What do you tell the responsible neighbor of the guy who gets his loan forgiven that he has to continue paying his full mortgage despite the fact they have the same house and paid the same for it? Or the other neighbor who bought the smaller, more affordable house/condo and now has to watch his neighbor get a huge break on the mortgage? Or the renter who saved and didn’t act irresponsibly and buy beyond his/her means only to find out the Federal government is now attempting to prop up the house prices?

If this has been asked on National TV, I’m curious as to the responses. Or, if it has not been asked, why not?

Thanks,

Phil

The problem is so huge that I can’t even imagine what these companies are really worth. It’s evident that PPT is at work. Morgan Stanley is not worth 40$ in the real world. Same thing for most of the companies in the list.

It will be interesting to see what will happen to UBS monday morning. Another -30% ?

No place to hide and not just homebuyer hit. Pension funds and company balance sheet hit.

NO PLACE TO HIDE.

———————————————————-
(Financial Sense Online june 18th 2008 Deepcaster)

Assets That Aren’t

Moreover, the prospects are slim-to-none for U.S. headquartered businesses-in-general having or achieving the capacity to catalyze an economic turnaround. Indeed, ten major companies have more “Level 3” Assets than capital. They are (as a percentage of total shareholder equity):

Bear Stearns 313.97%
Morgan Stanley 234.88%
Merrill Lynch 225.4%
Goldman Sachs 191.56%
Lehman 171.18%
Fannie Mae 161.47%
Northwest Air 142.02%
Citigroup 125.06%
Prudential 119.36%
Hartford 108.52%

Remember that the essence of a Level 3 Asset is that it has “no observable input.” That is, the company which owns a Level 3 Asset also determines its ostensible value.

Companies having a significant portion of their portfolios in Level 3 Assets claim that they are valuing these Assets by “Marking to (their subjective) Model.” Deepcaster’s view is that this is “Marking to Myth.”

A number of Level 3 Assets have, unsurprisingly, recently tended to be illiquid.

Reality Check: That which is illiquid has no market and therefore no market value.

Indeed, these harsh realities, and the consequences for consumers of Hyperinflation and a contracting economy, are starting to percolate into the mainstream consulting and media worlds.

““Suddenly consumers are focused on buying what they have to have as opposed to buying what they want to have,” said Howard Davidowitz, Chairman of Davidowitz & Associates, a New York retail consulting and investment-banking firm. “This is a permanent change for Americans who will face a declining standard of living over the next 20 years,” he added. (emphasis added) Jennifer Waters, MarketWatch, June 17, 2008

http://www.financialsense.com/fsu/editorials/deepcaster/2008/0620.html

Don’t say it can’t happen because it has all happened before. FSLIC went bankrupt in 1988 resulting in FIRREA. FIRREA created the RTC which had virtually a blank check to cover all losses. Results of the act today are the massive banking structures that took all the deposits and the massive mortgage entities that took all the loans.

Yes, US citizens gonna suffer a lot more in short term, especially those non-saving-credit-abuse suckers.

In the long run, a lot of US manufacturers will be forced to move back to the States, thus create a sound foundation for our future.