Will US Taxpayers have to pony up for investment bank fraudsters?

Do you think the US taxpayer will have to bail out the investment bank fraudsters who went around the world selling their junk?

Some of these banks have liabilities of 40 times their shareholder equity. What do you think will happen if they don't get bailed out? Will any of these people actually go to jail?

http://www.informationclearinghouse.info/article19324.htm

It's worth having some bags of silver coins. You can still use silver as money.

At this stage of the game its good to actually have paper cash on hand too. I don't mean in a bank but under the mattress or what have you (a safe is best).

 

I have a hard time believing that the people taking the loans didn't understand the loans. They just thought the market was going to keep on climbing at the same rate.

The loans were foolish for most to take, the loan was fine for someone who was investing and turning houses, etc... with value elsewhere.

I just don't see anyone saying "ya, I shouldn't have taken that loan, that was stupid of ME."

No one accepts fault these days, it is always someone elses fault. Now it's "the banks made me do it."

 

Yeah, they will probably have to bail out the banks. Survival for the fittest for the poor, socialism for the rich.

Paper cash is only good if it's not US dollars. America has an enormous external debt. To pay it off they either have to drasticly reduce their spending or drasticly increase the level of taxation or they can do what governments often do when they can no longer pay the bills: print money. That will lead to hyperinflation

 

The only part of the debt that needs to be paid off is the consumer debt. Debt that paid for things that have diminishing value over time. The government brings in 13 trillion a year and owes 9 trillion.

http://money.howstuffworks.com/question213.htm

It would take 1000 years to collect enough gold to equal the value of 1 years worth of paper money earned by the US government alone.

So now scale the value of gold and figure out how many atoms of gold a household making 50K a year would get in order to go back to the gold standard.

Seriously.

On Topic, the problem is figuring out who should be hurting and not hurting people who legitimately got screwed.

 

This is not asking whether or not the government will bail out the people with loans. Many banks are in a dangerous financial position be cause they resold the loans fraudulently to other investors. The government may bail out the banks from the financial cataclysm that will happen when all of the investors figure out the loans are worthless. Essentially the taxpayer will be bailing out criminals when they really should be going to jail.

The government is already trying to bail out the borrowers. It won't work though.

http://biz.yahoo.com/ap/080212/mortgage_mess_rescue.html

 

Jim Rogers warned about this months ago, when he spoke to Fox Business News about 3rd level accounting.

 

KalvinB, the government does not bring in $13 trillion per year.

That is the estimated gross domestic product of the US.

The government taxes $2.5 trillion of that. It has revenues of $2.5 trillion but has a debt of $9 trillion and pension liabilities of $52 trillion. If you were a listed company and you accounted for pension liabilities the way the government does you'd go to jail.

Guerilla, this isn't actually a lifeline for borrowers but a lifeline for the banks. People will take the free month then 'walk away' from there debt.

 

Banks Ask For Bail Out From Uncle Sam

http://online.wsj.com/article/SB120294935869166831.html

The banking industry, struggling to contain the fallout from the mortgage debacle, is urgently shopping proposals to Congress and the Bush administration that could shift some of the risk for troubled loans to the federal government.

One proposal, advanced by officials at Credit Suisse Group, would expand the scope of loans guaranteed by the Federal Housing Administration. The proposal would let the FHA guarantee mortgage refinancings by some delinquent borrowers.

Credit Suisse officials have met with senior officials from the Department of Housing and Urban Development, which runs the FHA, and other policy makers to discuss the proposal.

 

And the citizenry sleeps, as their wealth is taken by the government, for the bankers.

 

It looks like the banksters artificially pushed up housing prices, encouraged people to take out equity loans on overpriced houses, and now want to transfer what risk they didn't manage to sucker foreign banks or other inverters into to the American people.

A lot of people are wonder how they missed bankster in the college major brochure

Of course, they let you pretend to play every now and then, just ask the foreign bankster wannabes, the house flippers, and the retirement fund investors who got pwned.

 

And now the government wants to give those who are about to default on their home loans an extra 30 day relief period. So the government wants to bail out the banks that made the loans and the people who took out the loans. The government is not Santa Claus; these "gifts" don't come out of nowhere. Taxpayers will feel the burden of this fiscal disaster. Of course, it can be delayed until next year, when a Democrat will likely occupy the White House. People will cry "the Dems are raising our taxes again" while praising Bush for keeping the economy from collapsing during his 8 years without having to burden us with huge tax increases ("our country was so rich during the Bush years, he actually gave us money back").

 

What can you do? This bubble helped pull us out of the recession in the early 2000's and now it's back to bite us in the ass, whatever, I will continue on with business as usual.

 

Wall Street looks to milk the cow even more. Unbelievable that they could actually get away with this instead of going to jail. America and much of the world just got totally fleeced.

 

The banks that are in a dangerous position are the ones who held on to the mortgages, not the ones that resold them. There was a market for subprime mortgages and the bankers acted as a middle men supplying the market with what it need. Hedge Funds wanted higher returns and lent money for mortgages while average joe wanted to be mini Donald trump and owe 10 houses that he can't afford and he took the loans from the bankers but yet its the bankers fault.

 

Actually, it's the central bankers' fault.

They manipulated the interest rates, which confused the banks and consumers, leading to bad decisions. The consumers borrowed beyond their means, and the banks accommodated the increased market demand for credit, even getting so creative as to design many new instruments.

The issue isn't that some people are dumb, that is a given. The issue is that some smart people got drawn into this as well, and it's because the FED sent incorrect information into the market by artificially lowering rates.

The information communicated by the very low rates was so bad, it created a stampede in the housing market.

 

The interest rates were good but the houses were way overpriced. You really have to wonder about the appraisal process. Additionally, I don't understand all the points and commissions. In some cases it added another $30,000 or more to the price and not to mention the commision of the real estate agents.

 

Central Bankers in the USA or Japan? Also even if there was excess liquidity in the system. The Central Bankers didn't put a gun to home owners and told them to buy homes that they couldn't afford.

 

Japan is basically printing money to keep the Yen weak. The carry trade contributed to the subprime blowout. The Japanese rate of 0.5 % is ridiculous.

 

Japan is printing money to help spur inflation, they went through a deflationary period in the 90s and it caused economic hell on them and they are looking to get their economy going and get it out of deflation range.

My point was it really didn't matter what the Fed did, the money flowing around the world would of ended up in the USA and the subprime market because there was great demand for it and because the returns were better then investing in government bonds.

 

You have to price in risk. A lot of people when on b.s. mode saying that real estate can not go down in price.