Comments on: http://davidernst.net/blog/2007/11/13/125/ Things I'll talk about with anyone Mon, 01 Mar 2010 15:32:46 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Donna http://davidernst.net/blog/2007/11/13/125/comment-page-1/#comment-8468 Donna Thu, 15 Nov 2007 03:53:18 +0000 http://davidernst.net/blog/2007/11/13/125/#comment-8468 <p>Be careful, David, you are thinking more and more like your Dad.</p> Be careful, David, you are thinking more and more like your Dad.

]]> By: nerdmeyr http://davidernst.net/blog/2007/11/13/125/comment-page-1/#comment-8458 nerdmeyr Wed, 14 Nov 2007 15:47:03 +0000 http://davidernst.net/blog/2007/11/13/125/#comment-8458 <p>Interesting points, David - can't say that I disagree with much of what you wrote. But, I feel perhaps you're leaving something out - that the lenders in this case, those who deal in sub-prime (or even predatory) loans, will not actually be held responsible for their bad judgment. The government (i.e. us taxpayers) will end up bailing out these lenders in order for our economic boat to remain somewhat stable...and, of course, the average person who can't make their house payment won't get any sort of comparable handout. The thing that's so troubling about this bursting housing bubble is how many characteristics it shares with the Savings and Load crisis of the 80's.</p> <p>The S&L crisis was described as: "Estimates of a clean-up bill of around $30 to $50 billion shocked US taxpayers at the time, but turned out to be optimistic. Today we know that between 1986 and 1995, when the storm abated, the underwriting of US thrifts by the financial industry and the US taxpayer cost an extraordinary $153 billion. The extent of the disaster turned it into a major threat to the US financial system, and one of the most expensive financial sector crises the world has seen.</p> <p>The losses were the result of unmanaged asset/liability gaps that led to interest rate exposures, speculative investments in junk bonds and service industries, fraud, and - most especially - massive losses from lending to and investing in the US commercial real estate sector. " (from: <a href="http://www.erisk.com/Learning/CaseStudies/USSavingsLoanCrisis.asp" rel="nofollow">http://www.erisk.com/Learning/CaseStudies/USSavingsLoanCrisis.asp</a>).</p> Interesting points, David – can’t say that I disagree with much of what you wrote. But, I feel perhaps you’re leaving something out – that the lenders in this case, those who deal in sub-prime (or even predatory) loans, will not actually be held responsible for their bad judgment. The government (i.e. us taxpayers) will end up bailing out these lenders in order for our economic boat to remain somewhat stable…and, of course, the average person who can’t make their house payment won’t get any sort of comparable handout. The thing that’s so troubling about this bursting housing bubble is how many characteristics it shares with the Savings and Load crisis of the 80’s.

The S&L crisis was described as:
“Estimates of a clean-up bill of around $30 to $50 billion shocked US taxpayers at the time, but turned out to be optimistic. Today we know that between 1986 and 1995, when the storm abated, the underwriting of US thrifts by the financial industry and the US taxpayer cost an extraordinary $153 billion. The extent of the disaster turned it into a major threat to the US financial system, and one of the most expensive financial sector crises the world has seen.

The losses were the result of unmanaged asset/liability gaps that led to interest rate exposures, speculative investments in junk bonds and service industries, fraud, and – most especially – massive losses from lending to and investing in the US commercial real estate sector. ”
(from: http://www.erisk.com/Learning/CaseStudies/USSavingsLoanCrisis.asp).

]]>