Why the hell is everything on allocation?

Actually I was thinking more along the lines of, "because the government strongly encouraged banks to give mortgages to people who really weren't very good risks, the government bears some responsibility for helping out when massive mortgage defaults follow." ...But when it comes down to brass tacks, that does mean that tax payers are going to end up paying for some of those homes.

I view the government re-writing rules as just one of many risks of doing business. At present I don't believe that risk is so great that it would dissuade me from lending; the fact that many banks aren't lending today is more out of irrational fear than any objective calcuations of risk IMO. That's certainly their prerogative, but I'm confident it'll change in the next year or two as well.

We're also currently deflating our way out of having to make massive spending cuts -- not my preferred approach, but I can understand why the fed finds it attractive.

---Joel

We're in a world wide recession with no end in sight. Manufacturers are too scared to ramp up again due to the uncertainty of the economy. They still have memories of the dot com bust. If you lived thru the dot com bust, you would have seen allocation on simple resistors and capacitors.

If you buy stock out of China, good chance they are fake or substandard parts. We have seen some really bad stuff coming out of brokers lately. It appears semiconductor workers in Asia are raiding the reject bin and selling them to evil doers. We always have a return policy in place incase the parts are fake or substandard.

I haven't seen anything this bad in the UK since the mid 80s.

Back then I remember one distributor trying to sell us 5 year old Russian TTL.

I am dreadfully awaiting our annual increase letter, looks like they may be mailing these late. This one could be hefty, in part because of Obamataxes (new taxing of non-profit plans, I was told). We are already in the highest deductible plan they've got so this time we'll have no way out.

And if there is the slightest spec in your history or your wife's, you most likely will just receive "decline to quote" notices :-(

Sometimes it would be better for a bank to just re-fi at today's value, versus going through a messy foreclosure followed by an auction sale. I know it's not right but sometimes one has to lick the wounds and cut the losses. Many banks do not strike me as particularly smart in that domain. I have been told of cases where people made a reasonable offer to buy a foreclosed property, the bank dragged on and on and on, the buyer got p....d, walk away and bought something else. Later the same property was dumped at auction for a lot less. Six-digit sums were effectively being left on the table. Or had simply evaporated by then.

equipment

I've had small companies try to get me to indemnify them against adverse IRS judgements like that--usually because they pulled a 'standard' contract off the Internet and didn't really read it. (One of Napoleon's most inept generals was accused of losing battles on purpose. The Emperor replied, "Never attribute to treason what is adequately explained by incompetence.")

My standard answer to that sort of nonsense is, "I can't accept excess liability for things outside my control. I'll answer reasonable questions about my other client work if your accountant is worried."

I actually have a document called "NDA and Consulting Agreement Deal Breakers" that I sometimes send to folks who don't have much experience at contract writing.

Cheers

Phil Hobbs

It's sneakier than that. Most of these mortgages have Fannie Mae / Freddie Mac / FHA guarantees, so the banks don't lose... just you. ...Jim Thompson

This is just for me. Pamela is on Medicare!

Charlie

Then, if you are totally healthy, you might luck out. Remember, insurance companies would ideally like to only insure underwater carpet fires.

Never had that but did have the occasional case where a company (usually large ones) insisted on full liability insurance. Which I cannot obtain, on account of the fact that I also do medical and aerospace designs. In one case a month ago I had to tell them that, sorry, I can't consult for you then. Sometimes they then want you to work through an agency which carries insurance but only if you enter into a W2-relationship with that agency. And that gets dicey, at least with the current crackdown announcements. As I said earlier, such crackdowns are a job and project killer. Might seem innocent at first blush but if a whole project doesn't get off the ground because of it that also leads to lost production jobs. US jobs that could have been created but aren't.

And that's probably the root of the whole problem. Then Fannie/Freddie would have to set up some guidelines on short sales and such, including a "short sale" to the current resident. But AFAICT that ain't happening.

Well, they are all MADE in the far East, and most are USED there, so it is no surprise that they are stocked there. Assuming you are in the US, I'm afraid we are just going to have to get used to being a second-class citizen in these things. Might be good to learn Chinese, too. There are brokers who can communicate well in English, thank goodness. I just needed a really odd sensor, and every US distributor (franchised or NOT!) was unable to get them, although they showed inventory. Delivery was minimum of 6 months, then get in line with everybody else. The guy in Hong Kong got them to me in under 2 weeks.

Jon

You "can" but no one has. It's not happening.

They just drop *all* dependent coverage. Simple.

Again, a "short sale" to the current resident would simply cause more problems. People would simply stop paying their mortgages, it that's what it took, to get the "free money".

But why should the government be helping out those people who were (and still are) poor risks? If they shouldn't have qualified for a loan then, why should they now, at taxpayer's expense?

It's not an "irrational" fear at all. They're teetering on the edge of insolvency and have no interest in *more* risk.

"Deflating"? Huh?

That's what people already did, it's not new. Because the banks presented it to them on a silver platter: "Here, use your home as an ATM, we'll cover ya". Which was daft.

I know this is morally wrong, and people still risk that the bank can say "No, we think we can sell the house for more, so move out". But if the house is likely to sell for a lot less at auction than what the new mortgage would be based on I think it's a no-brainer, don't you think?

If we're talking Fannie & Freddie, they're government institutions, so when something goes wrong they suffer a loss... which translates into an expense for the taxpayers, as we're the "stockholders."

I realize it's not really that simple -- private banks are a big part of this as well --, but that's the basic premise for why taxpyers are going to have to eat some of the losses.

OK, "irrational" was too strong of a word. Perhaps it's more like, "overly anxious."

Banks are making profits again (and plenty of them at that); it won't be too long before they start lending a bit more.

Deflating our debts by printing money. :-)

...which leads to inflation, which would have been a better word choice.

---Joel

No it's not. They were still paying their mortgage. You're telling them to default and then get free money. That's a very dangerous way to train people to act.

No, I don't. You don't make it easy to do the wrong thing. If they are guilty of bad behavior don't reward it again, particularly on the backs of those of us who were "smarter".

I understand that we're going to lose, but the people who shouldn't have qualified then and certainly don't now should not be rewarded for being stupid, with *my* money.

I understand that, but stupid should *not* be rewarded. No one involved in these bad mortgages should come out with their skin.

But it's *not*. If their balance sheet goes upside down, they're OUT OF BUSINESS. There is no "restructuring". There is no second chance. Look how many banks have been closed. There are a whole lot more on the edge.

I wasn't quite sure where you were going. ;-)