{"id":4678,"date":"2008-09-26T10:51:15","date_gmt":"2008-09-26T17:51:15","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=4678"},"modified":"2008-09-26T10:51:15","modified_gmt":"2008-09-26T17:51:15","slug":"mortgage-market-week-in-review-to-bail-or-not-to-bail","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4678\/mortgage-market-week-in-review-to-bail-or-not-to-bail\/","title":{"rendered":"Mortgage Market Week in Review &#8211; to Bail or not to Bail?"},"content":{"rendered":"<div class=\"snap_preview\">\n<p><span><span style=\"Arial;\">Yikes, every week it\u2019s getting more and more challenging to lay out for you what\u2019s going on in the markets.\u00a0\u00a0 Hopefully it will get easier, but I\u2019m not really sure that it will for a while.\u00a0 So what are we going to talk about this week?\u00a0\u00a0 This week it\u2019s about the proposed bailout, the biggest bank failure in the history of our country, and a few thoughts from Dick DeVos (huh &#8211; trust me, it will fit in later).<\/span><\/span><\/p>\n<div><span> <\/span><\/div>\n<div><span><span style=\"Arial;\"><strong>The bailout &#8211;  $700,000,000,000.00.<\/strong> That\u2019s how much money the Treasury wants to have to bail out the troubled financial institutions.\u00a0\u00a0 What do they want to do?\u00a0\u00a0 Here it is in a nutshell: <\/span><\/span><\/div>\n<ul><span><\/p>\n<li>\n<div><span style=\"Arial;\">They want to buy approximately 5% of the mortgage backed securities (presumably the worst ones) from the banks and investment institutions. <\/span><\/div>\n<\/li>\n<li>\n<div><span style=\"Arial;\">Why?\u00a0 The theory is that if they take those loans off their books, that will free those institutions to start lending again (start loading up their books with better loans this time.) <\/span><\/div>\n<\/li>\n<li>\n<div><span style=\"Arial;\">Do we have any guarantee that it will work?\u00a0\u00a0 Nope, the only guarantee we have is the word of Treasury Secretary Paulson and Fed Chairman Bernanke, both of whom are very smart but both of whom have been wrong on numerous occasions as the credit crisis has spread. <\/span><\/div>\n<\/li>\n<li>\n<div><span style=\"Arial;\">Would the tax payer end up paying for the entire $700 Billion?\u00a0 Long term, probably substantially less than that because, depending on how the portfolio gets managed, because these loans are backed up by assets (houses) and the value of those won\u2019t go the way of Washington Mutual stock and become worthless.<\/span><\/div>\n<\/li>\n<li>\n<div><span style=\"Arial;\">Will banks immediately turn around and start  lending more to others?\u00a0\u00a0 That\u2019s a question that we don\u2019t know the answer  to.<\/span><\/div>\n<\/li>\n<li>\n<div><span style=\"Arial;\">I read an article this morning that said that the Central Banks might actually be making the problem worse.\u00a0\u00a0 How so?\u00a0\u00a0 They keep pumping more money into the system and that is making it easy for banks to borrow money from the Fed so they don\u2019t have to borrow money from each other and that has put a squeeze on the normal credit markets.\u00a0\u00a0 Interesting <a href=\"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4678\/mortgage-market-week-in-review-to-bail-or-not-to-bail\/#more-4678\" class=\"more-link\">Read more<\/a><\/span><\/div>\n<\/li>\n<p><\/span><\/ul>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Yikes, every week it\u2019s getting more and more challenging to lay out for you what\u2019s going on in the markets.\u00a0\u00a0 Hopefully it will get easier, but I\u2019m not really sure that it will for a while.\u00a0 So what are we going to talk about this week?\u00a0\u00a0 This week it\u2019s about the proposed bailout, the biggest [&hellip;]<\/p>\n","protected":false},"author":44,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[62,2,29,26],"tags":[],"class_list":{"0":"post-4678","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-dirty-laundry","7":"category-general","8":"category-group-therapy","9":"category-lending","11":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":4742,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4742\/a-quick-primer-on-liberal-conservative-economic-theory\/","url_meta":{"origin":4678,"position":0},"title":"A Quick Primer on Liberal &amp; Conservative Economic Theory","author":"Sean Purcell","date":"September 30, 2008","format":false,"excerpt":"We may or may not be in favor of the bailout.\u00a0 We may or may not fully understand what the bailout will or won't do.\u00a0 We may or may not be any smarter than the politicians who (in my humble opinion) don't have a clue what the bailout will or\u2026","rel":"","context":"In &quot;Investment&quot;","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":4287,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4287\/moral-hazard-revisited\/","url_meta":{"origin":4678,"position":1},"title":"Moral Hazard Revisited&#8230;..","author":"Tom Vanderwell","date":"September 8, 2008","format":false,"excerpt":"One of the important things that Paulson said in the press conference yesterday was that we (the government) don't want Fannie and Freddie to stay public and that one of the things that the next administration and Congress has to figure out is \"How in the world do we take\u2026","rel":"","context":"In &quot;Lending&quot;","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1777,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1777\/president-bush-says-no-to-an-uncle-sam-bailout\/","url_meta":{"origin":4678,"position":2},"title":"President Bush says &#8220;No&#8221; to an Uncle Sam Bailout","author":"Lani Anglin","date":"August 8, 2007","format":false,"excerpt":"After reading BENN's, Michael's and Greg's articles today, my ears were uber-perked regarding the current market conditions. In preparing to blog today, I had Fox News on in the background and loved Cavuto's analysis of the current conditions so much that I cared enough to pause, play, pause, play and\u2026","rel":"","context":"In &quot;Real Estate&quot;","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":3447,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3447\/moral-hazard\/","url_meta":{"origin":4678,"position":3},"title":"Moral Hazard&#8230;.","author":"Tom Vanderwell","date":"July 22, 2008","format":false,"excerpt":"Barry Ritholz at The Big Picture had these two comics that brought to the forefront again the issue of moral hazard. Check out the comics and then we'll talk \"on the other side.\" Okay, now some thoughts about moral hazard: The definition of moral hazard (as taken from that scholarly\u2026","rel":"","context":"In &quot;Investment&quot;","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"This is going to get expensive.....","src":"https:\/\/i0.wp.com\/straighttalkaboutmortgages.wordpress.com\/files\/2008\/07\/moral-hazard.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":2332,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2332\/compassionate-conservative-or-banana-republican\/","url_meta":{"origin":4678,"position":4},"title":"Compassionate Conservative or Banana Republican?","author":"Greg Swann","date":"December 6, 2007","format":false,"excerpt":"I have a tremendous admiration for George W. Bush, the President of the United States. My reasons are legion, and the rest of America will have to wait for historians to explain to them just what a great man they have so completely scorned in their well-scored chorus. But Phil\u2026","rel":"","context":"In &quot;Investment&quot;","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":4882,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4882\/the-glass-is-half-full\/","url_meta":{"origin":4678,"position":5},"title":"The Glass IS Half Full","author":"Sean Purcell","date":"October 13, 2008","format":false,"excerpt":"The \"new, post-bail-out\u00a0era of real estate\" is how Cheryl Johnson describes things going forward amidst the \"collapsing global financial markets\" in Back At The Ranch. In a comment to Friday's edition of the Bloodhound Blog Radio Mortgage program Brian Brady and I co-host, the optimistic view I have for real\u2026","rel":"","context":"In &quot;Real Estate&quot;","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4678","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=4678"}],"version-history":[{"count":2,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4678\/revisions"}],"predecessor-version":[{"id":4683,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4678\/revisions\/4683"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=4678"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=4678"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=4678"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}