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Post by jeffolie on Jul 9, 2007 12:18:11 GMT -6
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Post by unlawflcombatnt on Jul 9, 2007 14:41:04 GMT -6
I saw this same article on Bloomberg a couple of days ago. It's really aggravating to know that these large investment banks, through their "creative" financial "instruments" (financial "monstrosities" is more fitting), are inflating home prices by indirectly by providing excessively easy mortgage money to un-credit-worthy home buyers, as well as directly driving prices up by purchasing foreclosures. And the money they're purchasing foreclosures with comes from the leveraged, artificial wealth they've created themselves, with the help of the dishonest bond rating agencies.
I've personally gone to one "public" foreclosure auction, and I've heard stories from others. There is always some mysterious big-money buyer who wins the bid, instead of an honest individual who simply wants to buy a home to live in.
I really hope these investment banks get reamed over their practices. And the Democrats & Republicans in Congress had better not put up a dime of taxpayer's money to bail them out. They deserve to crash. And their entire "confidence game" should be investigated. And the ratings agencies should be investigated as well. The ratings agencies may not be legally guilty of fraud, but they're certainly guilty of deliberately deceiving investors and the public.
This is a one case where more regulation is needed to maintain a truly free market. I think even Adam Smith would agree that some government intervention is necessary here. Some intervention is certainly preferable to allowing private players to destroy the market, and maybe even the entire economy.
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Post by jeffolie on Jul 9, 2007 15:11:42 GMT -6
The eight hundred pound gorilla in the investment bank area which provides about 50% of these toxic mortgages are the Government Sponsored Enterprises - Fannie Mae and Freddie Mac. They are completely corrupt and should have been delisted by the NEW YORK STOCK EXCHANGE. They escaped by special federal legislation declaring them too important to be subject to regular stock exchange rules. The NYSE letter stated, however, that it had determined that Fannie Mae must file its 2005 Form 10-K by December 31, 2007 in order to continue to trade google.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?SessionID=6D30juNdQ_XV6sY&ID=4817429
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Post by jeffolie on Jul 9, 2007 15:31:19 GMT -6
You can see that there is already government intervention and it is by far the worst offender. And when the government breaks the regulations, then the government bends the regulations to suit itself.
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Post by unlawflcombatnt on Jul 9, 2007 16:15:36 GMT -6
I have to agree with what you're saying here. Fannie Mae and Freddie Mac are the product of government intervention. And this particular intervention has helped inflate home prices.
The area in need of more regulation is those areas involved with creating all of the risky, new-wave financial instruments. Rating agents shouldn't be allowed to issue ratings that are knowingly false, and then proclaim innocence because they are using mathematical models based on earlier (and knowingly outdated) information. Deliberate dis-information is something I believe should be regulated.
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Post by jeffolie on Jul 9, 2007 17:11:44 GMT -6
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