Zombie Banks
Evidently, those road signs rigged to say "Zombies Ahead" were prescient - today on NPR they were explaining "Zombie Banks." These are banks that by all rights should be dead, but unnatural means (i.e. government bailout) are keeping them from actually going out of business and selling their assets at firesale prices, which would help the market. Instead they feed off the government handouts and pull more people and banks down with them.
I'm not sure if I posted my ideas here at the time, but I was saying from about a year before the excrement first hit the rotary air impeller that we would be in deep trouble if the housing market started to go down, which by all accounts it must - after all, everything moves in cycles. Then you wind up with the situation where people owe more than the home is worth... we all know the deal by now. And my prediction was that it would end with a game of chicken among the banks, who could hold on the longest. Then once a few go under and sell off the mortgages for, say, 25 cents on the dollar, the bank BUYING those loans can afford to negotiate those loans and an equal value of their existing loans for getting back 75 cents on the dollar in the end, and they can still make money off the total. Then the people who were in trouble have their debt reduced by 25 cents on the dollar, and they can afford to make their payments. Of course, we would hope that primary residences would get first dibs on renegotiations and leave speculators for last.
I'm not sure if I posted my ideas here at the time, but I was saying from about a year before the excrement first hit the rotary air impeller that we would be in deep trouble if the housing market started to go down, which by all accounts it must - after all, everything moves in cycles. Then you wind up with the situation where people owe more than the home is worth... we all know the deal by now. And my prediction was that it would end with a game of chicken among the banks, who could hold on the longest. Then once a few go under and sell off the mortgages for, say, 25 cents on the dollar, the bank BUYING those loans can afford to negotiate those loans and an equal value of their existing loans for getting back 75 cents on the dollar in the end, and they can still make money off the total. Then the people who were in trouble have their debt reduced by 25 cents on the dollar, and they can afford to make their payments. Of course, we would hope that primary residences would get first dibs on renegotiations and leave speculators for last.