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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?!Leroy wrote: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.Leroy wrote: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.
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.pop_haines wrote:Why not just pick up gold bullion and drop it in a safety deposit box?dangerous wrote:The Five 'M's of Picking Gold Mining Stocks
http://seekingalpha.com/article/122369- ... ing-stocks
Don't risk any money until you read this book.Diddy wrote: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.Diddy wrote: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.
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.TimeForGuinness wrote:Two words: Financial Adviser.Diddy wrote: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.
click the link to read moreA 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."