housing/financial crisis explained in 3 sentences.

[knabe]

housing crisis explained in 3 sentences.

Big bank cash flow will never run out as long as the Federal Reserve exists. The Fed exists simply to protect big banks from the free market. Banks get to keep any profits they make, but bank losses just get passed on to you as inflation, when the Fed prints up money and buys their bad mortgages.


great website.

http://patrick.net/housing/crash.html

 

[SHAGGY]

And to keep everyones favorite Ben in a job  (lol)

 

[cotullaguy]

housing crisis explained in 3 sentences.

Big bank cash flow will never run out as long as the Federal Reserve exists. The Fed exists simply to protect big banks from the free market. Banks get to keep any profits they make, but bank losses just get passed on to you as inflation, when the Fed prints up money and buys their bad mortgages.


great website.

http://patrick.net/housing/crash.html

Think about this Knabe:

No Mortgage in America is a legal contract. 

You say, how is that so?  Well, in contract law you must have CONSIDERATION.  Yet, banks give nothing and get a home as collateral.  The dollar they have came from thin air. It has no backing and cost the Federal Reserve nothing but the cost of paper and ink.

 

[GoWyo]

A mortgage is not a contract, it is an interest in land.  The promissory note is the contract.  It says bank will provide to you funds to purchase the real property and in return you promise to pay it back.  You convey an interest in your real property that says if you do not pay, the bank gets the real property.  Your argument is that the money given to you as the borrower is illusory and not adequate consideration.  However, if the seller of the real property accepts money as consideration for the property, you now have the real property, and if you do not pay back the money, the bank gets the real property.  If that money is illusory, then you should be able to easily get a bunch of the worthless stuff and pay the bank back right away.  Under the Cotullaguy theory, anyone should be able to buy houses and ranches at will.

 

[cotullaguy]

A mortgage is not a contract, it is an interest in land.  The promissory note is the contract.  It says bank will provide to you funds to purchase the real property and in return you promise to pay it back.  You convey an interest in your real property that says if you do not pay, the bank gets the real property.  Your argument is that the money given to you as the borrower is illusory and not adequate consideration.  However, if the seller of the real property accepts money as consideration for the property, you now have the real property, and if you do not pay back the money, the bank gets the real property.  If that money is illusory, then you should be able to easily get a bunch of the worthless stuff and pay the bank back right away.  Under the Cotullaguy theory, anyone should be able to buy houses and ranches at will.

where did the bank get the money?  what did they give for it to create it?

to continue on, the banks did not want to avoid a collapse in the housing market. 

on the ARM loans, when the banks saw that NO ONE could pay them, they could have frozen the rates for a few years and avoided a collapse.  but instead, they must have known they had paid off and bribed enough politicians to get their bailouts done.  without the bailouts, we might have some legit banks in this country.

do not worry,  the worst of the housing market will begin this fall.  we will see record foreclosures then.  we are already seeing the rats that run the Federal Reserve bailing out their friends that installed the Euro.  WE will be next and then they will shut down the banks for a holiday and your dollars will be devalued.  Of course the power brokers that run the banks are already buying gold and holding all of the real estate that has some real value as the dollars have none unless we arbitrarily give them value.

 

[knabe]

Of course the power brokers that run the banks are already buying gold.

i started buying gold and silver when gold was 450 and silver 9.  no one stopped me.  i disagree with the term already.  if anything, they are late to the game.

 

[GoWyo]

OK -- sure the Fed Reserve keeps printing money to give to banks, which generally leads to inflation because so much money is pumped into the system so that the banks can afford to bid in the amount loaned on the foreclosure and take possession of the real property when the mortgage is foreclosed.  The goal is to prop up the value of the real property, but the effect is that the real property is worth what someone can pay for it.  If lots of people have lots of money, the price is higher.  If few people have money, then the price is lower.  Good old supply and demand of money versus real estate.

Now, say I have property that was worth $400K prior to Oct. 2008 and is now worth $300K, but my balance of the note I owe is only $100K and I do not intend to sell it or go anywhere, when inflation is finally realized, the amount to pay off my note is going to be substantially less than the real value of $100K today.  This doesn't hurt me, unless I decide I need to sell right now or in the near future before the inflation sets in.  As the article pointed out, it is stupid to buy real estate in times like now when the prices are high and loan interest rates are low due to the risk associated with declining real estate values.  The market is going to correct itself, but I agree, the banks / Fed Res have to quit manipulating the money supply or people might wise up and quit taking out loans.  Then there will be a glut of houses and money all in the hands of the banks and they are going to have to unload the houses before they become slums and the value really takes a tumble.  Then they will be practically paying people who are not meth heads to be living in them just to preserve the value.

 

[cotullaguy]

Of course the power brokers that run the banks are already buying gold.

i started buying gold and silver when gold was 450 and silver 9.  no one stopped me.  i disagree with the term already.  if anything, they are late to the game.

Knabe,

I bought my first gold back in 1993.  My point is the banks know what is soon coming.  According to Ron Paul, Peter Schiff, and many others, there is no stopping a collapse of the dollar.  With the dollar not tied to any gold standard, they have had the ability to print all of the money they wanted.  No audits of the Federal Reserve either thus they could rob us blind.  There is no gold in Ft. Knox anymore either according to most sources.  But there is not independent audit there either.  The Rothchild family is sitting on most of the gold in the world. they manipulate the prices daily. this is why gold is not already at $3-5000/ounce.  

Anyone that supports how banks are currently run needs to study it closer.  For every dollar in the bank, they can loan out 8.  This is creating money out of thin air.  This is why if we have a run on banks, there will not be enough actually dollars in the bank to cover.  This is the banks worst fears.

http://www.youtube.com/watch?v=LIWg90oMIVU

 

[jason]

The housing market is still in trouble, most inventory that was going to purchased was purchased using the tax credits.  We are going to see some bad months ahead.  Foreclosures are still rising and rent is on the decline.

If you are in the market, these foreclosures are a steal.  In my area you can pick them up for about half of their 2007 value.  As an investor you will need 25% down and you will have to rent them out until the market returns.

 

[cotullaguy]

With the prospects of the dollar value going down or collapsing, buying real estate is a good idea. Have it at least under contract.  Gold and Silver, cattle, land, homes are all things that will have Real Value in a economic dollar crisis.  Stocks, dollars, bonds etc will not.

 

[knabe]

Anyone that supports how banks are currently run needs to study it closer.  For every dollar in the bank, they can loan out 8.  This is creating money out of thin air.  This is why if we have a run on banks, there will not be enough actually dollars in the bank to cover.  This is the banks worst fears.

it's always been that way.  what has changed is the amount they must retain on hand. they are not making money out of thin air.  banks accept deposits and loan it out.  logic dictates that with even 99.99% of deposits on hand and you had a run on the banks, there wouldn't be enough.

the issue, for me at least, is that the borrowers and the lenders had no skin in the game do to regulation and that both sides knew or expected the government would bail them out.

fannie mae and freddie mac were allowed to make loans with less money down and little or no verification of income.  how is a bank supposed to compete?  easy, they demand a trading vehicle to get out from under that and have the government guarantee the loans with taxpayer money.  stupid.

this artificially props up the value of real estate, which generates a self reinforcing asset price increase which pays for government programs to offset the need to print so much money.  that is making money out of thin air.

 

[cotullaguy]

some interesting numbers:

Cost of a new house 1933:  $5,750.00 (equivalent to $93,565.72 in 2010)
Cost to rent a house in 1933:  $18.00 per month (equivalent to $292.00 in 2010)
Brand New Plymouth in 1933:  $445.00 (equivalent to $7241.17 in 2010)
Gallon of gas in 1933:  10 Cents (equivalent to $1.62 in 2010)
Loaf of Bread in 1933:  7 Cents (equivalent of $1.13 in 2010)
1 Lb. Of Hamburger Meat in 1933:  11 Cents (equivalent to $1.79 in 2010)
Can of Campbell’s Vegetable Soup in 1933: 10 Cents (equivalent to $1.62 in 2010)
Dozen Eggs in 1933: 5 Cents (equivalent to 81 Cents today)

 

[knabe]

some interesting numbers:

Cost of a new house 1933:  $5,750.00 (equivalent to $93,565.72 in 2010)
Cost to rent a house in 1933:  $18.00 per month (equivalent to $292.00 in 2010)
Brand New Plymouth in 1933:  $445.00 (equivalent to $7241.17 in 2010)
Gallon of gas in 1933:  10 Cents (equivalent to $1.62 in 2010)
Loaf of Bread in 1933:  7 Cents (equivalent of $1.13 in 2010)
1 Lb. Of Hamburger Meat in 1933:  11 Cents (equivalent to $1.79 in 2010)
Can of Campbell’s Vegetable Soup in 1933: 10 Cents (equivalent to $1.62 in 2010)
Dozen Eggs in 1933: 5 Cents (equivalent to 81 Cents today)

most of these numbers don't mean anything as they don't account for increases in quality compliance for regulation, union wages, insurance, lawsuits and countless other improvements like running water and indoor toilets.

houses have much more quality today than they did years ago.  they are better insulated, safer and last longer.  roofs last longer, paint lasts longer.

the comparisons are bogus and also do not take into account subsidies which raise prices and are not taken out of the future cost.

try another conspiracy.

 

[cotullaguy]

[/quote]

try another conspiracy.
[/quote]

Knabe,

name one thing on this board I have posted that I did not back up?  Just because you cannot get your mind around some subject does not make it a conspiracy. 

Give me one.

 

[ZNT]

houses have much more quality today than they did years ago.  they are better insulated, safer and last longer.  roofs last longer, paint lasts longer.

We were just at Mesa Verde last weekend, and I have to disagree.  Their homes were made out of stone, mud, and wood over 800 years ago, and they were still holding together very well, 700 years after they moved out.  I doubt very much I can say that about my home 700 years from now.  High quality is not part of the master plan in these modern day "Master Plan" communities, at least where I live.  We don't live in one, but have definitely been in several of them.

 

[knabe]

name one thing on this board I have posted that I did not back up? 
Give me one.

easy enough, i'll give you two.  the banking conspiracy and the one directly above regarding inflation that is an apples and oranges comparison.

 

[knabe]

We were just at Mesa Verde last weekend, and I have to disagree.  Their homes were made out of stone, mud, and wood over 800 years ago, and they were still holding together very well, 700 years after they moved out. 

where was the toilet, electricity, running water, replanted forest to replace old growth forests they so clearly cut down to make those houses.  lots of environmental damage to see there if you look closely.

i agree there are benefits to a common wall with the earth for temperature stabilization.

 

[cotullaguy]

name one thing on this board I have posted that I did not back up? 
Give me one.

easy enough, i'll give you two.  the banking conspiracy and the one directly above regarding inflation that is an apples and oranges comparison.

If you are happy with the Federal Reserve, then more power to you.  I guess you are happy we are paying interest to a group of bankers on our money. 

I think a loaf of bread is a loaf of bread.  Gas is gas.  Only a home construction and size has changed.  But, we clearly make much less reliable homes today. Paper thin walls and roofs that are waiting for the next storm to blow away.  How many people live in mobile homes today compared to the past.  etc.

Here is some info on the Federal Reserve you might find enlightening since you think it is a great organization:

THE FEDERAL RESERVE BANK IS A PRIVATE COMPANY.

Article 1, Section 8 of the Constitution states that Congress shall have the power to coin (create) money and regulate the value thereof. Today however, the FED, which is a privately owned company, controls and profits by printing money through the Treasury, and regulating its value.

The FED began with approximately 300 people or banks that became owners (stockholders purchasing stock at $100 per share - the stock is not publicly traded) in the Federal Reserve Banking System. They make up an international banking cartel of wealth beyond comparison (Reference 1, 14). The FED banking system collects billions of dollars (Reference 8, 17) in interest annually and distributes the profits to its shareholders. The Congress illegally gave the FED the right to print money (through the Treasury) at no interest to the FED. The FED creates money from nothing, and loans it back to us through banks, and charges interest on our currency. The FED also buys Government debt with money printed on a printing press and charges U.S. taxpayers interest. Many Congressmen and Presidents say this is fraud (Reference 1,2,3,5,17).

Who actually owns the Federal Reserve Central Banks? The ownership of the 12 Central banks, a very well kept secret, has been revealed:

Rothschild Bank of London Warburg Bank of Hamburg Rothschild Bank of Berlin Lehman Brothers of New York Lazard Brothers of Paris Kuhn Loeb Bank of New York Israel Moses Seif Banks of Italy Goldman, Sachs of New York Warburg Bank of Amsterdam Chase Manhattan Bank of New York (Reference 14, P. 13, Reference 12, P. 152)

These bankers are connected to London Banking Houses which ultimately control the FED. When England lost the Revolutionary War with America (our forefathers were fighting their own government), they planned to control us by controlling our banking system, the printing of our money, and our debt (Reference 4, 22).

The individuals listed below owned banks which in turn owned shares in the FED. The banks listed below have significant control over the New York FED District, which controls the other 11 FED Districts. These banks also are partly foreign owned and control the New York FED District Bank. (Reference 22)

First National Bank of New York James Stillman National City Bank, New York Mary W. Harnman

 

[JbarL]

housing crisis explained in 3 sentences.

Big bank cash flow will never run out as long as the Federal Reserve exists. The Fed exists simply to protect big banks from the free market. Banks get to keep any profits they make, but bank losses just get passed on to you as inflation, when the Fed prints up money and buys their bad mortgages.

so money really does grow on trees......   jbarl

 

[knabe]

If you are happy with the Federal Reserve, then more power to you.  I guess you are happy we are paying interest to a group of bankers on our money. 


Here is some info on the Federal Reserve you might find enlightening since you think it is a great organization:

here, i'll put some words in your mouth.  you hate capitalism.  what's wrong with paying interest?  who is stopping you from paying cash?  i don't find the info on the federal reserve enlightening.  you forgot the conspiracy that every president who wanted to print money was assassinated.  you don't have to put money in those banks.  no one is stopping you from loaning out money and charging interest.