Fact, fiction, or possibility?


#1

Both presumptive Presidential Candidates, in their efforts to promote palatable bromides, are trying to “do something” to address this country’s current financial fiasco.

The most outrageous idea, allegedly seriously discussed, concerns the foreclosure debacle and gigantic mismanagement and financial losses of Fannie Mae. According to the media, 210,000 homes are presently foreclosed on each month, with no immediate end in sight. The seriousness of the large number of defaults can hardly be overstated. The “solution to the problem” allegedly contemplated is simply to allow Fannie Mae to arbitrage the foreclosed and about-to-be-foreclosed houses, and to market them as “rental purchases” at “reasonable rents” to occupants and to voters who do not have a large enough down payment to buy a home, thus guaranteeing eventual ownership. At whose expense? This is preposterous: the promise of something for nothing, except for a vote! First, the government bail-out would force the taxpayer to be obligated to pay for the losses of the largest financial mortgage institution; second, it would force the taxpayers associated with the rental industry (including MH owners) to compete in the market with the same quasi-government institution. It would reduce every homeowner’s real estate value. In fact, it would devastate the entire residential real estate market for years to come. We would, in effect, be obliged to finance our own competition! Who would survive?

The idea is incredible, and I would like to believe, one that would seriously backfire on its champion(s).

Is this the stuff of rumors, food for doom-and gloomers and congenital pessimists? It could not happen in the Land of the Free . . . or could it?

Is such an immoral, and gigantic, transfer of wealth even remotely possible? I don’t know.


#2

Bernd, I firmly believe letting the market absorb these excesses would actually put this mess behind us, and that any kind of a bailout will alter the market permenatley. I can’t imagine the unintended consequences of a bailout…and I feel quite sure our legislators can’t (or won’t) either. I consider myself only slightly aware of some of the complexeties involved in trying to unwind these asset backed securities that have been sold in countless tranches to bond fund investors. Congress could do no greater service to their constentuincy than to leave this one alone.

I heard how banks booked payments on the negative amortization loans- when an partial interest payment was being made (terms of loan) the unpaid interest would be added to loan balance…and get this, BOOKED AS PROFIT at that moment.

Kind of makes Greentree’s acounting practice of booking entire 30 yr MH loan payments less funding costs of loan as profit as soon they paid dealer seem almost reasonable.


#3

Shawn Cisco for President or Secretary of the Treasury (or Chairman of the Federal Reserve with the explicit mandate to abort the monster of Jekyll Island)! Your recommendation to face our economic-financial-social problems at the altar of the market is, of course, moral, economically logical, and, in the very best tradition of the American Way, it is elegant (as an extension of your thoughts, somebody observed a long time ago that people who freely trade with each other do not shoot at each other).

Interference in the market through new regulations, new laws, central planning (socialism), and unbridled force has historically been the birth of unintended consequences that proved to be worse than the original problem and prolonged the recovery period. Every one in our great nation would suffer the consequences in one way or another.

How could this affect the investors, the industry, specifically our M.H. community? It seems to me, and it has been noted by others in the forum, that change is in the air:

a. production in the M.H. industry is already changing.

b. consumption of our products and services seems to be changing and requiring us to creatively adjust to new market conditions.

c. generally, new employment patterns and consequently patterns of doing business have to be researched, recognized, and realistically responded to by us. We do live in interesting times, and business as usual seems to be passe.


#4

Check out ml-implode.com lots of interesting reading/viewing


#5

Here is a hilarious and informative slideshow on how the subprime debacle went down

http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true&pli=1