If only someone had predicted…oh wait. Why aren’t the people who got it right on the staff of the incoming administration?

Andrea Mitchell is now wearing parenthesis hair.

(Sorry, back to read)

You could buy a house for every person in the country at this rate. Would that ever de-toxify the morgages! We could press the great, ol’ reset button on the mortgage market and start all over again, but this time do it right.

What if we just let it fail $500 million is a lot. Or lets put it this way either the GOP all votes for higher taxes on rich people or we do nothing and watch the GOP scramble as home prices take out the banks.

Part of the problem though may in part be a downward spiraling market an originally perfectly sound loan with a legitimate appraisal and 80% LTV could now be upside down and in trouble if something should happen to the borrower.

And the banks need their money now as the economy takes more people down the more loans go under and the more home prices go lower.

My head is spinning. More billions for Fannie, more for AIG. One financial e-letter I get claims the Fed threw $2.08 trillion (with a T!) at the various schemes they have going in the name of ~stability~ …

As I recall, Nouriel Roubini forecast the bursting of the housing bubble, in a speech to the IMF in 2006. They didn’t believe Dr. Doom then. And last year’s ‘12 steps’ has pretty much unfolded as he said. Meanwhile, more clues are being revealed to suggest that JPMC got the Bear Stearns deal to disguise the largest silver manipulation in history — aided and abetted by the watchdogs.

Soviet Russia had five-year plans, the pikers. Our economic catastrophe has been 95 years in the making.

NY times did a timeline which showed that the cost (about 2 weeks ago) of all the various things was coming in at about 5 trillion. We’re totally in fantasyland “made up money” at this point. It really is just the equivalent of running the presses hot.

Almost any loan based on bubble valuations is likely to have problems. I wrote earlier today of the core problems that Paulson has without exception avoided addressing. One of these is help for homeowners and by this help shoring up the housing market. This is by no means the only action needed but it would ease to some extent all of the problems downstream from it. It is hard to imagine a more worthless bunch of goofs in control of our economy than those who are there now. They are archtypal Bushians. They can turn a problem into a disaster, and a disaster into a catastrophe. It is not whether they will do something else stupid but what it will be.

You know what we are looking at here is actually 5 bubbles. The first one was in housing. The second was in commodities, and within that oil was the third. The fourth was in derivatives both the CDOs and CDSs. And the fifth has been the Paulson-Bernanke response to these, which has consisted of throwing away trillions of dollars to essentially no purpose. It is failure on an epic scale. Stupidity beyond measure. And a general paralysis from the public to the media to the politicians. Only the looters seem to have a capacity to act and it is precisely their actions which are most likely to bring the whole system down.

Shoring up the housing market as it is as present is about as useful as shoring up the Tulip Bubble would have been. When you exceed the trend line too fast and too long, a real correction has to happen.

It’s funny, middle of last year when the public became aware of the ~sub-prime~ crisis, the typical blog comment across the spectrum was: why should we care about greedy speculators and ignorant buyers? To which I knew the collateral damage about to unfold would affect everyone. My typical response was, When your 401(K) is trash, you might be whining as well.

I agree that housing prices should reset to pre-bubble say 2001 levels but that establishes a floor and a real means of calculating a value for them and everything downstream from them. How the losses get spread out among the participants from homeowners to banks and investment houses to holders of CDOs and CDSs that is a political matter. I favor something like a 10-15-15 split based on a decline in real estate values of 40%: a 10% hit to homeowners, 15% to banks and 15% to end holders.

the “general paralysis” you speak of is what naomi klein warned us about – and the necessity to recover quickly so that we may also act.

from Baghdad year zero: Pillaging Iraq in pursuit of a neocon utopia

Torturers believe that when electrical shocks are applied to various parts of the body simultaneously subjects are rendered so confused about where the pain is coming from that they become incapable of resistance. A declassified CIA “Counterintelligence Interrogation” manual from 1963 describes how a trauma inflicted on prisoners opens up “an interval—which may be extremely brief—of suspended animation, a kind of psychological shock or paralysis. . . . [A]t this moment the source is far more open to suggestion, far likelier to comply.” A similar theory applies to economic shock therapy, or “shock treatment,” the ugly term used to describe the rapid implementation of free-market reforms imposed on Chile in the wake of General Augusto Pinochet’s coup.

my bold.

The fact that the Fed is dumping all the toxic MBS’s into Fred/Fan may have something to do with the problem

Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds as the Bush administration expands its options to buy troubled financial assets and resuscitate the U.S. economy, according to three people briefed about the plan.

Fannie and Freddie began notifying bond traders last week that each company needs to buy $20 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities, according to the people, who asked not to be identified because the plans are confidential. The purchases would be separate from the U.S. Treasury’s $700 billion Troubled Asset Relief Program.
Bloomberg 10/11/08

There’s more at Bloomberg

It is hard to imagine a more worthless bunch of goofs in control of our economy than those who are there now. They are archtypal Bushians. They can turn a problem into a disaster, and a disaster into a catastrophe. It is not whether they will do something else stupid but what it will be.

How many times do I have to hear that they’re incompetent?

After the 2000 election the Bush administration intentionally let Enron rape California — they voted for Democrats.

In 2001 NYC was hit by “terrorists”. NYC voted for Democrats.
Also, Washington D.C. was hit by “terrorists”. They voted for Democrats.

When Katrina hit NOLA they clearly avoided helping. NOLA is a Dem town.

Now America has elected a Democrat president. Any chance the Bushies are getting their revenge in early and big?

BTW, NYC is a Democratic city, despite having Republican mayors.

So, incompetence? I don’t think so.

The big question for me is not whether the Bushies are guilty. The bigger question is who exactly are ALL of their co-conspirators and what are their next moves.

EPUland but still … a snip from Roubini’s website:

“Among large counterparties that made margin calls and now benefit from ongoing AIG bail-out: Goldman Sachs Group, Merrill and Société Générale, UBS, Barclays, Credit Agricole’s Calyon investment-banking unit and Royal Bank of Scotland; Deutsche Bank and Canadian banks CIBC and Bank of Montreal.”

Bah humbug.