government fails once again.

As a renter in California, I am also against supporting the home owners in trouble. The house price is still have far to fall before it became affordable to medium income families.

http://www.irvinehousingblog.com/blog/comments/the-reservoir-of-schadenfreude/

That's how I see it.

Methinks the 'Jima protests too much. Been sniffing round the streets of Dallas in search of more foreclosures, Jimbo?

With every great change, there is great opportunity. Opportunity to help others, and opportunity to do well for yourself at the same time.

One thing that can be said about Mr. Viajero is he most likely will never be the welfare burden his critics who are depending on the government will be.

Oh, Vaj is definitely a welfare burden: he's just on the side of the vultures and parasites.

"Obama is in a dream world if he thinks that throwing money at the problem will prop up housing values."

It's the difference between a hard landing and a soft landing. Remember, we are the world economy's buyers of last resort. If the US economy goes down, there is no one to get us out of it. Japan in the 90s could at least export to other nations to prevent economic matters from getting even worse. We don't have that option.

Wanting to teach people a lesson because you rent (as do I) is just childish. Having a bunch of houses go empty is just going to make the wider economy worse and hurt all of us. This isn't going to cause banks to loosen credit (a de facto freeze on lending is part of our current economic problems) or cause bank re-capitalization. No one benefits from having a bunch of empty houses in our nation, but having a bunch in your neighborhood will hurt you.

"If the US economy goes down"

Let's be real ok? The US economy is already going down and to date none of the attempts at propping up the finance sector with taxpayer money has been of any benefit to the rest of us.

The government should intervene directly to support the labor market so that people get a chance of earning an income. There is enough work to do that private employers won't pay for right now. This is what any rational stimulus or economic recovery plan needs to focus on, not half-baked schemes to perpetuate the illusion of affluence of some homeowners who turn out to be less affluent than they thought. This is what FDR successfully did and it is only for the worst of ideological blindness that this obvious approach is not even considered in the current crisis.

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