September 18, 2008

FLASH: And then, right on schedule, the government socialized the entire mess

We've been predicting "RTC2" here for years.

And now, it's come.

Get ready for the government to buy up all the houses. All the bad loans. All the foreclosures. All the losing lottery tickets. Trillions and trillions we're talking.

One small question though.

Where does all that money come from?

And get ready for the firesale of a lifetime HP'ers as the US government buys up and tries to get rid of at any price all those unwanted homes.

CNBC said Treasury Secretary Henry Paulson is considering creation of an entity like the Resolution Trust Corp. that was formed after the failure of savings and loan banks in the 1980s.

Investors were cheered by the notion of a huge federal intervention like the establishment of RTC to acquire the real estate debt that has hobbled financial institutions and led to the intense volatility in the markets this week.

If there's an RTC-like entity, "it's going to take a lot of the bad debt off the balance sheets of these companies," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. That would alleviate many of the pressures causing the credit crisis, he said, and open up the credit markets again.


Anonymous said...

Oh you poor renters. Don't worry you can always get a job cutting my grass. The Government is not going to let this THING go without a crazy fight against all odds.

pulte homes up said...

$180B more liquidity added.
Insane market swing.

PHM up.

born to lose said...

maybe the government won't sell the houses. They could just rent them out until property values go up.
the needier could get lower rents than the ones who have the means to pay more.

Anonymous said...

Poor Renter my a$$! I sold at the top knowing that I would be able to pick up multiple homes for a dime on the dollar. That day is coming.

I'll be somebody's landlord soon enough, If I want!

Save your pity for the real fools that bought into this crap, I'm sure you know who they really are!

Hint! They don't post on Housing Panic..

BubbleGirl said...


"Oh you poor renters. Don't worry you can always get a job cutting my grass. The Government is not going to let this THING go without a crazy fight against all odds."

What exactly are you trying to say? I rent and I have a high level job with advanced degrees. I rent because I didn't have to and I refused to buy an overvalued piece of crap during what I knew was a housing bubble. You are SICK and just stupid. And probably a Republican...

tom12008 said...

Thanks for the reassurance, Keith. Is the second coming of Charles Keating around the corner? Isn't it poetic that a bailout so massive that it makes the S&L resuce package look like a bag of chicken feed gets passed in the year that John McCain finally wins the GOP candidacy? This is nauseating, even though it has long seemed inevitable.

Anonymous said...

I own a restaurant ,I got a lot of bad debt . I want to government to
buy it .

Anonymous said...

Don't be deceived . The RTC of the 80's was simply a clearing house and the government did not buy the bad debt .

What Wall Street and the gambling lenders wants is for a TWIST on the prior RTC and for the taxpayers to just buy all the bad debt on home loans and make it the taxpayers problem .

Hasn't the criminal Bankers been
trying to blackmail everyone in to this from day one when they knew the gig was up and they were going to have losses from their folly of lending un-qualified gamblers money.

This is not right folks ,these companies deserve to fail and shrink to a fraction of their former selves and pay the price for years for their loan and leverage crimes . F them .

vanilla ice said...

"Where does all that money come from?"

It comes from three places:

1. The homeowners, I'm sorry homedebtors, who are simply paying for themselves back for their own stupidity.

2. Renters

3. Printer

Anthony said...

I feel awful as a renter in Los Angeles. I mean sure, I have over $150,000 in cash, a $200,000-a-year recession-proof job, plenty of safe investments, zero debt, and soon houses will be cheap enough that I might actually get a deal. But I didn't build false equity in a crappy over priced home in a neighborhood I didn't really want to live in that I pay the bank to live in for the next thirty years. Man, life sucks.

Moderate Infidel said...

Republitards - this is GOD speaking! Stop cynically using me as your scapegoat for your greed and ignorance or I will rapture your @sses and send you to room H and force you to listen for the rest of eternity to the stupid thoughts in your heads.

Anonymous said...

"What exactly are you trying to say? I rent and I have a high level job with advanced degrees. "

Funny how when anyone questions renters they come back with a mention of their degrees. Like I give a fuck about your degree. George Bush has a a BA from Yale and an MBA from Harvard.

Anonymous said...

Bailing out Banks is NOT buying up houses.

In other words, going to the bank for a loan to cover your gambling losses does not mean you are going to use the loan to buy the racehorse.

What you're really going to do with the money is BET ON MORE HORSE RACES!

vanilla ice said...

How totally F'd is this? This will go down as the most devious effort to save the banks and markets during this whole debacle. This further confirms that the free market is an illusion.

Anonymous said...

all your houses are belong to us.

Anonymous said...

hey, maybe the government can employ millions to "decommission" the vacant houses.

here come the judge said...

"Where does all that money come from?"

The Fed prints it, of course. Get ready for INFLATION.

Peter Schiff's 9/17 broadcast

Anonymous said...

Screw Wall Street ,what have they ever done for the taxpayers . Why should the taxpayers bail those creeps out. Let them die the death they deserve and let the prudent companies emerge as the new Wall Street . Stop responding to their
the market corrections that would be natural when Wall Street Companies refuse to mark to market because they are waiting for a bail out .

Anonymous said...

I have a solution to the housing crash and at the same time solve the homeless problem.

I model it after Massachusett's solution for those who don't have medical insurance.

congress should pass a law that requires everyone to buy a house (like MA law requires everyone to buy medical insurance).

Presto! homeless and housing bubble fixed!

Lisa said...

OMG. I'm disgusted beyond belief.

But does anyone think this has a chance in hell of magically fixing the housing debacle? The bottom line is prices are still horribly out of whack with income and rents.

Anonymous said...

Bubblegirl, and everyone elso that wants to point the finger at the opposite party, it is a waste of time. Both Democrats and Republicans have a hand in this. To coninue pointing fingers shows that you are only slightly getting it.

Afterthought said...


America and Americans should rejoice that this government is going to default on all the debt. Because that is what this is. We are not the suckers, it is any foreigner who buys our debt or holds dollars.

If you have money to spare get it out of the dollar because it's done.

Sorry China, sorry Japan, sorry Arabs, sorry Russia; you are left holding the bag 'cause we are the biggest baddest mo-fos on this or any other planet.

Andrew from Russia said...

Could this be arranged as a Sino-U.S. joint enterprise?

Eric said...

I wish the fed would buy up some of my bad debt and take it off my balance sheets. I thought all of these politicians were supposedly pro small business. Yet they're giving a handout directly to a corporation simply because of how big it is.

Oh, and does any one hind it odd that the Fed is loaning money to the company that insured loans.... Who's going to insure that loan if it goes bad?

Anonymous said...


You're off on this one. If anything this will cause real estate prices to go back up. I've been renting for close to 2 years. I've been waiting patiently for these fire sales you and others have been talking about. I haven't seen any and unfortunately won't be seeing any.

Here's why:

Say a bank has a $100K note on a house worth $80K that is foreclosed. Up until now if I as a buyer walked up to the bank and said, I'll give you $70K for the house, the bank would most likely say yes as it was either $70K from me or nothing.

But now the bank can tell me to go fuck myself since it knows the govt will be there to buy it for $70K. So they might as well list it for $90K and wait it out. If the house sells, great, if it doesn't, no big deal, govt is always there as a buyer of last resort. My buying power has just vanished.

That's reason 1.

Reason 2 is this:

Up until now the same bank was weary of lending any more money for people to buy houses. Lending standards were starting to come back. 5, 10 or even 20% down and high fico scores required. But again, now the bank knows that the govt will be there to buy up all bad debts. So instead of demanding a 10% or 20% down payment and high fico score, the bank will now start lending out money to anyone with a pulse. Why not? If the borrowers pay the loan back, great. If not, oh well, govt will be there to buy the debt. It's a win-win situation for the bank no matter what happens. And so they will be lending out money to one and all, regardless of ability to repay.

I'm giving up and will buy something soon. If you can't beat 'em, join 'em.

Anonymous said...

We will never "own" anything.... Housing will be a "gift" for not making any waves, come along sheeple.

Anonymous said...

Lincoln Savings and Loan

The Lincoln Savings led to the Keating Five political scandal, in which five U.S. senators were implicated in an influence-peddling scheme. It was named for Charles Keating, who headed Lincoln Savings and made $300,000 as political contributions to them in the 1980s. Three of those senators - Alan Cranston(D-CA), Don Riegle(D-MI), and Dennis DeConcini(D-AZ) - found their political careers cut short as a result. Two others - John Glenn(D-OH) and John McCain(R-AZ) - were rebuked by the Senate Ethics Committee for exercising "poor judgment" for intervening with the federal regulators on behalf of Keating.[10]

[edit] Silverado Savings and Loan

Silverado Savings and Loan collapsed in 1988, costing taxpayers $1.3 billion. Neil Bush, son of then Vice President of the United States George H. W. Bush, was Director of Silverado at the time. Neil Bush was accused of giving himself a loan from Silverado, but he denied all wrongdoing. [2]

The US Office of Thrift Supervision investigated Silverado's failure and determined that Neil Bush had engaged in numerous "breaches of his fiduciary duties involving multiple conflicts of interest." Although Bush was not indicted on criminal charges, a civil action was brought against him and the other Silverado directors by the Federal Deposit Insurance Corporation; it was eventually settled out of court, with Bush paying $50,000 as part of the settlement, as reported in the Washington Post [11].

As a director of a failing thrift, Bush voted to approve $100 million in what were ultimately bad loans to two of his business partners. And in voting for the loans, he failed to inform fellow board members at Silverado Savings & Loan that the loan applicants were his business partners.[citation needed]

Neil Bush paid a $50,000 fine and was banned from banking activities for his role in taking down Silverado, which cost taxpayers $1.3 billion. A Resolution Trust Corporation Suit against Bush and other officers of Silverado was settled in 1991 for $26.5 million.

Towjam said...


Lots of cheap government homes coming on the market. Prices nose dive even more then they are now.

Soon you will be able to buy a home for 1998 prices.

Anonymous said...

George Bush has a a BA from Yale and an MBA from Harvard.

That made him POTUS and millionaire, while you eat pudding. Your point is?

keith said...

I lived in Colorado in 1989 during the RTC debacle.

Anyone who had cash and access to credit (which wasn't many) who bought a home from the RTC could then rent it out for positive cash flow, and the price of that home went up nicely over the next 10 years, back to a realistic price, justified by its P/E ratio.

If you can bank on one thing HP'ers, it's that the US government and the monkeys running it are the worst businesspeople in the world. That's why they're failures in government and not in business.

So, when this finally passes in summer of 2009, and there are government owned homes all over the land (millions of them possibly) - that'll be the time to buy.

Not now. No, home prices will fall 20% - 50% more. It's gonna be bloody out there. But soon HP'ers. Raise cash equivalents. Be liquid. Get ready. But watch out for a dollar collapse, which is a strong possibility now too.

Anonymous said...

WTF USA? Free markets are good and worthy on the way up, but not on the way down? WTF? The biggest "DO-OVER" in the history of the world?

The notion that universal home ownership/indebtedness as being a desirable goal here = a sham, a fiction. Thanks.

The US now in the business of homes, insurance, investment banking.... great.

To hell with the whole mess.

Anonymous said...

Smart move indeed.

Now US debt is equivalent to junk bonds.

Foolishely, investors will buy the toxic paper, as they take for granted that U.S. debt won't ever be downgraded.

Only way it gets wrong is investor defiance or downgrade.

keith said...

Could you imagine if the true plan is to rack up as much debt - loaned by the Chinese and Arab countries, and then default on it in a few years?

What would they do? Invade us? Like "Red Dawn" maybe?

Oh, now that's a good book, if anyone wants to write it.

consultant said...


You've said it many times, if you have a mortgage, quit paying it. You're probably underwater anyway. Might as well take the savings, payoff credit cards, save some of the money and move on. Not being able to pay off the mortgage because you are now SO underwater, you're going to have to do this at some point in the future anyway.

Anonymous said...


"Oh you poor renters. Don't worry you can always get a job cutting my grass. The Government is not going to let this THING go without a crazy fight against all odds."

What exactly are you trying to say? I rent and I have a high level job with advanced degrees. I rent because I didn't have to and I refused to buy an overvalued piece of crap during what I knew was a housing bubble. You are SICK and just stupid. And probably a Republican...

September 18, 2008 9:17 PM
Cut my grass with your advance POOP Degree!

Anonymous said...

Funny how democrats blame Bush for this mess, as all those homes, condos, flips, and all the fraud that went with it, didn't have any participation of voters from both parties. No liberal celebrity from Hollywood was flipping mansions either. No liberal from San Francisco was flipping homes either. Nope, NYC didn't have any either. Only Republicans were doing.

No surprise here, since it's the Democrat way of ALWAYS participating in the rampant fraud or irresponsibility, and then acting like they were victims, fooled by the oh-sooo evil Bush or Republicans. "Bush got my hand and made me sign it or commit fraud, I swear to Obama!"

So sure Democrats, go along with your insanity of behaving like all those million of real estate transactions that created this mess didn't have participation of buyers, blacks, Latinos, immigrants, illegals, and fraudsters who were registered democrats or liberals, and who are now pointing fingers and cheering for the Marxist Messiah.

Oops, I was too lazy to take a pill with a glass of water or buying a condom at the Walgreens, so now I demand that a doctor get a bunch of tools and take this fetus from inside of me, piece by piece. I'm a victim! It's the conservative's fault!

"I came all the way from Mexico to depress American wages, and I'm illegal, but had six babies in the US. So I'm a victim who demands citizenship, free housing, food stamps, free school, and free healthcare. In the meantime, all the cash I earn under the table I send back to Mexico because I have a brand new Ford 350 truck and am building a second home there to spend vacation."

We are all victims, it's the GOP's fault, we demand free everything! The Democrats are saints, Obama is the Messiah, Arianna Huffington is our goddess, Olbermann just speaks the truth! Gay marriage is priority #1! Tax the evil "rich" who earns $250k a year. Please Messiah, tax all those "rich and evil" small business owners or eBay sellers who are structured as S-Corporation thus having revenues as personal income, who only get by after all expenses. Tax these bastards, Messiah; they're so evil!

Folks, get used to it because this is the new America, land of liberal cowards and Marxist Gen Y-ners who never take responsibility for anything, hence Obama's father taking off and his mother living out of welfare because she was too good to work for a living.

Anonymous said...

I need some HP B*tches to mow my lawn! I pay top Dollar for these whining HP Renters.

I get a kick out of watching them mow my lawn! Makes me feel powerful since I know I own a home and and they rent like B*tches.

They are under the power of a landlord that can kick them the F out when ever they want!

Now Mow My Lawn!

FlyingMonkeyWarrior said...

LOL at Chavez nationalizes profitable companies, only.
USA only bankrupt ones.

Anonymous said...

Seriously, but this is nothing short of the collapse of the American financial system period. It makes you breathless to comprehend....

I'm finding it impossible to overstate it, impossible to know what the response should be from anyone who works, pays taxes, invests for future, balances risk & reward - heck, anyone who is alive and breathes air in the USA today.

It's as if gravity stopped working. Or the sun stopped shining. Or the Continental land mass sank into the ocean... "Uh, OK...Didn't expect that... now what?..."

There is no contingency plan for something like this.

Are there words that can explain this reality?

Is there a newspaper headline big enough to lend enough context and gravitas to all this? A loud enough voice to scream "WTF!" at Washington, the Congress, the banks, the flippers, the Realtors, the Regulators?

Does language exist so that an elected official or federal agency head can explain and rationalize what is occurring?

No. It doesn't seem possible.


hp fan said...

loaned by the Chinese and Arab countries

You're starting to sound like Schiff.

The housing bubble money from 2003-2007 WAS NOT LOANED... it was created entirely out of thin air. Debt inflation was raging back then but no one cared as long as the price of gas was 2 bucks a gallon.

Wall Street Investment banks were handing out loans left and right with no increase in reserves. Now they are bankrupt and looking for bailouts or letting the government seize the loans and other assets for auctioning off.

death and taxes said...

Where is DOPES!?

The bottom is in, Helicopter Ben and CEO of the Treasury Henry are flying in on a fleet of GWB's helicopters to save the economy.

If you don't own your home, you are SOL. Renters can pay taxes for 100 years to pay mortgages for the buyers. The smart money bought a home in 2006!

Fearless Leader said...

Anonymous said...

"Funny how when anyone questions renters they come back with a mention of their degrees. Like I give a fuck about your degree. George Bush has a a BA from Yale and an MBA from Harvard."

What I want to know is why posters brag about their six figure recessionproof jobs but fail to state what that recessionproof job actually is.

BTW if you think what is happening is a recession it is time to wake up. Recessionproof is not the issue here. Maybe not even depression proof. Ask yourself if your six figure job is "WTF is going on here" proof. what is happening is way beyond what happened in the 1930s and the shit is only just starting to hit the fan.

Refuse to buy overpriced said...

Paulson did it in the middle of the week this time!

i've had it said...

Hank Paulson will go down in financial history as the WORST person EVER!

He has destroyed this country.

I've been watching CNBC and FoxBiz this week and all these monkeys get on and say how it's been so important that the banks have been getting bailed out, and now most are saying Paulson's plan is a necessity. Why? Because, they say, if he doesn't do it the financial industry in the US will cease to exist. Oh, PLEASE! These people are just scared for their own jobs. And they want the taxpayer to help them keep those jobs.

What's been done here the last few days is no different from a petty dictatorship, like Venezuela, nationalizing its industries.

We now live in a dictatorship and our leader is Hank Paulson.

Paul E. Math said...

Why would anyone hold USD when the fed and the treasury are minting currency out of thin air like this?

Dollars no longer have any meaning. It's like we're playing monopoly and when someone loses all their money we go tear-up some looseleaf and let them keep playing.

It's like the treasury flipped a coin and lost and then said "okay, best 2 out of 3". Okay, best 3 out of 5. Okay, best 5 out of 9...

We've switched around the scoreboard so that when our favourite team is losing they get to play an indefinite number of innings until they win. The purpose of the game is lost when points, games, championships have no meaning and no value.

Eventually, people get fed up. They take their marbles, their football, their cards and they go home. And now you've really lost because you're not even playing the game anymore. That's what our international trading partners are going to do.

Sure, you didn't lose the game - but now the league is completely disbanded. There is no "see you next year" because there is no next year.

The US dollar is worthless.

Anonymous said...

The 123 billion that was the price of the last RTC bailout seems like a dollar compared to what this bail out would require .The taxpayers can't afford this bail out ,the taxpayers can't afford the inflation .
Think about how short sited these bail-outs are in regards to the fact that wages are not inflating and jobs are not increasing .

Do you want to bail out the rich and greedy lenders in favor of all the pain they will inflict on you in years to come and say good bye middle and upper middle class and maybe good bye America .

The people in power right now are mad-hatters ,I tell you they are mad- hatters .

This is a critical point in history in which the right decisions must be made.

Weekend deals by Paulson under pressure is absurd ,and this is insane .

The SEC let up on the rules for leverage for big firms in 2004 ,that brought on a lot of this over leveraging by 30 times . I would like to find out who the clowns were that passed that de-regulation .

The clowns that sat back allowing this greed binge to continue are the same clowns trying to solve the problems ,so you know who owns those bastards . The former head of Goldman Sacks (Hank Paulson ) is the guy in charge with his scared puppy the Fed Chairman at his side .

So what if all these evil firms have to sell off their asset ,or have to merge with stronger entities to take care of their losses . Isn't that better than a market solution of the taxpayers paying and the havoc that will cause . Impeachment immediately . The media is still being controlled by the advertisers and the spin is just sick with trying to say that taxpayers will benefit.

Anonymous said...

I mean sure, I have over $150,000 in cash, a $200,000-a-year recession-proof job, plenty of safe investments,


And you are married to a swimsuit model too. Right?

Anonymous said...

Anonymous said...

Bubblegirl, and everyone elso that wants to point the finger at the opposite party, it is a waste of time. Both Democrats and Republicans have a hand in this. To coninue pointing fingers shows that you are only slightly getting it.

Oh no, we have finally got it. This financial crisis was caused directly by that Liberal goddamn Wall Street, those Liberal F**ng Bankers, and the mother of them all the Liberal Iraq War.

All reported by the Liberal Media.

We should have known that the liberals would socialize our financial system the first chance they got right? That's what Liberals do right?

I say we froggie march all these liberal ass clowns on Wall Street straight to Debtors Prison. Before they socialize everything and we are trading in French.


Anonymous said...

Ah the Savings and Loan scandal of the 80's. Starring the Keating Five including none other than John McCain! Co starring Neil Bush the utter hapless fuckwad brother of George W. Bush. Did you know that the Bush Klan decided Neil was going to be the governor of Colorado? Didn't work out that way. Lucky for the citizens of Colorado the S&L crisis ruined his career for good.

Anonymous said...




Once again HP loses.

Enjoy the 1 bed 1 bath rental dummies. You will be there for the rest of your live.

vanilla ice said...

"What would they do? Invade us? Like "Red Dawn" maybe?"

In Red Dawn, it was never was said why we were invaded by the Reds. Maybe it's because we defaulted on our debt.

Anonymous said...


"...The report also cooled investors' fervor for safe investments like government debt that were in demand for much of the day..."

Anonymous said...

"...Haven't the criminal Bankers been
trying to blackmail everyone in to this from day one..."

Nick said...

I told you HP'ers that the government would bail us out. I told you! So, people who lived life to the fullest and borrowed everything wins and anyone who saved their money and lived frugally will lose.

Anonymous said...

If someone pays off my credit card of 50k ,than that frees me up to run up credit card debt again .

Anonymous said...

You have Wall Street investment firms and lenders calling for a bail out ,yet the bulk of the firms with toxic waste loans have not even been transparent on their holding or balance sheets or losses . So the Government is going to bail them out by a RTC type of bail out and buy their junk loans now .
I thought the reason these firms said they couldn't re-write their loans was because they were in complicated investment like CDO's.
The very same reason should make it impossible for them to make a deal with the government on buying CDO's.

Rich said...

Free market capitalism is dead in the United States. The fix is now in. It is ironic to see Goldman Sachs complaining about naked short selling when they were the kinds of it for years. So there will no repercussions for the greedy assholes who have brought this all upon themseles. Instead the American public once again gets left holding the bag while these scumbag CEO's stroll off into the sunset with their bonuses. This is disgusting. The system is broken and most Americans are too stupid to even understand what is happening.

venetiancafe said...