Hmm...great blog! Very sorry state of finances we are in at the moment huh?

And then the tax payers who own and who do NOT own property all pay for it too! WOW, they just do not know when to put the plug in!

I'm absolutely astonished at the incompetence from banks to rectify some of their own problems (particularly in the short sale arena) and have wondered why it is that pulling out of this one falls to the people (purchasers) that are the only ones that can save it- penalize the spenders that will improve the situation; give latitude to the banks that facilitated much of it (with the govt's blessing).

Great blog and love that picture of Bernacke on the horse. I also agree with you on where the problem originated and whoses paying the price for it.

Sean Allen

Don't forget. In the middle of all of that Lenn beautifully points out, Congress passed new bankruptcy laws. The credit card companies knew what was coming. MBNA, CitiBank, Chase, Morgan Stanley, etc....Any company that was dealing with mortgages knew that when interest rates reset, people could have a hard time making things meet. These companies set out to protect themselves and it worked. The perfect storm, which they created, is taking the economy down.

Christina.  Sorry it is, indeed.

Katerina.  We all pay.  We all pay. 

Laurie.  I suspect that flexibility and innovation are not most banks' strong suits.

International.  Thanks.  We didn't know it when it was happened.  I was slow to pick up on the MBS problem until the financial bankers on Wall Street started dropping like flies. 

Scott.  I was a perfect storm, wasn't it?

Even with all the Bank bailouts the problem continues.....Bernanke says a couple of years!  He speaks painfully plain doesn't he?

It's a shame too. 98% pay their mortgages; we are talking about 2% who are in foreclosure.

Endea.  I agree.  A couple of years.  Surely it's a long way from over.

Stephan.  That's very true.  However, when you look at the total value of the MBSs, it's a pot full of money.

Even a 2% foreclosue rate is a pot full of money.

Bernanke: Banks must get better at foreseeing risk. Can you believe that he has to actually suggest such a thing?

Lenn, there is a fine line regulators will have to walk soon when invoking "systemic risk" as means to justify "bold" moves. Bear...justified. Beyond that, I grow suspect. If the "systemic risk" lever becomes abused much like the "National Security" mantra, it will be obvious and cause yet another spate of problems as confidence in the Fed itself could erode.

That's a very fine line to walk.

Lenn, no one could have placed this together better than yourself.  It is so true.  This is really a bank bailout, and not a consumer bailout.

Stephen.  Thanks.  Banks are not used to risk.  They are skilled at lending money to folks who dont need it.

Michael.  Thanks.  Good analogy.  So much of what they do is hidden by Accounting Gobbledigook, we'll never know.

Jim.  BINGO.

It is sad the the bailout will benefit those who created the mess.

Randy.  Indeed it is.  Indeed it is.

Lenn,

I agree...we all pay. We have a long way to go.

Lots of lobbying in Washington also help this perfect storm.  Where were our legislators? 

Lenn, I love your analysis of what he said, much clear with the reprecussions than what he didn't say. What a mess.

The home buying consumer is paying for the clean-up through loan fees and higher down payments.

 Oh Lenn, everyone who owns property is paying for it way more dearly than loan fees. They have watched their equity disappear into thin air, crippling them from selling or refinancing.

They aren't worried about higher loan fees. I have stacks of files on my desk that would pay whatever loan fee I wanted to charge.

IF I could only get them a loan.

This is how we are ALL paying.  Though the nose.

Now they get to pay with large losses but in the end we will get to pay with higher rates to get the pay back.

I'm also concerned about the financial picture this paints of America on an international basis.  Appealing to "Soverign Wealth Resources"...means bringing in foreign money.  Today it takes over $1.54 to buy one euro.  With real estate prices plummeting we will see more and more foreign money buying US real Estate.  Not houses....shopping malls, office buildings, etc.  This could be a dangerous time for america losing more and more control inside it's own borders.   

great indepth post and stats.  where ae the legislators?

As if we expected the FED to ride to the rescue of John and Jane Homeowner. Wall Street will be the only true beneficiary of FED intervention.  What a sad commentary that is.

I recall a quote from Cold Mountain that seems appropriate...They call this war economy a cloud over the land. But they made the weather and then they stand in the rain and say '^@*#, it's raining!'

Neal.  We're all paying, but when one of the big boys on Wall Street gets ousted following massive malfeasance, they walk away will $Millions.  When a little homeowner wants to take a hit and get out from under, they lose everything and are left with massive tax and debt liabilities.  The Wall Street guy knew exactly what they were doing.  The ignorant home buyer hadn't a clue what was going on. 

Joan.  They were busy trying to get reelected.

Missy.  Indeed.  With Greenspan, we wondered what he said.  With Bernanke we know what he said "The Window is Open" and just shake our heads. 

Janet.  I believe that the higher loan fees are taking many people out of the market.  Of course, the dramatically reduction of mortgage investment money is worse, but put together, there are so many out of the market it's shrinking the buying pool dramatically.  The shrinking of home value will cripple home sales for years.  But, I believe that had to happen in my market.  It got so high the average home buyer was locked out.

Terry.  Thanks.  Higher rates, higher fees and lower value.  Such a deal.

Bo.  I too am concerned that Bernanke would even mention the Soverign Wealth Funds matter.  Does he not know that foreigh governments do not follow our laws.  

Pam.  Getting reelected.

Jesse.  I agree.  It is sad.  The cronism that permiates the Governement and Wall Street is palpable. 

That's why I always though the whole thing was fixed...insiders always know...they just let us believe they don't. Kind of like keeping it in the family.

Greed, pure and simple.  No political spin can change what caused it.

Another stellar post from Lenn---------Girl, you have a gift, do you know that????????

Lenn, Getting more money from SWFs is going to create an even larger problem down the road. We are all ready dependent on their (Middle east, China) oil and goods now we are going to be dependent on their money as well. We are spoiled in this country and our insatiable desire for stuff is going to be our downfall. 

I agree it's going to take years for this market to level out.

Norma.  You are absolutely right.  Funny thing.  The home owners that are hurt will walk away with nothing.  The Wall Street gamers will leaver with millions.

Diane.  Thanks.  It's a gift, an a curse.  Yes, I'm in the Addicted to ActiveRain Group.

Bryant.  Thanks.  It took from 1988 to about 2004 for the market to recover fromthe S&L mess.