DIYbanter - View Single Post - Paulson begins wrapping his gift to FRAUD Street

HeyBub[_3_]

wrote:
"RickH" wrote in message
news:822c94ee-15fc-40a5-989f-
...
On Sep 23, 10:24 am, wrote:
On Sep 23, 5:14 am, wrote:

I resent my tax dollars bailing out
individuals in McMansions who missed payments because they could not
understand the reality their own budget before they signed a balloon
loan. What do you think?

Bing bing bing, we have a winner. From what I've read, most of the
people in
foreclosure are losing homes they haven't been in for very long, put
little
or nothing down, and were paying interest only. So what, exactly, are
they
losing? They were, in reality, renting palaces that they should have
realized they could never afford. And we're supposed to bail these
people
out? I don't think so.

That's not the problem. Assume each mortgage was $100,000. A hundred of
these were bundled into one instrument worth $10 million. This was then
sold, on credit, to Acme Corp who put it up as collateral to build a new
factory. These mortgages are now worthless and the people who loaned money
to Acme call the loan. Acme doesn't have $10 million in cash and no way to
get it. The close their business putting 100 people out of work. The bank
that loaned $10 million to Acme now has a worthless loan and this, coupled
with fifty other such loans, causes the bank to close. And so on...

The $700 billion in bad mortgages ripples through the $12 trillion credit
market and causes most of the credit market to collapse.