Fannie Mae and Freddie Mac: Now What?
68
Everything is Fine, Everything is Not Fine
Senator Chris Dodd was out in front of news cameras on Friday reassuring the American public that, despite the nauseating roller coaster ride last week on Wall Street, everything is fine with the nation's two largest mortgage lenders, Fannie Mae and Freddie Mac. Plenty of capital at both institutions, fundamentally healthy, don't panic. Everything is under control. Pay no attention to that man behind the curtain. I am the Great and Powerful Oz. And so on and so forth.
Okay, so that didn't work.
Then, Saturday, IndyMac bank failed and was seized by FDIC, after its CEO spent the entire preceding week reassuring Indymac's depositors that everything was fine, really, nothing to look at here, your money is safe, move along, move along, I am the Great and Powerful Oz. Okay, so that didn't work either. This morning IndyMac will reopen under the name IndyMac Federal, under the direction of the Federal Deposit Insurance Corporation, which was set up after the Great Depression to guarantee personal deposits at retail banks up to $100,000 each.
The FDIC was initially set up to prevent runs on banks. A 'run' on a bank is a situation in which customers lose so much faith in the bank that everyone decides to withdraw their money all at once before the bank goes belly up. Clearly the FDIC did not prevent a run on Indymac, as over the course of last week more and more depositors withdrew all of their funds, until the bank was forced to fold, all the while saying that of course it was not going to fold.
Ironically, Fannie Mae is another institution also set up after the Great Depression to gird the nation's financial health. Fannie Mae stimulates mortgage lending by buying up mortgage loans from other banks, packaging them as securities, and trading them on the stock market. Freddie Mac was set up in the 1970s for the same purpose, after a very bad run on real estate in the US that left people paying double digit interest rates on their mortgages. Both institutions work well when housing values are stable, but neither has ever been required to be very heavily capitalized.
However, since their initial founding, both companies have grown into mammoth institutions: Poorly run mammoth institutions. Both have been the targets of accounting scandals in recent years, and many, many people have called for their reform. They are private companies not government agencies, but because the federal government has always implied that it backs both of them in some yet-to-be-defined way, they have been exempt from many of the rules that would normally regulate private companies. Not that there are many of these rules, mind you, but the rules that exist, well, they don't need no stinkin' rules. Think Bear Stearns on steroids.
Sunday, that 'undefined government backing' suddenly became way became more defined.
Sunday evening Treasury Secretary Henry M Paulson and President George Bush called on Congress to back an emergency bail-out of these two institutions that will initially run into the billions, but could eventually run into the trillions of dollars. What that means is that taxpayers will once again be expected to bail out rich people behaving badly, only this time, we can't do it really, we don't have the money, and the government doesn't have the money either. It will have to borrow it. So what can a bail-out possibly mean?
Isn't this a case of the blind leading the blind?
The amount of money needed to bail out Fannie Mae and Freddie Mac is so huge that in order to make it available Congress will have to raise the ceiling on the federal debt. By a LOT. Like, by a third. Keep in mind that, at the rate the US has been borrowing money and not repaying it, even before the bailout of Fannie Mae and Freddie Mac, we will be unable to even pay the interest on our debt by 2050. By that time, the US debt will exceed the gross national product of the entire nation.
What are they thinking? This is a plan meant to reassure people?
Okay, so maybe everything really is not fine.
A Loss of Confidence
What is happening right now, and for good reason I think, is a near-total loss of confidence in the federal government to restore any kind of economic order. This is not happening because Americans are, as Phil Gramm so graciously put it, 'whiners'; it is happening because our government and our corporate executives (is there a difference?) lie to us with such regularity and such shameless calm that now, even if they are telling the truth, no one believes them.
Banks run on trust. That is why you often see the word 'trust' in the name of a bank. First Bank and Trust. We will hold your money in trust. You can trust us. When people stop trusting financial institutions, financial institutions fail. But to blame this lack of trust on the populace is disingenuous in the extreme. Banks and other financial institutions have to earn trust by behaving in a trustworthy manner. When they quit doing that, they have shirked their 'fiduciary responsibility', that is, their responsibility to look after your money and mine in an informed, careful way.
America's financial institutions have been shirking this responsibility since the Reagan administration. For a long time now, financial institutions have been under enormous pressure by stockholders to pump up profits without providing anything additional in the way of service or product to their customers. This has resulted in runaway mergers and acquisitions, poor or nonexistent customer service, insane sales pressure on even the lowliest of bank employees, (I think the janitors have a sales goal now), and increasingly risky moves in the area of investment strategy.
At the same time, the Federal government and Congress have never had such low approval ratings. To say the American people do not trust their own government is the understatement of the century. The approval rating for Congress is currently around 17%, and Bush is hovering in the 20% range give or take a few percentage points. We don't even want to talk about Dick Cheney. Seriously, let's just hope Darth stays holed up in his underground bunker for the duration. Why we have not yet impeached this crew is beyond my understanding, but I think it has something to do with the cowardice of that 17% Congress. Senator Worm and Senator Weasel.
My point is, when lack of trust is the problem, you can't fix the problem by standing before some news cameras and saying, "Trust us."
Only used car and insurance salesmen do that.
Oh yeah, and our government. And our corporations.
This will be an interesting week on Wall Street, because that is essentially what is happening now: "Trust us, we can bail Fannie and Freddie out, it'll all be fine. And please stop spreading all those rumours about how the financial system is in crash mode or we'll have to sic the SEC on your ass."
Well, the financial system is in crash mode. The only real question, the one no one can answer and only time will tell is:
Now what?
|
The Return of the Great Depression
Price: $16.27
List Price: $25.95 |
|
The Great Depression: A Diary
Price: $13.52
List Price: $24.95 |
|
The Great Depression Ahead: How to Prosper in the Debt Crisis of 2010 - 2012
Price: $10.80
List Price: $16.00 |
|
Rethinking the Great Depression (American Ways Series)
Price: $9.07
List Price: $12.95 |
|
The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century
Price: $7.00
List Price: $14.95 |
|
World Made by Hand: A Novel
Price: $7.75
List Price: $14.00 |
|
The Geography of Nowhere: The Rise and Decline of America's Man-Made Landscape
Price: $5.57
List Price: $15.00 |
|
Gettysburg: The Paintings of Mort Kunstler
Price: $36.00
List Price: $24.95 |
PrintShare it! — Rate it: up down flag this hub
Comments
Eric, I hope you are wrong but obviously I totally agree with you, I think this will be very bad, much worse than it is currently being portrayed in the press, which is bad, but not remotely bad enough.
Essentially, 99% of the country is being asked to bail out the top 1% of the country. Not only do I not understand why this administration has not been impeached, I wonder that they have not been executed for treason.
I like your comment, "...my mind just shuts down with the implications..." So does mine! As you know, I work in the call center of a big US bank, the tenth largest in the nation even though it is a regional bank. It's huge. And we have huge amounts of money in mortgages an home equity lines. I am supposed to make the bank half a million in sales each month--that is my personal 'goal', what I am required to sell. Guess what I have for July? Zero. I've sold zero dollars in bank products. Me and half of the rest of the team I'm on. People have no money to put into CDs, and the bank can't loan money--it's very hard to sell a loan, no one can get one. So what am I to sell? Chickens? Chickens I could sell. I'll be glad when they roost--I'll have something people will buy finally!!!
No seriously, we're freakin' doomed. I mean it. We're in for it big time.
Krugman wrote a more upbeat assessment (while saying many of the same things you did Eric) in his column today in the NYT. You can read it at: http://www.nytimes.com/2008/07/14/opinion/14krugma
I guess what bother me about his take on it is the size of the bailout. It's not a small thing, people are already hurting, and the national debit is already obscene.
Still, maybe it'll all be fine. We'll see I guess.
The loss of trust is not just inside US shores either. The Gulf economies (not poor!) are considering unpegging from the dollar. They want to unify first, but not if it means being dragged down much farther. If they do unpeg, sit back and watch the dollar really start to fall!
Pam, here's a scenario. Your boss comes to you and says: BTW, building permits in this market are down 73%, we have lower margins than ever, but we need you to increase your goals at least 50% or you're history. Happy times are "NOT" here again. Someone will be out of a job in the next 30 days unless our government or whoever can produce this mythical magic bullet. Another great read.
We haven't heard all the bad news yet, in my opinion.
@Ralph.
Unfortunately you're right.
Next will come the massive Credit Card defaults - because that's where people turn to for their living expenses when they can't access the "Equity" in their homes that previously funded their lifestyles (which their income could not support. )
From what I've read, "real" wages in the US have not increased for the last 30 or 40 years.
And many of the steady, high paying manufacturing jobs have been replaced with low paying casual and hospitality jobs as factories and industries shut down.
Hey pg-- I'm lining up a cardboard box to live in and stocking up on Little Friskies. Wanna come over for dinner? As usual you are right on the money(to coin a phrase:-) I wish I thought you were being pessimistic, but I don't. The talking heads are saying calming things about FDIC fixing it all on CNBC today--a sure sign that all hell is about to break loose. Buckle up and hang on to your 401k--here we go!!
Pgrundy,
Now What? With the Federal takeover of IndyMac, and the accompnying Freddie Mae/Fannie Mae bailout, the Feds now have over 50% of the mortgage market. With these measures, the Federal governemnt is now THE major player in the real estate market. Isn't that comforting?
I just looked at the news.
Unlike P.T. Barnum, the masters of our financial universe obviously believe that you CAN fool ALL of the people ALL of the time.
Looks like they're about to pull another lever. That big red one in the corner - in the glass case. The one which has never been pulled before.
They've sent for the hammer to smash the glass. Shouldn't be long now.
A trillion bailout here, a trillion subsidy there. Pretty soon there'll be real money involved in this!
Which will delay the inevitable for a little while - maybe till after the election. And then what? You can't REALLY keep cranking out more and more money - Zimbabwe style.
ANYWAY - Looks like the government is going to be the landlord for most of America.
Won't THAT be fun!
P.S. Might be an idea to drag those dollar bills out from under the bed, and swap them for some gold.
Howdy guys, thank you for all your comments! I just got home from work (at my terrifying bank job) and my, my, was it ever grisly.
Rob--I know EXACTLY what you mean. I got a nasty email today (so did my whole team) that said, get us some decent sales leads and get them now or you are out. (Half of us are at zero sales for July.) As my supervisor was shaming and flogging us, corporate issued a news statement that we are NOT experiencing a run on the bank today--even though by the time I left our stock had dropped 30% to $3 a share and some change. Tomorrow an emergency meeting with stockholders is suddenly scheduled. Could be getting down to the nitty gritty. I was so glad to get out of there today. Ugh. You can't get blood from a stone, but trust me, they're trying.
Paraglider, if OPEC goes off the dollar I agree, we're in for it big time. We'll all feel like we're living in South America not North America.
William, Ralph, JD & Eric, what can I say? Anybody need someone to mow their lawn? I may be available soon!
robie2--I'll take you up on that dinner. We'll bring the 'whine'! LOL! (Can you believe Phil Gramm said that? What a dick!)
GM, Ford and/or Chrysler may be next. Bankruptcy has been mentioned wrt all of them. Some may remember back in 1979 the federal government provided a $1.2 billion loan guarantee and the UAW made concessions to prevent Chrysler from going under.
http://www.time.com/time/magazine/article/0,9171,9
Ralph, what worries me is, where is this money coming from? The federal government will save the day? How? They just borrowed money from China to refund part of last year's taxes to us so we would run out and spend. They keep saying that taxpayers will end up carrying all this. How? I can't carry a drop of it, can you? It seems to me that just printing up more money to throw at this will only make it worse.
I agree about the car companies. As soon as they start denying rumors of bankruptcy, which is what they are doing now, you know that they are close to it. But I just don't see how the federal government can afford to bail them out. Plus, if they get bailed out, then the airlines will be right behind them in line with their hands out too.
Does anyone understand where this bailout money actually comes from? It's a serious question, I don't understand where it is supposed to come from.
Well, in the case of Chrysler, the bailout didn't cost the federal government a penny. The government provided a $1.2 billion loan guarantee which never had to be used. The auto workers came to the picnic when the UAW gave Chrysler a special cheaper deal than GM and Ford workers got in 1979. I don't recall the details--I believe the COLA (cost of living allowance) was frozen and a longer contract granted. In 1979 the politics were more favorable to the U.S. auto companies and the UAW than at present.
Interesting discussion here, thanks for bringing it up pgrundy.
I must say that selling nuclear secrets to China for a few drops in the bucket $ (which is what it equates to in the grand scheme of things) does us no good. We need some serious changes for this to not impact us in the long run because at this pace we'll out-borrow our own imaginations!
Pgrundy is correct that, to put it mildly, the federal government is short of money and long on things that need to be done--Medicare, housing crisis, etc. The first place to start is to let the Bush tax cuts for the rich expire. Other taxes can be increased. The U.S. has the lowest tax rates of any industrialized country and the most potholes in the roads, collapsing bridges, etc.
Ralph, I hate to say it but our road system is quite good compared to other industrialized nations. But apart from that point I agree that the rich shouldn't have as many tax cuts and that overall the US has some of the lowest tax rates.
Oh and not that I'm a pessimist, but I'd add social security to that "etc" you posted...
Nice one, Pam! People seldom even look at the situation as presented, let alone get down to the nuts-and-bolts of it. It's also a very rare situation where I can correct an error in one of your Hubs - let alone an error regarding the economic situation.
The FDIC wasn't created to prevent runs on banks. Sure, that was its stated purpose. My understanding is that it was created to reassure U.S. citizens after the very pre-planned run on the banks in the Great Depression. For some excellent research on this, check out the documentary Zeitgeist on YouTube:
The Federal Reserve segment: http://youtube.com/watch?v=_dmPchuXIXQ
The World Trade Center segment: http://youtube.com/watch?v=7_E4N5YIycI
You're so right in the politicians acting like used car salesmen. That's pretty much what they are. They're deeply in the pockets of the banking cartels, and are _trying_ to run us into more debt now - because they're working for the banks. Hence all the erosion on rights, as the bankers - which have done this the world over - work to create a global banking state. Sure, eventually people will see through the politicians' cheap ploys, but they're quite intentionally trading those falling approval numbers for military brute force. They're betting that by then, they'll have the military might to make dissent from citizens irrelevant. It starts with psychologal tactics from our representatives like, "What do you mean, economic problems? Shut up and sit down, before I send you to the principal's office." But it's got far beyond that by now. Remember kids, border-tightening can do a heck of a lot more than just keep people _out_ of a country... it can also keep them _in._ And as we're training our soldiers overseas for "urban combat" operations - detaining people, questioning, interrogating and torturing them, and forcibly installing a new system of governance, W. has just passed legislation which purports to allow him to swap out police officers for soldiers here in the U.S. whenever he feels like it.
http://www.projectcensored.org/top-stories/article
I guess it's true what they say. Regime change really does begin at home. And don't forget the mass secret arrests, already in progress.
Not where I live, are the roads quite good. We do have a good interstate highway system. However, in my experience roads in Europe are not in disrepair as they are in Michigan. Ours are closer to those in an underdeveloped country. And it was only a couple of years ago that the huge bridge in Minneapolis failed. I can't cite figures, but I've read plenty of articles since then about how many unsafe bridges there are in this country, not to mention levees along the Mississippi and in other parts of the country, e.g. the Sacramento River. The roads in and around Detroit are shemeful--lots of potholes and expressway roadsides lined with trash. I've never seen anything like that in Europe. More like Brazil and Mexico.
Basically, we have allowed our infrastructure to deteriorate to the point where we can't afford to repair it, but neither can we afford not to repair it.
@ Satori: And unfortunately that's where I suspected the conversation would go. Zeitgeist is such a pot of croc. It's full of thick, underlying agendas, lies and mis-quotes. I've watched it three times, so don't think I watched 10 minutes and wrote it off.
Apart from that movie, or rather in light of it, we are now discussing conspiracy theories? I suppose I shouldn't be that surprised as this was eluded to earlier, but this is where I have to stop.
@Ralph: I had a friend who grew up in Michigan and he said the roads there were horrible as well. I suspect Michigan is pretty high on the "crappy roads" list. But compare it to roads in Jamaica, Netherlands, Belgium, Mexico, etc (all places where I have been) and we're in good shape. In fact, many countries marvel at our traffic systems (albeit conducive to horrible rush-hour flow!)
WeddingConsultant, I have over a decade in researching the political and economic situation in this country, and can show you stuff that's actually on the books that would make your head spin. It's easy to dismiss something by calling it a crock - can you support that please? I mean, the idea that most of our mainstream media is held by the same small handful of corporations would seem pretty far-fetched as well, but it happens to be manifestly true. Conspiracy theories are only theories until you can prove them - at which point, they become conspiracy fact. The direction outlined in Zeitgeist correlates well with the decade of research I have done in this area.
Satori, well we should establish something that we both agree on first- Zeitgeist has SEVERAL focal points. Hopefully you'd agree with that. So since you need proof of my dismissal of it as evidence, let me dig up a link to a conversation I had about it in the forums about a month ago...
WeddingConsultant, yes it certainly does. I'm not even talking about the first segment on solar deities - which I do have a problem with (not because it's inaccurate, but simply because it's easy to take a data-set and recontextualize it to make a case for anything... solar affiliations or not, it doesn't undermine the basic spiritual value of the Gospel). Take the time you need to find the link - in fact we may even want to discuss this over e-mail instead, just to prevent a flamewar from erupting (as tends to happen when conversations like these happen in a public venue). =)
You know what, let's do that via email.
I'm sitting here sifting through my 800+ forum posts and I can't find it! haha
I'm also trying to find the source of this PDF file I have rebutting the movie, but I can't find that either! It would be better off as an attachment in an email...
Check your inbox- I look forward to further dialogue on the topic as it seems you've done some extensive work in the area!
Sounds good. If you remember what the PDF was called, I can check Google for it.
Unfortunately the name is called "zeitgeist.pdf", so it's of no help. I already tried to search for it that way and couldn't find it...
Wow, lots comments! I popped over to write my blog and came back to this. Cool! I'm glad you two--Satori and Wedding Planner--decided to continue this via email.
Ralph, well let's hope that something that painless could solve the auto industry failure here today. I doubt it could though. I get the sense it's over already, that we won't be getting those industries back and that they aren't even really trying to come back. GM is already focusing on China as both a market and a place to produce vehicles.
I live in Michigan too, and I can verify that the roads do suck, but not nearly as much as the Indiana roads suck. I was born in Indiana, the only southern state north of the Mason-Dixon line, and all that that implies. We're kind of the Mississippi of the North. Which is why I moved to Michigan.
pgrundy, maybe the CHICHENS are coming home to roost. It is getting very scarey out there. Milk, my measurement for the economy, sells for the same price in our town as a gallon of regular gas.
Over the past 10 years or so, while we slept, the rich got richer and when we woke, their plan was so fine tuned, we couldn't hear the music! We're gonna have to hang on to our shirttails as we might lose them next.
There is a sign on the counter where I go for the business banking - and it reads something to the effect that after your deposit, you may not be able to access your funds for 5 days, 10 days, or more.
I remember signs about 3 days, and for some checks 10 days, but I've not seen this -- now its getting worse, they want to operate on the "float" for a longer period of time.
Maybe we ought to cash the checks when we get them and stick the money under the mattress! Talk about the Eye of Hell....it may be that which we've never seen before. A cheery thought.
Mariesue, our bank just changed its policies to make it easier for people to get overdrafts. They are doing this intentionally to generate revenue. Availablity on deposits is different, fees are higher and charged sooner, and they told us flat out it is to generate money for the bank. We are on the front lines taking the rage and abuse, and they just keep leaning on us to make them more money while telling their own customers to drop dead. It makes me sick.
Today was a rough day for me there--thank God I only had a four hour shift, I barely got through that, another minute and I would have lost it. I took so much crap from all sides---my supervisor was shaming and threatening us if we don't get more sales, the sales department was biting us if we sent them anything less than big new money, and customers were biting my head off, all while the bank's stock fell (at one point) 30% in a single day. Corporate was out in front of the cameras denying that there was a run on the bank today.
What a circus. I dread tomorrow.
Bank suits denying a run?
Well, that's about it then!
Interestingly, the local and national news in Australia has gone VERY quiet on the US finance issue.
Nothing on the local or national radio today. Nothing in the paper.
Calm before the storm ??
Funny you should say that Eric, that's exactly what I thought: Like, oh no, they have a freakin' PRESS RELEASE now denying a BANK RUN! I read it in the NYT inbetween phone calls from enraged/freaked out customers and thought, OMG it's all over.
We ended the day down 15% although at one point we were down 30%. I think our stock is right around $3.70 now. We're on a short list of banks that may tank next.
I do think there is pressure on the international press, and the US press, to be calm, make nice, normalize everything. That just makes it creepier.
I read somewhere that a whole bunch of other banks 90? may be in trouble.
Yes, the FDIC lady was all over the news today saying happy things too. They expect the number to go up to around 150, but she kept stressing that in 1994 their watch list included 575, so 150 is no big deal. I think if that were true, she wouldn't have been all over the news saying it.
Happy-talk is never a good sign.
PJGrundy ... hope tomorrow holds some pockets of sanity for you.
pgrundy,
Some observations:
!) What does Jesus have to do with Freddie Mac and Fannie Mae?
2) Indy Mac failed because they handed out mortgages to any one who walked trough the door. Most of their mortgages were not based on the lender's ability to pay but on the valuation of the property.
3) The vast majority of mortgages bought by freddie mac and fannie mae are solid.
4) Further government regulation of lending only dries up the available pool of investment money necessary for growth.
5) Fannie Mae and Freddie Mac will not fail.
Thanks for you hub, it was interesting.
sschilke
@ sschilke
Good to hear that Fannie Mae and Freddie Mac will not fail.
Can you please explain where the money's coming from to save them? As far as I am aware, this formerly dynamic duo have liabilities of some 5 trillion dollars. That's about 35% of the GDP of the USA.
That's a huge statement about the solidity of their mortgage book. Maybe you're right. But if you are, what's all the current fuss about then?
Eric,
If all of the 5 trillion dollars of liability, namely all of the mortgages purchased by Freddie mac and Fannie mae, were at risk, I would be inclined to be scarred off by the whopping numbers you toss about. I am not convinced that the majority of mortgages held by these two entities are in danger of default.
As for the media, when then things in the market go well, they overplay it. When things in the economy sour, they overplay it. There is a mortgage crises in certain segments of this country and with certain types of mortgages (arm's), but the vast number of mortgages are sound.
I will wager you a cup of coffee at Tim Horton's (Canadian influence) that Fannie mae and Freddie Mac will not fail. In the end, only time will tell, but as for me I am not overly concerned about either Fannie mae or Freddie Mac.
Thanks for the discussion.
sschilke
Wel,, I'm a long way away from the US and Canada, and don't really know what's in the bag of mortgages. Neither do the people who buy the derivatives based on them.
However, I agree that there must be some good ones in there.
How many? I wouldn't have a clue.
It's like buying sausages.
Some are full of high grade meat. Others are mainly fat and gristle.
What's in the sausages made by the home loan packagers?
Nobody knows. that's the scary bit.
Anyway, I hope you're right about the high quality of the FM/FM portfolio.
I guess we'll find out in the next few months.
Next time I go past Starbucks I'll have a short black in your honour :-)
Hi Guys, Thanks for the comments. I'll take JC out of it. Have a great day.
Tuesday morning and Ben Bernecke and George Bush are on TV at the same time talking while the CNN crawl shows the Dow Jones Average down below 11,000 for the first time since 2006--but pay no attention to the man behind the curtain. All is well here in this best of all possible worlds:-)
Fanny Mae and Freddy Mac will be fine--they are too big to fall and only about 1% of their mortgages are in trouble. The government--read that American taxpayers--will bail them out continuing this administration's policy of privatizing profit and socializing loss.
I'd say this hub is definitely "evergreen" pg and may even have historical value. Wonder where the Dow Jones will be by closing time? Great hub and great comments BTW
Hi robie2! Yes, the market started down on a loss of confidence but I just got home and now it's recovering on a drop in the price of oil. Everything is very voloatile right now and that's shaking people all over the world, but it's hard to say where it will go from here. Lots of calls today at the bank about FDIC and lots of people looking to pull anything over 100K. But when I left, our stock was up a bit. Meanwhile my 401K is losing 14% but I'm going to leave it alone. I know I have it allocated right so I'm just going to quit looking at it. I makes me too nuts to think about it.
It is indeed a terrifying ride that the American public and investors are on. Excellent Hub on the recent news. Stay tuned.... right??
Right Stephanie! It's scary. I think everyone in the country feels like they are walking on eggshells. We'll see what happens...Thanks for your comments!
pgrundy, you've definitely got the job with a hot seat...but you know...if you can look at like the freak show that it is...(besides which helps pay the bills, I know that's scarey if you lose it) -- it just might be the most interesting seat in the house. Front row, drama galore, people freakin' out...at some point it just get's hilarious.
At least, I hope you can kinda "sit back and enjoy the show" since you can't stop it..
We sure don't want you to let them upset ya...I say, as I lick my own wounds over some things that went wrong at my job today. We are also experiencing all kinds of pressure to find customers who need storage...as people move out of their homes, they have to put their things somewhere, right? And where in the world are the loans for new storage sites coming from?? The market is saturated with them now...which dilutes all profit and pricing. sigh. It's the dominoe effect.
Who's going to get the next BUMP?
hang in there ladybug, and TAKE PICTURES. You might be able to sell them to CNN, etc.
Hey I never thought of that--the pictures--but I'm pretty sure they'd sue me right away. I write for an economists website www.amateureconomists.com for pay, and I have to do it under a pseudonym so I don't get sued when I talk about the bank. I never name the bank, but the owner of the website said another writer was sued for writing about her workplace under her real name.
Still, you're right, it's not boring! So sorry about the pressure at your job, you know, it's like the people at the bottom are getting squeezed hard now to generate profits for the corporations, but we can't pull it out of our butts, can we? We can only do what we can do. Hang in there!
pgrundy,
Here's a thought to hold with you over the next ?? days that may help you through:
"I used to be disgusted. Now I'm just amused".
I just heard George Bush on the radio, and he said something like
"I'm an optimist, not an economist. We've got growth, we'll be fine" and "Our financial structure is strong".
Now I REALLY know it's going to hit the fan in a big way!.
LOL! Eric, I thought the exact same thing when I heard Bush say our financial system is basically sound. I thought, OMG we really ARE screwed!
I'm still stuck at disgusted at work but I got a sale (finally) so maybe that will help me get to amused. Time will tell. I'm working on it, I'll keep you posted.
It sure isn't boring, I'll say that much!
yeah, I heard Bush's reassurance, I'd like to email him "Hey, your face said it all, and we don't feel better, AND IT'S ALL YOUR FAULT. - and by the way, Emperor, YOU'RE NAKED."
BUT, I don't think he can read. (hmmm, naked, can't read, wrong on the war, wrong on the economy...thank goodness his mother loves him...it's not a pretty sight.)
@pgrundy
This is off on a tangent, but It's interesting that the person who complained about your use of the word "Jesus" in your original title has put the following hub.
http://hubpages.com/hub/Politically-Incorrect-No-A
And also tells these jokes and riddles to his 4th grade students.
Wonder whether disabled people and amputees would find them so amusing?
I'm still trying to understand how it's perfectly OK to to make fun of disabilities and misfortunes that affect real people, yet get all uppity when someone merely mentions the name of a religious icon in a financial context.
And shame on you pgrundy for spoiling the title. :-)
Eric Graudins,
Very interesting comment.
I didn't ask Pgrundy to change anything in her title or complain about it. I only made an observation, just as you have made an observation about my hub. I value your opinion and feedback even though I find it a little harsh for what amounts to a piece of fiction. Regardless, it is your opinion and I respect that.
It is quite strange though, that we are having this exchange on Pgrundy's hub.
Sschilke
Sorry, I must have clicked the comment button twice.
I'm sorry you found it harsh. It was intended to be mild!
And you're right - We both just made observations - and it was 50/50 whether I mentioned it here, or on your hub. Doing it on both would be overkill.
Anyway, hope we can still be friends :-)
Eric,
Of course we can still be friends. After all this is hub pages, not life or death.
Hope to hear from you again. (but not on this hub.... we are so off topic, pgrundy must be wondering what the heck is going on)
sschilke
After the last few days, pgrundy probably won't even notice the off topic posts.
She's probably sitting in a corner right about now cutting out paper dolls and endlessly repeating "I'm a teapot"
Sorry, Couldn't resist posting this fragment from a newsletter I get.
And then I really must get back and do some work!
------------------------------------
EVENT HORIZON by James Howard Kunstler
There’s a particular moment known to all Baby Boomers when Wile E. Coyote, in a rapture of over-reaching, has run past the edge of the mesa and, still licking his chops and rubbing his front paws in anticipation of fricasseed roadrunner, discovers that he is suspended in thin air by nothing more than momentum.
Grin becomes chagrin.
He turns a nauseating shade of green, and drops, whistling, back to earth thousands of feet below, with a distant, dismal, barely audible thud at the end of his journey.
We are Wile E. Coyote Nation.
Is there anyone in the known universe who thinks that the U.S. financial system is not fifty feet beyond the edge of the mesa of credibility?
(From Daily Reckoning, 16 July 2008)
I am actually happy about this. Our country needs a correction. This isn't about one president or a few congressmen, or the rich or banks. It is about a society that has lived far beyond its means and passed the buck for too long. Why is there an objection to the government bailing out industries while it is expected to bail out people all of the time? When all of this crazy lending of money was going on over the last 20 years were people in the finance business suffering from guilt? Homeowners are not owning their homes they are renting them. THe abundance of fake money has made everyone captives to the credit agencies and banks. THis is all part of the " service industry" crap that his been touted for the last 15 years to hide the loss of tangible outcome from our economy.
Nothing personal but screw the banks and the people who work for them. It is one big parasitic industry. Perhaps this economic gloom will cause people to take a new look at their priorities. I am sure that even though CD's are down, DVD sales are fine. I don't see a large movement to throw cellphones into the Potomac or an increase in tv antennas going up on rooftops. People are bemoaning the economy and the talking heads all while watching large flat panel tv's with 300+ channels.
As a society we are not victims of a gross conspiracy, we are a product of our shared tendency to overendulge while expecting no ramifications.
The greeks understood temperance, all we know id decadence.
Thanks for the good hub and great comments
I have been trying to search the news to see what is really going on in the US but maybe this Hub gave me too much of what is really going on. Is it really that scary? I mean I'm living in dollars here in France so I know the exchange rate and dollar decline is real but this sounds very scary.
Hi everyone,
Eric and sschilke, I just steer away from arguments over JC anymore because its nonproductive. I didn't think it hurt the title to take Jesus out of it, so I did, for the sake of NOT derailing my hub into Christian faux-persecution territory. Although I did leave an unpleasant note on a God-hates-gays hub yesterday. That guy, I think he may be tracking me down at this very moment, AK47 in hand...
Eric, you crack me up. And I AM a littleteapot, for your information!
James Kunstler is a good apolcalptic author with what I think is a fairly accurate vision of what is to come if we don't straighten up--you can already see it happening. His ideas about suburbia are especially interesting. I say him on The Colbert Show and looked him up online--I'll post some of his books here on Amazon if anyone is interested.
funebone, I agree with you mostly, but I also think that 'us' is too wide a term. Not all of us behave that way, and many of 'us' who don't are paying for a few at the top of the pile who do.
francetales, it is pretty scary here. The decline of the dollar only tells part of the story. Since Friday, lots of people here in the US have been holding their breath, just waiting for the other shoe to drop. I know I have. I see the European indexes are down again today and the Dow is set to open lower. We'll see what happens. You might want to switch to euros if you can while you can.
The Founders of our nation demanded of us that we keep a very close eye on our government. They told us never to allow political parties to take the place of electing people who would be our public servants. We did not listen. Our politicians now pay more attention to party than to citizens. They even try to make us feel guilty for trying to hold them to task. Shame on them, and shame on us.
Unfortunately, the idea of public service has given way to political self-service, and we are going to bear the brunt of this selfishness that has become all too common a factor in U.S. politics. Moreover we have no one but ourselves to blame.
The worst is indeed yet to come and I am not being over sage here. We see the tip of the iceberg and we are simply rearranging the deck chair on the Titanic in response to the gash in the side of the U.S. economy.
Fannie Mae and Freddie Mac are like two behemoths that have gobbled up everything in sight and are still hungry. What happens when we spend too much money shoring them up? What happens when a few hundred billions of dollars here and a few hundred billions of dollars there rob the treasury of all available cash? How can we even hope to grow if we are constantly spending money to correct the mistakes our leaders are charging headlong into?
It is time for a drastic change. If things keep going as they are, expect dramatic and very drastic changes. Never forget that in the 1930's people were ready to bring about violence and open revolution to change the staus quo. Are we that far from it now? When do we reach the tipping point? And where does the point of no return begin?
We indeed do trust that those otherwise worthless pieces of paper we call money have value - but what happens when we have to start printing them like Weimar Germany did Deutschmarks in the 1930's? The once valuable Deutschmark became so worthless that it was said a person took a wheelbarrow full of million Mark bills to the bakery and brought home a dinner roll in one's purse.
We can't undo the past - the best we can hope for is to survive the future, secure in the knowledge that we are indeed our own worst enemies because we chose to vote for parties instead of leaders, because we settle for self-serving officials rather than officials who understand that they are public servants. Our leaders are supposed to work in our best interest, not in their own, yet we allow them to get away with it! Would we be allowed to get away with it, and then be given a pension afterwards?
When you vote, don't vote for idiots like we have in the past. Demand better, and don't be put off by cheap imitations of leaders. We deserve better, but we won't get it unless we are demanding and constantly vigilant.
Be vigilant.
Demand better.
Don't accept cheap imitations.
But, you guys, are you not listening? Bush says we're alright. What part of alright do we not get? Oh, that part. The price of gas, food and rent part. Well, is he ... I was going to say is he deaf, blind, and dumb, but I don't want to insult those who cannot hear, see or speak.
America, get ready, and dig out the tools of common sense and forward thinking. Preparation is key. Chef, you always lend so much -- it does seem grim doesn't it.
Yes, Marisuewrites, I am afraid it does look grim. I wish, I hope and I pray that things get better. But there are some politicians who seem Hell bent on making out that everyone who is suffering a foreclosure somehow deserves what is coming to them. There are 7,000 foreclosures a day, according to what I heard on the news yesterday.
Is Phil Graham trying to say that we are just a bunch of whiners who tried to cheat the system? Why isn't he saying to all of us - "I apologize that for all that time I spent in the Senate it never occurred to me that the policies I proposed and backed were going to ruin our great nation."
Instead of being allowed to spout off his stupid statements he ought to be standing before a judge and jury for the gross negligence and abuse of power for the time he spent in Congress doing everything except representing the wonderful people of this nation.
Better yet, maybe we could take away his pension and wealth and use it to get the oil companies to start drilling on the lands they now lease instead of whining about how we are preventing them from getting leases on new land.
As for Phil Graham - he is not alone. I hope someone can name a politician they know of who REALLY acts as a public servant and puts party and special interests far down the list when it comes to making correct and good choices for the nation.
I would like to know of at least ONE elected leader out there who knows and understands his or her role is that of a public servant, doing things that will make our country better off today than it was yesterday,and better off tomorrow than it is today.
Right now I can't think of any.
Hi mariesue and Chef Jeff,
Wow I'd like to come up with a cheerier scenario, but I do think the Titanic is a good metaphor. I too worry about when the tipping point will come and how bad it will be and how fast it will get bad. Right now, they are still trying to spin things. This thing won't spin though. Oh sure the market will cheer up for a minute or two (it did today) until the next catastrophe hit, at which time it's the Keystone cops all over again. At some point, and I fear soon, the general public will have enough of it and then we'll it really get ugly. That's the part that worries me. Violence. It could well come to that, and long before November 11 too.
Part of our problem is that we weigh the actions and reactions of the stock market too highly. Why should things like oil be subject to the mercurial whims and fears of the market place?
It's time to make some adjustments in the things that can be seriously damaged by free trade. Oil is but one of the commodities that needs to be taken out of the realm of speculation.
Yes, the market has been insanely volatile this year, and speculation is part of that. I read that Congress is trying to clamp down on short sales--stock traders that bet on stocks to fall and screw everything up. I have no faith in Congress to fix much of anything at this point though. I get the impression that Washington and the Fed are just reacting instead of acting, like there's no real plan or understanding, just damage control and kneejerk bandaide solutions. What a bunch of buffoons.
That's some excellent information. Thanks for posting.
Dear Pgrundy-
Well said. But we DO really trust these guys, don't we?
I mean, come on, with all this going on, Apple's servers crashed on Monday because they could not keep up with the demand for the 3gig iPhone-a mere $499.00 a pop! For a freaking phone!!
The sad truth is that 50% of the American people are walking around with their heads up their proverbial butts and the other 50% are talking on their brand new $500 phones and complaining to their friends that they had to stand on line for an HOUR to get one! Sure, they look at the headlines and groan, but do they change their behavior? Do they vote differently? Spend differently? Use resources differently? Of course not! Gas is up to $4.50 a gallon and SUV"S and Hummers are still cutting each other off on the freeway, oblivious to what is going on in the "real" world. And we wonder why the crooks, liars, child molesters and drunks that are running this country into the ground get away with it?
If the people of this country had any sense we would have demanded full accountability from our government a long time ago. George Bush and Dick Cheney would be in jail, as would half of Congress and about 75% of the bank CEO's who are- instead-right about now sipping cocktails on the verandas of their tax-shelters in Belize, counting their money out of view of the IRS or the SEC and laughing their asses off about how they got one over on us.. again.
Despicable people do despicable things-yet we keep electing them and allowing them to continue running the corporations that control a very large chunk of the American pie. We know what's going on, yet we are too lazy, scared or dazed by our Blackberries, All Digital Big Screen TV's with "High-Def" and Surround Sound and the First Ever photo's of "Brangelina's" twins to take the action that needs taking.
Now we are looking at this band of thieves and asking them to fix this mess-pretending that we don't know that they are completely incapable of doing so. And the only thing I can say that makes any sense is that we deserve what we're getting. It's too bad, though, that the real fallout from this disaster-including a National Debt that has already bankrupted our grandchildren's futures and will continue doing so for generations beyond theirs-is not going to be felt until long after we are gone. Maybe if some real consequences rained down on our heads we might wake up and demand some real answers and some real action before it REALLY IS too late.
Hi Kathleenclo> Amen to everything you said here. I've said it before and I'll keep saying it until they throw me in Gitmo: Impeachment is too good for this crew--Bush, Cheney et al should be tried for treason. I'd say execute them, but that's too easy on them. They ought to be locked up with the people they torture and be subjected to the same procedures. I mean, they stand by those methods so they shouldn't have any complaint about being subjected to them.
I fear our country has been dealt a death blow. We will never be what we were. We'll be lucky if we recover from this in two or three generations.
good hud.....Arc_Jet1
jetwifi.blogspot.com
http://www.xomba.com/my/xomblurb
http://www.xomba.com/xombyte/archilyn
http://hubpages.com/hub/Definition-of-Rheumatoid-A
http://hubpages.com/hub/All-about-Wifi
http://hubpages.com/hub/How-to-tell-neighbors-you-
http://hubpages.com/hub/Ways-to-Build-Strong--Happ
http://hubpages.com/hub/ABCS-of-Romance
http://hubpages.com/hub/The-Titan---Counter-Strike
http://hubpages.com/hub/Ragnarok-Online
http://hubpages.com/hub/Best-Free-Antivirus-Softwa
OK, It looks like the hot air that was pumped into Fannie and Freddie's tyres by Paulson et al has all leaked out.
Share values have dropped from around $70 a year ago, to about $4. Prices dropped about 40% in the last week.
Will the Govt. nationalise them?
Will someone buy them?
How is this affecting people in the US?
Must be pretty well impossible to borrow money for housing.
Hi Eric! I like your new photo. Very dashing! Actually I was just thinking of writing another hub on this, since the whole issue is heating up again this week. The Fannie/Freddie bailout was tacked onto a bill pretending to help homeowners in foreclosure, and the big song and dance at the time was "we'll never need to use it, it's just to restore confidence in the markets."
Yeah, right. Whatever.
Already it appears obvious that we'll have to use it, and there is speculation that a group of investors is driving down the price of the stock on purpose to force the Fed to step in and back both entities with federal dollars sooner rather than later. But what federal dollars? If we just print some more up, that's going to really spike inflation, which in the past two months has jumped to 17-year highs. We had an inflation rate of 1.9% in July--JULY. A single month. And that's before we rescue Fannie and Freddie with funny money.
I'm really sick over the state of the country, just sick over it. I looked at my stats at the bank yesterday and they've got me at a sales goal of just under a million dollars for August, when I work 4 hours a day getting cussed at by overdrafted persons. That's insane. I can't just pull money out of my butt (although, if I could, that would be SO cool!) Miraculously I made my insane sales goal of a quarter million last month, at the last minute, but right now I'm at $29,000 out of $775,000, and our bank stock is running at around $4.90.
I think they're just setting up bogus reasons to let us go in case they need to so they can save themselves from paying unemployment insurance for a month on the grounds we were all canned for incompetence.
I have no clue what will happen next, but my guess is it won't be pretty.
I think he may be right. I read the article. Scary stuff.
Its very interesting and i got more information from your hub. Here i posted recently one hub one http://hubpages.com/hub/MortgageCalculator May be it will be useful for you.
Eric Graudins says:
17 months ago
Hi pgrundy.
We're in uncharted waters here folks, and the maps are outdated, and the captain of the ship is blind.
The wheels and levers that always worked before are useless - they don't connect to anything any more.
It's far too late for the government spin doctors to have any effect.
For over 50 years our society has been treated like mushrooms.
Kept in the dark, and fed on bullshit, while the Masters of the universe conjure up new "systems" and financial instruments to maintain the illusion, and line their pockets.
Many banks and investment advisors don't even understand how these new financial instruments operate. But that didn't prevent them from unloading them onto their clients.
A bail out of Freddie and Fannie and the others would have to surely be the biggest example EVER of taxpayers subsidising the disastrous actions of private enterprise.
My mind just shuts down with the implications and flow on effects for the american mortgage system, the global financial system, and our way of life.
The chickens are really coming home to roost on the excesses of the past, and I suspect that the perches aren't strong enough to take the weight. I hope that my many US friends on Hubpages make it through OK.
Somehow.
And that the fallout here in Australia isn't too bad.
And to those people who think that this is just scaremongering, and everything would be alright if nobody said anything - I hope your philosophy works out for you.
I'm just waiting to learn how a problem caused by too much cheap, easy money can be fixed by the application of unprecedented amounts of the same.