[SGVLUG] OT: housing and bear stearns

[Miguel Hernandez]

Yea, it's a bad omen looming on the horizon. Too many key things were done
incorrectly, imho. You had banks & banking institutions pushing sub-prime
loans on people who qualified for the better loans. That sounds odd until
you find out that the banks didn't care because if (when) people defaulted,
they could re-sell that debt on wall street. Adding insult to injury to the
beleaguered consumer was that the government went to the aid of the banking
institutions (partially understandable as the banks are a large part of the
economic backbone), not the folks who lost their homes or are still stuck in
bad loans.

I feel bad for those who bought recently, as Matti said. :(

--miguel

On Mon, Mar 17, 2008 at 6:28 PM, David Lawyer <dave at lafn.org> wrote:

> On Mon, Mar 17, 2008 at 01:45:08PM -0700, matti wrote:
> > Hi,
> >
> > this is off topic...
> [snip]
> > I'm guessing we will see what some people like to politely call a
> > "market adjustment" is coming to the socal housing prices as credit
> > tightens and some more banks fail
> >
> > glad I didn't buy a house in the last year or 2...
>
> This is part of a much larger problem: possible financial collapse of
> the U.S. gov't but it may be years away.  With the gov't bailing out
> companies who took undue risk, it may wind up that the gov't itself
> can't keep going into debt anymore and has to go thru default itself.
> No country has every gone into debt as much as the US (including all
> forms of debt such as private debt) and not suffered financial
> collapse.  It used to be that a way to default was via hyperinflation
> so as to make the real value of debts nearly worthless.  Old postage
> stamps of Russia and Germany illustrate hyperinflation.  In Germany in
> the 1920's it took billions of Marks to buy some of the postage stamps
> (in my stamp collection) when inflation hit it's peak.  But now the
> U.S gov't has issued a lot of debt in "inflation protected securities"
> that can't be made to go away via hyperinflation.  The only way to
> default on this debt is just to not pay it back.
>
> So while house prices in real terms may drop, in term of dollars they
> may hyperinflate along with hyperinflation of everything else.  If you
> would like to read some hyperbole (that is often humorous) on these
> and related problems  see Kunstler's (author of "The Long Emergency")
> site:
>
> http://jameshowardkunstler.typepad.com/clusterfuck_nation/2007/12/forecast-for-20.html
>
> Linux both helps and hurts our current account balance of trade.  It
> hurts since it reduces the monopoly profits that MS can bring into the
> U.S. from other countries.  But at the same time, the fact that Linux
> was mainly a U.S. phenomena helps improve the public opinion the U.S.
> worldwide and this may help the U.S. get more sympathetic treatment in
> economic matters.  For example, will the oil trade switch to euros
> from dollars?  Iran has already switched and wants others to do so
> also.  Iran may win this since outside of Linux (and some other
> things), world public opinion of the US is pretty low, and the Bear
> Stearns bailout (and related gov't loans of "liquidity" to Wall
> Street, etc.) makes it worse resulting in a falling value of dollar
> which leads to inflation as the prices of imported goods rise.
>
> I wrote about the problem of free trade years ago and did
> nothing for years with what I wrote.  It's now on my website and while
> I've added to it but it's not up-to-date.  Many of the things I
> predicted are happening now, but others predicted the same (see
> the list of books on the subject).
> http://www.lafn.org/~dave/gov/collapse.html<http://www.lafn.org/%7Edave/gov/collapse.html>
>                         David Lawyer
>
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