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2010-10-05 05:32:03
Jay
Bork! Bork! Bork!
+2,006|5636|London, England

KEN-JENNINGS wrote:

JohnG@lt wrote:

KEN-JENNINGS wrote:

this little blurb stood out to me:

I really don't get why packaging mortgage securities (among other things) and allowing them to be traded as commodities is a good thing?  The negative impacts far outweigh any positives.  Commodity trading in foodstuffs is going to result in more famine than any drought mother nature could possibly drop on us.
It's actually a fantastic way to get money into the system, far better than the old S&L system ever was. It hooks up investors directly with people who want to buy a home and spreads the risk around without putting any one bank under too much strain in case of a collapse in a local market.

The only negative comes about when there are more investors wanting to buy the bonds than there are reasonable mortgages to give out. This is what ultimately led to the collapse. The market got hyper-hot, sleazy mortgage brokers came in, gave out fake and/or unwarranted loans, had Fannie/Freddie back them, and the risk was dumped on investors who trusted the AAA ratings.

The problem was not with the bonds themselves, it was a whole torrent of mismanagement, fraud, and misguided beliefs in every other sector.
No, loans and other securities are bundled after the fact - that is, after the loan is already made.  The broker and underwriter make their money up front and alleviate themselves from the risk.  It's not the same thing.
The broker doesn't front the money himself though, he has to find a commercial bank willing to take on the loan. Then he goes back and tells the loan seekers if they've been approved or not. The broker is just a glorified, overpaid, middleman.
"Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."
-Frederick Bastiat
2010-10-05 08:10:54
KEN-JENNINGS
I am all that is MOD!
+2,981|6910|949

I never said he did.
2010-10-05 08:24:24
Jay
Bork! Bork! Bork!
+2,006|5636|London, England

KEN-JENNINGS wrote:

I never said he did.
Right, and what I'm saying is that under the old S&L system, the bank kept the risk within itself (somewhat, the US taxpayer was on the hook if the bank collapsed via the FDIC). With the advent of Fannie/Freddie, MBS and mortgage brokers, those S&Ls were made obsolete. S&Ls just couldn't compete with the amount of money the new system could bring to the table so they were pushed out.

The real problem within this system is Fannie and Freddie. They are the ones that back all originated loans and originate many themselves. They are the ones that package mortgages into giant blocks of securities and punt them onto brokers to sell. As a government agency, Fannie/Freddie doesn't have the motivation or quality manpower to perform this task without a lot of corruption being able to run rampant. It's also at the mercy of its political overlords who decide what percentage of all loans should go to unqualified borrowers.

If you don't believe me that government agencies by default fail, take a look at the rampant corruption and scamming that takes place within Medicare down in Florida. False claims, doctors selling patients items they don't need etc. Fannie/Freddie need to be destroyed and commercial banks need to go back to originating loans, without government backing. You want to see MBS' reflect reality? Take away that FHA sponsorship that lets investors know that their investment is ironclad and backed by the US taxpayer. When investors know they are on the hook for bad loans, they'll put a shitload of pressure on the banks, and thus the brokers, to do their job correctly.

Last edited by JohnG@lt (2010-10-05 08:24:56)

"Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."
-Frederick Bastiat
2010-10-05 08:52:43
cpt.fass1
The Cap'n Can Make it Hap'n
+329|6974|NJ

JohnG@lt wrote:

KEN-JENNINGS wrote:

JohnG@lt wrote:


It's actually a fantastic way to get money into the system, far better than the old S&L system ever was. It hooks up investors directly with people who want to buy a home and spreads the risk around without putting any one bank under too much strain in case of a collapse in a local market.

The only negative comes about when there are more investors wanting to buy the bonds than there are reasonable mortgages to give out. This is what ultimately led to the collapse. The market got hyper-hot, sleazy mortgage brokers came in, gave out fake and/or unwarranted loans, had Fannie/Freddie back them, and the risk was dumped on investors who trusted the AAA ratings.

The problem was not with the bonds themselves, it was a whole torrent of mismanagement, fraud, and misguided beliefs in every other sector.
No, loans and other securities are bundled after the fact - that is, after the loan is already made.  The broker and underwriter make their money up front and alleviate themselves from the risk.  It's not the same thing.
The broker doesn't front the money himself though, he has to find a commercial bank willing to take on the loan. Then he goes back and tells the loan seekers if they've been approved or not. The broker is just a glorified, overpaid, middleman.
actually majority of the times, the brokers do front their own money(well a credit line at a 9-13%) to the borrower then sell off the loans to the investor. If the loan defaults it gets put back on the line untill they can find an other bank to purchase it. The fact that you say a Broker/Loan Officer does no work is disgusting and when you find a property you'll actually see how much we really do. The attorney, the Realtor and everyone else in the process are pretty much useless once you find the property.

If you think the brokers do no work and have no risk you are sadly mistaken, their is alot of risk we take as loan originators and we're the sales people of the banks. The Realtors that sell the homes and guide people to homes they can't afford take no risk. In the sub prime market what happened alot is you talked to the client and found a payment they were comfortable with. Then the Realtor takes them to homes that were 100k over there comfort zone, obviously 100k on a home makes it far Superior to the cheaper home. The client falls in love and wants that more expensive home, so who's to blame? If you said No, he'd just go to an other Broker/loan officer.

The underwriters actually have insurance cause if a loan goes bad it's their responsibility. We FOLLOW bank guidelines and have to make sure they'll purchase the loan off the warehouse loan. Basically what you're doing is blaming the cops for enforcing stupid laws that the politicians create.
2010-10-05 10:06:52
KEN-JENNINGS
I am all that is MOD!
+2,981|6910|949

JohnG@lt wrote:

KEN-JENNINGS wrote:

I never said he did.
Right, and what I'm saying is that under the old S&L system, the bank kept the risk within itself (somewhat, the US taxpayer was on the hook if the bank collapsed via the FDIC). With the advent of Fannie/Freddie, MBS and mortgage brokers, those S&Ls were made obsolete. S&Ls just couldn't compete with the amount of money the new system could bring to the table so they were pushed out.

The real problem within this system is Fannie and Freddie. They are the ones that back all originated loans and originate many themselves. They are the ones that package mortgages into giant blocks of securities and punt them onto brokers to sell. As a government agency, Fannie/Freddie doesn't have the motivation or quality manpower to perform this task without a lot of corruption being able to run rampant. It's also at the mercy of its political overlords who decide what percentage of all loans should go to unqualified borrowers.

If you don't believe me that government agencies by default fail, take a look at the rampant corruption and scamming that takes place within Medicare down in Florida. False claims, doctors selling patients items they don't need etc. Fannie/Freddie need to be destroyed and commercial banks need to go back to originating loans, without government backing. You want to see MBS' reflect reality? Take away that FHA sponsorship that lets investors know that their investment is ironclad and backed by the US taxpayer. When investors know they are on the hook for bad loans, they'll put a shitload of pressure on the banks, and thus the brokers, to do their job correctly.
I have a mortgage with Freddie.  They gave me a 4.75% rate.  They offered me a cheaper rate than anyone else so as far as I'm concerned they are great.  But they obviously suck so I'm interested - who funded your mortgage and was it at better than a 4.75% rate?  Are you happy with what you got?

As far as bundling securities, that's hardly something only Fannie and Freddie do.
2010-10-05 10:22:45
Turquoise
O Canada
+1,596|6683|North Carolina

JohnG@lt wrote:

KEN-JENNINGS wrote:

I never said he did.
Right, and what I'm saying is that under the old S&L system, the bank kept the risk within itself (somewhat, the US taxpayer was on the hook if the bank collapsed via the FDIC). With the advent of Fannie/Freddie, MBS and mortgage brokers, those S&Ls were made obsolete. S&Ls just couldn't compete with the amount of money the new system could bring to the table so they were pushed out.

The real problem within this system is Fannie and Freddie. They are the ones that back all originated loans and originate many themselves. They are the ones that package mortgages into giant blocks of securities and punt them onto brokers to sell. As a government agency, Fannie/Freddie doesn't have the motivation or quality manpower to perform this task without a lot of corruption being able to run rampant. It's also at the mercy of its political overlords who decide what percentage of all loans should go to unqualified borrowers.

If you don't believe me that government agencies by default fail, take a look at the rampant corruption and scamming that takes place within Medicare down in Florida. False claims, doctors selling patients items they don't need etc. Fannie/Freddie need to be destroyed and commercial banks need to go back to originating loans, without government backing. You want to see MBS' reflect reality? Take away that FHA sponsorship that lets investors know that their investment is ironclad and backed by the US taxpayer. When investors know they are on the hook for bad loans, they'll put a shitload of pressure on the banks, and thus the brokers, to do their job correctly.
Out of curiosity, what do you think would happen if the FDIC no longer existed?  This is a serious question...  I'm not being flippant.
2010-10-05 16:00:47
Dilbert_X
The X stands for
+1,816|6384|eXtreme to the maX

JohnG@lt wrote:

Dilbert_X wrote:

JohnG@lt wrote:

The problem was not with the bonds themselves, it was a whole torrent of mismanagement, fraud, and misguided beliefs in every other sector.
And people buying investments they didn't understand.
Whose fault is that? I rarely feel bad for investors. They expect to make easy risk free profits and cry when that doesn't happen. Fuck them. No such thing as a free lunch.
But:
- If a 'reputable' company is selling an investment product
- They're regulated by the SEC
- They're rated by AAA by Moodys or S+P

Then the average investor has reason to believe its a reasonably safe bet, not blatant fraud.

Otherwise you might as well close the banks and tell people to stuff their money in mattresses.
Fuck Israel
2010-10-05 17:18:45
Jay
Bork! Bork! Bork!
+2,006|5636|London, England

Turquoise wrote:

JohnG@lt wrote:

KEN-JENNINGS wrote:

I never said he did.
Right, and what I'm saying is that under the old S&L system, the bank kept the risk within itself (somewhat, the US taxpayer was on the hook if the bank collapsed via the FDIC). With the advent of Fannie/Freddie, MBS and mortgage brokers, those S&Ls were made obsolete. S&Ls just couldn't compete with the amount of money the new system could bring to the table so they were pushed out.

The real problem within this system is Fannie and Freddie. They are the ones that back all originated loans and originate many themselves. They are the ones that package mortgages into giant blocks of securities and punt them onto brokers to sell. As a government agency, Fannie/Freddie doesn't have the motivation or quality manpower to perform this task without a lot of corruption being able to run rampant. It's also at the mercy of its political overlords who decide what percentage of all loans should go to unqualified borrowers.

If you don't believe me that government agencies by default fail, take a look at the rampant corruption and scamming that takes place within Medicare down in Florida. False claims, doctors selling patients items they don't need etc. Fannie/Freddie need to be destroyed and commercial banks need to go back to originating loans, without government backing. You want to see MBS' reflect reality? Take away that FHA sponsorship that lets investors know that their investment is ironclad and backed by the US taxpayer. When investors know they are on the hook for bad loans, they'll put a shitload of pressure on the banks, and thus the brokers, to do their job correctly.
Out of curiosity, what do you think would happen if the FDIC no longer existed?  This is a serious question...  I'm not being flippant.
Nothing really. The FDIC is an outdated institution that was created to back Savings and Loans. S&Ls no longer really exist as they were largely destroyed in the 80s and 90s by MBSs. It used to be that the government wanted to encourage people to put money into savings accounts in order to provide the funds necessary to originate loans. This is no longer the case. Frankly, depositors have very little to fear as large commercial banks don't collapse very often, and if they do, their accounts are scooped up by others. When WaMu collapsed, all accounts were transferred over to Chase and the depositor experienced virtually no change aside from the letterhead on their debit card and statements.

What the FDIC does now is simply allow banks that do take deposits to take extra risks because they know they won't have depositors howling at them if they go bankrupt. Instead of the depositors being on the hook for risky behavior taken by the bank, the US taxpayer is instead backing the risk. It's a fucked up situation. What's been created is a system where the depositor collects interest risk free and the taxpayer takes on the risk for them.
"Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."
-Frederick Bastiat
2010-10-05 17:26:12
Jay
Bork! Bork! Bork!
+2,006|5636|London, England

Dilbert_X wrote:

JohnG@lt wrote:

Dilbert_X wrote:


And people buying investments they didn't understand.
Whose fault is that? I rarely feel bad for investors. They expect to make easy risk free profits and cry when that doesn't happen. Fuck them. No such thing as a free lunch.
But:
- If a 'reputable' company is selling an investment product
- They're regulated by the SEC
- They're rated by AAA by Moodys or S+P

Then the average investor has reason to believe its a reasonably safe bet, not blatant fraud.

Otherwise you might as well close the banks and tell people to stuff their money in mattresses.
Right, and the problem wasn't with the investment product, it was with the people originating bad loans. As capt.fass stated a few posts ago, mortgage lenders are under tremendous stress to rubber stamp every loan that crosses their desk or they risk losing out on the commissions when they just walk down the road to the next broker that will rubber stamp it for them. The problem originated at the broker level (coupled with the constant drone of the sales pitch directed at every American that they need a bigger, better endowed home by realtors. Watch the Home & Garden network sometime, it's nothing but house flipping shows and shows that show happy people moving into their new homes.) who, as replacements for the old S&L system, should bear the primary responsibility for underwriting and making sure that the prospective home buyer can actually afford what they are attempting to buy. They don't. They originate and kick it to commercial banks or fannie/freddie who then piece it up and sell it off to investors. If anyone needs their asses kicked, it's the brokers, and that pressure should come down from the banks, not the government.
"Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."
-Frederick Bastiat
2010-10-05 17:28:18
Turquoise
O Canada
+1,596|6683|North Carolina

JohnG@lt wrote:

Turquoise wrote:

JohnG@lt wrote:


Right, and what I'm saying is that under the old S&L system, the bank kept the risk within itself (somewhat, the US taxpayer was on the hook if the bank collapsed via the FDIC). With the advent of Fannie/Freddie, MBS and mortgage brokers, those S&Ls were made obsolete. S&Ls just couldn't compete with the amount of money the new system could bring to the table so they were pushed out.

The real problem within this system is Fannie and Freddie. They are the ones that back all originated loans and originate many themselves. They are the ones that package mortgages into giant blocks of securities and punt them onto brokers to sell. As a government agency, Fannie/Freddie doesn't have the motivation or quality manpower to perform this task without a lot of corruption being able to run rampant. It's also at the mercy of its political overlords who decide what percentage of all loans should go to unqualified borrowers.

If you don't believe me that government agencies by default fail, take a look at the rampant corruption and scamming that takes place within Medicare down in Florida. False claims, doctors selling patients items they don't need etc. Fannie/Freddie need to be destroyed and commercial banks need to go back to originating loans, without government backing. You want to see MBS' reflect reality? Take away that FHA sponsorship that lets investors know that their investment is ironclad and backed by the US taxpayer. When investors know they are on the hook for bad loans, they'll put a shitload of pressure on the banks, and thus the brokers, to do their job correctly.
Out of curiosity, what do you think would happen if the FDIC no longer existed?  This is a serious question...  I'm not being flippant.
Nothing really. The FDIC is an outdated institution that was created to back Savings and Loans. S&Ls no longer really exist as they were largely destroyed in the 80s and 90s by MBSs. It used to be that the government wanted to encourage people to put money into savings accounts in order to provide the funds necessary to originate loans. This is no longer the case. Frankly, depositors have very little to fear as large commercial banks don't collapse very often, and if they do, their accounts are scooped up by others. When WaMu collapsed, all accounts were transferred over to Chase and the depositor experienced virtually no change aside from the letterhead on their debit card and statements.

What the FDIC does now is simply allow banks that do take deposits to take extra risks because they know they won't have depositors howling at them if they go bankrupt. Instead of the depositors being on the hook for risky behavior taken by the bank, the US taxpayer is instead backing the risk. It's a fucked up situation. What's been created is a system where the depositor collects interest risk free and the taxpayer takes on the risk for them.
Hmmm....  You know...   you make a good argument for abolishing the FDIC.
2010-10-05 17:37:47
Jay
Bork! Bork! Bork!
+2,006|5636|London, England

Turquoise wrote:

JohnG@lt wrote:

Turquoise wrote:


Out of curiosity, what do you think would happen if the FDIC no longer existed?  This is a serious question...  I'm not being flippant.
Nothing really. The FDIC is an outdated institution that was created to back Savings and Loans. S&Ls no longer really exist as they were largely destroyed in the 80s and 90s by MBSs. It used to be that the government wanted to encourage people to put money into savings accounts in order to provide the funds necessary to originate loans. This is no longer the case. Frankly, depositors have very little to fear as large commercial banks don't collapse very often, and if they do, their accounts are scooped up by others. When WaMu collapsed, all accounts were transferred over to Chase and the depositor experienced virtually no change aside from the letterhead on their debit card and statements.

What the FDIC does now is simply allow banks that do take deposits to take extra risks because they know they won't have depositors howling at them if they go bankrupt. Instead of the depositors being on the hook for risky behavior taken by the bank, the US taxpayer is instead backing the risk. It's a fucked up situation. What's been created is a system where the depositor collects interest risk free and the taxpayer takes on the risk for them.
Hmmm....  You know...   you make a good argument for abolishing the FDIC.
Yes, and bumping up FDIC insurance to $250,000 like they recently did was completely and utterly asinine. First, anyone who keeps more than $100k (even this is ridiculous overkill) in a savings account is a moron. And second, in the rare event that someone actually does keep that much in a savings or checking account, it allows the bank to take on that much more risk without depositors having to worry. It's an obsolete 'feel good' piece of legislature. Nothing more.
"Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."
-Frederick Bastiat
2010-10-05 17:44:31
Turquoise
O Canada
+1,596|6683|North Carolina

JohnG@lt wrote:

Turquoise wrote:

JohnG@lt wrote:


Nothing really. The FDIC is an outdated institution that was created to back Savings and Loans. S&Ls no longer really exist as they were largely destroyed in the 80s and 90s by MBSs. It used to be that the government wanted to encourage people to put money into savings accounts in order to provide the funds necessary to originate loans. This is no longer the case. Frankly, depositors have very little to fear as large commercial banks don't collapse very often, and if they do, their accounts are scooped up by others. When WaMu collapsed, all accounts were transferred over to Chase and the depositor experienced virtually no change aside from the letterhead on their debit card and statements.

What the FDIC does now is simply allow banks that do take deposits to take extra risks because they know they won't have depositors howling at them if they go bankrupt. Instead of the depositors being on the hook for risky behavior taken by the bank, the US taxpayer is instead backing the risk. It's a fucked up situation. What's been created is a system where the depositor collects interest risk free and the taxpayer takes on the risk for them.
Hmmm....  You know...   you make a good argument for abolishing the FDIC.
Yes, and bumping up FDIC insurance to $250,000 like they recently did was completely and utterly asinine. First, anyone who keeps more than $100k (even this is ridiculous overkill) in a savings account is a moron. And second, in the rare event that someone actually does keep that much in a savings or checking account, it allows the bank to take on that much more risk without depositors having to worry. It's an obsolete 'feel good' piece of legislature. Nothing more.
Makes sense...   You know, we might disagree on certain regulatory matters and on socialized medicine, but I think we actually agree on the topic of socializing risk.
2010-10-05 18:17:36
Jay
Bork! Bork! Bork!
+2,006|5636|London, England

Turquoise wrote:

JohnG@lt wrote:

Turquoise wrote:


Hmmm....  You know...   you make a good argument for abolishing the FDIC.
Yes, and bumping up FDIC insurance to $250,000 like they recently did was completely and utterly asinine. First, anyone who keeps more than $100k (even this is ridiculous overkill) in a savings account is a moron. And second, in the rare event that someone actually does keep that much in a savings or checking account, it allows the bank to take on that much more risk without depositors having to worry. It's an obsolete 'feel good' piece of legislature. Nothing more.
Makes sense...   You know, we might disagree on certain regulatory matters and on socialized medicine, but I think we actually agree on the topic of socializing risk.
Socializing medicine is socializing risk
"Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."
-Frederick Bastiat
2010-10-05 18:36:45
Turquoise
O Canada
+1,596|6683|North Carolina

JohnG@lt wrote:

Turquoise wrote:

JohnG@lt wrote:


Yes, and bumping up FDIC insurance to $250,000 like they recently did was completely and utterly asinine. First, anyone who keeps more than $100k (even this is ridiculous overkill) in a savings account is a moron. And second, in the rare event that someone actually does keep that much in a savings or checking account, it allows the bank to take on that much more risk without depositors having to worry. It's an obsolete 'feel good' piece of legislature. Nothing more.
Makes sense...   You know, we might disagree on certain regulatory matters and on socialized medicine, but I think we actually agree on the topic of socializing risk.
Socializing medicine is socializing risk
To a degree...
2010-10-05 18:37:05
Dilbert_X
The X stands for
+1,816|6384|eXtreme to the maX

JohnG@lt wrote:

Right, and the problem wasn't with the investment product, it was with the people originating bad loans. As capt.fass stated a few posts ago, mortgage lenders are under tremendous stress to rubber stamp every loan that crosses their desk or they risk losing out on the commissions when they just walk down the road to the next broker that will rubber stamp it for them. The problem originated at the broker level (coupled with the constant drone of the sales pitch directed at every American that they need a bigger, better endowed home by realtors. Watch the Home & Garden network sometime, it's nothing but house flipping shows and shows that show happy people moving into their new homes.) who, as replacements for the old S&L system, should bear the primary responsibility for underwriting and making sure that the prospective home buyer can actually afford what they are attempting to buy. They don't. They originate and kick it to commercial banks or fannie/freddie who then piece it up and sell it off to investors. If anyone needs their asses kicked, it's the brokers, and that pressure should come down from the banks, not the government.
It was mainly the investment banks desperate for more loans, whatever the risk, hence they were paying brokers fat bonuses to write the loans.
If commercial banks don't pick up the loans kicked to them they don't get written in the first place.

Brokers are always shit, they never bear the problem when a loan or other product goes bad, everyone knows this - the banks especially.
Fuck Israel
2010-10-05 18:38:08
Jay
Bork! Bork! Bork!
+2,006|5636|London, England

Turquoise wrote:

JohnG@lt wrote:

Turquoise wrote:


Makes sense...   You know, we might disagree on certain regulatory matters and on socialized medicine, but I think we actually agree on the topic of socializing risk.
Socializing medicine is socializing risk
To a degree...
The very definition of socialism is the spreading of risk away from the individual and onto society at large. By taking away his risk, he also loses his freedom of choice...
"Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."
-Frederick Bastiat
2010-10-05 18:39:44
Dilbert_X
The X stands for
+1,816|6384|eXtreme to the maX
So ....... insurance is Marxism?
Fuck Israel
2010-10-05 18:53:09
Jay
Bork! Bork! Bork!
+2,006|5636|London, England

Dilbert_X wrote:

So ....... insurance is Marxism?
It's voluntary, so no.
"Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."
-Frederick Bastiat
2010-10-05 19:26:23
13rin
Member
+977|6757
Barney Frank.
I stood in line for four hours. They better give me a Wal-Mart gift card, or something.  - Rodney Booker, Job Fair attendee.
2010-10-05 20:45:51
Dilbert_X
The X stands for
+1,816|6384|eXtreme to the maX

JohnG@lt wrote:

Dilbert_X wrote:

So ....... insurance is Marxism?
It's voluntary, so no.
But anyone who buys insurance is a Marxist.
Fuck Israel
2010-10-06 04:56:46
Jay
Bork! Bork! Bork!
+2,006|5636|London, England

Dilbert_X wrote:

JohnG@lt wrote:

Dilbert_X wrote:

So ....... insurance is Marxism?
It's voluntary, so no.
But anyone who buys insurance is a Marxist.
Know how I know you lost this argument?
"Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."
-Frederick Bastiat
2010-10-06 05:17:48
Dilbert_X
The X stands for
+1,816|6384|eXtreme to the maX
You don't have insurance for anything?

Anyway, the US is fundamentally socialist, you just won't admit it.
Fuck Israel
2010-10-06 05:44:09
Jay
Bork! Bork! Bork!
+2,006|5636|London, England

Dilbert_X wrote:

You don't have insurance for anything?

Anyway, the US is fundamentally socialist, you just won't admit it.
Insurance simply smooths out the peaks and valleys of ones expenses they might encounter in their lifetime. It's a service. The fact that the company offsets their potential losses from one customer with the premiums paid by another doesn't make it a socialist endeavor. This is especially true since they, more times than not, make a profit on the individuals that pay for their service.

So no, I don't really buy into the concept of insurance. Odds are that I can get through life paying out of pocket for whatever expenses come up and end up saving myself a lot of money that would otherwise go to an insurance company. If insurance is necessary, I'm a big fan of things like Health Savings Accounts paired with a high deductible plan.
"Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."
-Frederick Bastiat
2010-10-06 09:23:37
cpt.fass1
The Cap'n Can Make it Hap'n
+329|6974|NJ
But when people really can't afford or don't have savings, what is the bank suppose to loan?

Which is really what's happened since the 80's, the amount of savings has droped. Due to the cost of living increases and salaries not matching it.
2010-10-06 11:09:28
Jay
Bork! Bork! Bork!
+2,006|5636|London, England

cpt.fass1 wrote:

But when people really can't afford or don't have savings, what is the bank suppose to loan?

Which is really what's happened since the 80's, the amount of savings has droped. Due to the cost of living increases and salaries not matching it.
Banks no longer loan their own funds except in the short term. They simply package up mortgages into MBSs and sell them to investors. That's where the money comes in from, not from deposits.
"Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."
-Frederick Bastiat

 

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