Our financial system is crumbling this week.

[KyCardinalFan]

Just a FYI: The FDIC chairperson will be featured at a town hall meeting on CNBC tonight (Wed., 2/25) at 9:00 Central.

http://www.cnbc.com/id/29351774

[Leroy]

Federal Reserve Chairman Ben Bernanke said Wednesday that the embattled housing market has crippled the economy, and at-risk homeowners need a bailout - even if they knew they couldn't afford their home in the first place.

"Some borrowers presumably knew what they were getting into," Bernanke said before the House Financial Services Committee. "But from a public policy point of view, the large amount of foreclosures are detrimental not just to the borrower and lender but to the broader system."

"In many of these situations we have to trade off the moral hazard issue against the greater good," he added.

[KyCardinalFan]

Federal Reserve Chairman Ben Bernanke said Wednesday that the embattled housing market has crippled the economy, and at-risk homeowners need a bailout - even if they knew they couldn't afford their home in the first place.

"Some borrowers presumably knew what they were getting into," Bernanke said before the House Financial Services Committee. "But from a public policy point of view, the large amount of foreclosures are detrimental not just to the borrower and lender but to the broader system."

"In many of these situations we have to trade off the moral hazard issue against the greater good," he added.

Greater good?!
[youtube=http://www.youtube.com/watch?v=V-WFgoS_7b0&][/youtube]

[maddash]

Federal Reserve Chairman Ben Bernanke said Wednesday that the embattled housing market has crippled the economy, and at-risk homeowners need a bailout - even if they knew they couldn't afford their home in the first place.

"Some borrowers presumably knew what they were getting into," Bernanke said before the House Financial Services Committee. "But from a public policy point of view, the large amount of foreclosures are detrimental not just to the borrower and lender but to the broader system."

"In many of these situations we have to trade off the moral hazard issue against the greater good," he added.

It's a bitter pill, but I don't know how else to go about it. Apparently Obama's mortgage plan says it will differentiate between the good mortgages and bad ones... but even if that's feasible, does it really stop the bleeding? I don't see out you get out of this without directly addressing some of these bad deals. That is, subsidizing these people who, irresponsibly, got in over their heads. The plan to just help people who made good deals but are in trouble now just doesn't seem like it will realistically be enough.

A properly regulated market should have prevented this, and that blame goes to both sides of the aisle all the way back to Clinton. Instead, you had greedy buyers who got in with the idea that their home would increase in value 8% every year in perpetuity. And you had ignorant buyers who were probably manipulated, but who also didn't have the wherewithal to pay a lawyer $500 to read the contract to them. And the lenders, most of them independent (fly-by-night) brokers were more than happy to prey on them.

Some of the buyers should sink and lose their house - in an ideal world, all of them would suffer the consequences coming to them - but you can't let them all sink. At some point the responsible citizens are going to have to pony up and carry these saps along, or they're just going to drag everyone down with them.

It's a [expletive], but I think Bernanke is right.

[dangerous]

The Five 'M's of Picking Gold Mining Stocks

http://seekingalpha.com/article/122369- ... ing-stocks

Why not just pick up gold bullion and drop it in a safety deposit box?

Gold tripled from 2001 to now-$300 to $900-- gold mining stocks tripled from Thanksgiving to last week. They look weak the past few days I'm not sure if they are consolidating or are showing the pullback in gold this week is a top. A monthly chart of the US Dollar looks like it wants to keep going up and eventually gold and the dollar should diverge, I don't know when. OTOH if the markets are anticipating inflation, the dollar would benefit from higher interest rates and people will still want gold, then bond prices will fall and gold and the dollar will be strong. Having a few gold bars in your garage is not a bad thing.

[Diddy]

if one is ready to put some money in the stock market where do you start looking. Ive never invested before but have some money set back that i could invest.

[dangerous]

if one is ready to put some money in the stock market where do you start looking. Ive never invested before but have some money set back that i could invest.

Don't risk any money until you read this book.

Then read this book

[TimeForGuinness]

if one is ready to put some money in the stock market where do you start looking. Ive never invested before but have some money set back that i could invest.

Two words: Financial Adviser.

[stldogget05]

if one is ready to put some money in the stock market where do you start looking. Ive never invested before but have some money set back that i could invest.

Two words: Financial Adviser.

Make sure he is fee-only based. Some of these dudes get kickbacks for recommending products and I have a tough time believing they are giving an honest opinion when they are getting paid by the people who's products they are recommending.

[maddash]

NPR had an interesting (and depressing) story on how some economists are starting to state what everyone fears (and kind of already knows) - we're in a "your money or your life" type situation. And the idea that, we as tax payers, bail the banks out but get repaid down the road, just isn't realistic. We're probably going to lose money in the end, and those of us who lived within our means are going to have pay for people and institutions who didn't.

Definitely worth a read/listen.

Taxpayer Beware: Bank Bailout Will Hurt

A single piece of paper may just be one of the most surprising and illuminating documents of the whole banking crisis.

It's a one-page research note from an economist at Deutsche Bank, and it outlines in the clearest terms the kind of solution many bankers are looking for. The basic message: We should forget trying to get a good deal for taxpayers because even trying will hurt.

"Ultimately, the taxpayer will be on the hook one way or another, either through greatly diminished job prospects and/or significantly higher taxes down the line," the document says.

In other words, the paper says, if the government tries to save taxpayers money, many people will lose their jobs and the whole economy will suffer.

The research note offers a solution any banker would love: The government should "estimate the highest price it can pay for the various toxic assets on financial institution balance sheets," then pay that price to buy them.

Another economist, Simon Johnson, a professor at the Massachusetts Institute of Technology's Sloan School of Management, wrote about this note on his blog.

"This is a robbery note!" Johnson says. "It's saying, 'Guys, either you'll have 20 percent unemployment or national debt will go up to these dangerous level, unless you buy toxic assets — not for what they're worth, not for what the market price is, as much as you can pay.'"

Johnson says his "first reaction was: It's a spoof. My second reaction was: Oh my God."

click the link to read more