Isn't it ironic that

[kandrathe]

Kandrathe "I think the problems are worse now that the White House is at the intersection of K Street and Madison Avenue."

K Street is the legendary name for popular lobbies and think tanks. Madison Avenue is the legendary name of advertising giants.

Hence, partisan think tanks and special interest lobbies meet advertising giants. Sorry, it was subtle. OpenSecrets.org is a fun site to dig around in and see who gives and who gets. Then go and compare how they vote, or what they promote or kill in their committees.

Ever wonder how Project for a New American Century got its pick of George W. Bush to be President? Think about how Bill Clinton originally got the funding to make a run for the White House. Whitewater, it turned out was a money loser, it resulted in the failure of Madison Guaranty, and cost tax payers $73 million. Even though Hale was tainted, I still wonder if Bill did pressure him. How many other schemes go on like this where politics and finance converge to defraud the government with tax payer bailouts? How trustworthy is a group of people who conspire to defraud the SBA, and subvert Mortgage companies in their greed for money and power?

In 1996, the FEC issued a record $719K in fines against democrat party fund raisers.

Hillary financed her last run on a couple book deals, and Mr. Bill's outrageously high fees for speaking engagements (usually $150-200K a pop). Barack had two books written about himself, hired many insiders from the Chicago Daley machine, and has the 527 pumping, anti-american George Soros, and the SEI Union 527 helping him. Once you get momentum though, you can get the party fund raisers going on your behalf.

[Colonel_here]

"Which of these products do you think makes sense?

1. The "balloon mortgage," in which the borrower pays only interest for 10 years before a big lump-sum payment is due.
2. The "liar loan," in which the borrower is asked merely to state his annual income, without presenting any documentation.
3. The "option ARM" loan, in which the borrower can pay less than the agreed-upon interest and principal payment, simply by adding to the outstanding balance of the loan.
4. The "piggyback loan," in which a combination of a first and second mortgage eliminates the need for any down payment.
5. The "teaser loan," which qualifies a borrower for a loan based on an artificially low initial interest rate, even though he or she doesn't have sufficient income to make the monthly payments when the interest rate is reset in two years.
6. The "stretch loan," in which the borrower has to commit more than 50 percent of gross income to make the monthly payments.
7. All of the above.

If you answered (7), congratulations! Not only do you qualify for a job as a mortgage banker, but you may also have a future as a Wall Street investment banker and a bank regulator."

Alright lets see how this works.
Number one mortgage is based on the following idea. That average family moves out of their house after 5 years and doesn't really keep the house over long term, so for this purpose this mortgage would make sense as the last grand payment would come from the sale of the home. Interest only payments would decrease the cost of the mortgage of the mortgage allowing more families to buy the home.
This product would also be great for speculators.

Number 2 is based on the idea that bad loans could be written off and successfully managed of by the risk management department. In the end of it all the bank still gets the house that they can liquidate.

Number 3 same idea as before new families with lower incomes could buy the home sooner and since their income expected to go up over time they will increase their mortgage payments. More dangerous loan for the banks because it exposes it to greater risk due to the value of loan could exceed the value of the asset. However the banks often have the options to pull the loan back.

Number 4 has been a common practice for a long time and just analogical to having multiple leans on the house.

Number 5 same idea as before, the persons income will grow and they would be able to make the new payments.

Number 6 the loan is based on the idea that the person can make the payments (hey they signed it) but the bank will get the house to liquidate in the worst case.

Final person at fault is CONSUMER for being and IDIOT and signing up for this stuff without consulting financial adviser or thinking things thought. It is all great to blame the big companies but they did not make anybody sing those mortgage papers people chose to do it themselves. If they would have thought more about it or gave another thought to it they would not be in the mess. The companies are at fault with improper risk management of these loans.

[--Pete]

Hi,

Final person at fault is CONSUMER for being and IDIOT and signing up for this stuff without consulting financial adviser or thinking things thought.

You mean a financial adviser other than the loan officer making the loan? Because, of course, you *must* assume the loan officer is out to screw you. But how do you know that you can trust the financial adviser? Perhaps he is an idiot who understands the whole mortgage mess no better than you do. And, other than having one for an uncle, how do you go about getting a financial adviser?

And 'thinking things through', while a nice concept, suffers from the realiy of the inability of the average person to make correct change, much less work out a detailed budget for the next twenty or so years.

There's enough blame to go around. Maybe the greedy SOBs who saw a way to make a killing by abandoning the ethics of bankers don't deserve all the blame, but 'caveat emptor' is not the whole answer, either.

--Pete

[roguebanshee]

Final person at fault is CONSUMER for being and IDIOT and signing up for this stuff without consulting financial adviser or thinking things thought. It is all great to blame the big companies but they did not make anybody sing those mortgage papers people chose to do it themselves. If they would have thought more about it or gave another thought to it they would not be in the mess. The companies are at fault with improper risk management of these loans.

Of course, if the advisor is paid by the number of loans he manages to get signed, as has just been revealed to be the case in a couple of banks here, things do change a bit. The customer should still be critical, but few people will be alarmed (or even find cause to go over the numbers), if their bank advisor tells them everything is ok.

[kandrathe]

...

Alright lets see how this works.
Number one mortgage is based on the following idea. That average family moves out of their house after 5 years and doesn't really keep the house over long term, so for this purpose this mortgage would make sense as the last grand payment would come from the sale of the home. Interest only payments would decrease the cost of the mortgage of the mortgage allowing more families to buy the home.
This product would also be great for speculators.

Number 2 is based on the idea that bad loans could be written off and successfully managed of by the risk management department. In the end of it all the bank still gets the house that they can liquidate.

Number 3 same idea as before new families with lower incomes could buy the home sooner and since their income expected to go up over time they will increase their mortgage payments. More dangerous loan for the banks because it exposes it to greater risk due to the value of loan could exceed the value of the asset. However the banks often have the options to pull the loan back.

Number 4 has been a common practice for a long time and just analogical to having multiple leans on the house.

Number 5 same idea as before, the persons income will grow and they would be able to make the new payments.

Number 6 the loan is based on the idea that the person can make the payments (hey they signed it) but the bank will get the house to liquidate in the worst case.

Final person at fault is CONSUMER for being and IDIOT and signing up for this stuff without consulting financial adviser or thinking things thought. It is all great to blame the big companies but they did not make anybody sing those mortgage papers people chose to do it themselves. If they would have thought more about it or gave another thought to it they would not be in the mess. The companies are at fault with improper risk management of these loans.

All of it is predicated on the idea that the value of the property will remain flat or increase. The housing price bubble resulted in loans being written for well over the actual value of the property. Massive foreclosures have snow-balled putting more properties into an already glutted market further reducing the housing values. This is also why AIG, the world largest Mortgage insurer is in trouble. Mortgage banks, and mortgage derivitive securities have policies with AIG that protect some of their portfolios from mortgage values on bad debt decreasing.

Actually, the poor CONSUMER is not really the idiot here. They came with nothing, and walk away with nothing. Anyone with a nest egg could lose it all. I have a good friend who lost his house because he refinanced to an ARM that went up, and then when his wife had an illness, they lost her supplemental income, and they couldn't keep up with payments on their debt load. Many people live only a few paychecks away from financial crisis. The next insolvency will be State governments who will be unable to cope with the spike in demand for unemployment, and services for the newly poor.

[Zenda]

Delc "To be fair, most spam comes from computer infected by viruses."

Are you saying that it's because American computers are less well protected against attacks from the 'outside' world? Btw, I was only pointing out that the argument wasn't exactly truthful. If you want to base your opinion on what little Kandrathe told about this matter, go ahead.

Kandrathe "K Street is the legendary name for popular lobbies and think tanks. Madison Avenue is the legendary name of advertising giants."

I see. It's the usual complaining about greedy politicians again. Wasn't that matter dealt with, over 2 years ago already?

"But who are the bigger idiots? The jackasses we've voted for, or us for voting for them?

Once again, a country gets the government it deserves. An ignorant, apathetic, self centered, avaricious people will get just the scum that fills fifty state and one national capitols in what was once a great country. If ignorance begets ignorance, then I for one fear for future generations.

--Pete"

[kandrathe]

I see. It's the usual complaining about greedy politicians again. Wasn't that matter dealt with, over 2 years ago already?

No, you don't see. It's not the "usual" complaining about greedy politicians. Has it been dealt with? Did they pass the Fair Elections Now Act?

The point is understanding the nexus of who finances campaigns and the psychology of advertising. The American people are habituated to filling their brains from the fountains of propaganda we call TV sets. Sound bites and deceptive or misleading ads become "TRUTH" when repeated over, and over. People no longer even know what their elected representatives actually do in Washington.

The topic was how American politics has become degraded since 1950.

My claim was that with the advent of A) special interest groups and lobbyists, and B) multiple millions spent on advertising, that almost any stupid ape could get elected for public office. The first party has the agenda and the funding, the second party makes it scrumptious for the American voters. The difference between a "McCain/Palin", and a "Obama/Biden" is negligible. Neither want to really discuss issues, but rather toss out vague visions and appetizing sound bites to mollify the people into choosing them. The media and advertisers would have us all think differently, and have us at each others throat.

Here's the big secret of this election... With nearly 1 trillion dollars now committed to bailing out this financial mess, who here really thinks either an Obama, or a McCain campaign promise to spend a dime on anything else is worth a hill of beans? The United States is facing having its bond rating lowered from AAA which would really mess up the deficit and the budget further. Here is a warning by Moody from January. (link)

So, here's an idea. First amendment considerations aside, restrict political advertising from radio and television. Political programming would be acceptable if equal treatment is given to candidates (and here I would like that to be major and minor) and the program were at least 30 minutes duration.

[Colonel_here]

Hi,
You mean a financial adviser other than the loan officer making the loan? Because, of course, you *must* assume the loan officer is out to screw you. But how do you know that you can trust the financial adviser? Perhaps he is an idiot who understands the whole mortgage mess no better than you do. And, other than having one for an uncle, how do you go about getting a financial adviser?

Number one in North America financial advisors could be sued for malpractice just like dentists, and doctors. Mortgage brokers, stock brokers can't be. So if they get you in the situation by misunderstanding your needs and misleading you you can sue them, often just by filling a complaint through their licensing agency, it will do most of the job after that.
Now to get a financial advisor just pick up phone directory and see financial planning section. You will find both independents and the ones working under major companies. I know the ones in Canada are:
Investors Group
Manulife Financial Group
Sunlife Financial
all major banks have financial planning departments but often they are more limited than the other ones.
I am sure that US has such companies. I think Fidelity does financial planning in US and Sunlife Financial is present in US.

And 'thinking things through', while a nice concept, suffers from the realiy of the inability of the average person to make correct change, much less work out a detailed budget for the next twenty or so years.

That is why there are accountants and financial planers are around.

There's enough blame to go around. Maybe the greedy SOBs who saw a way to make a killing by abandoning the ethics of bankers don't deserve all the blame, but 'caveat emptor' is not the whole answer, either.
--Pete

The problem with US that mortgage brokers did not have any ethics to fall down to. They just like a store. You come in and buy a plasma TV is the salesperson in the store will ask you if you can afford to put that TV on a credit card or whether it will fit on your wall. No. People came to the mortgage broker and asked for cheapest mortgage and he provided that.

Of course, if the advisor is paid by the number of loans he manages to get signed, as has just been revealed to be the case in a couple of banks here, things do change a bit. The customer should still be critical, but few people will be alarmed (or even find cause to go over the numbers), if their bank advisor tells them everything is ok.

True, that people do no check through things but it is their fault for doing that, they should we are taught to read everything before we sign. I do literally that and ask questions untill it is crystal clear before I sign the contracts it drives the person on the other side crazy but so what it is my money and I deserve to know what is being done to it.

"All of it is predicated on the idea that the value of the property will remain flat or increase. The housing price bubble resulted in loans being written for well over the actual value of the property. Massive foreclosures have snow-balled putting more properties into an already glutted market further reducing the housing values. This is also why AIG, the world largest Mortgage insurer is in trouble. Mortgage banks, and mortgage derivitive securities have policies with AIG that protect some of their portfolios from mortgage values on bad debt decreasing."
Well the easy lending usually drives the prices of houses up and people when see prices of housing go up usually buy. The smart people usually offload their houses and move to rent because rent usually drops and quality of it increases. When the prices take a dive as they did they start buying the houses back and wait until the next house boom starts to sell it (actual strategy of a real estate speculator I know). He now adopted it to do it across borders.

"Actually, the poor CONSUMER is not really the idiot here. They came with nothing, and walk away with nothing. Anyone with a nest egg could lose it all. I have a good friend who lost his house because he refinanced to an ARM that went up, and then when his wife had an illness, they lost her supplemental income, and they couldn't keep up with payments on their debt load. Many people live only a few paychecks away from financial crisis. The next insolvency will be State governments who will be unable to cope with the spike in demand for unemployment, and services for the newly poor."
Well in the case above mentioned once again if your friend would have went to financial adviser they most likely would have got disability insurance or critical illness insurance that would have provided for that situation and if their financial advisor never mentioned it I believe they can sue him for malpractice.

[Zenda]

Kandrathe "Has it been dealt with?"

Apparantly not, but that's because you are still missing the point. Your politicians will change when you do. While you don't mind getting rich at the expense of others, don't be surprised if others feel the same way about you.

Kandrathe "The media and advertisers would have us all think differently, and have us at each others throat."

Those are in it, too? That's quite a conspiracy you have uncovered there:whistling:

[kandrathe]

Those are in it, too? That's quite a conspiracy you have uncovered there

You have heard of the phrase, "If it bleeds, it leads"? For media the best possible scenario is controversy. They need to motivate you, and get your blood pressure up. If they didn't, you would cease to find their media interesting and go do something else. So, in America, we mostly have two flavors of pablum, one for those who lean left and one for those who lean right. And every four years the media is filled with the idiotic battle of the pablum eaters.

[Zenda]

Kandrathe "If they didn't, you would cease to find their media interesting and go do something else."

Are you saying they only provide sensation and keep away from real issues, because they have a business to run? Doesn't that imply they are actually doing what their customers like most?

[Chesspiece_face]

Kandrathe "If they didn't, you would cease to find their media interesting and go do something else."

Are you saying they only provide sensation and keep away from real issues, because they have a business to run? Doesn't that imply they are actually doing what their customers like most?

It's less a question of people finding things interesting and goes back to the blending of marketing and information based programing. If you want a good tutorial of the american news programing watch the prophetic movie "Network". Keep in mind that when this movie was released it was viewed as science fiction and people balked that it could never happen. Whoops.

Part of the deal that the television corporations agree to to be able to utilize the public airwaves is that they provide a certain percentage of valuable information to the public. Once marketing got their hands on the news programs, however, it became more profitable to produce stories like "What item in your kitchen is silently killing you? come back at 11 to find out." than to provide intelligent information.

Which leads me to a side issue. I recently saw a commercial by Time Warner asking people who paid for CSPAN. the people came back with responses varying from tax payers to advertising, etc. until someone said the cable companies pay for it. The commercial ended with Time Warner coming off all altruistic as if they are giving the public a gift by paying for CSPAN. BULL$#!@, It's your civic responsibility. But this brings up a question for americans. The deals made with broadcasters that they provide valuable information to the public is based on the idea tha they are utilizing the public airwaves. Next year all TV will go digital and it isn't too far fetched that very soon the airwaves won't be used at all. The old deals are becoming, and pretty much have become, outdated. Soon the move from information programming to marketing will be complete and the broadcasters will have no need to provide any real information disconnected from marketing.

[Zenda]

Chesspiece_face "It's less a question of people finding things interesting and goes back to the blending of marketing and information based programing."

In other words, the customers of the media are the advertisers, and not the public? That may well be true, but it doesn't turn the public into innocent victims. There would be no commercials, if there was noone watching them. As long as you all keep buying every gadget that comes available, things won't change.

Consumers are more powerful then they realize. You don't even have to boycot a product completely, to make your wishes felt. If just 10% of all customers would buy only 10% less or elsewhere, a company would see its business go down by 1% already. That's quite a lot for the big ones, and certainly enough to make them rethink their strategies.

[kandrathe]

Chesspiece_face "It's less a question of people finding things interesting and goes back to the blending of marketing and information based programing."

In other words, the customers of the media are the advertisers, and not the public? That may well be true, but it doesn't turn the public into innocent victims. There would be no commercials, if there was noone watching them. As long as you all keep buying every gadget that comes available, things won't change.

Consumers are more powerful then they realize. You don't even have to boycot a product completely, to make your wishes felt. If just 10% of all customers would buy only 10% less or elsewhere, a company would see its business go down by 1% already. That's quite a lot for the big ones, and certainly enough to make them rethink their strategies.

There is a difference between content and advertising. The content is chosen for its ability to attract lucrative advertising to that time slot. My kids watch "Ben 10", but end up asking me to go buy them "Cocoa Pebbles". Also, don't confuse entertainment for enlightenment. Even news programs have given up on enlightenment, as it is not entertaining. So in our world today, Lindsay Lohan's hoohoo exposed is news, but genocide in Rwanda, or mass starvation in Darfur is boring.

I think your argument about boycott is also moot, since advertising is everywhere. Even TIVO has jumped into bed with the advertisers. To affect 1%, you would need to convince 648,000 households to unplug from cable or boycott any products they saw advertised. 58% of Americans are connected to the cable networks, who raise $29.6 billion from advertising, and $75.2 billion from subscriptions. They could buy or rent DVD's or video tapes for movies, but would be disconnected from big events like "The World Series", or "The Presidential Debates".

The National Cable and Telecommunications Association has some statistics.

[Concillian]

We mere mortal Europeans were dumbfounded when we heard.

1: US banks take enormous risks
2: US banks go bankrupt
3: US Government saves US banks
4: US citizen pays for a: Mortage, b: Saving Bank providing mortage.

Where does the US gov get this money? The wars cost over a trillion, this bank saving scheme 700 billion.

Actually on 4) you have the smart and budget conscious US citizens paying for a) Mortgage andB)saving bank providing mortgage and people too dumb to figure out they couldn't afford their mortgage when they signed up for an adjustable rate mortgage in a time of historic low interest rates because they couldn't afford the payments on the fixed rate loan.

I have watched people at work foreclose, I have watched family members foreclose. Every one who I've talked to the story is one of two things:
1) They were too dumb to know what would actually happen with an adjustable rate mortgage once interest rates were no longer at historic lows and they couldn't just refinance again next year to continue the super-low rate.

2) In addition to number 1, they were SO DUMB that they refinanced a solid fixed rate loan that they could afford into an adjustable rate loan that also took equity out of their house so that their initial payment was about the same as their old fixed rate loan.

I know or work with at least 10 people who have had to foreclose and every one of them fits into category 1 or 2. None of them are sob stories about how they lost their job or whatever. No, these people are pure, unfiltered moron when it comes to financial planning. Ultimately, these people lose very little in personal worth, mostly because they didn't have much to begin with. Yet they are often causing huge impact on others with their really bad decisions.

Just an example of one family I know:
bought their house for zero down long enough ago that they were well ahead of the bubble. As prices rose, they were convinced by some dumbass that they should refinance to take money out of their house because everyone was doing it. They refinanced and pulled 50k out of their house that they had put zero down on.
Their loan was an "option ARM" that gave one option of paying LESS than the P&I. They didn't understand the loan at all, but the lowest cost option payment was about the same as their old fixed rate loan monthly, and that's all they really cared about. They were getting 50k and their payment was the same, so woohoo! Well they've been paying ~1k less than the P&I for a while now, and lo-and-behold when they're in financial difficulty and come to me for help sorting it out, they owe 150k more than they bought the house for originally.

Well of course I'm thinking they're nothing short of "how are you able to keep from drowning in your own saliva when you're that dumb?" but I can't actually tell them that, and now I'm this frustrated person wondering how many other normal college educated people I see around are really drooling idiots in disguise. I mean this was one house, and when it forecloses, it will be responsible for over 150k all by itself. The family will move into a rental they can afford and will suffer through a few years of bad credit, but really won't have to suffer much for making this decision.

Honestly, I used to think the online community in games like WoW and DiabloII were just a large percentage of total dumbasses just because it was an anonymous medium, and they could let their inner idiot free reign with no repercussions. But now I really wonder... I mean maybe that's not the case, maybe everyone really is like that and I have this sheltered community of friends where I don't really see it until something like this mortgage thing shows who the morons really are.

The banks have some of the responsibility here, and they will be the media scapegoat. They were qualifying everyone at the starting payment of these ARMs, even though they knew these loans would not stay at that monthly payment for long. However, I believe what we are seeing here is the maturity of American Idiocy. People are so dumb, they didn't understand understand the loans they were signing or were incapable of the financial planning that should be required to sign for a mortgage. These people are more to blame than the banks and are imploding the economy. Ultimately it comes down to a rather large percentage of Americans making really, REALLY bad financial decisions with large sums of money. And those of us who can make good decisions are the ones paying for those mistakes.

[Chesspiece_face]

I have watched people at work foreclose, I have watched family members foreclose. Every one who I've talked to the story is one of two things:
1) They were too dumb to know what would actually happen with an adjustable rate mortgage once interest rates were no longer at historic lows and they couldn't just refinance again next year to continue the super-low rate.

2) In addition to number 1, they were SO DUMB that they refinanced a solid fixed rate loan that they could afford into an adjustable rate loan that also took equity out of their house so that their initial payment was about the same as their old fixed rate loan.

I'll add:

3) They built a new house and could have afforded the loans they took out even if the rates went up, but they were too stupid to realize that the initial property taxes they were paying were based on an empty lot and the next year when the property was a completed house those taxes would rocket up.

[Jester]

Many people who are in other ways smart, or even brilliant, are complete dunces when it comes to financial matters, especially prudent planning about debt. Take a look at the lifetime finances of Thomas Jefferson if you want confirmation that this is not only true, but that it has been true for quite some time.

Some people just don't have the knack, and when they're given the kind of rope that a totally free, power-drunk credit market will give them, they hang themselves, time after time.

-Jester

[Zenda]

Kandrathe "To affect 1%, you would need to convince ..."

No, you misunderstood. I never said that 1% of all viewers would have to disconnect their cable. Only 10% of the viewers would have to switch channels in 10% of the cases where they didn't like what they saw. But maybe that's too much to ask. Just complaining is a lot less effort, after all, and it even gives you the feeling you are doing the right thing.

[Jester]

No, you misunderstood. I never said that 1% of all viewers would have to disconnect their cable. Only 10% of the viewers would have to switch channels in 10% of the cases where they didn't like what they saw. But maybe that's too much to ask. Just complaining is a lot less effort, after all, and it even gives you the feeling you are doing the right thing.

10% of viewers "boycotting" 10% of the time is equivalent to 1% all of the time. At least, it is in terms of its impact on advertisers, cable companies, and so forth.

-Jester

[kandrathe]

Kandrathe "To affect 1%, you would need to convince ..."

No, you misunderstood. I never said that 1% of all viewers would have to disconnect their cable. Only 10% of the viewers would have to switch channels in 10% of the cases where they didn't like what they saw. But maybe that's too much to ask. Just complaining is a lot less effort, after all, and it even gives you the feeling you are doing the right thing.

Switch channels to a different commercial. If you notice they all tend to run commercials at the same time. I don't watch TV much, and when I do it is mostly on-demand movies. I'm not much of a consumer either. I'm the kind of person who can eat the same boring meal everyday and not care. I can appreciate fine things, but it's more that I don't crave them or need to be pampered.