105% loans, interest-only adjustable rate mortgages, exorbitant credit rates for those with poor credit backgrounds only work in ascending markets. They are very iffy, and when it all hits the fan, consumers lose, banks lose, and taxpayers eventually lose. Banks and hedge funds that invested heavily in buying up these loans will get bailed out of their losses, but the consumers are just screwed. Their credit will be shot for years and years,plus they are having huge penalties added to their foreclosures by lenders. Those will remain on their credit as judgements.
Of course, some of the blame lies with those who bought counting on their home to appreciate and the economy to hum along when that can’t be counted on. It’s a mess….but the Bush buddies will somehow make money on all this.

Bushville is the perfect name for the parking lots where the homeless sleep. It’s amazing that Bush can sleep nights, though.

The entire income generating model of financial institutions – make income out of securitization fees rather than by holding the credit risk – is broken now that the generalized credit bubble (not just subprime mortgages) has burst; thus, how will these financial institutions generate earnings over time? Capital losses are one-time problems; but destruction of the income generation process is a more severe and persistent problem that will require banks and other financial institutions to rethink their overall business model of credit risk transfer. But there is no clear and sound new business model for them: going back to the old days of “originate and hold” is not fully possible while the new “originate and distribute” model has shown all of its wrong and distorted incentives, risks and systemic failures.

Registration for the blog at Roubini’s site is free.

I’ve said before that too much of what they’ve done, in the financial sphere and elsewhere, has the feel of a go-for-broke strategy. Now, I also think that the world has turned out to be much larger than their little minds had imagined, but that won’t stop a tremendous amount of unnecessary heartache and social waste on their account.

As for names, I like both Bushville and Cheneytown, the former on principle and the latter as a noir reminder that we shuddanode better. Maybe they can be used to distinguish car lots versus tent cities, or public versus wildcat sites or something, but they both should be pegged with this debacle. Gotta think of something fitting to memoriallize Greenspan, too.

When do they hit national news? If not before, then for sure any in the upper Midwest come the cold weather (if cold weather still be coming; this past winter had no real cold spells around lower Lake MI afaic).

-G