Comments on: The Government Hopes the Snakes Can Solve the Lizard Problem http://briansullivan.blogs.foxbusiness.com/2008/12/03/the-government-hopes-the-snakes-can-solve-the-lizard-problem/ FOXBusiness Fri, 20 Nov 2009 18:24:21 -0500 http://wordpress.org/?v=2.8.5.2 hourly 1 By: Robert http://briansullivan.blogs.foxbusiness.com/2008/12/03/the-government-hopes-the-snakes-can-solve-the-lizard-problem/comment-page-1/#comment-2666 Robert Thu, 04 Dec 2008 18:59:47 +0000 http://briansullivan.blogs.foxbusiness.com/?p=325#comment-2666 Also, are you arguing free market or govt. intervention. Free market would argue that Wall Street created the mess and we should allow their reaction to the problem to be the solution. There are two schools of thought on what to do and you're sort of saying you don't like either... Do you have a third idea we haven't heard about? Also, are you arguing free market or govt. intervention. Free market would argue that Wall Street created the mess and we should allow their reaction to the problem to be the solution. There are two schools of thought on what to do and you’re sort of saying you don’t like either… Do you have a third idea we haven’t heard about?

]]> By: Robert http://briansullivan.blogs.foxbusiness.com/2008/12/03/the-government-hopes-the-snakes-can-solve-the-lizard-problem/comment-page-1/#comment-2665 Robert Thu, 04 Dec 2008 18:57:08 +0000 http://briansullivan.blogs.foxbusiness.com/?p=325#comment-2665 Well, they may not single-handedly get us out of it, but if there's no market for mortgages created on Wall Street we haven't even begun to see how bad it will get. No rational person would suggest that they will "get us out of it", however, without considering the effects of bank policies and government action on the MBS market, there's no hope of making any effective decisions.... Unless of course you plan to dismantle the entire world economy and go back to bartering goats for food. Well, they may not single-handedly get us out of it, but if there’s no market for mortgages created on Wall Street we haven’t even begun to see how bad it will get. No rational person would suggest that they will “get us out of it”, however, without considering the effects of bank policies and government action on the MBS market, there’s no hope of making any effective decisions….

Unless of course you plan to dismantle the entire world economy and go back to bartering goats for food.

]]> By: David D. http://briansullivan.blogs.foxbusiness.com/2008/12/03/the-government-hopes-the-snakes-can-solve-the-lizard-problem/comment-page-1/#comment-2663 David D. Thu, 04 Dec 2008 18:10:17 +0000 http://briansullivan.blogs.foxbusiness.com/?p=325#comment-2663 Lizards, snakes and gorillas – One of the best analogies to date regarding our current economic calamities!! All of this frantic – and I mean FRANTIC – governmental activity only serves to validate the greatest warnings concerning massive economic interventionism / social engineering: it becomes impossible to stop. Once politicians, government functionaries and the pseudo-capitalists sip from that cup, they must keep going back for more. Free markets (the true objects of destruction in all of this) don’t just inadvertently result in occasional failures and losses, they REQUIRE it to function properly. For what was once the greatest engine – and distributor – of prosperity on the planet, all of the dramatic rhetoric about “new paradigms” is, unfortunately, very true. And unlike the character in another, much older, television cartoon, when the damage and mayhem becomes untenable, you can’t just yell “Help, Mr. Wizard!” Lizards, snakes and gorillas – One of the best analogies to date regarding our current economic calamities!! All of this frantic – and I mean FRANTIC – governmental activity only serves to validate the greatest warnings concerning massive economic interventionism / social engineering: it becomes impossible to stop. Once politicians, government functionaries and the pseudo-capitalists sip from that cup, they must keep going back for more. Free markets (the true objects of destruction in all of this) don’t just inadvertently result in occasional failures and losses, they REQUIRE it to function properly. For what was once the greatest engine – and distributor – of prosperity on the planet, all of the dramatic rhetoric about “new paradigms” is, unfortunately, very true. And unlike the character in another, much older, television cartoon, when the damage and mayhem becomes untenable, you can’t just yell “Help, Mr. Wizard!”

]]> By: John http://briansullivan.blogs.foxbusiness.com/2008/12/03/the-government-hopes-the-snakes-can-solve-the-lizard-problem/comment-page-1/#comment-2659 John Thu, 04 Dec 2008 16:55:44 +0000 http://briansullivan.blogs.foxbusiness.com/?p=325#comment-2659 THey prove that with every day that goes by. THey prove that with every day that goes by.

]]> By: John http://briansullivan.blogs.foxbusiness.com/2008/12/03/the-government-hopes-the-snakes-can-solve-the-lizard-problem/comment-page-1/#comment-2658 John Thu, 04 Dec 2008 16:54:09 +0000 http://briansullivan.blogs.foxbusiness.com/?p=325#comment-2658 The government and Wall Street got us into this mess - for anyone to think that they will get us out is obsurd! The government and Wall Street got us into this mess – for anyone to think that they will get us out is obsurd!

]]> By: Robert http://briansullivan.blogs.foxbusiness.com/2008/12/03/the-government-hopes-the-snakes-can-solve-the-lizard-problem/comment-page-1/#comment-2656 Robert Thu, 04 Dec 2008 16:43:02 +0000 http://briansullivan.blogs.foxbusiness.com/?p=325#comment-2656 While I agree in principal with some of your concepts, at least one of your premises is exaggerated. The low rates of the past few years were a contributing factor to the "bubble". However, there were many other factors which do not exist in the market anymore. Relaxed underwriting guidelines resulting in little or no restrictions to buying homes with no down-payment, provable income or credit rating were the main culprit. With those issues "over eliminated" to the point where banks are reluctant to make even very strong, low risk loans, we may need something to jump start things a little bit. While I am concerned about over involvement from the government for the reasons that you point out, remember that the original issues were driven by the free market. Being in the industry, I saw first hand how Bank A would be driven to make lending guidelines a little more lax than Bank B's in order to bite off a segment of the mortgage market that they thought would perform. And for years, these "toxic" mortgages did artificially perform due to the housing value bubble that they themselves created. This created their incentive to keep relaxing guidelines in order to get more market share. That's the free market at work. I think the banks knew at some level that it would collapse at some point, they made the decision that the enormous profits today were worth the cost of tomorrow's collapse. They just underestimated the scope of the collapse. While I agree in principal with some of your concepts, at least one of your premises is exaggerated. The low rates of the past few years were a contributing factor to the “bubble”. However, there were many other factors which do not exist in the market anymore. Relaxed underwriting guidelines resulting in little or no restrictions to buying homes with no down-payment, provable income or credit rating were the main culprit. With those issues “over eliminated” to the point where banks are reluctant to make even very strong, low risk loans, we may need something to jump start things a little bit. While I am concerned about over involvement from the government for the reasons that you point out, remember that the original issues were driven by the free market. Being in the industry, I saw first hand how Bank A would be driven to make lending guidelines a little more lax than Bank B’s in order to bite off a segment of the mortgage market that they thought would perform. And for years, these “toxic” mortgages did artificially perform due to the housing value bubble that they themselves created. This created their incentive to keep relaxing guidelines in order to get more market share. That’s the free market at work. I think the banks knew at some level that it would collapse at some point, they made the decision that the enormous profits today were worth the cost of tomorrow’s collapse. They just underestimated the scope of the collapse.

]]> By: moving http://briansullivan.blogs.foxbusiness.com/2008/12/03/the-government-hopes-the-snakes-can-solve-the-lizard-problem/comment-page-1/#comment-2654 moving Thu, 04 Dec 2008 16:21:13 +0000 http://briansullivan.blogs.foxbusiness.com/?p=325#comment-2654 As an Atlanta based moving company I would love to see the mortgage rates drop to historic lows and see a rebound in the housing and moving markets. As a member of the US general population I look at all that is being done/considered to bail out the banks, the autos, the cities, states, and on and on and I think how and when does this stop? Also, If gov't can spend the way out of this and it is a good thing then why do we bother with the market economy in the first place? As an Atlanta based moving company I would love to see the mortgage rates drop to historic lows and see a rebound in the housing and moving markets. As a member of the US general population I look at all that is being done/considered to bail out the banks, the autos, the cities, states, and on and on and I think how and when does this stop? Also, If gov’t can spend the way out of this and it is a good thing then why do we bother with the market economy in the first place?

]]> By: brian http://briansullivan.blogs.foxbusiness.com/2008/12/03/the-government-hopes-the-snakes-can-solve-the-lizard-problem/comment-page-1/#comment-2649 brian Thu, 04 Dec 2008 15:46:43 +0000 http://briansullivan.blogs.foxbusiness.com/?p=325#comment-2649 Not to mention when interest rates rise later on down the road home prices will drop, leaving those who take advantage of lower rates now possibly upside down in their mortgages as many are now. Not to mention when interest rates rise later on down the road home prices will drop, leaving those who take advantage of lower rates now possibly upside down in their mortgages as many are now.

]]> By: 6ftrabbit http://briansullivan.blogs.foxbusiness.com/2008/12/03/the-government-hopes-the-snakes-can-solve-the-lizard-problem/comment-page-1/#comment-2643 6ftrabbit Thu, 04 Dec 2008 14:03:36 +0000 http://briansullivan.blogs.foxbusiness.com/?p=325#comment-2643 I love the Simpsons :). Good write up, Brian. Are you familiar with the basic concepts of Chaos Theory? Not the Hollywood movie variety, but the real mathematical thing? Specifically the "self-organizing" aspect of it. I love the Simpsons :) . Good write up, Brian. Are you familiar with the basic concepts of Chaos Theory? Not the Hollywood movie variety, but the real mathematical thing? Specifically the “self-organizing” aspect of it.

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