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Finances / Finanzen » uk.finance » King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large social
| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386768 ] |
Do, 11 Mai 2006 18:49 |
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abelard wrote:
> >> >> monetary expansion - gdp increase....
> >> >> currently ~11% in the uk....
> >> >
> >> >Duh, that's not inflation. I'll stick with RPI.
> >>
> >> that's your privilege
> >> i'm sure the gov't will be delighted
> >
> >I've just realised you're the clueless idiot I killfiled a few months ago, but you've
> >since changed your email address. Back in you go.
>
> ah diddums....
> you gonna run and hide behind the curtain.....
Only abelard could lose an argument with Andy pandy and crow about it.
Try the flowerpot men next abbo
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386770 ] |
Do, 11 Mai 2006 19:09 |
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On 11 May 2006 09:49:40 -0700, "the Good Captain"
<concerned_citizen77 [at] hotmail.com>
typed:
>
>abelard wrote:
>
>> >> >> monetary expansion - gdp increase....
>> >> >> currently ~11% in the uk....
>> >> >
>> >> >Duh, that's not inflation. I'll stick with RPI.
>> >>
>> >> that's your privilege
>> >> i'm sure the gov't will be delighted
>> >
>> >I've just realised you're the clueless idiot I killfiled a few months ago, but you've
>> >since changed your email address. Back in you go.
>>
>> ah diddums....
>> you gonna run and hide behind the curtain.....
>
>Only abelard could lose an argument with Andy pandy and crow about it.
>Try the flowerpot men next abbo
ok flower potman....bring it on.....
--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
------------------------------------------------------------ --------------------
all that is necessary for [] walk quietly and carry
the triumph of evil is that [] a big stick.
good people do nothing [] trust actions not words
only when it's funny -- roger rabbit
------------------------------------------------------------ --------------------
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386771 ] |
Do, 11 Mai 2006 19:10 |
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On 11 May 2006 09:47:12 -0700, "the Good Captain"
<concerned_citizen77 [at] hotmail.com>
typed:
>
>abelard wrote:
>
>> >> >> monetary expansion - gdp increase....
>> >> >> currently ~11% in the uk....
>> >> >
>> >> >Duh, that's not inflation. I'll stick with RPI.
>> >>
>> >> that's your privilege
>> >> i'm sure the gov't will be delighted
>> >
>> >I've just realised you're the clueless idiot I killfiled a few months ago, but you've
>> >since changed your email address. Back in you go.
>>
>> ah diddums....
>> you gonna run and hide behind the curtain.....
>
>Only abelard could lose an argument with Andy pandy and crow about it.
>Try the flowerpot men next abbo
ok flower potman....bring it on.....
--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
------------------------------------------------------------ --------------------
all that is necessary for [] walk quietly and carry
the triumph of evil is that [] a big stick.
good people do nothing [] trust actions not words
only when it's funny -- roger rabbit
------------------------------------------------------------ --------------------
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386772 ] |
Do, 11 Mai 2006 19:13 |
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"abelard" <abelard3 [at] abelard.org> wrote in message
news:bvr6621nv2q6054vrmrm4igfdjv5ps8rri [at] 4ax.com...
> On 11 May 2006 09:47:12 -0700, "the Good Captain"
> <concerned_citizen77 [at] hotmail.com>
>
> typed:
>>
>>abelard wrote:
>>
>>> >> >> monetary expansion - gdp increase....
>>> >> >> currently ~11% in the uk....
>>> >> >
>>> >> >Duh, that's not inflation. I'll stick with RPI.
>>> >>
>>> >> that's your privilege
>>> >> i'm sure the gov't will be delighted
>>> >
>>> >I've just realised you're the clueless idiot I killfiled a few months
>>> >ago, but you've
>>> >since changed your email address. Back in you go.
>>>
>>> ah diddums....
>>> you gonna run and hide behind the curtain.....
>>
>>Only abelard could lose an argument with Andy pandy and crow about it.
>>Try the flowerpot men next abbo
>
> ok flower potman....bring it on.....
He's a little rabbit who's running, running, running away from you, isn't
he, Mad Ol' Uncle Fraudelard ?!!
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386774 ] |
Do, 11 Mai 2006 21:12 |
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"Andy Pandy" <spam8times [at] wonderful.spam.invalid> wrote in message
news:4cg8snF15mt9cU1 [at] individual.net...
>
> "tim (back at home)" <tim_back_home2006 [at] yahoo.co.uk> wrote in message
> news:4cf55uF15kvb2U2 [at] individual.net...
>> > Buying makes no sense if you are only going to live there for a short
>> > time
>> > frame.
>>
>> The classic way to get to the house that you want is to
>> trade up every 2-3 years.
>>
>> It's suprising the number of houses which are bought
>> by buyers that live in them for less than 2 years
>> (including both my first and third purchase).
>>
>> I think that the average between moves is seven, but
>> that must be increased by the people (like my dad) who
>> own the same house for over 50 years.
>>
>> It use to be the done thing, now I would suggest that
>> it is not sensible, but there would still seem to be people
>> doing it.
>
> It was never sensible financially, except for those periods during which
> house price
> inflation was unusually high (and you'd have needed your crystal ball to
> predict
> these periods).
>
> Historically house price inflation has averaged about the same as mortgage
> rates, so
> by trading up every few years you are simply giving your mortgage company
> all the
> increase in equity. Add in the higher costs of owning the bigger house,
> and you are
> losing. Add in the buying/selling costs, which will be very significant
> of you
> buy/sell every 2-3 years, and you are losing big time.
>
> Usually the quickest way to get the house you want is to pay as little as
> possible in
> mortgage for as long as possible and save.
This ignores the cost of living somewhere else.
When buying costs less than renting (which until very
recently it did by a large margin), buying the small house
that you can afford today and trading up as your income
increases in the cheapest way overall of owning the house
that you really want (the detached 4 bed with a third of
an acre garden).
Yes, of course trading up costs more than simply buying
the house that you want at step one, but most people
don't have the income to justify the required mortgage
when they first start work. The obtainable choice for
people starting on the housing ladder is small house or no
(owned) house, not big house or small house. Renting
until you can afford to buy the big house costs more.
tim
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386775 ] |
Do, 11 Mai 2006 22:07 |
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"tim (back at home)" <tim_back_home2006 [at] yahoo.co.uk> wrote in message
news:4chi7fF15ec3eU1 [at] individual.net...
> > It was never sensible financially, except for those periods during which
> > house price
> > inflation was unusually high (and you'd have needed your crystal ball to
> > predict
> > these periods).
> >
> > Historically house price inflation has averaged about the same as mortgage
> > rates, so
> > by trading up every few years you are simply giving your mortgage company
> > all the
> > increase in equity. Add in the higher costs of owning the bigger house,
> > and you are
> > losing. Add in the buying/selling costs, which will be very significant
> > of you
> > buy/sell every 2-3 years, and you are losing big time.
> >
> > Usually the quickest way to get the house you want is to pay as little as
> > possible in
> > mortgage for as long as possible and save.
>
> This ignores the cost of living somewhere else.
No it doesn't. Read the last paragraph above.
> When buying costs less than renting (which until very
> recently it did by a large margin), buying the small house
> that you can afford today and trading up as your income
> increases in the cheapest way overall of owning the house
> that you really want (the detached 4 bed with a third of
> an acre garden).
No it isn't. The cheapest way is to live in your first small house, and save until
you can afford the house you really want, instead of continually throwing money down
the drain in estate agent fees, stamp duty etc every few years.
The more houses you own between your first house and your dream house, the longer
it'll take you to get there (except in times of significantly higher than average
house price inflation).
> Yes, of course trading up costs more than simply buying
> the house that you want at step one, but most people
> don't have the income to justify the required mortgage
> when they first start work. The obtainable choice for
> people starting on the housing ladder is small house or no
> (owned) house, not big house or small house. Renting
> until you can afford to buy the big house costs more.
Who suggested renting?
If you want to get to house G, stay in house A until you can afford house G. If you
go there via houses B,C,D,E & F then it'll probably cost you much more and take you
much longer.
The "housing ladder" concept is only applicable when house price inflation is very
high. In normal times it's quicker to wait at the bottom and "jump" to the top!
--
Andy
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386778 ] |
Do, 11 Mai 2006 22:19 |
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abelard wrote: -
>ok flower potman....bring it on.....
sorry silly me, how could the weed scrap with the Flowerpot men
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386779 ] |
Do, 11 Mai 2006 22:15 |
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On 10 May 2006 12:01:07 -0700, "allan tracy"
<thunderbird57303 [at] hotmail.com> wrote:
>> Only until and unless the population drops dramatically (?bird flu), and the
>> supply/demand ratio changes.
>
>Wouldn't need anything too dramatic to occur just pen, paper and a
>rewrite of the planning laws to free up the countryside for
>development, basically what the Government is proposing.
>
>It's not the price of houses that's the issue it's the price of land
>and to have such high land prices in the 49th least crowded country in
>the World is just plain dumb. Especially, when so much agricultural
>land just sits there eating up subsidy.
>
>It also goes to show just how fragile the house price boom could really
>be when a simple change in regulation could bring the whole lot
>tumbling down.
>
>All inflation is bad for an economy and house price inflation is no
>different. House prices, truely left to the market place, should go
>down in real terms due to improvements in technology and building
>methods.
Not necessarily so. Houses, unlike most goods, are 'positional goods'.
That is, their value depends not just on what they are, but where they
are. As a result, houses in desirable locations are effectively
auctioned. Their price depends only on the disposable income of the
potential buyers, and has almost nothing to do with the cost of
construction
>This will never happen whilst the housing market remains so
>regulated but, with increasing inward migration required to keep the
>economy growing, the square now needs to be circled and whoever is in
>power expect that to happen very soon.
>
>Our attitude to buying a house should be no different to that when
>buying a car or white goods. It's not an investment decision but a
>consumer decision.
This isn't an either/or situation
--
cheers
matt
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386780 ] |
Do, 11 Mai 2006 22:16 |
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On 10 May 2006 09:37:24 -0700, mmaker [at] my-deja.com wrote:
>> A house is worth what someone will pay for it.
>
>No. A house is worth _what a bank will lend someone_ to pay for it.
>
>If King was worried about debts, he shouldn't have dropped UK interest
>rates to insanely low levels. It's far too late now, the damage is
>done... debts are vast, houses are probably the most overvalued on the
>planet, inflation is only being kept down by outsourcing jobs and
>shipping in vast numbers of cheap immigrants to work on minimum wage or
>less, and global interest rates are rising.
These aren't even connected phenomena!
>He and Brown have utterly devastated the British economy: it will take
>a generation to recover.
You really haven't got a clue, have you?
--
cheers
matt
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386786 ] |
Fr, 12 Mai 2006 01:01 |
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"Andy Pandy" <spam8times [at] wonderful.spam.invalid> wrote in message
news:4cg99tF15cs0mU1 [at] individual.net...
>
> "Chris.S" <Chris [at] postmaster.co.uk> wrote in message
> news:44625c44$0$9230$ed2619ec [at] ptn-nntp-reader01.plus.net...
> > > So what? The point is that *anything* can be overvalued
> > >, whether there is a real
> > > asset behind it or not.
> > > If something triples in price over 10 years, then it could
> > > half in price over the next 10 years. Look up what happened in Tokyo
> > since the late
> > > 80's if you don't believe the same sort of thing can happen to
property
> > prices as
> > > shares.
> >
> > If you are comparing shares to houses your not going to make a point as
one
> > is purely for speculation and the other is used as a place to live.
> > shares will have a market price, it's price usually reflects the
performance
> > of the business.
> > Houses have many variables that effect price, one of which is how much a
> > particular buyer wants it
>
> If people only ever considered the question "is living in this house worth
the price
> I'm paying" when buying a house, then I'd agree.
I would say that is what they do, or do you think they blindly just put in
the highest bid regardless?
> But they often don't, they often think "this house will go up in price, so
it doesn't
> matter whether it's worth the price I'm paying, because I'm not losing the
money, I'm
> investing it". Which is pretty similar to the reason they buy shares.
The vast majority don't think this I would say, most are more interested in
is it a good house in a good area near the usual facilities, of course if it
is it is likely to be a increasing asset also.
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386787 ] |
Fr, 12 Mai 2006 01:07 |
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<mmaker [at] my-deja.com> wrote in message
news:1147347482.684130.224360 [at] j33g2000cwa.googlegroups.com...
> Chris.S wrote:
> > A house is worth what you are willing to pay for it, you then may or may
not
> > need to go to a bank where they may or may not agree to give you the
money.
>
> And, uh, exactly what fraction of people are buying houses for cash,
> particularly at current prices?
I am not suggesting they are.
What I am saying is there is a difference as to what a person buying a house
thinks it is worth and what the bank thinks.
The bank look at worth from an entirely different and single view.
> > Whether a bank gives you money says nothing regarding the worth of the
house
> > but more about your credit risk.
>
> Bollocks. If the bank are willing to lend Joe Sixpack a million pounds
> to buy a two-bed terrace then two-bed terraces will cost a million
> pounds. If the bank are only willing to lend him 50k to buy it, then
> two-bed terraces will cost 50k.
I think you are not understanding the point.
If a bank lent a million for a two bed property it, by itself, wouldn't mean
it is worth that, which is my point.
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386793 ] |
Fr, 12 Mai 2006 02:08 |
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"Chris.S" <Chris [at] postmaster.co.uk> wrote in message
news:4463c3a6$0$9264$ed2619ec [at] ptn-nntp-reader01.plus.net...
>
> I think you are not understanding the point.
> If a bank lent a million for a two bed property it, by itself, wouldn't
> mean
> it is worth that, which is my point.
>
Of course it would. That is why they do valuations beforehand, to check they
arent exposed more than they wish to be.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386795 ] |
Fr, 12 Mai 2006 02:16 |
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"Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
news:4ci1v5F15t7ukU1 [at] individual.net...
> "Chris.S" <Chris [at] postmaster.co.uk> wrote in message
> news:4463c3a6$0$9264$ed2619ec [at] ptn-nntp-reader01.plus.net...
>
> >
> > I think you are not understanding the point.
> > If a bank lent a million for a two bed property it, by itself, wouldn't
> > mean
> > it is worth that, which is my point.
> >
>
> Of course it would. That is why they do valuations beforehand, to check
they
> arent exposed more than they wish to be.
Valuations for their view in regard to what they are lending.
I said at the start, a house is worth what someone will pay for it.
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386800 ] |
Fr, 12 Mai 2006 08:27 |
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"Chris.S" <Chris [at] postmaster.co.uk> wrote in message
news:4463d3ef$0$9239$ed2619ec [at] ptn-nntp-reader01.plus.net...
>
> "Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
> news:4ci1v5F15t7ukU1 [at] individual.net...
>> "Chris.S" <Chris [at] postmaster.co.uk> wrote in message
>> news:4463c3a6$0$9264$ed2619ec [at] ptn-nntp-reader01.plus.net...
>>
>> >
>> > I think you are not understanding the point.
>> > If a bank lent a million for a two bed property it, by itself, wouldn't
>> > mean
>> > it is worth that, which is my point.
>> >
>>
>> Of course it would. That is why they do valuations beforehand, to check
> they
>> arent exposed more than they wish to be.
>
> Valuations for their view in regard to what they are lending.
> I said at the start, a house is worth what someone will pay for it.
>
Its only worth that to the person who is doing the paying. Thats a trivial
definition of 'worth'. Most people would use what its market value is to
mean 'what its worth', eg market value being a general consensus.
Example. I offer 500k for house. I go to the Bank for a mortgage who carry
out a valuation. The valuation says 'this house is worth 250k'. The bank
will not lend you more than (say) 80% of 250k. It might be worth 500k to
you, but to the bank and everyone else its only worth 250k. So in the sense
you use, worth needs to be qualified to whom you are referring.
--
Tumbleweed
email replies not necessary but to contact use;
tumbleweednews at hotmail dot com
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| Re: King sounds warning over economy. House prices overvalued andbankrupcies risk becoming large soc [message #386818 ] |
Fr, 12 Mai 2006 18:23 |
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tim (back at home) wrote:
> "Andy Pandy" <spam8times [at] wonderful.spam.invalid> wrote in message
> news:4cg8snF15mt9cU1 [at] individual.net...
>
>>"tim (back at home)" <tim_back_home2006 [at] yahoo.co.uk> wrote in message
>>news:4cf55uF15kvb2U2 [at] individual.net...
>>
>>>>Buying makes no sense if you are only going to live there for a short
>>>>time
>>>>frame.
>>>
>>>The classic way to get to the house that you want is to
>>>trade up every 2-3 years.
>>>
>>>It's suprising the number of houses which are bought
>>>by buyers that live in them for less than 2 years
>>>(including both my first and third purchase).
>>>
>>>I think that the average between moves is seven, but
>>>that must be increased by the people (like my dad) who
>>>own the same house for over 50 years.
>>>
>>>It use to be the done thing, now I would suggest that
>>>it is not sensible, but there would still seem to be people
>>>doing it.
>>
>>It was never sensible financially, except for those periods during which
>>house price
>>inflation was unusually high (and you'd have needed your crystal ball to
>>predict
>>these periods).
>>
>>Historically house price inflation has averaged about the same as mortgage
>>rates, so
>>by trading up every few years you are simply giving your mortgage company
>>all the
>>increase in equity. Add in the higher costs of owning the bigger house,
>>and you are
>>losing. Add in the buying/selling costs, which will be very significant
>>of you
>>buy/sell every 2-3 years, and you are losing big time.
>>
>>Usually the quickest way to get the house you want is to pay as little as
>>possible in
>>mortgage for as long as possible and save.
>
>
> This ignores the cost of living somewhere else.
>
> When buying costs less than renting (which until very
> recently it did by a large margin), buying the small house
> that you can afford today and trading up as your income
> increases in the cheapest way overall of owning the house
> that you really want (the detached 4 bed with a third of
> an acre garden).
>
> Yes, of course trading up costs more than simply buying
> the house that you want at step one, but most people
> don't have the income to justify the required mortgage
> when they first start work. The obtainable choice for
> people starting on the housing ladder is small house or no
> (owned) house, not big house or small house. Renting
> until you can afford to buy the big house costs more.
>
> tim
>
>
The correct decision requires a judgment of the interest rate and
housing market. If you can manage that it will be easy for you to make
so much money that you can live in any way that you want.
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386940 ] |
So, 14 Mai 2006 21:53 |
|
"Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
news:4cio6rF15gu85U1 [at] individual.net...
>
> "Chris.S" <Chris [at] postmaster.co.uk> wrote in message
> news:4463d3ef$0$9239$ed2619ec [at] ptn-nntp-reader01.plus.net...
> >
> > "Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
> > news:4ci1v5F15t7ukU1 [at] individual.net...
> >> "Chris.S" <Chris [at] postmaster.co.uk> wrote in message
> >> news:4463c3a6$0$9264$ed2619ec [at] ptn-nntp-reader01.plus.net...
> >>
> >> >
> >> > I think you are not understanding the point.
> >> > If a bank lent a million for a two bed property it, by itself,
wouldn't
> >> > mean
> >> > it is worth that, which is my point.
> >> >
> >>
> >> Of course it would. That is why they do valuations beforehand, to check
> > they
> >> arent exposed more than they wish to be.
> >
> > Valuations for their view in regard to what they are lending.
> > I said at the start, a house is worth what someone will pay for it.
> >
>
> Its only worth that to the person who is doing the paying. Thats a trivial
> definition of 'worth'.
It's as trivial as what the bank are willing to lend depending on it.
> Most people would use what its market value is to
> mean 'what its worth', eg market value being a general consensus.
Most people have no idea of market value.
What they tend to do is compare different properties that they may see, that
says nothing about what they think it's value is.
> Example. I offer 500k for house. I go to the Bank for a mortgage who carry
> out a valuation. The valuation says 'this house is worth 250k'. The bank
> will not lend you more than (say) 80% of 250k. It might be worth 500k to
> you, but to the bank and everyone else its only worth 250k. So in the
sense
> you use, worth needs to be qualified to whom you are referring.
Which is exactly what I did at the start
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| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386942 ] |
So, 14 Mai 2006 22:06 |
|
"Chris.S" <Chris [at] postmaster.co.uk> wrote in message
news:44678ad8$0$9250$ed2619ec [at] ptn-nntp-reader01.plus.net...
>
> "Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
> news:4cio6rF15gu85U1 [at] individual.net...
>>
>> "Chris.S" <Chris [at] postmaster.co.uk> wrote in message
>> news:4463d3ef$0$9239$ed2619ec [at] ptn-nntp-reader01.plus.net...
>> >
>> > "Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
>> > news:4ci1v5F15t7ukU1 [at] individual.net...
>> >> "Chris.S" <Chris [at] postmaster.co.uk> wrote in message
>> >> news:4463c3a6$0$9264$ed2619ec [at] ptn-nntp-reader01.plus.net...
>> >>
>> >> >
>> >> > I think you are not understanding the point.
>> >> > If a bank lent a million for a two bed property it, by itself,
> wouldn't
>> >> > mean
>> >> > it is worth that, which is my point.
>> >> >
>> >>
>> >> Of course it would. That is why they do valuations beforehand, to
>> >> check
>> > they
>> >> arent exposed more than they wish to be.
>> >
>> > Valuations for their view in regard to what they are lending.
>> > I said at the start, a house is worth what someone will pay for it.
>> >
>>
>> Its only worth that to the person who is doing the paying. Thats a
>> trivial
>> definition of 'worth'.
>
> It's as trivial as what the bank are willing to lend depending on it.
>
>> Most people would use what its market value is to
>> mean 'what its worth', eg market value being a general consensus.
>
> Most people have no idea of market value.
> What they tend to do is compare different properties that they may see,
> that
> says nothing about what they think it's value is.
>
>> Example. I offer 500k for house. I go to the Bank for a mortgage who
>> carry
>> out a valuation. The valuation says 'this house is worth 250k'. The bank
>> will not lend you more than (say) 80% of 250k. It might be worth 500k to
>> you, but to the bank and everyone else its only worth 250k. So in the
> sense
>> you use, worth needs to be qualified to whom you are referring.
>
> Which is exactly what I did at the start
Slimey, you've been utterly humiliated in this thread - as you are in all
others, in fact.
|
|
|
| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386943 ] |
So, 14 Mai 2006 22:07 |
|
"Chris X" <Chris_x [at] postmaster.co.uk> wrote in message
news:TJidnS_PpZXvEPrZRVnyhQ [at] giganews.com...
>
> "Chris.S" <Chris [at] postmaster.co.uk> wrote in message
> news:44678ad8$0$9250$ed2619ec [at] ptn-nntp-reader01.plus.net...
> >
> > "Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
> > news:4cio6rF15gu85U1 [at] individual.net...
> >>
> >> "Chris.S" <Chris [at] postmaster.co.uk> wrote in message
> >> news:4463d3ef$0$9239$ed2619ec [at] ptn-nntp-reader01.plus.net...
> >> >
> >> > "Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
> >> > news:4ci1v5F15t7ukU1 [at] individual.net...
> >> >> "Chris.S" <Chris [at] postmaster.co.uk> wrote in message
> >> >> news:4463c3a6$0$9264$ed2619ec [at] ptn-nntp-reader01.plus.net...
> >> >>
> >> >> >
> >> >> > I think you are not understanding the point.
> >> >> > If a bank lent a million for a two bed property it, by itself,
> > wouldn't
> >> >> > mean
> >> >> > it is worth that, which is my point.
> >> >> >
> >> >>
> >> >> Of course it would. That is why they do valuations beforehand, to
> >> >> check
> >> > they
> >> >> arent exposed more than they wish to be.
> >> >
> >> > Valuations for their view in regard to what they are lending.
> >> > I said at the start, a house is worth what someone will pay for it.
> >> >
> >>
> >> Its only worth that to the person who is doing the paying. Thats a
> >> trivial
> >> definition of 'worth'.
> >
> > It's as trivial as what the bank are willing to lend depending on it.
> >
> >> Most people would use what its market value is to
> >> mean 'what its worth', eg market value being a general consensus.
> >
> > Most people have no idea of market value.
> > What they tend to do is compare different properties that they may see,
> > that
> > says nothing about what they think it's value is.
> >
> >> Example. I offer 500k for house. I go to the Bank for a mortgage who
> >> carry
> >> out a valuation. The valuation says 'this house is worth 250k'. The
bank
> >> will not lend you more than (say) 80% of 250k. It might be worth 500k
to
> >> you, but to the bank and everyone else its only worth 250k. So in the
> > sense
> >> you use, worth needs to be qualified to whom you are referring.
> >
> > Which is exactly what I did at the start
>
> Slimey, you've been utterly humiliated in this thread - as you are in all
> others, in fact.
Shouldn't you and Onlyme be watching a gay video?
|
|
|
| Re: King sounds warning over economy. House prices overvalued and bankrupcies risk becoming large so [message #386945 ] |
So, 14 Mai 2006 22:21 |
|
"Chris.S" <Chris [at] postmaster.co.uk> wrote in message
news:44678e18$0$9248$ed2619ec [at] ptn-nntp-reader01.plus.net...
>
> "Chris X" <Chris_x [at] postmaster.co.uk> wrote in message
> news:TJidnS_PpZXvEPrZRVnyhQ [at] giganews.com...
>>
>> "Chris.S" <Chris [at] postmaster.co.uk> wrote in message
>> news:44678ad8$0$9250$ed2619ec [at] ptn-nntp-reader01.plus.net...
>> >
>> > "Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
>> > news:4cio6rF15gu85U1 [at] individual.net...
>> >>
>> >> "Chris.S" <Chris [at] postmaster.co.uk> wrote in message
>> >> news:4463d3ef$0$9239$ed2619ec [at] ptn-nntp-reader01.plus.net...
>> >> >
>> >> > "Tumbleweed" <thisaccountneverread [at] yahoo.com> wrote in message
>> >> > news:4ci1v5F15t7ukU1 [at] individual.net...
>> >> >> "Chris.S" <Chris [at] postmaster.co.uk> wrote in message
>> >> >> news:4463c3a6$0$9264$ed2619ec [at] ptn-nntp-reader01.plus.net...
>> >> >>
>> >> >> >
>> >> >> > I think you are not understanding the point.
>> >> >> > If a bank lent a million for a two bed property it, by itself,
>> > wouldn't
>> >> >> > mean
>> >> >> > it is worth that, which is my point.
>> >> >> >
>> >> >>
>> >> >> Of course it would. That is why they do valuations beforehand, to
>> >> >> check
>> >> > they
>> >> >> arent exposed more than they wish to be.
>> >> >
>> >> > Valuations for their view in regard to what they are lending.
>> >> > I said at the start, a house is worth what someone will pay for it.
>> >> >
>> >>
>> >> Its only worth that to the person who is doing the paying. Thats a
>> >> trivial
>> >> definition of 'worth'.
>> >
>> > It's as trivial as what the bank are willing to lend depending on it.
>> >
>> >> Most people would use what its market value is to
>> >> mean 'what its worth', eg market value being a general consensus.
>> >
>> > Most people have no idea of market value.
>> > What they tend to do is compare different properties that they may see,
>> > that
>> > says nothing about what they think it's value is.
>> >
>> >> Example. I offer 500k for house. I go to the Bank for a mortgage who
>> >> carry
>> >> out a valuation. The valuation says 'this house is worth 250k'. The
> bank
>> >> will not lend you more than (say) 80% of 250k. It might be worth 500k
> to
>> >> you, but to the bank and everyone else its only worth 250k. So in the
>> > sense
>> >> you use, worth needs to be qualified to whom you are referring.
>> >
>> > Which is exactly what I did at the start
>>
Slimey, you've been utterly humiliated in this thread - as you are in all
others, in fact.
> Shouldn't you
Amusing to see you pretending to know something about economics, though.
(Snigger !)
|
|
|
| Fannie Mae w/ Ameriquest marriage of corruption. [message #386947 ] |
So, 14 Mai 2006 22:37 |
|
"FANNIE MAE, YOUR NAME IS MUDD!"
http://unemployment_crisis.tripod.com/IMMIGRATION.html
http://unemployment_crisis.tripod.com/fannie-mae.html
Fannie Mae and Freddie Mac, its smaller rival in the $8 trillion
home-mortgage market, have wielded influence in Congress and
traditionally have been heavy contributors to lawmakers of both
parties.
MAYOR OF BOSTON SAYS:
Curse on your House, ACC Capital Holdings, Ameriquest's holding
company!!
Ameriquest, one of the biggest lending firms in the country, has been
accused repeatedly of predatory lending practices aimed at the elderly,
minorities, and low-income people. In January, the company signed a
settlement agreement with 49 states, costing it $325 million in
restitution to borrowers.
http://www.knowledgeplex.org/news/167174.html
WHY? CAN YOU SAY AMERIQUEST? A-M-E-R-I-Q-U-E-S-T?!!
Or TOWN & COUNTRY MORTGAGE INC?
Most Fannie Mae mortgages and loans go through Ameriquest!!! Did you
know that?
Complaints that Ameriquest employees deceived borrowers about expensive
loan terms and falsified documents to get people into mortgages they
couldn't afford were the topic of a series of Times articles beginning
in February of last year. That month, Ameriquest disclosed it was under
investigation by a multistate task force.
Ameriquest spokesman Chris Orlando said the company "is not for sale,
and hasn't been for sale." Ameriquest is a division of ACC Capital
Holdings Corp., which also owns Argent Mortgage Co. and Town & Country
Credit Corp. Orlando declined to comment when asked whether another
division of ACC might be for sale because the whole Fannie Mae
trillions and trillions financial house of cards is ready to tumble.
ACC's founder and owner, Roland E. Arnall, removed himself from the
company's management last year to accept a presidential appointment as
U.S. ambassador to the Netherlands. His wife, Dawn Arnall, now serves
as chairman.
Olson said there would be obstacles to any possible sale. One is that
industry insiders think mortgage profits will continue to decline until
at least the middle of next year. Even after the cuts announced this
week, Ameriquest is among the least efficient mortgage companies, with
large administrative costs, he said.
There also are concerns about Ameriquest's reputation after the
investigation by the states and a drumbeat of negative news stories.
Homeless Man Gets Five Fannie Mae Loans In Florida
St. Petersburg Times ^ | 04/09/2006 | JEFF TESTERMAN
Posted on 04/12/2006 6:40:26 AM PDT by babbabooey
Homeless Man Gets Five Fannie Mae Loans In Florida
The St. Petersburg Times found a homeless man who had bought a few
houses. "After struggling much of his adult life with unemployment,
homelessness and drug addiction, Johnny Moon Sr. died last year on a
dirty mattress on the floor of a small home near Tampa's College Hill
district. Moon left behind a watch, a flashlight and a wallet
containing a solitary dollar bill. And more than a half-million dollars
worth of real estate."
Fannie Mae Home Mortgage with NetSkrill.com
25 February 2005Article by Sally Serena Ramage
Free Weekly Newsletters
Abstract
Fannie Mae is a government sponsored enterprise created by the US
Congress to increase liquidity in primary and secondary mortgage
markets as well as to supply low-cost capital for housing loans.
Quietly over a few decades, it transformed itself into a high risk
group which refinances securitisation transactions but which sits
unregulated in the banking sector, one of the most regulated industries
in the world.
Lawsuits filed against Fanny Mae in 2004 were the first indication
outside the corporation that there was financial fraud and deceit
operating at Fanny Mae, known before 2004 as 'a paragon of strong
corporate governance'.
Introduction
Fanny Mae is a public- held company, the biggest corporation in the
United States' $7 TRILLION mortgage investment market and hold one
quarter of this secondary mortgage market for US home loans .It is the
second -largest issuer of debt in the US after the federal government
that guarantees Fannie Mae to a total of $2 trillion.
Recently Discovered Irregularities
The corporation is alleged to have held back expenses at year end in
order to keep profits steady as per forecasted figures and so achieve
bonus compensation targets. It has manipulated its earnings per share
ratio since 1998. This was so that it could maintain stable earnings at
the expense of accurate financial disclosure. It employed an improper
reserve in accounting for the amortisation of deferred price
adjustments under GAAP Accounting Rules and tolerated related internal
control deficiencies. As far back as 1966, studies by Brief
demonstrated that cheating on the earnings ratio was a bad influence on
resource allocation, prices and output, the business cycle and economic
growth in general.
This false accounting manipulated those investors who simply trusted
and market by taking the earnings ratio as the main decision factor of
sound investment, investing in Fannie Mae.
Past Mortgage Collapses - The Saving And Banks Disaster
It must be remembered that there was a mortgage market scandal in the
US; the Savings and Loans debacle which caused billions of dollars of
bank losses in 1989 Savings and Loans were small time money lending
co-operatives which grew in poor communities and gathered deposits from
people in the neighbourhood by paying interest on savings and lending
the money to other neighbours who wanted to borrow money to buy homes.
With government permission, this grew, but with rising inflation and
fraud, deposits were spent and loans were taken out to pay loans until
the system crashed and depositors lost their money when US federal debt
rose to $2000 billion.
The Present Mortgage Issue
Now only 15 years later, it is happening again in the mortgage market.
>From a deficit of 542 billion US dollars in 2003, the US had a retained
mortgage portfolio of $1000 billion plus debts to EU and Asian banks of
$800 billion and a sharp increase of hedge funds to US $ 40 billion.
The US also has $ 210 billion in credit card loans. With US business
mostly equity based, compared to the equity and fixed income business
base of Europe, there is not much competition between banks (See Table
1 for net capital flows
Fanny Mae's present financial fraud is not an exception to the rule in
the mortgage market in the US. The Federal Bureau of Investigation
(FBI) reports in 2004 state that the whole US mortgage market is
fraudulent The FBI have investigated hundreds of mortgage frauds
recently covering billions of US dollars which are defrauded, causing
billions of dollars of losses to financial institutions. Such mortgage
fraud is occurring in Charlotte, Washington, New York, Georgia,
Missouri, California, Nevada and many other states and is therefore
widespread.
Fannie Mae's Fraud And Financial Irregularities
(1) It put the US Federal Government at risk.
The first impact is the potential loss to the US federal government
which guarantees Fannie Mae up to $2 trillion, whilst Fannie Mae itself
guarantees the payments of $1.9 trillion of mortgage-backed securities.
The US government already owes other debt totalling 7.1 trillion
dollars to Japan, China, and Saudi Arabia, including 80 billion dollars
to France, Germany and Russia. Regulatory investigations and
litigation, a steady amount yearly as per the SEC yearly enforcement
actions (Table 3), is costly. For instance, World-comb's fraud
litigation cost the taxpayer almost US $3,000 million to the year 2002,
Enron's about 60 million US dollars, conflict of interest and other
cases over US $1025 million.
(2)It put the Global Financial Markets at risk.
This could impact on the US dollar which could be devalued and since
66% of US assets are owned by foreign domiciles, devaluation might
follow if such owners cease to invest in the US assets and this will
cause an erosion of the US market. But peculiarly, although the US
financial situation is aberrant compared with Europe including the UK,
its stock market performance is very similar to that of the UK and
Europe (see Table 2 below) This may be because the US has one trillion
dollars invested in the UK and European banks whilst 50% of the UK's
assets are invested in the US, smoothing out the market performances.
(3) Unqualified Accounting Statements of the Auditor misled the market.
In clear violation of Accounting Standards, the auditors of Fannie Mae,
issued an unqualified audit certificate. The 2002 Sarbanes Oxley Act
made drastic changes to corporate governance The Chief Executive
Officer must certify that each periodic financial report. fully
complies with the requirements of sections 13(a) and 15(a) of the
Exchange Act and that the information in the report is fair and true in
all material respects, of the financial conditions and results of the
company. There are now criminal sanctions for signing a false report.
Violation of section 302 carries civil penalties to the Chief Executive
Officer and violations to section 906, certifying accounts knowing it
to be false, subjects him to a fine of up to one million US dollars or
imprisonment for up to ten years, or both. If the CEO or CFO wilfully
makes such a certification, the penalties increase to a maximum fine of
US $ 5 million and twenty years imprisonment.
And in addition to the penalties for false certifications, the Act
establishes new criminal offences, including destruction, alteration or
falsification of records in connection with federal investigations and
bankruptcies proceedings, conspiracy, or attempt to commit securities
fraud; and retaliation against whistleblowers It also increases
criminal penalties for securities, mail and wire fraud, the violations
of the Exchange Act and the Employee Retirement Income Security Act.
There are new sentencing guidelines for corporate crime, effective as
of November 2003. The Sentencing Guidelines apply a chart that uses two
variables - the crime's offence level and the offender's criminal
history. to determine the length of prison sentence. In a complex
accounting fraud which causes millions of dollars in losses to banks
and others, a chief financial officer can face thirty (30) years in
prison.
An examination of levels of federal securities fraud class action
litigation from 1992 to October 2004 show that the average number of
securities fraud lawsuits for this period was 222.cases This indicates
the seriousness with which the SEC views fraud and with the 30-year
prison sentence available, should be a sober check on illegal
intentions.
(4) Insufficient Regulation for a multi-trillion dollar organisation
tarnishes the reputation of the US financial market.
It is surprising that a business with mortgaged assets valued at three
trillion dollars was regulated by a minor body, the Office of Federal
Housing Enterprise Oversight (OFHEO) and supervised by the Secretary of
Housing and Urban Development and not directly by the Securities
Exchange Commission.
Because Fannie Mae's Regulator is the OFHEO which is not a financial
regulator but a housing regulator, the fraud continued for years. This
has similarities with other large frauds such as the Enron fraud. Enron
had very little regulation and lobbied government for even less
regulation at a time when the SEC was proposing stricter controls on
corporate 'conflict of interest.
(5) Illegal, un-licensed, securitisation of debts.
Just as Enron quietly expanded its illegal internet futures trading
under its energy regulator instead of under strict futures trading
financial regulators. (Because of its futures trading over the
internet, it should have had the same level of regulation as the
Chicago Board of Trade or the New York Mercantile Exchange.) Fannie Mae
quietly stayed with the Housing Supervisor and grew into a massive
trillion dollar bank-like business using the legal loophole that it was
not a bank but a 'thrift'
(6) Gross Capital Inadequacies
Gross Capital inadequacies have been hidden by a complex use of Special
Purpose Entities to hedge certain Fannie Mae investments. Basically
Fannie Mae had no assets to speak of that could possibly represent its
debts. To speak colloquially, Fannie Mae took loans out to buy property
and took more loans out to pay those loan payments and took further
loans out to make those payments, etc. Their fancy names are "hedge
betting", "derivatives", "securitization", "options", etc. This is also
the method used by Enron. No one would have found out about Enron's
fraud if stock had continued to rise, and they would have continued to
tell lies in the accounts for ever. The trick here is that Enron sold
assets at a profit to non-consolidated Special Purpose Entities and
recognised these profits in its financial statements... It sold itself
to itself for a profit and put the profit on the Balance Sheet, making
it look even wealthier when in fact it was bankrupt many times over.
Similarly, Fannie Mae guarantees its own loans. If house prices in the
US start falling, Fannie Mae will suffer great losses on top of the
drop in asset value due to inflating its past 5 years earnings per
share. But the global economists know that Fannie has government
guarantee. The situation has caused a spread of banking panics in many
countries as people wonder if the federal government will bail Fannie
Mae out. The Federal Government has decided that it will not be allowed
to collapse.
Addressing The Legal Issues - Closing The Gaps?
Market Response
The Federal Reserve's response to Fannie Mae's false accounting and
fraud was to refuse to promise to buy back open purchases of dated
paper such as 10year T Notes and the European Central Bank took all
Fanny Mae debt from its reserve base. Fannie Mae's own Regulator, the
Office of Federal Housing Enterprise Oversight has demanded that Fannie
Mae must, from now maintain 30% more capital than current rules
stipulate. The OFHEO also demanded changes to the contracts of the CEO
and the MD so that they would only be able to draw on their stock
options and salary before September 2004, as per SEC rules. Asia has
encouraged trade by offering rate swap contracts and low rates to
corporate borrowers. Fannie Mae's stock price has decreased from $128
before this news to $70.10 on 6th November 2004 when Fanny Mae redeemed
$350 million securities and the dollar fell.
How 'Thrift' Institutions Escapes Banking Regulation But Became
Securitized Groups
The financial services corporation, Fannie Mae, is unregulated and is
heavily involved in unregulated cross-border securitisation to the sum
of trillions of US dollars. It is not classed as a state bank and "it
has been getting away with murder". A state bank is defined in the
United States Charter 1813 as organised and operated under state law a
savings association, like Fannie Mae, savings and loans association or
thrift institution is not a state bank.
Such thrift institutions are only regulated by the US Treasury's Office
of Thrift Supervision for consumer credit issues, a lenient and softer
supervisor than the US banking supervisor. These 'thrifts' escaped
through this loophole and over the years have steadily engaged in the
financial services market, tax and estate planning, securities,
custodial matters, trust transactions artificially allocated, low
quality or high risk assets, money laundering, black economy, drugs
trafficking, generating capital through stock purchase loans overseas,
terrorism, organised crime, subjective underwriting criteria.
In the mid 1980's the US discovered it had massive fraud in these
savings and loans institutions which resulted in hundreds of billions
of dollars of losses. Until this time, the 'thrift' industry consisted
of mutual entities, like the UK's mutual building societies. Thousands
of these entities were put into receivership and thus put up for sale
and new owners, foreign and US, were given incentives to buy the
bankrupt thrifts, with the state promising the new owners
non-supervision, carrying forward of losses acquired for tax relief,
concessions to be unregulated and to engage in any lawful activity.
Later, these so-called 'thrift' companies were acquired by other
financial non-bank organisations which made use of the regulatory slack
to operate insurance companies, securities, savings accounts, loans,
credit cards and mortgage loans, until the US Gramm - Leach- Bliley Act
1999 which stopped commercial companies from holding 'thrifts'. This
law was not retrospective and so such 'thrifts' formed before 1999,
were allowed to continue in business. This is how Fannie Mae came to
use bond futures, derivatives, hedging and corporate swaps.
State Legislation To Prevent Predatory Mortgage Lending
And when Fannie Mae's illegal securitisation came to light in 2003, it
triggered a US consumer lending alert by the federal government,
quickly followed by changes in legislation in various states.
There is the amendment to the New Jersey Home Ownership Security Act
2002 in November 2003 A new section 279 amended the Act to eliminate
'covered loans' and to prohibit 'loan flipping', a fraud. The section
also excluded escrows to pay for future taxes and insurance.
The state of Massachusetts also enacted legislation as a direct result
of Fannie Mae fraud, namely, the Massachusetts Predatory Home Loan
Practices Act 2003, to be applied to all loans closed on or after 7
November, 2004. The Act includes a prepayment penalty incurred in the
refinancing of a loan and the Act stops the previous unfair terms of
misleading advertising, unreasonable terms, fees and charges on all
home mortgage loans. It also makes 'loan flipping' illegal and
prohibits the financing of credit insurance, with compulsory mandatory
reporting of payment history. The Act permits a court to rescind or bar
a lender from collecting on a home mortgage loan contract that violates
the law. The Act prohibits the following terms and practices - no
lending without home counselling; no lending without regard to
repayment ability; limit on financing points and fees; limit on payment
to contractors; no recommending default on existing debt; no evading
the Act; no prepayment penalties; no increased default interest rate;
no balloon payments; no call provision; no negative amortisation; no
modification of deferral fees; no advance payments; no mandatory
arbitration clauses. New York also has similar new legislation.
The state of Maine now has new mortgage legislation Maine Truth in
Lending Act 2004 with anti-predatory lending provisions. The state of
Nebraska also reacted to the Fannie Mae fraud and made amendments to
its Nebraska Mortgage Bankers Registration and Licensing Act. In
January 2004, Oklahoma has in force a new anti -predatory lending law,
the Oklahoma Anti-Predatory Lending Law. And New Jersey also made
amendments to its New Jersey Home Ownership Security Act.
New SEC Regulation For Fannie Mae
The SEC also, has now advised such non-publicly held subsidiaries of
bank holdings, that in spite of being independent, they should, but not
must, comply with section 301 and have an audit committee. Also, the
SEC is now in discussions to bring new disclosure requirements for
ASSET-BACKED SECURITIES (ASB'S) for the asset-backed market.
New Law Relating To Overseas Financial Banking Business
Now the connection with the EU Basel Capital Accord, EU Market Abuse
Directive, EU Prospectus Directive, money laundering and new US federal
Regulation is absent for Thrift Cross-Border activities which include
all manner of financial activities transferred to foreign countries.
This poses high risk for such countries' markets, even though foreign
banks' jurisdiction are governed by the International Money Laundering
Abatement and Financial Anti-Terrorism Act 2001. Already, some of the
US savings and loans holding companies have European operations and are
already protected under the Gramm-Leach-Bliley Act 1999, because they
were formed before 1999 and the Act is not retrospective.
These 'thrifts' engage in offering clearing-house services through a
foreign agency office, including global custody, settlement, securities
lending, paying agent and CEDEL depository services; investing in
foreign currency-dominated certificates of deposit and foreign debt
instruments and providing foreign currency exchange forward contracts
to commercial borrowers; foreign currency exchange services; making
loans on the security of foreign real estate; re-insurance activities,
provide internal asset-management services to reduce tax, and
establishing foreign real estate investment trusts!
These thrifts are currently not subject to federal financial services
regulation other than the 'thrift' regulator. The US with the Basel
Committee, have developed specific rules for these 'thrifts' in the EU,
such as the Joint Agency Statement on Parallel Banking Organisations
('thrifts') and the Office of Thrift Supervision (OTS) now has a role
as a consolidated financial services regulator under European Union
Directive 2002/87. The United States now has joint legislation with the
European Union, partly governing the EU banking sector. The Bank of
England Financial Stability Report 2004 reveals that the US accounts
for the largest single country exposure of UK -owned banks. It is
planned that the US will impose a similar weighted capital requirements
from European owned banking institutions which are operating in the US.
US 'thrifts' have, over many years, let into the global financial
system trillions of dollars of unregulated financial products, most of
which can be summarised as 'junk bonds'. The EU and the US now wish to
call an amnesty on and start afresh with new regulations to be applied
only to new products. This is the crux of the European Union's Basel II
Accord and the United States's Depository Institution
Management Interlock Act 2000 (DIMIA). Cross-border financial
interaction with some form of security via capital requirements for all
banks and non-bank institutions is now in place.
Compromises Made To The Use Of International Accounting Standards.
The EU has agreed to allow the US banks (and all other parties) to use
their present accounting standards but restate the accounts to
statements EQUIVALENT to the International Accounting Statements.
No definition of the word "equivalent" has been given... It was the use
of GAAP Accounting standards which Fannie Mae used to manipulate its
operating costs, profit and earnings per share for at least five years.
The US Accounting Standards Board
The Powers Report which was commissioned. soon after the Enron
collapse, reported that Price Water-house Accountants had breached SEC
requirements in giving a true and fait opinion on the exchange of Enron
shares for the Special Purpose Entity's "put note"; had failed to treat
the Special Purpose Entities as Enron assets and had treated a
third-party debt as equity; had made insufficient and opaque
disclosures to the SEC; had condoned the use of derivatives for hedging
risk; had condoned disproportionate employee bonuses which had not gone
through the proper procedure of Board approval and had left untangled
the complicated incomprehensible financial transactions or
securitisation and most alarmingly, had failed to see anything wrong in
Enron's two year period of internet futures trading in volumes
equivalent to the trading of a small Stock Exchange, without SEC
approval or licence.
The SEC is considering whether to compel companies to make their
earnings ratio public, filing their earnings information to include a
side-by-side reconciliation of the announced earnings to GAAP
Accounting Rules, along with a plain- English narrative description of
any differences. To earnings calculation using International Accounting
Standards.
Securitization Debt As Used By Fannie Mae
Securitisation debt has a lower interest-rate cost (see Table 4 below)
than say, corporate debt Securitized capital market debt is called
"Commercial Paper". Securitization compared to the Ordinary bank rate;
the small reductions in bank rates make for very substantial cash-flow
differences when the securitisation involves billions of US dollars and
is one method of providing liquidity for companies not in a position to
borrow, so preventing bankruptcy, although a company should be prudent
enough not to take the high risks.that securitisation entail. The US
securitisation industry deals in trillions of dollars of securitisation
each year, a very lucrative industry. The US Federal government has
implemented the Sarbanes -Oxley Act 2002 demands transparency in the
financial reports and could literally wipe out the securitisation
industry, causing several states to enact laws that permit 'true sale'
treatment without regard to the substance of the transaction.
When US banks show signs of deep financial trouble, they can be
bankrupted, a practice alien to Europe. The Federal Deposit Insurance
Corporation (FIDC) is authorised to conserve the debtors' bank balance.
But the FIDC's power does not extend to assets which are no longer
owned by the bank, i.e. securitized debt
US Corporate Governance Changes That Did Not Protect Against Fraud
It is a telling fact that in the history of US corporate governance,
rewards by way of shares was not usual, the usual method of calculating
management reward was the use of accounting ratios as indicators of
performance and earnings per share was the chosen ratio, this same
earnings ratio which was manipulated by Fannie Mae.
After the OECD Corporate Governance Rules were published in 1998,
corporate governance Codes of Conduct were operated and share incentive
schemes for employees and for the Management Board became popular and
institutional investors grew. US corporate executives enjoy higher
salaries and bonus share options than executives in other countries,
There is shareholder primacy as there is in Europe although it is
institutional shareholders who have increased share ownership from 30
to 50% from 1980 to 1996 at the expense of individual share ownership
which has decreased from 70% in 1970 to 48% in 1994.These institutional
shareholders are by definition financially astute and should have
challenged Fannie Mae's management where there was an accounting issue.
The Securities Exchange Commission-Federal Regulator.
There was much conflict of interest in the Enron financial fraud and
there is at Fannie Mae, conflict of interest because the directors of
the Board have been involved in approving all of the securitisation
deals, which are so complex, that it is questionable whether they
understood securitisation. More importantly, the 2002 Sarbanes-Oxley
Act was the reaction the recent serious financial frauds and it
mandated some corporate governance changes for listed companies. CEO
and CFO's must return to the company any profits if they sell their
their shares within 1 year of the Financial Reports. There is more
insider trading regulation and better accounts transparency because
now, off-Balance Sheet transactions and Special Purpose Entities must
be reported. The audit committee has more power, responsibility and
independence to monitor the Board with criminal sanction for
misreporting. Outside accountants and lawyers are required to calculate
the asset register The SEC also set out for NYSE and NASDAQ, similar
corporate governance rules to the Cadbury Code used by LSE listed
companies. The voluntary code recommends at least 3 non-executive
directors and one non-executive Chairperson for each company Board. But
the SEC was not the regulator for Fannie Mae, so these rules did not
apply.
Conclusion
Fannie Mae highlights the vast multi-trillion dollar unregulated US
financial market which has also permeated across borders. It has been
play-acting as the paragon of good corporate management, whilst in fact
it led the US insurance market in inflating prices, conflict of
interest, bid rigging, a complacent regulator, and insufficient capital
/liquidity plan. Manipulation of its earnings ratio to lend an air of
liquidity and soundness, and poor audit and internal controls. Fannie
Mae engaged in high risk synthetic securitisation, the use of credit
risk mitigation techniques, that is, collateral, guarantees and credit
derivatives, for hedging the underlying exposure without collateral.
The result of this alarmingly massive financial fraud is that many
states of the US speedily enacted new legislation against
anti-predatory money lending. Recently Germany amended its Mortgage
Bank Act to protect the Pfandbrief holder's rights in case of an
issuer's insolvency; since Germany has 70% of the European covered bond
market and some of the market share of US Treasury and Agency Paper
which the Asian Central Banks no longer wanted.
In deceit Fannie Mae misused structured finance vehicles, designed to
lower financing costs and spread investment risk, to carry out sham
transactions and mislead investors, analysts and regulators about their
true financial condition.
Bibliography
abelard wrote:
> On Thu, 11 May 2006 11:56:43 +0000 (UTC), M Holmes
> <fofp [at] holyrood.ed.ac.uk>
>
> typed:
> >In uk.finance Tumbleweed <thisaccountneverread [at] yahoo.com> wrote:
> >
> >> "M Holmes" <fofp [at] holyrood.ed.ac.uk> wrote in message
> >> news:e3v5ov$k61$2 [at] scotsman.ed.ac.uk...
> >
> >>> Fannie Mae found two more accounting problems this week and gold
> >>> crossed 700 Dollars per ounce. The Japanese are talking about coming
> >>> off 0% rates very soon. All my markers for the end have been hit and
> >>> I'm just about to make my first prediction on timing:
> >
> >>> Soon.
> >
> >> Would you care to make a prediction for 'soon'? Because at the moment
> >> you are saying that you will make a prediction at an unspecified time
> >> re an unspecified event (definition of 'crash'?) that will occur at an
> >> undefined time.
> >
> >Sorry, but a reading of the history of credit bubbles makes it very
> >clear that even when those doing rational analysis see that it's as
> >plain as the nose on the end of one's face that society is once more
> >caught up in a credit bubble, that theese things can last much longer
> >than anyone might expect. What is spottable are the common markers of a
> >bubble reaching its peak or starting to deflate.
> >
> >For "soon" though, I suspect the US is at the peak right now and we're
> >starting to see signs of distressed borrowers. As expected, this is
> >hitting the housing markets in some cities where "flippers" are trying
> >to get out of their legal obligation to pay the remaining 90% on
> >completed properties that they now cannot sell. Several markets are
> >showing an increase of unsold houses which is a marker of "divergence"
> >seen at market tops.
> >
> >I've long suspected that the UK is about a year behind the US in this
> >cycle and that'd put a top around early 2007. It's hard though to avoid
> >the suspicion that when Japanese and Chinese long-term rates start
> >rising, it won't hit us just as soon as it does the US. I guess we'll
> >see...
>
> but what of it....the world is locally much richer than in the 30s and
> you are now dealing with fiat currencies....
> meanwhile in the last uk crash people did not starve....
> they just pulled in their horns a little and variously adjusted....
>
> >> Out of interest, when you make this prediction, what actions do you
> >> propose people take?
> >
> >Each person has to take action based on their own circumstances. What is
> >clear from previous credit bubbles is that once it breaks, it's best not
> >be be holding debt and one would profit best from selling assets which
> >were inflated in price through the mass availability of credit, as soon
> >as possible because their price will fall as credit is withdrawn from
> >the masses and later is either settled or defaulted upon.
> >
> >It doesn't hurt to hold gold either - provided that the state doesn't
> >decide to confiscate it in order to shore up its attempt to prevent
> >deflation by printing paper.
>
> or flood the markets with their non-performing assets at a neat price
>
> >If I'm right though, we can all get a preview of what works by a careful
> >analysis of what happens in the US from here on in. They have all the
> >same problems: overindebted consumers who spend more than they earn;
> >overinflated property prices as a result of mass-availability of credit;
> >massive trade deficits due to overindebted consumers; overspending
> >government; potential currency problems.
>
> that looks like a return to voodoobabble rather than analysis
> the reality is the usa remains immensely powerful and wealthy
>
> >The only specific prediction I've made that hasn't come to pass before
> >the bubble bursts is that of serious trouble in the derivatives markets.
> >I still find it very hard to believe that we won't see something at the
> >least on the order of LTCM. Fannie Mae has had its troubles,
> >but not (yet?) on that scale.
>
> all of which have been met with hardly a ripple...
> mainly by the sophistication and sane actions of the fed....
>
> regards...
>
> --
> web site at www.abelard.org - news comment service, logic, economics
> energy, education, politics, etc 1,552,396 document calls in year past
> ------------------------------------------------------------ --------------------
> all that is necessary for [] walk quietly and carry
> the triumph of evil is that [] a big stick.
> good people do nothing [] trust actions not words
> only when it's funny -- roger rabbit
> ------------------------------------------------------------ --------------------
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| Re: Fannie Mae w/ Ameriquest marriage of corruption. [message #390301 ] |
So, 21 Mai 2006 22:27 |
|
The Fannie Mae GIANT MUDSLIDE of tsunamis of filth to destroy our
nation is coming with the very next Chinese YUAN rainclouds!.....
http://unemployment_crisis.tripod.com/fannie-mae.html
http://unemployment_crisis.tripod.com/IMMIGRATION.html
maggie
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| Re: Fannie Mae w/ Ameriquest marriage of corruption. [message #396183 ] |
Do, 08 Juni 2006 19:00 |
|
Soon the feds and the FEMA men in black with no insignia or name badge
or label will be rounding up American freedom insurgents and doing them
in, same as Iraqi freedom insurgents are being hunted down ... one by
one ... it is just a rehearsal for here.
Join hands and FIGHT THE MAN. He is not our father nor our uncle, he
is a liar and a destroyer, not to be trusted.
Willem Proxmire
------------
http://unemployment_crisis.tripod.com/fannie-mae.html
Don't you think that [above] is rather a REMOTE VIEW of the Fannie Mae
trillion dollar disaster tied into our US T-bills to China, and that is
clearly troubling frowning Bernard Shalom Bernanke so much that the
stock market tumbled nearly 300 points in less than 48 hours after his
pronouncements?
The following website [below] takes a more synthetic, almost telepathic
view, of the coming collapse, that even 666 FEMAs will not patch back
together again [in fact, they will appoint Humpty Dumpty as director to
rescue us!]. Bring on the non-bid trailer city contracts!
http://unemployment_crisis.tripod.com/fannie-mae.html
I love that photo of the slush fund agency for Republican fake
environmental assistance aid, DUCKS UNLIMITED, on the website! Thanks
and gracias! That is one fine con game of the Dept. of the Interior!
Ducks? What else!
Sorry ... gotta get back to my car and out of the internet cafe! Gotta
find work!
see ya!
Maggie Alioto wrote:
> The Fannie Mae GIANT MUDSLIDE of tsunamis of filth to destroy our
> nation is coming with the very next Chinese YUAN rainclouds!.....
> http://unemployment_crisis.tripod.com/fannie-mae.html
> http://unemployment_crisis.tripod.com/IMMIGRATION.html
>
> maggie
|
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| TERROR ALERT: Fannie Mae w/ Ameriquest marriage of corruption. [message #396253 ] |
Fr, 09 Juni 2006 20:37 |
|
ALLAH-u-AKBAR!!
Dolly Madison is the greatest!
Go freedom fighters united!!!
American and Iraqi and Palestinian Freedom loving INSURGENTS, stand
tall!
God is great and so is Babylon and USA!
Overthrow the rotten fish heads ruling our factories and hospitals and
fed agencies!
Do not be sitting ducks or we will all turn out like the ducks
slaughtered by the fake environmental group in Arlington VA near DC's
Dept. of the Interior, DUCKS UNLIMITED!
INSURGENTS UNITED UNLIMITED! Good name for the exploding peace
movement that does not take crap from the ROTTEN FISH HEADS UNLIMITED.
Soon the feds and the FEMA men in black with no insignia or name badge
or label will be rounding up American freedom insurgents and doing them
in, same as Iraqi freedom insurgents are being hunted down ... one by
one ... it is just a rehearsal for here.
Join hands and FIGHT THE MAN. He is not our father nor our uncle, he
is a liar and a destroyer, not to be trusted.
Willem Proxmire
http://unemployment_crisis.tripod.com/fannie-mae.html
Don't you think that [above] is rather a REMOTE VIEW of the Fannie Mae
trillion dollar disaster tied into our US T-bills to China, and that is
clearly troubling frowning Bernard Shalom Bernanke so much that the
stock market tumbled nearly 300 points in less than 48 hours after his
pronouncements?
The following website [below] takes a more synthetic, almost telepathic
view, of the coming collapse, that even 666 FEMAs will not patch back
together again [in fact, they will appoint Humpty Dumpty as director to
rescue us!]. Bring on the non-bid trailer city contracts!
http://unemployment_crisis.tripod.com/fannie-mae.html
I love that photo of the slush fund agency for Republican fake
environmental assistance aid, DUCKS UNLIMITED, on the website! Thanks
and gracias! That is one fine con game of the Dept. of the Interior!
Ducks? What else!
Sorry ... gotta get back to my car and out of the internet cafe! Gotta
find work!
see ya!
AMERIQUEST the Hand of Satan wrote:
Paul Wellstone wrote:
> Soon the feds and the FEMA men in black with no insignia or name badge
> or label will be rounding up American freedom insurgents and doing them
> in, same as Iraqi freedom insurgents are being hunted down ... one by
> one ... it is just a rehearsal for here.
>
> Join hands and FIGHT THE MAN. He is not our father nor our uncle, he
> is a liar and a destroyer, not to be trusted.
>
> Willem Proxmire
>
> ------------
>
> http://unemployment_crisis.tripod.com/fannie-mae.html
> Don't you think that [above] is rather a REMOTE VIEW of the Fannie Mae
> trillion dollar disaster tied into our US T-bills to China, and that is
>
> clearly troubling frowning Bernard Shalom Bernanke so much that the
> stock market tumbled nearly 300 points in less than 48 hours after his
> pronouncements?
>
> The following website [below] takes a more synthetic, almost telepathic
>
> view, of the coming collapse, that even 666 FEMAs will not patch back
> together again [in fact, they will appoint Humpty Dumpty as director to
>
> rescue us!]. Bring on the non-bid trailer city contracts!
>
> http://unemployment_crisis.tripod.com/fannie-mae.html
>
> I love that photo of the slush fund agency for Republican fake
> environmental assistance aid, DUCKS UNLIMITED, on the website! Thanks
> and gracias! That is one fine con game of the Dept. of the Interior!
> Ducks? What else!
>
> Sorry ... gotta get back to my car and out of the internet cafe! Gotta
>
> find work!
>
> see ya!
>
> Maggie Alioto wrote:
> > The Fannie Mae GIANT MUDSLIDE of tsunamis of filth to destroy our
> > nation is coming with the very next Chinese YUAN rainclouds!.....
> > http://unemployment_crisis.tripod.com/fannie-mae.html
> > http://unemployment_crisis.tripod.com/IMMIGRATION.html
> >
> > maggie
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