[Rick]

But people are still sucked in by the age old demon of greed. Yes you have the lenders pushing 'easy' money at one & all, home builders building bigger and more extravagant homes and everyone hell bent on keeping up with the Jones's.

And then the question is: is it a good investment or risky speculation? We were really tempted by the potential of a sub prime loan when we parlayed the sale of the house in Calgary into the home in Whitefish. We were very, very certain that our income would go up fast enough with our new degrees and our business reinvigorated that we could use those rates to kick the hell out of the principle and have the property that we really wanted rather than what we settled for.

In the end, after talking with the investment dude, we decided that the potential gain wasn't worth the risks. As it turns out now, if we'd have gone for that low sub prime, we would indeed have kicked the crap out of the principle and be looking pretty good right now. But it was beyond the comfort envelope for our blue collar common sense.

So... speculation? Or investment?

The temptations are huge today, and in your face every second of every day, so it is no wonder so many people get themselves into trouble. Business ethics, and indeed societal ethics, have dropped in the name of profit to satisfy hungry stock market investors.

And how many of us AREN'T stock market investors when we look at our retirement funds, RRSP's, union funds, etc? Does just giving x amount of dollars per year to Investors Group or whoever exclude us from being part and parcel of the stock market, it's ethos, and how business is done? Who would turn down a 30% growth in their funds?

What I wonder about is why we allow our kids to go through school without any kind of significant education in finances, credit, mortgages, compounding, etc. We never got that back in the 60's, but then again the world was a much, much simpler place financially speaking back then.

I wonder what sort of catasrophe the global society will have to endure to learn the lesson. Interesting times we live in.
Cheers.

Seeing as I've seen similar real estate speculation grief about 30 years ago, it seems that one kick in the arse every thirty years still doesn't get the message home. Is it a once in a generation thing or what?

[jmdeegan]

Just a few brief points...

1-I agree with Rick. The lenders, for the most part, cannot be blamed. Most of those who screwed the pooch with sub-prime loans knew it was either that or no house. They gambled, a lot of people gambled, and they lost big. But no one made them do it. Whether they lack intelligence isn't an issue. Its actually more a common sense thing-which, sadly, is not that common.
2-some of it is people who bought the max of what they could afford, without taking into account upkeep, utilities, food, etc. some people are just dumb with budgets and money, but that again is not an IQ thing....

I do agree that predatory lending needs to be done away with because it does have negative impacts...however, its legal-slimy, but legal.
I did not take a lot of pity in some folks whining about the sub prime issues, because clearly they were desperate and stupid and when it blew up in their face they couldn't take responsibility. I think Bloomberg had similar sentiments about it-yes, slimy predatory lenders took advantage, but they saw an opportunity and went for it-as a smart businessman does. However no one forced these people into their "bad" loans. When they moved in and had their home....that loan wasn't so bad, was it?

[Mallee Boy]

Speculation or Investment? Better off or worse off?

I dont know Rick, only you, with the benefit of hind sight can answer that. But dont get caught up too much in the " I could have done better" stuff, I am firm believer in that you make the decisions on the day, equipped with the homework you have done on the subject.

If that homework was complete then "that decision" should be a good one that stands the test of time. Works for me.

The bad decisions I have made have been a result of the homework being incomplete.

As for the lessons of the past, I don't know the answers. But, yes, the cycle continues in varying degrees of severity.

I farmed for 35 years and have been out of it for 10 years, but I can see the younger generations repeating the same,financial, mistakes, (they look different today, but the fundamentals are the same). But because people get bailed out the lesson is never fully learned, and as farmers are a very small minority (less than 4% & falling, of the population over here) the lesson is wasted anyway.

I agree with your comment on the 'Nanny state', but govts nowadays are so poll driven that they jump at shadows, with good, sound or responsible policy decisions taking a back seat to populist, feel good crap that the 'feel good/hand wringing' fraternity clamour for.

I do not see this changing anytime soon, as any politician that stands up and tells the voter to take responibility for the consequences of their actions will never get elected....at least over here.

Cheers.

[Rick]

Most of those who screwed the pooch with sub-prime loans knew it was either that or no house. They gambled, a lot of people gambled, and they lost big.

I don't know if you can even give them that - although I don't claim to know it was worse for a fact..

First, a lot of these loans weren't the popular conception that for all these sub prime borrowers it was either that or keep on renting. Take a look at the value of a lot of these homes - these aren't starter homes for a young couple, or a manufactured home or whatever. These are pretty nice shacks. Many of these people who defaulted had incomes probably in the same line as those of my wife and myself. They had two choices - a normal morgage for a much lower rate to buy a smaller/less expensive property - or a subprime rated mortgage and speculating that they'd either drastically improve financially or else bank rates and rising home values would let them win financially. They looked at their options just like we did. We decided it was a bit too risky for us, some of them speculated and took the sub prime. The two small businessmen who defaulted near where we live could have bought our single acre and house and walked away with pocket change. Instead, they went for the properties near the golf course, lake, and ski hill and tried to swing it with a sub prime. They couldn't do it. Not exactly a case of being on the street if they didn't purchase or being duped into the loan.

Second, there were the ones that were just outright flipping houses. There's a silent number that never gets mentioned in this - the number of subprime borrowers that made a tidy little sum of money on all of this flipping houses throughout the life of the sub prime loans. I wonder if they're among the ones moaning for government help now if they got stuck with the last house they bought and no buyer. Will I be bailing them out as well when Obama is president and rides to the rescue?

Having said all of that, I have no idea what percentage of the sub prime defaulters fall into the category of those who gambled to buy bigger than they could otherwise afford, nor what percentage were flipping houses (even though developers are talking about speculators buying their houses now being found to be in the 25% of purchasers range). But I do believe that, in balance, borrower misconduct, speculating, and outright criminal acts is much more the root cause of all of this than the lenders. Any program that focuses on the nasty ol' lenders as being the primary culprit here and they're all a bunch of criminals isn't supportable by the facts as far as I understand it.

Having said all of that, if memory serves me correctly, about one in eight sub prime loans went into default, correct? So one could assume then that the other 88% either escaped at the very least or else came out of it with a house that they could otherwise not have purchased? Should we make all those people give their houses back or profits from flipping houses in the interests of fairness?

But no one made them do it. Whether they lack intelligence isn't an issue. Its actually more a common sense thing-which, sadly, is not that common.

Is it that common sense isn't common anymore? Or perhaps that people do recognize the risks, but what society has been teaching them is that they don't have to listen to their common sense because the nanny state will come in and bail them out if their risky behavior gets them into trouble? If there's a good chance government will step in so you don't have to take the full consequences of your actions, that kind of skews the risk assessment a fair amount, doesn't it?

I do agree that predatory lending needs to be done away with because it does have negative impacts...however, its legal-slimy, but legal.

That's a fair comment. How far do we go with that? Take a look at most credit card interest rates for example and what the law in your jurisdiction considers to be ursary. At what point do we start - I have no idea. And if predatory lending should be regulated or criminalized, how about legalized gambling? Now there's one activity that makes a sub prime loan look like a bargain.

In the end it comes down to asking ourselves how much we want the government sticking its nose into our private lives and controlling what we do with our private property. What one person finds acceptable, another person looks at as one an outrageous invasion of their private lives.

And as somebody else here already posted in observation, you can bet your ass that no politician is ever going to tell people what they don't want to hear about spending and loans, whether to finance a house or a national health care system. Whether you like Ron Paul or not, he pretty much said it like it is regarding the US financial situation. As you can see, it carried him far in this presidental election cycle...

[Lance B]

That's not true. You didn't, say "some" at all - here, let me help you with what you really said:

That's fine *if* these people could understand what they were doing, but most who take out these sort of motgages are in the lower socioeconomic situation and are also below the IQ level to be able to comprehend what they are getting themselves into and thus are incapable of understanding what they were doing.

I helped your memory by adding a bit of emphasis in the quote of what you said... and you never did find the time to tell me where you read any study or finding that determined that most of these people had sub normal intelligence levels. I think you just made that up as you went along to justify your argument. Am I wrong?

Yes, I *should have added to my original post the word *some*, but as with all things they are taken too literally and you are playing semantics to trying add emphasis to your argument, but it doesn't cut it with me. Anyway, I thought you would have cottoned onto my intention when I also added that there were borrowers that took advantage of the situation also, so obviously they were *not* below the IQ level to understand, but then *that* wouldn't have given you ammunition.

As for deciding that most, or some, or whatever percentage of these people are sub intelligence, ie below 100 IQ(average IQ is 90- 109 which takes up 50% of the population), below average IQ is 90 and is about 16% of the populace. Here is just one source of info:
IQ Scores.
Now, regardless of what you *think* or are trying to *imply*, it doesn't take a Harvard graduate to realise that most of the lower socioeconomic community would be in the lower IQ areas.

If that is your new position, then I can live with that. Up until this point however, your rants about who has been "criminal" and who should be held to account have soley dealt with the lenders while portraying the borrowers as the victims - when the vast majority of the actually criminal behavior was on the part of borrowers.

Don't try and bolster your argument by calling my arguments rants and by implication yours are not rants. If anyone is ranting, it's you.

You have asked me for facts yet you are now stating that it is a "fact" that the vast majority of the "criminal behaviour" was by the borrowers, no the lenders. Now *you* should give evidence.

The point is, the lenders have the facts of these people's incomes in front of them and they *know* that they could never afford the loans. The lenders have the facts as to whaqt the outcomes of these dealings and yet they *still* gave the loans for a short term gain to them. I can guarantee that these lenders fast talked, more than likely blinded them with figures and cojoled these borrowers into these loans by coercing them that they would be ok in being able to pay them off.

I would find it rather refreshing, actually, if during the cleanup of this mess all the mortgage applications were reviewed and in those cases where criminal or civil torts were committed by borrowers, the law went after those individuals. Fraud rates as high as 70% or more on the part of borrowers... wow, that's a lot of court time! But we know that isn't going to happen, because the unwashed masses have drank the purple Kool-Aid and ares so fixated on them evil ol' moneylenders and making out the borrowers to be the unwitting victims.

Are you trying to tell me that the lenders could not see that the borrowers had incomes that would be unable to pay these loans off? That is the biggest joke yet.

See Lance, you just don't pay attention, whether it's not looking at the sub prime issue beyond what the claptrap tabloids are publishing or even bothering to look at my name in the posts. See that little part where it says "SE BC and NW Montana" by my name. SE BC should be your first hint I'm not necessarily an American. In fact, I'm a Canadian, and still currently a Canadian as far as residency status goes, although that will probably change this year when I spend more time in the US than in Canada for the first time - by choice. But by virtue of my visa and the fact I own property and work in both countries, I also have the priviledge of paying personal taxes in both countries.

I missed that. I apologise.

So now that you've let your anti-American stereotypes out of the closet for all to see, should I just assume that like many Australians you don't think very clearly because you drink too much? Stereotypes are dangerous things to play with.

Actually, I am very much pro American, so you can pull your head in there.

Here's that question for you again: who put a gun to the head of your money managers to force them to invest in the US market and particular high risk investments? Nobody, right? That was their CHOICE, as it was the CHOICE of investors to then buy into those high risk investments that were offered.

You're a joke. You don't seriously believe this tripe. Money markets affect the whole world, not just the USA. If the US market goes into decline, the rest of the world is affected regardless of where the money comes from.

Once again, an excellent example of everybody refusing to take personal responsibility and single out somebody else to be the scapegoat for the consequences of their own actions. If those high risk investments had paid off as they hoped and they'd all made a killing on them, they'd be too busy slapping each other on the back about what a great investment vehicle they'd cashed in on to be throwing words around like "charlatan". But they didn't, and suddenly all the "charlatans" are the US lenders - and everyone else merely a pathetic, helpless victim who just didn't know what they were getting into.

You're also paying the price every day for allowing the population access to alcohol. Are you as bitter about that too - or is the price of alcohol in society one you're happy to accept? How many people die of booze related causes in Australia every year? And how many people are going to die in Australia of causes related to the sub-prime mess in the US?

You seem to think that I am happy about people dying from alcohol related issues. Do you think it is a good thing that people die from alcohol related illness?

I suspect you're a little choosy about what prices you find are unacceptable or not, but I'll take human life over speculative investment losses any day.

Why should we accept either? It can be avoided with education and a few laws limiting the impact of both.

Furthermore, I'll still take the freedom of self determination over an intrusive nanny state any day of the week. Fortunately, I do have that option and I'm voting with my feet. A government powerful enough to do everything for you is also a government powerful enough to do everything to you - and God knows we're seeing enough of that recently.

You keep saying this, but we are regulated to the hilt but you choose to ignore it. My proposal is as much a concern for those who are being duped, but for the *consequences* that arrise from it, ie the fact that a recession will hit due to this short term money grabbing be either the lender or the borrower. Much of this could all have been avoided with some guidelines as to whom these lenders should lend money to. You keep glossing over this point. There are already laws governing the lending of money(so much for your no nanny state idea), so what is wrong with just tightening up these laws to ensure that it doesn't cause a meltdown of the US economy again?

You absolutely will not even begin to acknowledge that there was more wrongdoing on the part of borrowers than lenders - and certainly more criminal activity on the part of borrowers than lenders. It is all about the "unscrupulous lenders" in your mind, and everyone else an unwitting victim.

Here you go again saying that there was *more* wrong doing by the borrower than the lender but there is no *absolute* proof of this.

I'm glad you do seem to realize that the market is regulated in the US - although obviously not as regulated as you would prefer it to be from your alien vantagepoint over in Oz.

Didn't you just say that you were Canadian? Is that not alien to the US too?

Living part time under those laws in the US, and soon to be full time, permit me to prefer US residents making their decisions on their laws, rather than being instructed on what we should be doing by foreign investors from another continent who apparently lost some money somewhere along the way gambling on high risk investments.

Where did you get the idea that I lost money by *any* dubious investment? See, you are making up stories to emphasise your flawed argument. I haven't lost anything from any investments.

My concern is that the world economy is affected by these dubious loans, We *all* have to pay the price for these loans dur to higher cost of money(ie higher interest rates), slowing economies and the associated higher unemployment.

I'll also have to have a look at my past posts to confirm that I never for one minute suggested that I supported a wide open marketplace free of regulation. Reasonable regulation is both necessary and common sense - nanny state regulation restricting everyone in an effort to prevent some people from being hurt by making risky and/or stupid investment decisions is something else again, and I don't support that.

Of course, if you can find anywhere that I posted support for an unregulated financial system, feel free to post a quote of that here to prove me wrong. I just don't agree with your view that Americans should regulate themselves to the point they're treated like children by their government. If that works for you in Australia, fine, go for it, but I'd prefer not to have that over here.[/QUOTE]

It won't be treating everyone like children at all. A few regulations to avoid as many of these specualtive loans would only affect those that should not take these loans out in the first place. No big deal. Frankly, I don't see what the fuss is about as it won't affect you other than it may mean that the US economy will be less likely to go into recession due to these overzealous lenders.

"Tightening up" to a nanny state with government control over how I invest is not what I want. I prefer to be governed as though I'm an adult, not an idiot.

It's not stopping you from investing in anything. How would a law with guidelines on tightening up this sort of lending practice affect what you invest in?

You are, however, remarkably consistent in your view that it is all about going after the lenders and not the borrowers - who of course are merely the poor duped victims in all of this.

Because it is the *lender* who has the facts and figures and the final say as to whether the give the loan or not, it is not the borrower that has that power. So the lender has to take the responsibility that they lend to people that *have* the wherewithall to be able to repay the loan and *not* done on pure specualtion which is driven by his/her urge to get commissions.

Of course, there are those borrowers that *do* have the means to pay the loan back and decide to default. I mean really, most take out a loan with the desire to pay it back and a place to live rather than be turfed out onto the street with no place to live.

I still say that the majority of these loans were done where they shouldn't have been done to a section of the market which was a bordeline market to begin with. If it weren't norderline, then there wouldn't be this problem.

xactly. Both consumer goods and financial transactions are regulated - but while you want Americans to tightly regulate themselves in the financial world to coddle them away from the potential of financial harm due to poor decisions, you sure wouldn't want the same strictness put in place for food and drink to prevent them from incurring much more serious physical harm from similarly poor decisions.

A complete, absolute lack of consistency in approach.

Not at all. I am not aksing for them to be coddled. It is a few guidelines for lending, over and above what there already is, that would avoid a majority of the result we see. Of course it wouldn't stop it all, but you have to start somewhere.

Aha... we've finally got to "some" unscrupulous borrowers. Ummmm... mortgage fraud is CRIMINAL, not "unscrupulous". Fraudulent loan applications ran as high as 70% in some reviews, with violations of occupancy agreements running around 25% as a result of people using these mortgages to flip houses and speculate.

But they were fraudulent by both parties and the result is the same, recession and higher inflation and higher unemployment as a result.

Are you saying that the lenders forged incomes of the borrowers to put on the relevent paperwork? Or that the borrowers lied about their incomes or assets? A simple law makng sure that these people actually have those incomes my be required.

Perhaps not in Oz, but in North America, when you get to figures like 25% and 70%, you're well beyond what people envision when somebody says "some borrowers".

But you don't know if the lender, in his/her desire to get that all important commission, fudged the income figures of the applicants. The lender has *no* constraint as to who he/she lends the money to. It is almost like open slather as long as he/she gets the commission.

You just can't help yourself. You can manage to acknowledge that there were unscrupulous borrowers - but you immediately follow that by putting the blame on the lenders trying to make a quick buck. What were all those lenders involved in mortgage fraud, speculation, and house flipping doing? Trying to earn Boy Scout badges? I think they were trying to make a quick buck, myself.

Because ultimately it is the lender who has the power of giving the loan or not and with that hefty commission weighing on his/her mind, I bet he/she won't err towards caution, but boldy writes the loan regardless of any consequences. A few guidelines would avoid this.

Y'know, I distinctly get the feeling you lost some money here and there.

Nice try to bolster your argument, but I haven't lost a dime. It *may* however affect *you* much more than me and this is why I find it curious that you would not want to put in place a few guidelines in order to avoid this from happening. It won't even affect you.

It's a very acceptable price to me to have a country where the government does not regulate every aspect of my life from cradle to grave. And until the person steps up to the plate says they also think alcohol should be removed from society because of the price that freedom of choice leads to, they don't have a single moral or legal leg to stand on and lecture Americans to move into a nanny state to prevent people from making bad investment decisions because of that cost.

You seem to think that this *has* to be the thin edge of the wedge to total government domination. There have been many laws not dissimilar to this that have been put in place and yet we don't see the total nanny state that you invisage. You still have the right to vote if you think that the government gets too much power over you.

Lance, I have to hand it to you. You are incredibly consistent in making this all about the hapless borrowers being duped by the heartless moneylenders.

That's the remarkable thing about the truth, it is consistent.

But audits of the mortgage applications for defaulted mortgages found SEVENTY PERCENT had misleading and/or false information in them.

Who fudged the figures, the lender or the borrower? I am sure they are both pointing the finger at each other. Let me see, a lender worried about his/her fat commission or a borrower trying to put a roof over his /her head because the lender says that he can afford it(even though the lender knows the borrower will default).

Occupancy violations alone were around 25%, and lenders reported 20% more suspicious mortgage activity to the feds than ever before. Yet none of this apparently registers in your world, where all these borrowers were duped and anyone who thinks otherwise is apparantly heartless.

See above. It is still the same. A law setting borrowing guidelines would avoid much of this.

Mortgage fraud on the part of the borrower is a CRIME, not "unscrupulous". I don't think for one minute that all the fault and wrongdoing in this was on the part of borrowers, but you cling to this position that despite those high rates of CRIME among the borrowers, it's all about the lenders.

Well, not a small enough world that a 70% rate in falsified mortgage applications still translates into my interpreting it to mean that most of these people were duped.

How big does my world have to be before it's like your big world and I can look at a 70% mortgage application fraud rate on the part of borrowers and still claim most of those people were naive and duped?

What could a borrower do on his/her application form for a loan that would be a crime? He/she would have to overstate income and not advise of any other borrowings. A simple law would avoid that.

What would a lender do to get his/her commission that is a crime? Fudge income and borrowing figures of the lender in order to get his/her fat commission.

Both are criminal in my book and both are just as guilty.

[QUOTE]Could some lenders have lied to these people? Promised them they would double their money, the rates would never go up, housing prices would never drop? Perhaps psychologically or emotionally pressured them? You bet they could, and some probably did.[QUOTE]

Definitely, and this is part of my point.

However, there are ALREADY laws about luring people into mortgages with those kinds of promises, and bringing us into the nanny state with a redundant set of laws is not where I want the country I live in to go.

There are laws? Then they are toothless and don't work. They need tightening up. Simple.

Why don't you try, just for one single minute, to wrap your mind around the significance of what a 70% rate in falsified mortgage applications means. A 25% rate in occupancy violations?

Again you are assuming that the lenders did not fudge the figures and saying that 70% were falsified doesn't point the finger at anyone. I am more than sure that many these people were coerced into these loans that were already borderline by commission hungry lenders. Again, guidelines would avoid much of this. Do not sell to borderline applicants.

If I told you that 70% of the customers of that multi million dollar business you have had falsified their credit applications with you, would you look at those customers as poor misguided dears who needed more protection from the law - or would you be a little bit concerned about the character and quality of who you were dealing with. To take it one step further, if somebody then came up and said that YOU'RE to blame because they falsified their credit applications... would you find that a little bit unjust?

No, I have a credit checking system that avoids *any* problems with my customers.

You did lose some money, didn't you!

Hahaha. You're determined to score points no matter what in the mistaken belief that it will bolster your argument. It just makes you look silly. I repeat, I have not invested one cent/dime/peso/yeneuro(call it what you like) into the US market. I have not lost any money whatsoever.

What actually intrigues me is that *you* seem to believe that you will be happy to pay more for *your* mortgage and/or that the US will go into recession, and the resultant high unemployment, just so that you don't have a law that could avoid much of this from happening and this law wouldn't affect *you* anyway. Quite astounding.

Cheer up. First, the US economy is inevitably headed into the tank anyways, whether you want to blame it on sub prime, the war in Iraq, enormous deficit budgeting for decades, baby boomers now retiring, or whatever. Second, you can take solace that it is going to cost me one hell of a lot more than it is going to cost you - and my business doesn't and never will reach the multi million dollar levels that yours is at so I can afford it a lot less.

So by having the subprime fallout this helps how? If it were on the brink this didn't cause it to happen? If it were going to be a minor slow down we are now looking at a major one? Unemployment goes up much higher as a result is good because? All this is good exactly how?

No. In my world we have a consistent approach. Not a hypocritical one where we say we want a nanny state to protect people from financial misfortune, but God Damn... DON'T YOU DARE TAKE THAT SAME APPROACH TO MY BOOZE AND MY MOTORCYCLE EVEN THOUGH THEY CAN CAUSE ME AND SOCIETY AT LARGE MUCH MORE HARM.

Your argument is flawed because you are saying that the government *doesn't* regulate anything but it is a fact that they *do* regulate most things. You are trying to punch holes in my argument by saying an all or none scenario, but that is exactly what it *isn't*.

I don't care which way you go - but a little consistency in approach would be nice. Something that apparently is a foreign creature in your world.

It is more foreign in yours. My argument has been consisitent throughout. Put laws in place so that these sort of loans are not written in the first place. Simple.

Hmmmm... it's almost as though what you're really concerned about is losing some money on high risk investments - not about the well being of the stupid. So it isn't that a young kid and how he spends his money on expensive toys instead of school and a future shouldn't be protected by commerce restrictions while an adult in his 30's should be protected when trying to flip houses. It's about what it costs YOU.

How much do you figure you lost on sub prime related investments, Lance?

Hahaha. Again, as you want me to be hurting so as to bolster your flawed argument, I repeat, I haven't lost a dime.

No. What I'm saying is that your claim that the sub prime situation is what is ruining the US economy is pure nonsense. Here, let me help you once again by reminding you of what you posted:

this is hardly going to ruin the US economy like these home defaulters are.

I may not be an economic giant in your eyes, but I'm pretty certain that I'm right when I don't agree with your belief that the sub prime situation is what is ruining the US economy. A dumb ol' mountain boy I might be, but I think it is due to many, many issues and years of mismanagement all coming to a head. If Lance the Economist thinks that the ruin of the US economy is all about the home defaulters, then we'll just have to disagree on that point.

If you really believe that the subprime market is not going to help ruin the US economy, then you really have your head in the sand.

Here are a few links:
Subprime cost to banks 'will spiral sixfold' | This is Money

Excerpt:
"Many will go to jail for fiddling the books" Only a lender can fiddle the books.

Bernanke says sub-prime crisis could cost $100bn - Times Online

Excerpt:
"A day earlier he had bowed to sustained pressure from Congress and said that he would introduce new rules to cut down on the kind of “predatory” practices that had resulted in home loans being made to high-risk borrowers and prompted a surge in mortgage defaults"

Read: "Predatory" practices that had resulted in home loans made to high-risk borrowers and prompted a surge in defaults.

No. Restrictions to the point where we eliminate the potential of risk from consumption - just like the degree of restriction you want to ensure no economic harm can ever befall people with money related decisions they make. Which would mean about one drink per day, anything else being a crime. Let me know when you're going to publicly propose that in Oz, will ya. 'Cause I want to watch that one when the bars, restaurants, night clubs, and your fellow Aussies hear about that one.

Consistency, please.

Actually, I'm not the only former cop who thinks drug laws (or alcohol laws for that matter) are violations of civil liberties, not to mention being stupid in concept.

On the other hand, if we're going to have a policy of protecting people from making stupid decisions by way of regulating how they live their lives, we can't just do it with their financial decisions while ignoring what they eat and drink, now can we? Because then we'd just be a bunch of arsehole hypocrites.

Consistency Lance. Think "consistency". You want the US to bring in nanny state laws to prevent their investors from making stupid decisions that might hit your pocketbook, but you sure as hell aren't going to lobby over in Oz to have alcohol banned to eliminate the much more serious harm and death being caused by booze.

And then you turn around and talk about people who want some laws but not others. It is nothing but hypocritical to have a position on one hand that government should enact laws to prevent people from making stupid or overly risky decisions with their money. And yet not be advocating exactly the same sort of laws that would eliminate the ability of people to make stupid decisions regarding their consumption of alcohol - something that can outright kill them and is a causal factor in half the violent crimes committed.

Actually, you are consistent. Right to the end - despite findings like 70% mortgage application fraud on failed sub prime loans and 25% violations on occupancy requirements - you still hold to the position that all these people were "duped". Who "duped" them into falsifying their mortgage applications? Who duped them into violations on occupancy requirements?

First they were mostly of sub normal intelligence and couldn't understand. Now they were duped.

70% rate on mortgage applications for these failed sub primes. 70%. Think about what a 70% mortgage application falsification rate and what that means. But no... they were "duped".

Don't invest in American markets anymore Lance. Unlike me, you don't have to pay US taxes. If you want me to find sympathy for the 70% or so who committed criminal acts when getting their mortgages, you're barking up the wrong tree.

Trying to bolster your argument again. Sad.

No, I think a 70% mortgage fraud rate is not a good thing. However, my "warped sense of justice and freedom" does not lead me to want to repeatedly put the blame on the lenders for that as you want to. Another cultural difference, I suppose.

Read the links.

That's your decision, from another country with a different ethos. If I want to live like a Brit or an Aussie, I'll move there. Meanwhile, I don't want my domestic policy dictated to me by foreigners. What you think is an acceptable level of government intervention in what I can and can't do with my money is not my values. That is consistent whether you talk about financial regulations, gun control, police powers of arrest and detention, or anything else.

And while you think my argument is stupid, I find yours to be hypocritical, deliberately narrow minded, and selfishly financially self serving.

Two things. Firstly, again, I have not lost *any* money. Secondly, if being self serving means that I am concerned for the fallout of this and what it will do to many *innocent* people, then I am guilty as charged. A little more compassion for those that are made unemployed etc due to the ensuing recession I do not find such a bad thing. Maybe you should have a little more compassion. No, you're too interested in making sure I have losy money to bolster your flawed argument.

So yet again, we have differences of opinion and values. Which is why cultural differences exist in the first place.

Fine. We'll just ramp up sufficient laws and restrictions on access and use of alcohol so that it will be practically impossible to get legally impaired. You won't have a problem with that and how it impacts how people make choices with their lives, will you? After all, the impact of alcohol related deaths is far more significant than losing your shirt speculating on high risk investments.

Not ban cars - effectively prohibit speeding and ban vehicles capable of speeding. Which, given todays GIS technologies, could be easily done and very cheaply at that.

But you're right it won't happen. Because the self serving who demand that how people choose to spend their own money be regulated and controlled by government so their investment vehicles won't take a hit would never tolerate government action that would prohibit much more harmful behavior with alcohol, motor vehicles, etc. Because that would impact THEM and what they do in their lives.

It's also worth noting that in the US one of your civil rights is that of ownership and use of private property, including your money. To the best of my knowledge, driving a vehicle to begin with is a state issued priviledge - not a civil right. Given that, there's a lot more legal justification for restricting what people can manufacture in the way of motor vehicles and how they drive them than there is for restricting how people dispose of their property.

Oh no. You do manage to choke that out once in a while - and only after the facts are shoved in your face repeatedly. But anyone reading through your messages will see the ongoing consistent theme that what the lenders did was criminal, the borrowers were of sub normal intelligence, the borrowers were duped, and what needs to be done holding the lenders responsible for all of this. I'm tempted to go back through your posts and see how many times each post you keep repeating your mantra that the borrowers were duped.

Bugger all about holding the borrowers who committed mortage fraud accountable. Bugger all about regulating them. Bugger all about their criminal activities - which really WERE criminal in many cases (70% mortgage application fraud, remember?). Your theme is all about the lenders and how the US should change it's laws to protect your financial wellbeing over in Australia.

A very one sided view of things to say the least.

Yep. Right on schedule. There's the old "they wuz duped" theme again. Can't go more than two paragraphs before repeating that claim.

"Duped" Which apparently includes the 70% who submitted falsified mortgage applications...

I feel just as warm and fuzzy knowing your acceptance of alcohol in society and the toll of death, violence, disease and broken families it brings leaves us all that much safer. I'll take broke over dead any day, thanks.

I'll make you a deal. If you don't try to dictate how people residing in the US legally regulate their personal activities, I won't try to dictate how people in Australia regulate their personal activities.

I don't take the time to point out the hypocrisy in the arguments you're putting forward to convince you, Lance. Your mind is made up and it's mostly fixated on what's best for your pocket book over in Oz, not how people choose to live their personal lives in a foreign country.

The only reason I take the time to write this is so that readers have the option of seeing something other than the pablum that this is all the fault of the nasty lenders and all those poor innocent borrowers (70% of mortgage applications falsified, remember) were low intelligence people who were duped.

Where people go after that is completely up to them.

[jmdeegan]

ron paul had some OK ideas lance. he also had some pretty bad ones, or at least, ones that wouldn't fly in the general public. but the best candidates don't always get to run in november, as we see all too often.

as for the houses-whether a shanty or a mcmansion, it was a gamble. living beyond one's means can happen if you are making 60k or 600k just the same. it's sadly not too hard.

[Rick]

Speculation or Investment? Better off or worse off?

I dont know Rick, only you, with the benefit of hind sight can answer that. But dont get caught up too much in the " I could have done better" stuff, I am firm believer in that you make the decisions on the day, equipped with the homework you have done on the subject.

If that homework was complete then "that decision" should be a good one that stands the test of time. Works for me.

Oh we're not snivelling too badly - our safe mortgage bought us a house and acre with a view of the mountains of Glacier National Park just a few miles away, about ten minutes from the ski hill, and 20 minutes from flathead lake. We have wild turkeys, deer, elk, foxes, and even bears and cougars wandering through our yard. So we're not full of remorse.

The other place was even more attractive as a place to spend the rest of our lives, but in the end the gamble with the sub prime was more risk than we were willing to undertake. If I can't stand the sub prime speculators and mortgage fraud artists whining about their losses, I'm certainly not going to snivel because I didn't take on one of those loans myself in order to get a house that also had the benefit of being on a wonderful flyfishing river.

The bad decisions I have made have been a result of the homework being incomplete.

Now there you are over in Oz and me here over in the mountains in BC and Montana, and we've both discovered that exact same thing in life. Funny how that kind of works out to being an International Fact Of Life, huh?

Of course, add to that the second root cause, which is not listening to that little warning voice in your head that keeps nagging "I dunno about this..."

Not to be confused with "I do what I do because the voices in my head tell me to", of course...

As for the lessons of the past, I don't know the answers. But, yes, the cycle continues in varying degrees of severity.

If memory serves me correctly, the BC Teachers Federation also lost their shirt speculating on real estate some years ago. Here's a bunch of people with undergraduate and graduate degrees, some with post graduate degrees, and they went up on a rock trying for the big killing. If memory serves me correctly a second time, the BC government then leaped in with regulations and all sorts of other farting and fury to protect that particular class of "duped investor" as well. If my memory hasn't been faulty to this point, these would be the people we hope are teaching children something about accepting the consequences of your decisions.

I farmed for 35 years and have been out of it for 10 years, but I can see the younger generations repeating the same,financial, mistakes, (they look different today, but the fundamentals are the same). But because people get bailed out the lesson is never fully learned, and as farmers are a very small minority (less than 4% & falling, of the population over here) the lesson is wasted anyway.

We're pretty good at subsidizing unprofitable and outright stupid agricultural operations in the southeast corner of BC as well, and there is always some sort of farm aid program out there. We had a very small place while I was growing up, but my father didn't pretend that he was a rancher when he knew it wouldn't pay the bills - he did his 40 hours a week in the mine and then made what he could as he could. I can't see my father taking a handout for any mistake he made in a million years; I think he'd rather crawl in a hole out of sight and die first.

I agree with your comment on the 'Nanny state', but govts nowadays are so poll driven that they jump at shadows, with good, sound or responsible policy decisions taking a back seat to populist, feel good crap that the 'feel good/hand wringing' fraternity clamour for.

Funny how that seems to be international in scope as well, eh?

I do not see this changing anytime soon, as any politician that stands up and tells the voter to take responibility for the consequences of their actions will never get elected....at least over here.

Ditto for Canada and the US. A former Alberta premier explained his success this way: "I see which way the parade is going and then run like hell to get to the front of it".

In life as a general rule, we pretty much get what we deserve. Governments, our personal lives, whatever.

[Mallee Boy]

Oh we're not snivelling too badly - our safe mortgage bought us a house and acre with a view of the mountains of Glacier National Park just a few miles away, about ten minutes from the ski hill, and 20 minutes from flathead lake. We have wild turkeys, deer, elk, foxes, and even bears and cougars wandering through our yard. So we're not full of remorse

That sounds pretty special, we didn't get to Glacier NP, headed south at some point west of there enroute to Yellowstone...from Vancouver.
Will get back there though one day, I've got a mate in Saskatchewan who keeps asking when I'm coming over.
Enjoy it...and please share some of the scenery via the camera.
Cheers
Grant

[Rick]

I can see that you do not want to see my side of the discussion and I am not going to reply further as I could not really care any more what you think. You are not going to changer my mind and it would seem nor am I going to change yours and frankly, I just don't care any more.

Oh you aren't going to respond any more, eh? Well, scratch that claim as well I see. You're off to a good start on your mission of saying one thing while doing another.

Yes, I *should have added to my original post the word *some*, but as with all things they are taken too literally and you are playing semantics to trying add emphasis to your argument, but it doesn't cut it with me.

Okay. So then... these borrowers didn't really know what they were getting into and shouldn't be accountable for it? And you didn't really know the difference between the meaning of the words "some" and "most" and it would be unfair to take the difference in the two meanings too literally and hold you accountable for it?

It isn't a case of personal accountabity for what you do or say, somebody took advantage of you financially or semantically. No, you wuz taken advantage of. Got it.

By the way, in LATER posts you also said things like this:

Many of these poor people are not smart enough to add 2 and 2 to come up with 4.

Is that what you meant to say, or am I taking you too literally again?

Now, regardless of what you *think* or are trying to *imply*, it doesn't take a Harvard graduate to realise that most of the lower socioeconomic community would be in the lower IQ areas.

Assuming that one, it was primarily people below the poverty line who took out these mortgages and, two, poor people have less innate intelligence than the rest of us.

Wow. Just "wow"...

Well, perhaps it takes a Simon Fraser criminology graduate to point out to you that IQ tests have a high cultural bias and are notoriously poor predictors of innate intelligence. Why don't you give your Harvard graduate - or yourself - the Chitling IQ test to see whether you're smart enough to make a mortgage decision? Lower economic class people who fail miserably at the IQ tests dreamed up by Harvard graduates reflecting their Harvard cultural and economic backgrounds do very well on it, so why don't you see how you make out?
TheChitling Intelligence Short Test

I have never been to Harvard in my life. However, I am reasonably sure that Harvard does not tell their students that IQ tests are accurate predictors of innate intelligence across cultural boundaries and economic in their social science departments. No reputable social science program would ever attempt to use IQ tests in the way you're trying to do. I also known that IQ testing was the basis justifying racism against blacks as "too dumb" for much of the first part of the 20th century in the US - they taught us that in university as well.

So your little detour was kind of amusing, but it still leaves me wondering where you came by the information these people were too dumb to understand a mortage. More to the point, just when were these people given IQ tests during the mortgage application process anyways?

You have asked me for facts yet you are now stating that it is a "fact" that the vast majority of the "criminal behaviour" was by the borrowers, no the lenders. Now *you* should give evidence.

Now this is kind of amusing. You wave some kind of vague web paging describing IQ testing in general as some sort of "fact" that these borrowers were of sub normal intelligence and thus were taken advantage of. Not that you'll go so far as to claim that even one was actually given any kind of intelligence testing before or after of course. And that's supposed to be "evidence"???

That's pretty funny, all in all.

However, you want to hear about the percentage of morgage and occupancy fraud? Okay, with Base Point Analytics. Ask for their white papers on application and occupancy fraud. You'll be happy to know they swing both ways and look at mortgage broker fraud as well, so ask for that one too. But to cut to the chase, here's the line you're looking for from the abstract "70% of mortgage early payment defaults can be linked to a significant misrepresentation on the original loan application".

You can go look at the material piled up by the Mortgage Asset Research Institute. They found that almost 60 percent of stated income loans it examined were exaggerated by at least 50 percent and earned their nickname "liar's loans"

If Google is your main source of information in life and you'd prefer not to read paper, go look for news associated with the FBI's Operation Malicious Mortgage - and again, they go after fraudulent lenders as well as borrowers. You may notice that their indictments are for far more borrowers than lenders - of course, you can always blow that off by claiming that the FBI always goes after the poor, sub normal intelligence guy first. But here's a short little outtake for you:

The FBI targets what it calls "fraud for profit," which is related to conspirators who lie to get multiple mortgages and have no intention of repaying them, said Stephen Kodak, an FBI special agent in Washington.
Cases of individuals who lie about their income to buy a house they intend to live in, or commit "fraud for housing," occur more often but account for less money lost, Kodak said. The FBI generally does not go after fraud for housing, he said.

When you get through all of that, give me a call and I'll send you some more. In the meantime, seeing as you seem to think you have the IQ smoking gun there somewhere, could you please tell me where I could read about where all these borrowers were determined to have sub normal intelligence as you're trying to make us all believe? I'd like to know how many were tested for one thing.

The point is, the lenders have the facts of these people's incomes in front of them and they *know* that they could never afford the loans. The lenders have the facts as to whaqt the outcomes of these dealings and yet they *still* gave the loans for a short term gain to them.

We've gotten this far and you still can't acknowledge the percentage of loan applications that contained false and misleading mortgage application information? Income overvalued by 50% in 60% of loan information given to lenders, and yet in your mind it is still the lender's fault? Sheesh.

And of course, God forbid we should ever expect these loan applicants to take personal responsibility for their financial decisions - or the fraudulent information they submitted to lenders to obtain the loan in the first place. God no - it's still the lender's fault.

I can guarantee that these lenders fast talked, more than likely blinded them with figures and cojoled these borrowers into these loans by coercing them that they would be ok in being able to pay them off.

You can guarantee that, huh? Okay, let's see you prove that claim.

I don't think you can guarantee or prove that any more than you can the intelligence testing of mortgage applications.

Are you trying to tell me that the lenders could not see that the borrowers had incomes that would be unable to pay these loans off? That is the biggest joke yet.

If you could be good enough to tell me how they knew the mortgage applications the borrowers gave them were falsified, often supported by fake pay stubs that were being sold over the Internet, etc, I'd sure like to hear that story - I bet it's a good one.

Actually, I am very much pro American, so you can pull your head in there.

"Like many Americans you seem to live in a vacuum."

Boy, if that's your idea of being Pro American, I sure hate to think of what you'd say about many Americans if you didn't like them.

You're a joke.

Why thank you Mr. IQ Test. I am cut to the quick, wounded beyond any hope of recovery, pychologically devastated in fact. Quick, somebody fly me to a nanny state where somebody will kiss me and make it all better.

Relax, I'm sitting here laughing - although I should be either working or going to bed at this hour of the night.

You seem to think that I am happy about people dying from alcohol related issues.

No. I think you're just patently inconsistent in how far you want the government to regulate the personal decisions and lifestyles of individuals in what they do with their lives and the harm that their decisions cause. I think you don't care on the one issue, but want to see a foreign government regulate how it's citizens live their lives on the other because of the financial implications for you.

My proposal is as much a concern for those who are being duped,

There's that "duped" word again...

Much of this could all have been avoided with some guidelines as to whom these lenders should lend money to.

Your not talking about guidelines, you're talking about yet more regulations on what people choose to do in investing THEIR money. Setting rates for what is ursary and fraud is one thing; telling you or anybody else how they should run their business and what financial decisions are safe or not is quite another.

And of course, as usual, you're not talking about the borrowers taking any personal responsibility for this.

Nanny state.

You keep glossing over this point. There are already laws governing the lending of money(so much for your no nanny state idea), so what is wrong with just tightening up these laws to ensure that it doesn't cause a meltdown of the US economy again?

Can I continue to disagree with your premise that this is the cause of the US Economic woes.

Here you go again saying that there was *more* wrong doing by the borrower than the lender but there is no *absolute* proof of this.

Well there is that embarrassing figure of 60 or 70 percentage of mortgage applications having false information in them. Can you point me to anything that suggests a greater number of lenders were engaged in criminal lending practices?

I'm also willing to bet - now that you're into "proof" mode - that there's a lot more proof in existance about that percentage of mortgage application fraud than there is to your claim that all these lenders had sub normal IQ's

Didn't you just say that you were Canadian? Is that not alien to the US too?

Not when you have an immigrant visa in your passport and live under US laws for nearly half the year and pay taxes there. So yes, I feel some resentment that some foreigner living on another continent, not paying those taxes and not living under those laws, should lecture US residents in how the government should treat them as children so his financial security is enhanced.

It won't be treating everyone like children at all.

Of course it is. We tell little children whether they can put their coins in a piggy bank or buy a chocolate bar - not adults.

Over here, anyways. So far.

A few regulations to avoid as many of these specualtive loans would only affect those that should not take these loans out in the first place. No big deal.

Yeah, and income tax was only supposed to be for the duration of the war. "Just a few regulations"... oh God, how many regulatory nightmares have been started and sold to the public using that line.

If I WANT to risk my money in a fund underwriting speculative loans, mining stocks, pork belly futures, or any other venture where I accept high risk in return for hopes of high returns, that's MY business, not the governments or yours far away on another continent. It's MY money to risk or not risk as I see fit - not yours.

It's not stopping you from investing in anything. How would a law with guidelines on tightening up this sort of lending practice affect what you invest in?

First you say you want the US to pass regulations that will prevent these kind of high risk loans. Then you turn around and try and claim it won't stop me from investing in anything. But of course, that's exactly what it would do - prevent me from investing in high risk loans if I decide that's where I want to put my money.

You made it exactly one paragraph before contradicting what you claimed you wanted to do and what the effect would be.

Because it is the *lender* who has the facts and figures and the final say as to whether the give the loan or not, it is not the borrower that has that power. So the lender has to take the responsibility that they lend to people that *have* the wherewithall to be able to repay the loan and *not* done on pure specualtion which is driven by his/her urge to get commissions.

Once again, we pretend that the lender didn't fill out the mortgage application with their income, assets, debt, etc and sign it claiming that all the information contained herein was true. And we pretend that over half of the loan applications weren't found to have falsehoods and misrepresentations.

Apparently, the lender's crystal ball telling them who was lying on their mortgage application and who wasn't hasn't been working too well lately. And so, yet again it is the lender who is the bad guy here.

I mean really, most take out a loan with the desire to pay it back and a place to live rather than be turfed out onto the street with no place to live.

Ah yes, the other brand of Kool Aid - they were all poor as well as sub normal intelligence.

I still say that the majority of these loans were done where they shouldn't have been done to a section of the market which was a bordeline market to begin with. If it weren't norderline, then there wouldn't be this problem.

Meaning, you DO want to have the legal right to tell me whether I can risk my money in high risk loans if I so choose.

You want the power through the government to control what I do with my money to prevent me from investing in high risk mortages if that happens to be my choice. I don't want that. Simple.

It is a few guidelines for lending, over and above what there already is, that would avoid a majority of the result we see.

You're not asking for guidelines. You're asking for laws that would have the government prevent me from investing MY money in high risk loans if I chose that as an investment vehicle. That is not a "guideline", and I don't think your problem with language extends to the point you don't know the difference between a guideline and a law.

A few guidelines would avoid this.

You sure like that word "guideline" don't you? Sounds so much more innocent than "investment prohibition", doesn't it?

You want the power to prevent me from investing my money in high risk funds. I don't think you're entitled to have the power to decide whether I risk my money or not.

You seem to think that this *has* to be the thin edge of the wedge to total government domination.

No. I just don't think you deserve or are entitled to for one minute have any say in whether I choose to invest my money in high risk investments. In other words, keep your nose out of my business and my investment decisions - particularly from the distance of another continent where you don't have to live under those laws or the bureaucracy.

You still have the right to vote if you think that the government gets too much power over you.

Keep your nose out of my financial affairs and my decisions on where I choose to risk my money - or whether I want to take out a high risk loan, for that matter. I'm an adult and I don't need the government or somebody in another country telling me how to spend my money or how I should borrow money.

See above. It is still the same. A law setting borrowing guidelines would avoid much of this.

Prohibitions are not "guidelines".

What could a borrower do on his/her application form for a loan that would be a crime? He/she would have to overstate income and not advise of any other borrowings. A simple law would avoid that.

What they COULD do is what 60 - 70% of them do - submit a mortgage application with false information. And it was and already is a crime.

There are laws? Then they are toothless and don't work. They need tightening up. Simple.

Ah yes, the nanny state. If what you have doesn't stop it, then pass some more laws and restrict personal freedom any more. If you think bank and wire fraud laws are toothless in the US, then I guess you think you think 30 years in jail is a joke too.

I am more than sure that many these people were coerced into these loans that were already borderline by commission hungry lenders.

You know that just as surely as you know that intelligence tests determined that all those borrowers had sub normal intelligence levels, do you?

Again, guidelines would avoid much of this. Do not sell to borderline applicants.

The prohibitions you want are not guidelines. And I thought you said it wouldn't prevent me from doing what I wanted in how I invest my money. But now you're telling me I can't invest in high risk mortgages.

You can't keep your story straight to begin with. You use the term "guideline" when what you're talking about is a prohibition. And THAT's why I don't want your hands on my money and interfering in what I do and don't choose to do as far as borrowing money or investing money.

Your argument is flawed because you are saying that the government *doesn't* regulate anything but it is a fact that they *do* regulate most things.

I didn't say the government doesn't regulate anything. What I am saying is that you and people like you want laws that prevent me from making decisions that might cause me financial harm, but you don't want laws that eliminate the risk of me causing myself personal harm or death - like drinking for example.

You don't have an argument in this respect. You just have an armload of inconsistent hypocrisy. If you're going to meddle in people's affairs and the decisions they make, then don't just pick and choose what you personally like and don't like. If you're going to mommy people from cradle to grave instead of letting them make their own decisions regarding risk, then bloody well be consistent about it - even if that approach eventually encroaches on what you would like to do.

You are trying to punch holes in my argument by saying an all or none scenario, but that is exactly what it *isn't*.

You're absolutely right. It's a hypocritical approach where we want the government to pass prohibitions on how people invest their money to protect them from financial harm, but don't pass laws to prevent them from access to things like alcohol that might cause their death - because those laws might affect the things WE might like to do in life.

It's inconsistent as hell. More than that, it's hypocritical.

My argument has been consisitent throughout. Put laws in place so that these sort of loans are not written in the first place. Simple.

Consistent, huh? Here, check this out:
It's not stopping you from investing in anything.
followed by:
Put laws in place so that these sort of loans are not written in the first place.

"Oh no, I'm don't want laws that will stop you from investing in anything, I just want laws in place that won't allow you to invest in those sorts of investment vehicles".

As I said, you can't even keep your story straight. And that's why I don't want you or people like you with their hands and their noses anywhere near my money or with any authority to control how I borrow or how I invest it. You can't be trusted. You say one thing and then promptly promise another, and you're a statist on top of that.

If you really believe that the subprime market is not going to help ruin the US economy, then you really have your head in the sand.

I never said the sub prime loans wouldn't badly harm the economy -. I disagreed with your claim that it was going to "ruin the US economy like these home defaulters are". However, it now seems you're modifying that claim as well. Fine.

Now, unlike you, when I say I won't respond to you further, I really mean it. Unlike you, I don't say one thing and then do something else. So unless you do happen to magically produce these tests that determined that all these lenders were handicapped by low levels of intelligence, I really don't think I have anything further to add to this as far as you're concerned. I don't think it will surprise anybody when I say I don't think you can produce anything like that, and you basically pulled that BS claim out of your nether regions to bolster your argument that these people were all duped.

In the final analysis, you're trying on the one hand to tell Americans that you don't want laws that will restrict were they can and can't invest their money or how they can borrow money. And then in practically the same paragraph you're talking about guidelines that would prevent them from investing in these kind of high risk mortgages, or getting one for that matter if they so choose.

That kind of duplicity leads me to say one last time: keep your hands off my money and out of my financial decisions. I don't trust you.

[Rick]

That sounds pretty special, we didn't get to Glacier NP, headed south at some point west of there enroute to Yellowstone...from Vancouver.

Well, unless you turned south early and went through Coeur d'Alene (which is a beautiful lake in itself), you just missed it. And Glacier is a pretty viable route to Yellowstone as well, although nowhere near as crowded. Kind of nice to be able to park on the top of the Continental Divide and start hiking in the alpine without earning the sweat equity. Kind of reminds me of a high mountain pass in... Switzerland I think... where a bunch of highways come together. Name escapes me right now, but same thing, park at the top in the Alpine and start hiking. Heartbreakingly gorgeous. And eye candy for photographers.

Will get back there though one day, I've got a mate in Saskatchewan who keeps asking when I'm coming over.

Saskatchewan? Oh God... run away, run away (sorry you Saskatchewan guys... but it's so FLAT). What's that Saskatchewan natives say? "It's so flat you can watch your dog run away for three days."

Next time you're through, drop a line while you're in the area and we'll try to guide you in to some camera fodder up here in the mountains - which is kind of a no brainer effort no matter which direction you walk in around here. Drive to the Top of Going To The Sun highway. Park. Start walking.

Simple. But Jewel Basin will do just fine as well. Or the Bitterroots. Or the Purcells just to the north. Or the Bugaboos about four hours away. You get the idea...

Enjoy it...and please share some of the scenery via the camera.

Here's my confession. I've been so busy busting my ass on this mapping contract I foolishly took out here in the oil patch this year that I not only missed most of an epic year of skiing, but I haven't had my K10d in the mountains since I bought it late last fall.

I am so ashamed...

However, the bright side is I have told them that September 1st is absolutely it, period, full stop, going home. I think I've had something like twelve days off in total since the end of January, and most days are 16 hour days out here (except tonight where I am shamelessly dogging it and paying the price in lost billable hours).

So 1st of September I go home with the wifey driving her new Jeep, my new lens toys, a big chunk of cash thrown at the principle of the mortgage, the first day of hunting season, the best flyfishing and backpacking weather of the whole season ahead of me, some spending coin in the bank, and no need to work again if I don't want to for four or five months anyways. Life is going to be so, so sweet! Playtime! Assuming all goes as planned, of course...

I suspect one or two pictures might come out of THAT!

Yeah... you gotta get back here to the Rockies at least once with a camera. Middle September to early-mid October is just about ideal for weather, colors, etc.

[Mallee Boy]

I have dug out the map to re-trace our route. Stayed a night in Osoyoos and then crossed into the US at Cascade on Hwy 395.

I tend to avoid major roads if I can for no other reason than we like to stop and take photos and smell the roses etc....which gets a bit hard on interstates.

Understand the Saskatchewan bit....but he is a good mate...so you do what youhave to do.

Will certainly take you up on your offer, and should our paths cross, the first drink is on me.
Cheers
Grant.

[Rick]

I have dug out the map to re-trace our route. Stayed a night in Osoyoos and then crossed into the US at Cascade on Hwy 395.

I'm familiar with that route. If photography had been foremost in your mind, and if you do it again, a better route is to drop straight south out of Vancouver headed towards Seattle, then hang a left and go East at Sedro Wooley. I don't remember the highway names, but you go over all the passes and long and winding roads on that route to the Rockies. You have to cross the plains of Washington, of course, but I think the scenery options are better than Hwy 3 in BC if you intend to head south at Cascade instead of continuing in BC right up to Cranbrook/Eastport or Elko/Rooseville before heading south.

On the other hand, if the peaches are ripe, that's reason enough to stay in BC and drive through Osoyoos and Creston and gorge on fresh fruit straight off the trees...

I tend to avoid major roads if I can for no other reason than we like to stop and take photos and smell the roses etc....which gets a bit hard on interstates.

Then the Sedro Wooley route East is your meat. The Trans Canada over the Coquihalla Pass and then through Rogers Pass and Canada's Glacier Park would make a great route as well. That would take you through the lake country, and if you got off the Trans Canada at Revelstoke and headed south along that tiny little road along Kooteney Lake you'd get really get an eyefull.

Understand the Saskatchewan bit....but he is a good mate...so you do what you have to do.

Lure him to the mountains...

Will certainly take you up on your offer, and should our paths cross, the first drink is on me.

You'll have to make that the first two - American beer is like sex in a canoe, if you get my drift.

[Lance B]

Oh you aren't going to respond any more, eh? Well, scratch that claim as well I see. You're off to a good start on your mission of saying one thing while doing another.

Hahaha. Too many of your cliams and arguments were naive and your ridiculous replies meant that I needed to respond and do again. Your responses really are a joke and designed to deflect from the issues in some misguided way to score cheap points.

Okay. So then... these borrowers didn't really know what they were getting into and shouldn't be accountable for it? And you didn't really know the difference between the meaning of the words "some" and "most" and it would be unfair to take the difference in the two meanings too literally and hold you accountable for it?

It isn't a case of personal accountabity for what you do or say, somebody took advantage of you financially or semantically. No, you wuz taken advantage of. Got it.

By the way, in LATER posts you also said things like this:

Many of these poor people are not smart enough to add 2 and 2 to come up with 4.

Is that what you meant to say, or am I taking you too literally again?

Assuming that one, it was primarily people below the poverty line who took out these mortgages and, two, poor people have less innate intelligence than the rest of us.

Wow. Just "wow"...

Well, perhaps it takes a Simon Fraser criminology graduate to point out to you that IQ tests have a high cultural bias and are notoriously poor predictors of innate intelligence. Why don't you give your Harvard graduate - or yourself - the Chitling IQ test to see whether you're smart enough to make a mortgage decision? Lower economic class people who fail miserably at the IQ tests dreamed up by Harvard graduates reflecting their Harvard cultural and economic backgrounds do very well on it, so why don't you see how you make out?
TheChitling Intelligence Short Test

And this test would help them work out a home loan how? *Completely irrelevent to working out a home loan and an argument by you to deflect the issues. Another joke thought by you.

Of course there will be *some* people in lower socioeconomic circumstances that are not low IQ, but the majority will be.

I have never been to Harvard in my life.

Don't worry, it shows.

However, I am reasonably sure that Harvard does not tell their students that IQ tests are accurate predictors of innate intelligence across cultural boundaries and economic in their social science departments. No reputable social science program would ever attempt to use IQ tests in the way you're trying to do. I also known that IQ testing was the basis justifying racism against blacks as "too dumb" for much of the first part of the 20th century in the US - they taught us that in university as well.

Hahaha. Another attempt to discredit by deflecting the argument.

So your little detour was kind of amusing, but it still leaves me wondering where you came by the information these people were too dumb to understand a mortage. More to the point, just when were these people given IQ tests during the mortgage application process anyways?

Why on earth would there be an IQ test on a mortgage application? Where did I say that? Another attempt to deflect the argument.

Now this is kind of amusing. You wave some kind of vague web paging describing IQ testing in general as some sort of "fact" that these borrowers were of sub normal intelligence and thus were taken advantage of. Not that you'll go so far as to claim that even one was actually given any kind of intelligence testing before or after of course. And that's supposed to be "evidence"???

If these people had the relevent IQ levels they would not have gotten themselves into this mess *regardless* of what you would *like* to think. As I linked to, but you so ignored:

Subprime cost to banks 'will spiral sixfold' | This is Money

Excerpt:
"Many will go to jail for fiddling the books" Only a lender can fiddle the books.

Bernanke says sub-prime crisis could cost $100bn - Times Online

Excerpt:
"A day earlier he had bowed to sustained pressure from Congress and said that he would introduce new rules to cut down on the kind of “predatory” practices that had resulted in home loans being made to high-risk borrowers and prompted a surge in mortgage defaults"

Read: "Predatory" practices that had resulted in home loans made to high-risk borrowers and prompted a surge in defaults.

It is the lenders who are the target of blame as pointed out by these links and all the newspapers. You can say all you like and try to bluster and rant all you like, but at the end of the day it is the lenders who should take much of the responsibility of these loans.

That's pretty funny, all in all.

However, you want to hear about the percentage of morgage and occupancy fraud? Okay, with Base Point Analytics. Ask for their white papers on application and occupancy fraud. You'll be happy to know they swing both ways and look at mortgage broker fraud as well, so ask for that one too. But to cut to the chase, here's the line you're looking for from the abstract "70% of mortgage early payment defaults can be linked to a significant misrepresentation on the original loan application".

You can go look at the material piled up by the Mortgage Asset Research Institute. They found that almost 60 percent of stated income loans it examined were exaggerated by at least 50 percent and earned their nickname "liar's loans"

If Google is your main source of information in life and you'd prefer not to read paper, go look for news associated with the FBI's Operation Malicious Mortgage - and again, they go after fraudulent lenders as well as borrowers. You may notice that their indictments are for far more borrowers than lenders - of course, you can always blow that off by claiming that the FBI always goes after the poor, sub normal intelligence guy first. But here's a short little outtake for you:

The FBI targets what it calls "fraud for profit," which is related to conspirators who lie to get multiple mortgages and have no intention of repaying them, said Stephen Kodak, an FBI special agent in Washington.
Cases of individuals who lie about their income to buy a house they intend to live in, or commit "fraud for housing," occur more often but account for less money lost, Kodak said. The FBI generally does not go after fraud for housing, he said.

When you get through all of that, give me a call and I'll send you some more. In the meantime, seeing as you seem to think you have the IQ smoking gun there somewhere, could you please tell me where I could read about where all these borrowers were determined to have sub normal intelligence as you're trying to make us all believe? I'd like to know how many were tested for one thing.

You *still* don't get it. It matters *NOUT* who defaulted but *who* wrote these dodgy loans in the first place. It was the lenders who coerced and pushed these loans through in order to get their fat commissions and they did this to the those most vulnerable of our society and those with the least resources in order to pay back the loans. This is the whole point of it. If there were laws *and/or* guidelines put in place then this would be less likely to happen. You keep missing this point in order to score points.

We've gotten this far and you still can't acknowledge the percentage of loan applications that contained false and misleading mortgage application information? Income overvalued by 50% in 60% of loan information given to lenders, and yet in your mind it is still the lender's fault? Sheesh.

Hahaha. *You* still don't get it do you? Why weren't these so called incomes checked? The lenders didn't check because they didn't want to!!!!! They *wanted* to see these incomes inflated 50% and 60% *becuase they would then have the ammunition to say that what they did *was* above board in order to get their fat commissions. I am astounded that you can't see this. I simple law that *requires* *proof* of income rather than just what the borrower tells the lender is all that would be required.

You live in la la land if you think these lenders were going to forego a fat commission in order to put down the correct figures. Due to the fact that there are obviously *no* laws governing this type of behaviour, the lender is free to coerce or suggest to the borrower that they inflate their incomes by these amounts in order to get the loan approved.

And of course, God forbid we should ever expect these loan applicants to take personal responsibility for their financial decisions - or the fraudulent information they submitted to lenders to obtain the loan in the first place. God no - it's still the lender's fault.

You can guarantee that, huh? Okay, let's see you prove that claim.

No, let's see yours as I don't have to as I have just proved it above and you even said it yourself

I don't think you can guarantee or prove that any more than you can the intelligence testing of mortgage applications.

If you could be good enough to tell me how they knew the mortgage applications the borrowers gave them were falsified, often supported by fake pay stubs that were being sold over the Internet, etc, I'd sure like to hear that story - I bet it's a good one.[/QUOTE]

Laws would stop this from happening. Here is a quote from another source:

"There has been plenty of talk about “predatory lending,” but “predatory borrowing” may have been the bigger problem. As much as 70% of recent early payment defaults had fraudulent misrepresentations on their original loan applications. One study looked at more than three million loans from 1997 to 2006, with a majority from 2005 to 2006. Applications with misrepresentations were also 5 times as likely to go into default.


Many of the frauds were simple rather than ingenious. In some cases, borrowers who were asked to state their incomes just lied, sometimes reporting five times actual income; other borrowers falsified income documents by using computers. Too often, mortgage originators and middlemen looked the other way rather than slowing down the process or insisting on adequate documentation of income and assets. As long as housing prices kept rising, it didn’t seem to matter."

Read: "mortgage originators and middlemen looked the other way rather than slowing down the process or insisting on adequate documentation of income and assets. As long as housing prices kept rising, it didn’t seem to matter."

I rest my case.

"Like many Americans you seem to live in a vacuum."

Boy, if that's your idea of being Pro American, I sure hate to think of what you'd say about many Americans if you didn't like them.

Many Americans do live in a vacuum, but that doesn't mean that I don't like America or Americans. Why does that follow. Another weak attempt to try to discredit by deflecting the argument in order *try* to score points. Poor, very poor.

Why thank you Mr. IQ Test.

Now we are name calling in order to score cheap points? Childish.

I am cut to the quick, wounded beyond any hope of recovery, pychologically devastated in fact. Quick, somebody fly me to a nanny state where somebody will kiss me and make it all better.

Sarcasm in order to score chaep points? Sad.

Relax, I'm sitting here laughing - although I should be either working or going to bed at this hour of the night.

No. I think you're just patently inconsistent in how far you want the government to regulate the personal decisions and lifestyles of individuals in what they do with their lives and the harm that their decisions cause. I think you don't care on the one issue, but want to see a foreign government regulate how it's citizens live their lives on the other because of the financial implications for you.

You mean like the US going to war in Ahghanistan to stop terrorism? Hmmm.

There's that "duped" word again...

Your not talking about guidelines, you're talking about yet more regulations on what people choose to do in investing THEIR money. Setting rates for what is ursary and fraud is one thing; telling you or anybody else how they should run their business and what financial decisions are safe or not is quite another.

You still have no idea.

And of course, as usual, you're not talking about the borrowers taking any personal responsibility for this.

And where did I say that the borrowers should *not* take any responsibility? The proposed laws would stop either side of the ledger from taking advantage of the situation. That is my whole point, to stop anyone from taking advantage of what is a poor system of regulation. You just choose not to see that to suit your flawed argument.

Nanny state.

Can I continue to disagree with your premise that this is the cause of the US Economic woes.

Haha. You can do what you like. Your hole is getting deeper.

Well there is that embarrassing figure of 60 or 70 percentage of mortgage applications having false information in them. Can you point me to anything that suggests a greater number of lenders were engaged in criminal lending practices?

I did, read a few paragrahs back.

I'm also willing to bet - now that you're into "proof" mode - that there's a lot more proof in existance about that percentage of mortgage application fraud than there is to your claim that all these lenders had sub normal IQ's

Can you supply any to the contrary?

Not when you have an immigrant visa in your passport and live under US laws for nearly half the year and pay taxes there. So yes, I feel some resentment that some foreigner living on another continent, not paying those taxes and not living under those laws, should lecture US residents in how the government should treat them as children so his financial security is enhanced.

Maybe *you* do need a lesson. Just because it's America and they are the biggest economy doesn't mean that they can't learn a few things. Is it such a bitter pill to swallow that there are some things that the US could do better? I am sure there are many things that we could all do better.

Of course it is. We tell little children whether they can put their coins in a piggy bank or buy a chocolate bar - not adults.

What a ridiculous parallel to make. Is it really wrong to want to make sure that these lenders and borrowers abide by guidelines(laws if you like, seeings as we must play with semantics) so as they both make sure that mortgages are true? Again, this will have no impact on you, so why the concern?

Over here, anyways. So far.

Yeah, and income tax was only supposed to be for the duration of the war. "Just a few regulations"... oh God, how many regulatory nightmares have been started and sold to the public using that line.

If I WANT to risk my money in a fund underwriting speculative loans, mining stocks, pork belly futures, or any other venture where I accept high risk in return for hopes of high returns, that's MY business, not the governments or yours far away on another continent. It's MY money to risk or not risk as I see fit - not yours.

First you say you want the US to pass regulations that will prevent these kind of high risk loans. Then you turn around and try and claim it won't stop me from investing in anything. But of course, that's exactly what it would do - prevent me from investing in high risk loans if I decide that's where I want to put my money.

You mean you *want* to be able to invest in high risk ventures by either lying about your income or the lender making sure that you lie about your income and then overlooking these lies? This is exactly what you are saying and exactly you want to be able to do and what I am saying shouldn't be allowed to happen. Unbelieveable.

You made it exactly one paragraph before contradicting what you claimed you wanted to do and what the effect would be.

Once again, we pretend that the lender didn't fill out the mortgage application with their income, assets, debt, etc and sign it claiming that all the information contained herein was true. And we pretend that over half of the loan applications weren't found to have falsehoods and misrepresentations.

Apparently, the lender's crystal ball telling them who was lying on their mortgage application and who wasn't hasn't been working too well lately. And so, yet again it is the lender who is the bad guy here.

Ah yes, the other brand of Kool Aid - they were all poor as well as sub normal intelligence.

Meaning, you DO want to have the legal right to tell me whether I can risk my money in high risk loans if I so choose.

You want the power through the government to control what I do with my money to prevent me from investing in high risk mortages if that happens to be my choice. I don't want that. Simple.

Two points.
One, when it affects everyone else, yes I think it appropriate. This is what is called good for the rest of us.
Two, when you or the mortgage broker has to lie in order to do it, yes. This is what is called fraud.

You're not asking for guidelines. You're asking for laws that would have the government prevent me from investing MY money in high risk loans if I chose that as an investment vehicle. That is not a "guideline", and I don't think your problem with language extends to the point you don't know the difference between a guideline and a law.

You sure like that word "guideline" don't you? Sounds so much more innocent than "investment prohibition", doesn't it?

Ok, so they're laws, even better. This will stop the fraud. And the point of another cheap point score?

You want the power to prevent me from investing my money in high risk funds. I don't think you're entitled to have the power to decide whether I risk my money or not.

No. I just don't think you deserve or are entitled to for one minute have any say in whether I choose to invest my money in high risk investments. In other words, keep your nose out of my business and my investment decisions - particularly from the distance of another continent where you don't have to live under those laws or the bureaucracy.

Keep your nose out of my financial affairs and my decisions on where I choose to risk my money - or whether I want to take out a high risk loan, for that matter. I'm an adult and I don't need the government or somebody in another country telling me how to spend my money or how I should borrow money.

I am not putting my nose in it, the government will be.

When you lie to do it, then yes that should be stopped. That is fraud.

When your decision affects the rest of us, the yes to that also. Your individual risky investments will not affect the rest of us in the big scheme of things, but when hundreds of thousands of people make the same risky investment under fraudulent means, then that should be stopped. You don't live in a vacuum, even you said this yourself.

When the stockmarket is going through a large sell, the government puts a stop sell on the market so as to not cause panic selling. This is protecting the majority and what society is all about.

Prohibitions are not "guidelines".

What they COULD do is what 60 - 70% of them do - submit a mortgage application with false information. And it was and already is a crime.

So, it is ok for either the lender or the borrower to falsify documents? At the moment, it seems the laws you have did not prevent this. Maybe some will be prosecuted for lying on their applications but it's too late the horse has bolted. Nip it in the bud and stop it *before* it happens.

Ah yes, the nanny state. If what you have doesn't stop it, then pass some more laws and restrict personal freedom any more. If you think bank and wire fraud laws are toothless in the US, then I guess you think you think 30 years in jail is a joke too.

Where did I say that bank wire fraud was toothless? Where did I say stop personal freedom? More untruths to deflect the argument in order to score cheap points.

You know that just as surely as you know that intelligence tests determined that all those borrowers had sub normal intelligence levels, do you?

The prohibitions you want are not guidelines. And I thought you said it wouldn't prevent me from doing what I wanted in how I invest my money. But now you're telling me I can't invest in high risk mortgages.

If you lie, then yes. You're going all over the place and shooting yourself in the foot. Stop now bwfore you dig too deep a hole.

You can't keep your story straight to begin with. You use the term "guideline" when what you're talking about is a prohibition. And THAT's why I don't want your hands on my money and interfering in what I do and don't choose to do as far as borrowing money or investing money.

I didn't say the government doesn't regulate anything. What I am saying is that you and people like you want laws that prevent me from making decisions that might cause me financial harm, but you don't want laws that eliminate the risk of me causing myself personal harm or death - like drinking for example.

I couldn't really give a toss about whether you harm yourself financially, just that your actions do not impact on me or *anyone else*. You are very insular in your outlook and seem to think that you are the most important and stuff everyone else.

You don't have an argument in this respect. You just have an armload of inconsistent hypocrisy. If you're going to meddle in people's affairs and the decisions they make, then don't just pick and choose what you personally like and don't like. If you're going to mommy people from cradle to grave instead of letting them make their own decisions regarding risk, then bloody well be consistent about it - even if that approach eventually encroaches on what you would like to do.

You're absolutely right. It's a hypocritical approach where we want the government to pass prohibitions on how people invest their money to protect them from financial harm, but don't pass laws to prevent them from access to things like alcohol that might cause their death - because those laws might affect the things WE might like to do in life.

It's inconsistent as hell. More than that, it's hypocritical.

Actually I have been very consistent throughout. All I wanted to do is to tighten up the laws so that these high risk loans will be very unlikely to happen in the future. You are going all over the place talking about government intervention into your life which *won't* happen under these proposed laws. These laws will *stop* fraud being committed and so, if you like to invest by the use of fraud, then yes, you would be stopped from doing it. If you don't use fraud, then you are free to invest in anything you like. Simple.

Consistent, huh? Here, check this out:
It's not stopping you from investing in anything.
followed by:
Put laws in place so that these sort of loans are not written in the first place.

"Oh no, I'm don't want laws that will stop you from investing in anything, I just want laws in place that won't allow you to invest in those sorts of investment vehicles".

As I said, you can't even keep your story straight.

As I said above, my story has been very consistent, unlike yours which switching from one agenda to the other and using deflective arguments to cloud the issue.

And that's why I don't want you or people like you with their hands and their noses anywhere near my money or with any authority to control how I borrow or how I invest it. You can't be trusted. You say one thing and then promptly promise another, and you're a statist on top of that.

I can't be trusted? You don't even know me. You're a joke deflecting the argument again in some misguided belief that you will score cheap points.

I never said the sub prime loans wouldn't badly harm the economy -. I disagreed with your claim that it was going to "ruin the US economy like these home defaulters are". However, it now seems you're modifying that claim as well. Fine.

Now, unlike you, when I say I won't respond to you further, I really mean it. Unlike you, I don't say one thing and then do something else. So unless you do happen to magically produce these tests that determined that all these lenders were handicapped by low levels of intelligence, I really don't think I have anything further to add to this as far as you're concerned. I don't think it will surprise anybody when I say I don't think you can produce anything like that, and you basically pulled that BS claim out of your nether regions to bolster your argument that these people were all duped.

In the final analysis, you're trying on the one hand to tell Americans that you don't want laws that will restrict were they can and can't invest their money or how they can borrow money. And then in practically the same paragraph you're talking about guidelines that would prevent them from investing in these kind of high risk mortgages, or getting one for that matter if they so choose.

See, you are either choose to ignore the point or do so intentionally. I am saying that these laws would stop fraudulent actions and thus would stop these loans being written in the first place. *Who* committed the fraud is virtually irrelevent as the result is the same. *You* are the one who has

That kind of duplicity leads me to say one last time: keep your hands off my money and out of my financial decisions. I don't trust you.

LOL. I want nothing to do with your money. I hope you *do* take some high risk investments, just *try* as hard as you can not to lie to the creditors when you do it. Do you think you could manage that? Or are you going to twist these words to mean something that it's not also?

[tranq78]

Since I started this thread, allow me to express my opinion. Lance and Rick are both talking about 2 separate things. Let to try to explain in my poor way...

1) Lance's main point revolves around a concept called "duty of care" by a lender to a borrower. It is actually one of the main tenets of lending (for those who have studied this, it follows the "know your borrower" rule). It is a quaint, old fashioned concept that seems to have been forgotten in recent times. The basic point is the financial institution lending the money has a basic duty to make sure the loan is not used for an imprudent purpose and is structured in a conservative way so as to not cause grief to the borrower.

Duty of care is not about a nanny state or treating people like children. It presumes the lender is willing to educate and be prudent. The borrower in turn is presumed to be rationale and an adult.

So what went wrong? As Grant has pointed out human nature got in the way. Simply put greed overwhelmed common sense. [If some stranger offers to sell you half a dozen new FA200 macros for $50 each your common sense quickly overcomes the initial pulse of greed, right?].

Back to my point. There was greed on both the financial institutions and the people taking out mortgages. Risk was completely ignored. But it wasn't just the U.S. There was all sorts of financial craziness going on all over the world. Examples of financial dodginess are surfacing everywhere from Australia to Europe. Subprime was simply a catalyst that set of a chain of catastrophes worldwide.

I am sympathetic to many hard working people who didn't participate in this but have been caught in the ensuing financial maelstrom. It is quite sad to read some of their stories.

2) One of Rick's main points talks to the concept of "moral hazard". Wall Street paid itself $100 billion in bonuses (on top of salary) over the last decade (yes, billion$). Investment bankers outside the U.S. also got billions & billions in bonuses. These people aren't going to pay the money back, ever. But the losses caused by their financial recklessness are being capped through the actions of central banks & governments worldwide (ie. ultimately, the hardworking taxpayer). As for the people who took on excessive risk and poorly structured mortgages, betting on ever rising housing prices, well the government is now taking steps to help them out too.

So here we have a living example of moral hazard. When ultimately the taxpayer/government mitigates losses to both financial institutions and mortgagees. However both the institutions and homeowners would have gotten to keep all the financial upside if their risky bets paid off! Yuck. If you think this is more like Dukes of Hazzard, you are not alone.

3) Last point. Items 1 & 2 refer to the abundance of moral turptitude that has surfaced. It is not illegal however.

Both Lance and Rick have talked about fraudulent activity. This, in my mind, is kind of a separate issue from the first 2 items. I don't think either of you are sympathetic to the lender or the borrower if they engaged in illegal behavior.

[Mallee Boy]

Hi George (tranq78),
Good to hear from you.

(Tranq78 works in the finance industry, so his comments / observations should be taken in that context.)

You are dead right George when you say it is world wide and not just restricted to the US. Our press here is full of stories of financial stress all blamed on the 'sub prime' crisis in the US...whether it is or not is probably open to some debate, as I do not doubt that it would be a handy cover for other mis-management.

As you know, Jason is in Hong Kong and talks of it being a very difficult and volatile trading environment where previous 'rules' and trading patterns mean little. They have done ok through the turmoil, but there are reports of massive losses and collapses. Interestingly he is not convinced it is all over yet either.

It has been interesting following the debate between Lance & Rick, and the saddest part of it is that many people will get hurt by this, for what ever reasons, and many more will recover, rebuild and go on....until next time.

I can remember very clearly the reckless monetary & industrial policies of a previous govt here that led to interest rates peaking at some 21-22% ( I know, I was paying it!!)....we now see the same sort of stuff emanating from our current govt and I laugh when I see people who are too young to recall those days and the pain of them, telling us that it will never happen again.

Sorry, don't believe you. because of that one factor in human nature.....greed.

Hope the kids are all well, they would be keeping you busy now I imagine with sports etc.
Cheers
Grant