From: "Bill Reid" 
Newsgroups: misc.invest.stocks misc.consumers.frugal-living misc.invest.real-estate
Subject: Re: Where did the 400 billion USD in subprime mortgage losses go
Date: Wed, 21 Nov 2007 16:42:54 GMT
Bytes: 6082


Rod Speed  wrote in message
news:5qi9neF100h2rU1@mid.individual.net...
> Bill Reid  wrote:
> > Rod Speed  wrote in message
> > news:5qhqriF104g7eU1@mid.individual.net...
> >> Bill Reid  wrote:
> >>> FrediFizzx  wrote in message
> >>> news:5qhfkiFvj35pU1@mid.individual.net...
> >>>> "Rod Speed"  wrote in message
> >>>> news:5qgub4F103pskU1@mid.individual.net...
> >>>>> FrediFizzx  wrote:
> >>>>
> >>>>>> Good example.  The money is still out there.  The people that
> >>>>>> sold at the top have the money.
> >>>>>
> >>>>> No they dont when the whole market drops significantly due to the
> >>>>> large
> >>>>> oversupply of houses that are the result of mortgage defaults with
> >>>>> those
> >>>>> who should never have been given that mortgage in the first place.
> >>>>
> >>>> What the heck does that have to do with people that sold at the
> >>>> top? This totally answers the OP's original question as to where
> >>>> the money went.  It doesn't just vaporize.
> >>>
> >>> Oh, but it does, eventually.  Last time this question came
> >>> up, I mentioned my brother-in-law and sister kind of sold
> >>> at the top in one of the most expensive real-estate markets
> >>> and moved to the same size house in a much less expensive
> >>> market and pocketed the difference.  So THAT'S where the
> >>> money went...first.
> >>>
> >>> Then of course they bought a boat, and then they needed a
> >>> new giant truck to haul it around, so the boat dealer and the
> >>> truck dealer got it, and so on.  So everybody wound up getting
> >>> a little piece of it.
> >>>
> >>> But now THAT well is dry, so where is the NEXT $400billion
> >>> gonna come from?  I think my brother-in-law and sister and their
> >>> boat and truck dealers deserve an answer to that question...as do
> >>> we all, or at least those of us who are smart enough to even ask
> >>> the question (and answer it)...
> >>
> >> If it was that easy to predict, it wouldnt happen.
>
> > WRONG!!!
>
> RIGHT!!!!!!
>
> Have fun explaining how come even Greenspan who was
> paid to see that sort of thing coming, didnt manage to do that.

He was paid to see "irrational exuberance" in the stock market,
and he saw it...only problem, he saw it years before the market
finally DID decline disasterously after first rising tremendously...

I bring up this particular Greenspan prognostication not just
because it is so well-known but so typical.  The trick is not to
"see them coming", that's just a matter of common sense, simple
math, and public information and data.  The IMPOSSIBILITY
is to "predict" EXACT tops and bottoms, dates and prices...

> >> You dont get fiascos like that very often at all.
>
> > Just frequently enough to be part of the "historical record"...but
> > certainly not frequently enough for individuals operating at selfish
> > greedy cross-purposes to realize en masse the hole they're digging...
>
> Or they didnt have enough information about exactly
> what was going on to be able to predict the fiasco
> soon enough to avoid any consequences for themselves.

In some cases, some people may have been "duped", but in ALL
cases their greed exceeded their caution...and common sense...

> > Look, there HAVE been some real winners in these periodic
> > blowouts; I'm not holding my breath waiting for Mark Cuban
> > to go bankrupt after selling out right at the peak of the dot-com
> > craze, and I'm hanging on to MY pennies...and oh yeah, that
> > was what, a whole six years ago?
>
> See above on Greenspan.

Exactly.  I think Cuban has taken some sort of credit for his
apparent prescience, but really how smart do you have to be
to take a $billion for a company with virtually no revenues?  The
real question is about the other side of the transaction: how
STUPID do you have to be to PAY a $billion for a company
with no revenues?  And how thick do you have to be to not
recognize this kind of activity as a problem?  But you brag
that YOU can't "see them coming"...

That's probably because you NEVER heard a word about
mortgage issuers loaning money to people without ANY
documentation of their income or credit history, loaning amounts
up to and OVER 100% of any realistic "appraisal" of the
home value (and of course, an "appraisal" is no different
than looking at the prices of all the other dot-coms and
deciding that a company with no revenues really IS worth
a $billion)...

---
William Ernest Reid
Post count:  858