Reply With QuoteThats true, the money never really dissappears. It just gets re-distributed. I hope some of it gets goes my way
Incorrect....if all debt was paid off there would be no money. Your money is just based on debt.
I think 08 is a dream. I read that a record was set in Oct.07, 50 Billion in loan resets. These homes won't hit the market for 5-8 months. Then is March of 08 the loan resets start hitting over 100 billion each month through the entire year. These homes won't reach the market till the end of 08 into 09. I have a friend that has not made a payment on his house for 7 months, the bank has not even filed a NOD yet. The banks don't want to show bad loans on their books. This runs a lot deeper than we all think. Election year, fuel prices, tight credit. the list goes on and on. We're in for 4-5 years of crap. Of course in the long run..........................
Your spot on.....we are only 20% into this mess. The resets in the tens of millions go all the way through 08. I can't remember if March or May is the D-Day month but something like 80mil reset in that month alone.
Thats true, the money never really dissappears. It just gets re-distributed. I hope some of it gets goes my way
Incorrect....if all debt was paid off there would be no money. Your money is just based on debt.
Sad to say, but IMO we are still at the beginning. There are still a lot of loans to reset and it takes 8 months or more before they go under and get back on the market as a foreclosure. Prices are still too high.
Down here Countrywide is going to try and rent some of their REOs to fire victims.....that's going to be interesting for sure. I think its a mistake, but it will look better for them accounting wise I guess.
Incorrect....if all debt was paid off there would be no money. Your money is just based on debt.
Doesn't somebody somewhere have the money these people lost?
I think Enron proved once and for all that the "too big to fail" theory is long dead and gone.
Enron kept itself discreetly on life support for a long time...how? Creative book keeping. Complicit accounting firm. Political connections. None of these could save it in the end. They all kept it alive long enough to insure that it imploded suddenly and quickly.
I see no reason why the same recipe for disaster can't apply to Citi. CITI admits to another 10 ****in billion dollars of loss.
And the Fed just gave them 40 billion on thur.
Every department in Citi , I am sure, is looking through the rosiest glasses they can put on and beliving it. So, I think it likely the quarterly results were way off. People will do anything to avoid being considered losers particularly geeky overachiever types . They are not programmed to lose and when they do somebody stole the award they should get. Every organization refuses to believe when they might be the blamed. People get canned and if you think that is a possibility you hide even more to get a paycheck longer.
Citi has reported a pittance, a quarterly decline. How about two years profits in the past as loss for the current year to date. Hell, I survived in a company that lost five years earnings in one year. But banks are hugely different. Want to see what will happen, try googling " Continental Illinois National Bank & Trust Co. . Banks owe claims by someone and their assets are claims by the bank on others. That makes them highly vulnerable in the electronic age. Still, the Feds could easily cover the runs. The problem is stopping loss of confidence in books cooked for twenty years at least. Cooked books makes "Hot Money" run very fast.
Doesn't somebody somewhere have the money these people lost?
Are you asking if someone somewhere has the electronic digits created out of thin air?
What is money??? This sums it up well.
"People seem to have trouble grasping how money is actually debt, and how particularly debt-based money relates to economic growth requirements. The following is an explanation from what I have found in reading about it from a number of sources. It is long but when people start to understand the interconnectedness of debt and the economy most find it very interesting. So here goes my best shot:
All nations currently have a money system based upon the creation of money being made through the issuing of loans.
If you go to Superb Bank Plc and take out a $5,000 personal loan, Superb Bank Plc needs roughly 10% of that loan amount in deposits in their bank in order to issue you that loan. So, assuming a $500 deposit in the bank that has not been used as 10% deposit on another loan, that means Superb Bank Plc can then create $5,000 via the signing of a bank manager's pen. The bank charges you, let's say, 12% APR interest.
Before we go on to how that relates to the economy, let's explain what can happen then and how this relates to further money creation.
You now go and splash out on a second hand car, previously owned by Bob. Bob, through the sale of that car, then goes to Brilliant Bank Plc and deposits that $5,000 into his account. It's his current account, so whilst Superb Bank Plc are charging you 12% interest, Brilliant Bank Plc are only giving Bob on his current account around 0.5% interest on that same $5,000.
Here's the crux though; the banking system then does not distinguish between unpaid debt and debt that has been paid back. In fact, under this money system, both are hard to define. So, Brilliant Bank Plc, with Bob's new $5,000 deposit created by the manager's pen at Superb Bank Plc, can then create a further $50,000 on this just-created money.
Whilst they are giving Bob 0.5% interest on his $5,000 deposit, they will charge let's say 12% interest on that $50,000 created money. They can make prospectively $6,000 in the first year (before compounding takes place if you do not repay) on that $50,000, create by the manager's pen, whilst Bob only gets $25 in the first year from his $5,000 deposit. Also, you are also being charged 12% on your $5,000 loan as well by Superb Bank Plc.
You get compound growth with your savings, hence the reason why banks only give very small interest on your savings - if they didn't, over time, 12% growth per year in interest on your savings would grow to very large amounts over a relatively small number of years. Over 10 years, with no repayments, with a $50,000 loan at 12% interest you would owe the bank $155,000. On Bob's savings of $5,000 - from which that money was created - at 0.5% interest, after the same amount of years his savings deposit would be worth $5,250. A net difference of $150,000.
Why Do Some Banks Offer 6% Interest On A Savings Account, If Only For A Short Period?
You will find this often in new bank startups. Many internet banks have offered such interest rates due to lower overheads than highstreet banks. However, most of the time they then (without reporting to you directly) reduce that interest rate down to a more modest level. Why do they do this? They need deposits first in order to make loans. By inticing people to move money to their accounts via high interest, and it is notoriously difficult to get people to change banks for any reason, they may then make more and more loans. After that, their profits grow.
Now we see how and why the banks make such large amounts of profits, whilst actually producing very little, and also why it is better for them if you don't actually pay back your loan.
The darker side to this is also, that commercial banks actually decide the direction of the economy by issuing or refusing loans.
Given that created money can then be used in another bank to make more created money, it is easy to see how this process can end up generating huge amounts of debt very quickly. In fact, besides paper money, it is estimated that 97% of money in circulation is now debt. Meanwhile, the only work the bank has to do is issue enough loans in order to cover all interest payments on deposits - which in most accounts are devaluing with inflation anyway. Statistically, all that requires is well-designed marketing campaigns targetted at the general public - it is virtually guaranteed that given a marketing exposure to the population, a certain percentage will then take out a loan providing that the potential benefits are communicated well.
So how does this relate to economic growth requirements? The problem that arises with the system is this: where does the money come from to pay back the interest on loans?.
Ultimately, this money must come from the issuing of new loans somewhere else within the financial system. Otherwise, somewhere along the line, someone will be finding it impossible to pay back interest on their existing loans, and bankruptcy will follow. Also notice, for interest's sake, that many people give their labour to receive money created by the pen of bank managers, who then profit out of that loan issue without doing any work for it. Now we know why owning a bank is such a great thing in this soceity - it is almost wealth without work.
Overall, then, this means that for debt to be constantly repaid, new industries and new markets must constantly be found and consumption of goods and services must therefore also rise, otherwise those new markets and industries would not be successful at generating sales. This is why our current economy requires growth and therefore growing consumption of products to remain coherent."
In the end not enough debt is now being created to keep things afloat in the housing market.
Are you asking if someone somewhere has the electronic digits created out of thin air?
What is money??? This sums it up well.
"People seem to have trouble grasping how money is actually debt, and how particularly debt-based money relates to economic growth requirements. The following is an explanation from what I have found in reading about it from a number of sources. It is long but when people start to understand the interconnectedness of debt and the economy most find it very interesting. So here goes my best shot:
All nations currently have a money system based upon the creation of money being made through the issuing of loans.
If you go to Superb Bank Plc and take out a $5,000 personal loan, Superb Bank Plc needs roughly 10% of that loan amount in deposits in their bank in order to issue you that loan. So, assuming a $500 deposit in the bank that has not been used as 10% deposit on another loan, that means Superb Bank Plc can then create $5,000 via the signing of a bank manager's pen. The bank charges you, let's say, 12% APR interest.
Before we go on to how that relates to the economy, let's explain what can happen then and how this relates to further money creation.
You now go and splash out on a second hand car, previously owned by Bob. Bob, through the sale of that car, then goes to Brilliant Bank Plc and deposits that $5,000 into his account. It's his current account, so whilst Superb Bank Plc are charging you 12% interest, Brilliant Bank Plc are only giving Bob on his current account around 0.5% interest on that same $5,000.
Here's the crux though; the banking system then does not distinguish between unpaid debt and debt that has been paid back. In fact, under this money system, both are hard to define. So, Brilliant Bank Plc, with Bob's new $5,000 deposit created by the manager's pen at Superb Bank Plc, can then create a further $50,000 on this just-created money.
Whilst they are giving Bob 0.5% interest on his $5,000 deposit, they will charge let's say 12% interest on that $50,000 created money. They can make prospectively $6,000 in the first year (before compounding takes place if you do not repay) on that $50,000, create by the manager's pen, whilst Bob only gets $25 in the first year from his $5,000 deposit. Also, you are also being charged 12% on your $5,000 loan as well by Superb Bank Plc.
You get compound growth with your savings, hence the reason why banks only give very small interest on your savings - if they didn't, over time, 12% growth per year in interest on your savings would grow to very large amounts over a relatively small number of years. Over 10 years, with no repayments, with a $50,000 loan at 12% interest you would owe the bank $155,000. On Bob's savings of $5,000 - from which that money was created - at 0.5% interest, after the same amount of years his savings deposit would be worth $5,250. A net difference of $150,000.
Why Do Some Banks Offer 6% Interest On A Savings Account, If Only For A Short Period?
You will find this often in new bank startups. Many internet banks have offered such interest rates due to lower overheads than highstreet banks. However, most of the time they then (without reporting to you directly) reduce that interest rate down to a more modest level. Why do they do this? They need deposits first in order to make loans. By inticing people to move money to their accounts via high interest, and it is notoriously difficult to get people to change banks for any reason, they may then make more and more loans. After that, their profits grow.
Now we see how and why the banks make such large amounts of profits, whilst actually producing very little, and also why it is better for them if you don't actually pay back your loan.
The darker side to this is also, that commercial banks actually decide the direction of the economy by issuing or refusing loans.
Given that created money can then be used in another bank to make more created money, it is easy to see how this process can end up generating huge amounts of debt very quickly. In fact, besides paper money, it is estimated that 97% of money in circulation is now debt. Meanwhile, the only work the bank has to do is issue enough loans in order to cover all interest payments on deposits - which in most accounts are devaluing with inflation anyway. Statistically, all that requires is well-designed marketing campaigns targetted at the general public - it is virtually guaranteed that given a marketing exposure to the population, a certain percentage will then take out a loan providing that the potential benefits are communicated well.
So how does this relate to economic growth requirements? The problem that arises with the system is this: where does the money come from to pay back the interest on loans?.
Ultimately, this money must come from the issuing of new loans somewhere else within the financial system. Otherwise, somewhere along the line, someone will be finding it impossible to pay back interest on their existing loans, and bankruptcy will follow. Also notice, for interest's sake, that many people give their labour to receive money created by the pen of bank managers, who then profit out of that loan issue without doing any work for it. Now we know why owning a bank is such a great thing in this soceity - it is almost wealth without work.
Overall, then, this means that for debt to be constantly repaid, new industries and new markets must constantly be found and consumption of goods and services must therefore also rise, otherwise those new markets and industries would not be successful at generating sales. This is why our current economy requires growth and therefore growing consumption of products to remain coherent."
In the end not enough debt is now being created to keep things afloat in the housing market.
Thanks for the lesson. You definately have a better understanding than I. But wasn't some of this debt turned into cash and stuffed into a pocket or bank account.
Thats what he tells me. I know he has not made a payment since March, still lives in the house and no sale date has been set as of yet (I always look)
He could be bulls--ting about the NOD. but he is still in the house, that I know.
It's true I have a neighbor who hasn't made payments for 7 months and he is still living in the house. It is currently in pre foreclosure and the bank hasn't put up a sign or anything.
It's true I have a neighbor who hasn't made payments for 7 months and he is still living in the house. It is currently in pre foreclosure and the bank hasn't put up a sign or anything.
N.O.D (Notice of Default) and having a sign because it is an REO is 2 VERY different things. I GUARANTEE you that person had a NOD filed on the property a long tim ago.
It's true I have a neighbor who hasn't made payments for 7 months and he is still living in the house. It is currently in pre foreclosure and the bank hasn't put up a sign or anything.
An NOD is pre-foreclosure
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