This Is Going To Hurt - The Paulson Plan - Wall Street Smackdown

By
Real Estate Services with Digital Content Creator

Also could be titled "We Saw The Enemy And He Was Us" or "What Goes Around Comes Around" - either way a lot of you really aren't going to like what I am about to write. I don't like Paulson's plan but the investors in the MBS's are the ones who brought this on. I call them the nuevo-riche, candy ass, pansie pants little yellow bellied cry babies and in spite of the fact that I need them for my business to survive I think they are all whiny little wusses.

The media giveth and the media taketh away.

I know I have been telling people 2008 is my year of kindness and encouragement. The closer we get to New Year's the more difficult that sounds. If you've been around enough to have inhaled one of my blogs you know I don't have much to say. Or, maybe it's the other way around. Either way let me use the media as a whipping boy and the Wall Street Whiners as the target just once more.

It all started like this: Up until the late 1990's and early 2000's when investors were gobbling up tech stocks and dot com IPO's like a group of fat kids on jello a borrower had to have good credit, good income, stable employment and good assets as well as a down payment or equity to get a loan. The media and the socialists kept whining that "the little people" were being held back from the American dream by the big banks and the "evil Republican capitalist regime".

Dot com went bye-bye boom boom. Nuevo-riche investors and wanna-bees had no place to play. The along came a few forward thinkers who created massive Real Estate Investment Trusts and started snapping up mortgage backed securities as quickly as they came available. The early successes were phenomenal as the lending guidelines were still somewhat common sense based on over a hundred years of data and risk management. An old stable investment vehicle was marked for doom.

But it wasn't enough - the candy-asses wanted MORE and they brought in their friends to play and hedged their bets on massive successes across the board. Then they discovered all they had to do was to buy whatever the lenders could originate and the lenders discovered the inexperienced, greedy youth from the streets of America and the world would buy almost anything. A marriage made in hell! Or maybe just a really disgusting one night stand?

Non-conforming soon became known as sub-prime. Kids who couldn't make enough delivering pizzas were hired as "loan consultants" and with little training were turned loose on the unwary public to just do whatever their managers told them to do.

It was the perfect storm

You can't have a circus without an audience. Welcome to the script greedy, uneducated and lazy borrowers ... millions and millions of them! They didn't care about the small print, the details or the future. All they heard was CASH OUT THOUSANDS OF DOLLARS PAYMENTS LOWER THAN BEFORE or IT DOESN'T MATTER IF YOU'RE FINANCIALLY WORTHLESS HERE ARE THE KEYS TO YOUR DREAM HOME! Sorry I was all-caps for effect.

It couldn't have happened in the 50's or 60's because people actually took responsibility for their own actions. It wasn't until the freedom movement and the socialism of America - originally called "The Great Awakening" but affectionately referred to by me as "The Day America Puked Out Its Brains". Citizens of the 1950's and 1960's cared about their credit, their finances and their future. Their rotten ass spoiled brat little punks could care less. That's why it was very easy for big name national lenders to get people with stellar credit to sing on the line on some really crappy loans to people who have no sense of personal responsibility.

America is ripe for the picking by a socialist agenda 

Meanwhile Wall Street was churning out millions and billions in ORIGINATION dollars. No new loans - no profit. The candy-ass investors were just as stupid and greedy as the people selling their souls to them. As long as new loans were being made, packaged and traded everybody was happy. Remember, this all started as a capitulation to the whining left and media that the underserved were being ... well, underserved. Some where along the lines someone forgot that was because the underserved were undeserving. You must watch your spelling for those two are similar! 

So now the care-free were being care-less on both sides of the investment pile. One side was getting a few dollars or a new home. The other side was swimming in massive profits but what they forgot was the media is never your friend. The media giveth and the media taketh away. The media had allowed this monster to grow unchecked. Now it had a veracious appetite and the incredible turned into the unrealistic and the piper started demanding some pay.

Nevermind that the candy-asses had made billions of dollars now their 30% annual increases were becoming 15% annual increases and the media told them - "you are doomed". They believed it after about 12 months of having foreclosures stuffed in their face and failed to enjoy the massive profits they were still makeing.

So they left.

Wall Street must have seemed vacant that day in 2007 when the market stopped buying MBS's. The big problem? The originators had told all those borrowers, "Don't worry, we'll watch the market when the rates drop we'll refinance you for free. We're good everyone else is scum." Then suddenly, like a thief in the night, all hope was gone. It got stuck in the bank account after the last transaction when the cry baby little pink pants investors took their millions and billions and went home. There would be no more refinances. The books were rolled back to 1999.

Will Paulson's plan work?

No. Government plans rarely do. That's why communism and socialism destroy economies and capitalism always rights itself. No form of government is perfect but mine is damn close ;)

My suggestion? There is only one everything else won't work. HANDS OFF. Let the market fix itself.

 

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Writer For Hire - I write. Whether you need blog content, research intense reports, data reports (and accompanying charts and graphics), ebooks, presentation content, speeches, advertising scripts, or similar, let me show you what you can have.

I started writing on Active Rain in 2006 when I was representing the mortgage industry. I am no longer in that industry and many of the older posts contain outdated information. Please do not contact me for LENDING or MORTGAGE questions but rather contact a licensed mortgage professional from your area. I have always been in marketing and branding and that is still what I do. Thanks for reading!

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Comments 8 New Comment

Rainmaker
271,087
Ken Cook
Writer For Hire
Digital Content Creator

Gold schmold! Give me dirt. My father was a developer and builder, too. The only thing that kept us going through the tough late 1970's was commercial. Know what's keeping me going through the tough 00's? Commercial - investors. Amazing isn't it?

I like dirt and non-conforming mortgage backed investments. There is a segment of "sub-prime" that works. I keep telling people: Ken Cook is a "sub-prime" borrower. High credit, good assets, non-conforming (that'd be sub-prime) loan amounts on primary and investments and stated income. Why stated? Multiple streams: real estate holdings, stocks, private investments, and business revenue. Funny thing is I state less than I actually make just to keep it safe for me! I would loan me money in a HEART BEAT. So, I'm still looking for people with guts and funds who want to see real returns! Dirt and dirt backed investments, Kathleen.

December 07, 2007 10:46 AM
Rainmaker
361,125
Leigh Brown
Broker/Owner - Charlotte NC
RE/MAX Executive Realty
One of these days we'll find out what you REALLY think.  You're so right on target, though.  The audience is as much to blame as the lenders or investors or any of them.  Personal responsibility no longer exists.  And this plan to 'freeze' things means we're only delaying the inevitable.  Are there going to be required classes on developing fiscal responsibility if your rate is frozen by the benevolent government?
December 07, 2007 12:20 PM
Rainmaker
271,087
Ken Cook
Writer For Hire
Digital Content Creator
Ah Leigh, you know I keep my feelings close to my chest. I'm trying to open up a little more. This would be a disaster for the national economy - if certain lenders decided to do it on their own that would be noble and globally acceptable but being "forced" to do so by regulators will frighten away much needed investors.
December 07, 2007 07:58 PM
Rainmaker
217,645
Joan Mirantz
Realtor, GRI, CBR, SRES - Concord New Hampshire
Homequest Real Estate
January 1st huh? Whatever will you talk about?
December 08, 2007 06:25 PM
Rainmaker
271,087
Ken Cook
Writer For Hire
Digital Content Creator
Bunnies, cotton candy, marshmallows, angels. The usual stuff.
December 08, 2007 10:19 PM
Rainmaker
271,087

Ken Cook

Writer For Hire
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