The Ancient Greeks had a word for it: Akrasia. It means lack of
self control. Acting against one’s sense of good judgement. What
do we do when our parents, or our government, can no longer
bail us out? Growing up is a bitch, but being insolvent is worse.
“A worst-case taxpayer bailout of mortgage-market giants Fannie Mae and
Freddie Mac, whose plummeting stock prices caused consternation in early
June, could cost as much as $1.1 trillion, according to Standard & Poor’s.”
Time Magazine, The Not-Quite Bailout
“To avoid taking responsibility, I become unresponsive
but hang on until the other person leaves me.
Quotation from Mason Cooley, City Aphorisms
you guys have a finance company called Standard and Poor’s?????
nursemyras last blog post..harigata*
It’s yet another chapter in this continuing saga of bad news arising from bad lending process, what is becoming increasingly ugly. Fannie & Freddie I understand only had about 80 Billion in capital and yet owned or guaranteed almost 50% of the 12 Trillion in home loans currently existing in the USA. That means they were always exceptionally highly leveraged companies, a few percentage losses and it’s all lost. Ironically they only have 3.5% of the book in the subprime area but that still represents an amount of 170 billion. The current options could vary from a right issue priced at well below the existing share price, say 50% to quarantining the mortgages in a government sponsored vehicle and restructuring or simply for the government to provide a guarantee rather than the current implied guarantee which seems to have been ignored in the markets in their share prices, close saw Freddie $7.75& Fannie $ 10.25.
What can you say? -Here is quote from Warren Buffet from Berkshire Hathaway’s Anual Report which I think maybe sums up overall lending practices pretty well.
You may recall a 2003 Silicon Valley bumper sticker that implored, “Please, God, Just One More
Bubble.†Unfortunately, this wish was promptly granted, as just about all Americans came to believe that House prices would forever rise. That conviction made a borrower’s income and cash equity seemunimportant to lenders, who shoveled out money, confident that HPA – house price appreciation – would cure all problems. Today, our country is experiencing widespread pain because of that erroneous belief.
As house prices fall, a huge amount of financial folly is being exposed. You only learn who has been swimming naked when the tide goes out – and what we are witnessing at some of our largest financial institutions is an ugly sight.
Best wishes
Lindsaylobes last blog post..The Victorian Photo Album
have a great weekend dear,
a kiss!!!
Kiras last blog post..Boho Chic?
There is fault on both sides: The mortgage companies lent money to people who couldn’t afford the payments, and people took mortgages they knew they couldn’t afford. Stupid. Stupid. Stupid.
And now the government is supposed to bail everybody out? Hey, I had a lousy auction the other night. Where’s my check from Uncle Sam?
John J Savo, the Authoring Auctioneers last blog post..Applying the F-Word
I couldn’t say it any better than Lindsay did. We haven’t glimpsed the bottom yet.
Great analogy with the cage and the belt refernce
susans last blog post..looking our best
i loved this post…well said, well said.
wendivas last blog post..And The Beat Goes On…
Oh those Greeks… don’t they just have a word for everything! What’s Greek for ‘stupid greed’?
You’re brilliant by the way.
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Great post Seraphine.
I don’t know how to say it in Greek – History repeats itself.
I hope you have a great weekend.
Glenn Bishop
Great word- Akrasia, sounds beautiful but there is a strong meaning attached.
Hi Sera, I’m putting up the Ophelia poems today, please stop by if you get a chance.
Cynthias last blog post..poemflesh
Lindsay’s got the point right in the spotlight. Great post, great answer by Lindsaylobe.
Eidurs last blog post..Mixing The Vibe – July 2008 (a/k/a Almost Deep)
yeah. Sometimes I hate being a grown up.
and why are you in a cage, Ms Seraphinaaaa
Dolces last blog post..A little moment of clarity
I guess, I will not buy a house and just be a kid for the rest of my life.
Rass last blog post..Signal-Mountain,TN
The country and the world is much too complicated. Plus we suffer from “flat-learning”. A Great Common Sense post, Seraphine!
The USA need to spend money and the people like to do it on things they can’t afford. Nobody’s fault, I think they have been raised that way.
I have to pay my credit card now…
Zhus last blog post..How To Work Temporarily In Canada (2/10)
So relevant today, we spent our youth trusting big businesses and our government and the past several years all they are proving is that they can and will fail us. It’s time for a youth-nation.
Important issue! I love the way you deal with the news!
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