"Mike Marlow" wrote in
:


"Morris Dovey" wrote in message
...
Mike Marlow wrote:

He reversed it in light of very recent circumstances that nobody
predicted, or could predict.

[1] I think the only people who could have failed to predict it are
those who believed that the housing "bubble" would continue
indefinitely.

In Des Moines, an average person earns 30-40K. The average price of a
new home here passed the quarter-million mark a year or two ago, and
homes were sold as quickly as banks could process mortgage
applications.

[2] The legislature recognized that lenders had become too greedy and
that credit card debt had become a serious problem for many
cardholders. It was interesting to note that in the course of the
congressional hearings, it was the lenders' predatory practices that
were identified as the most significant part of the problem.

[3] Under pressure from lobbyists representing lenders who recognized
that borrowers were over-extending, the legislature tightened up the
bankruptcy laws to protect the lenders - a clear departure from the
principle that bankruptcy laws were to protect honest debtors.

[4] With the bankruptcy legislation in place, lenders exercised their
options to raise rates on ARM's - and foreclosure rates skyrocketed.
Unfortunately for the lenders, they had made mortages for homes whose
actual values were considerably less than the amount of the loan and,
following foreclosure, could not recover the principal by selling the
property in a rapidly disintegrating market.


Excellent points one and all. But - while they are all true, they
only point out the fundamental greed of the system and they only
pessimistically predict the future. What those points don't do though
is explain the suddenness of Lehman, AIG, Morgan, etc. That's what
took everybody by surprise. One would not have to agree with the
prevailing practices to feel more secure in the economy, up until Wall
Street took a dive. That suddenness is what I was making reference to
in my statement.

All true, IMNSHO, both Morris and Mike.
And I agree (unfortunately) wth McPain that it is due to excessive greed
of the bankers - which is what regulators and legislators should protect
the "common" man from. Now, caveat emptor should go both ways - the
unscrupulous bankers and the stupid borrowers should be punished, but in
a way that leaves the rest of US (pun intended) protected. If I have
been prudently spending and borrowing within my means, why should I have
to bail out the aforementioned unscrupulous bankers and the stupid
borrowers?

And to protect the future, more regulation, including more openness with
short sellers, is absolutely required.

--
Best regards
Han
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