Wednesday, October 15, 2008

I stole it from Azúcar

The link, not the money...

So where did all the money go?

"The banks and investors holding all those mortgage backed investments are also big losers, now that millions of homeowners are defaulting on their loans. The winners there are all the folks who profited from the lending boom. The mortgage brokers collected their fees and commissions on those mortgages, lenders took a slice when they sold them to Wall Street, which collected fees for packaging all them and selling them to investors. When the music stopped, there weren’t enough chairs. So if you're holding this mortgage backed paper, you’re going to have a tough time finding a chair to sit on."--John W. Schoen


dalene said...

One more time and then I'm done.

I think.

So the people who bought low and sold high made out good.

The mortgage brokers who collected fees on unwise mortgages made out good.

And at whoever it is that is buying the tanked out stocks during the sell off might eventually make out good.

But I don't have any money to buy low because years of investing in my 401K is completely wiped out.

And my only decent investment--the equity in my house--hit the skids because so many people went under.

And now the government--me Josephine P. Taxpayer--is buying up the mortgage backed paper in hopes of salvaging something from the complete global market meltdone.

I'm left without a chair and the government is telling me to go spend more money.

I'm not buying it.

Justine said...

If you regularly contribute (as in a scheduled deposit) to your 401(k), then you already follow the principle of buy low, sell high. If you contribute $500 a month, for example, that $500 will buy a lot more actual shares right now than it would have a year ago.

It's cold comfort, I know, but it's the only thing keeping me going whenever I think about how much money we've lost in the last 2 weeks.

And those broker guys make money regardless! It makes me crazy.

dalene said...

Excellent point Justine. It's just sooooo hard to watch your thousands turn into pennies almost overnight and it feels impossible to build back up.

I appreciate your bright ray of hope. But someone I think my measly $25/month (really $50 because my company--if it doesn't go under--matches) is going to make it slow going...

I also wanted to share this link from Carina. Some of them were funny, but even w/o the captions a lot was said from those photos. I'd like to see a photo essay of such photos. It kind of sums it all up for me (even though I know those guys will probably come out of this mess way better than I will).

dalene said...

(somehow--I must still be looking for someone to blame)

Jennifer B. said...

I loved those pictures. I guess the thing that bugs me the most here is that is seems that people who were irresponsible in either borrowing/lending more than was reasonable are now going to be bailed out. I'm probably oversimplifying it, but to me it seems like saying, "Here, you've shown us that you don't know how to handle money responsibly, so let's give you a whole bunch more so you can mess up, or um, "try" again."


wendysue said...

I think Jennifer is right, the people that screwed up are getting bailed out and the people that just got screwed are being told it's "business as usual", and go ahead and spend that money. Well, we're doing fine, we don't need that money ASAP like some of those very-near-future retirees, but I'm definitely thinking twice about my buying. The market WILL turn around and things will get better, it may just be 10 years or so. Just stay in. It'll turn.

My brother-in-law was over the other day and was saying, "I don't get it, people have so much more money than they used to. . .why is this happening?" I said, "NO, the problem is that people THINK they have a lot more money than they do. They think they do, the bank tells them they do, and now we get to pay in for it."

dalene said...

I agree with you Jennifer B. And what a great quote from your BIL Wendysue. He summed it up perfectly!

cabesh said...

I'm in the sit and wait boat...we don't need our retirement for a long while. Sure, those who are retiring/near retirement got the short end of the deal....but, if they're accounts were set up properly, most of their funds should have been in safe places. And, they don't take it all out at once.

So, there are protections for these things. I risk being unpopular, but I think that the majority of people being hit hard are being hit because they took a risk--and sometimes (this time) you lose. i.e., ARMs.

The rest of us? Sure, we're not seeing out home values soar like they did, but we can feed our families, we have a roof over our heads. And that's a lot better than what my grandparents went through.

Justine said...

The crazy thing is that we aren't even technically in a recession. They've actually come up with a new term for what's happening, it's something like a growth recession. Our GDP is actually still growing, but it's just growing SLOWER than it has in the past 5 years, so everyone is freaking out about that.

People keep saying that we're "heading" into a recession, but in technical economic terms, we haven't even hit it yet!

dalene said...


On the bright side--gas and milk prices are falling (bread is still outrageous though--you know it's bad when the hot dog buns are more expensive than the hot dogs).

Azúcar said...

I blame the communists.