01 October 2008

My take on the ongoing total economic collapse

The people who have lost houses need houses.

The banks have lots of houses that they don't need or want.

The houses need people to take care of them, lest they fall apart and start losing in value.

So ... the banks should sell the houses back to their original owners at a fraction of the cost, and/or put them on sensible mortgages. The banks will probably lose lots of money if they did that, but since it was their greed that caused the problem in the first place, I don't see that as a problem.


Me : complex financial stuff :: Nathan : non-geometry math

(alternately, I like Jim Wright's plan.)


Nathan said...


Jim Wright said...

The banks won't do it.

Not because it's not an excellent idea, but because they'd rather go under waiting for a bailout than do something altruistic and less profitable.

It's a vicious cycle. People who didn't qualify for a long-term fixed mortgage, opted for a sub-prime loan. The bank knew it was unlikely that they'd pay it back, but for the first couple of years they paid interest only anyway and the bank reasoned they would get the money back via foreclosure or by selling the mortgage. When the borrower inevitably defaulted, his credit was ruined pretty much forever. Now, no matter what, he can't qualify for any kind of loan.

The banks basically removed 2.2 million long term customers from their client base. Deliberately, and now the banks are screwed and whining about it.

There's enough stupidity here to float a boat, but the banks are so committed to it, they can't change.

MWT said...

Yeah, I know. It's sad when simple straightforward supply and demand no longer applies because the businesses have gotten so big that they have to make it all complicated.

An Englishman in New York said...

You should run for president. Oh, hang on a minute, you're way too sensible.

Thanks for being a return visitor.