Beatrice M (paisleychick) wrote,

sometimes I don't like being right

It's not often. Usually I'm really happy when I'm right. But, I am of the temperament that I'd much rather be happy than right. This is definitely one of those times...

Back in February I wrote about credit default swaps. Last night our bank, WaMu, was seized by the Feds and then sold to Chase. It's not like we didn't see this coming (it's been on a death march for at least a month), but still. It's one thing to think about the economic collapse in theory, it's quite another to have it play out in practice. WaMu is the largest bank failure in the USA's history and the 13th bank to collapse this year.

"On Main Street, insurance protects people from the effects of catastrophes.
But on Wall Street, specialized insurance known as a credit default swaps are turning a bad situation into a catastrophe.
When historians write about the current crisis, much of the blame will go to the slump in the housing and mortgage markets, which triggered the losses, layoffs and liquidations sweeping the financial industry.
But credit default swaps -- complex derivatives originally designed to protect banks from deadbeat borrowers -- are adding to the turmoil."
Source

"Washington Mutual, the giant lender that came to symbolize the excesses of the mortgage boom, was seized by federal regulators on Thursday night, in what is by far the largest bank failure in American history.
Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual, the nation’s largest savings and loan, to JPMorgan Chase for $1.9 billion, averting another potentially huge taxpayer bill for the rescue of a failing institution.
The move came as lawmakers reached a stalemate over the passage of a $700 billion bailout fund designed to help ailing banks, and removed one of America’s most troubled banks from the financial landscape.
Customers of WaMu, based in Seattle, are unlikely to be affected, although shareholders and some bondholders will be wiped out. WaMu account holders are guaranteed by the Federal Deposit Insurance Corporation up to $100,000, and additional deposits will be backed by JPMorgan Chase."
Source

After looking like there was going to be a bailout yesterday, the talks broke down with Republicans rebuffing Bush's demands for a deal. Paulson's three page plan is deeply flawed, 95% of the citizens of the US are against it and something better needs to be brokered through. McCain's posturing did little to help and he was basically silent during the meeting, while Obama peppered Paulson with questions. As of Tuesday, McCain hadn't read the three page plan. It's only three pages long and fairly easy to read - even I understood it and saw how bad it was. C'mon. After the meeting, Paulson got down on bended knee and begged Pelosi (seriously I'm not making this shit up). She quipped "I didn't know you were catholic". There were protests yesterday on Wall Street against the bailout. As it was written by Paulson, it doesn't help the little guy, there's no oversight, and the $700 Billion figure was PULLED OUT OF A HAT.

I know I'm not an economist, but wouldn't have been a good idea for banks - like 6 to 12 months ago - to sit down with people and rewrite the mortgages so that people could afford to live in their houses, the banks could get paid money, and wouldn't be left holding empty houses that deteriorate in value as more and more tent cities pop up all around the country? Kragen pointed out that the whole point of security backed loans is that you don't have to beg for the money, you just take the security. But, in this mess, with the housing market collapsing and credit drying up, people can't get loans to buy the houses that have been foreclosed on. It would have made more sense to have people continue to live in their homes, instead of leaving them when they were upside-down on their mortgages and sometimes stripping the places when they left - talking about the counter-tops and the light fixtures here people. At least the banks would have made some money. That's my arm-chair diagnosis. I'm just really glad we didn't buy a house and that our rent here in Buenos Aires is 1/4 what it was in San Francisco. Still, we're all in for a bumpy ride. But, I'm living in a country that went through their own economic meltdown in 2001. It was harsh, there's no denying it, but life continued on, and the country is getting back into business. This meltdown isn't going to be easy, but I don't think that it's going to be the end of the world that some people think it will be.
Tags: amerika, economy
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