The Tycoon Report

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20. Bigfathenri (4 weeks ago) Is this Spam?

    I walked away.
    
    
    
    Now, not that I expect to too sway many here, but as I see it, the recent history of high finance and its dependent housing market was bolstered by two huge fluffy pillows. (1) fraud, and (2)ill-advised government insurance. Both were reprehensible to begin with, and both continue.
    
    
    
    Without exception, large banks, insurers, and holding companies, have been actively engaged in misrepresentation of their risks for years. Indeed, under political pressure, Fannie and Freddie have been hauled before congress on more than one occasion to explain their puckish ways - always diverting and deflecting. Always allowed to escape because your congressmen and government were complicit.
    
    
    
    They and other financial titans have utilized reporting loopholes that their lobbyists have tendered to Capitol Hill in order to hide what they knew they could not sustain. No worries, though. Got them rich - and still does. CDS and CDO vehicles allowed these guys to close deals that never should have been consummated, by hiding the true volume of asset exposure from their books. Hidden, of course, until they became illiquid.
    
    
    
    So we come to the millions of us who, in good faith and honest earnings, came to market expecting that bankers, insurers, and government officials had an interest in maintaining a sustainable system. The rest we know.
    
    
    
    All that said, I understand the vexation of those who aren't compelled to make a decision on the specific matter of walking away. I simply argue that many of us who have walked feel as though our contracts were proffered under false pretense. The subsequent bailouts, and discussions of bailouts, for everyone under the sun who went into the market fraudulently has only exacerbated the angst for those of us deeply under water.
    
    
    
    So I ask, to what extent do we owe the honor of our word to parties who lied at the outset? Opinions will certainly vary, but I’d ask that the scope of the problem be considered during deliberation. To some extent, this crisis belongs to us all. It is, after all, the duty of every one of us to check on our government, who’s duty it is to check on the aforementioned institutions.

19. JorDonna (5 weeks ago) Is this Spam?

    Wow, you are so right. A large portion of our generation whose parents may have failed to teach them to take personal responsibility for their actions are destroying what our forefathers worked so hard to preserve for us. I shudder to think of what those people's own children will do when they decide it's inconvenient to pay off their own debt. Let this be a valuable lesson for each of to teach the children in our lives how important it is to be responsible for our debts.
    
    ColeTrades.com

18. Dan (6 weeks ago) Is this Spam?

    Great article Dylan! It's refreshing to hear a young man speak with principles and responsibility. I know it's tough to "be underwater" and fight your way to the surface but our forefathers faced much more severe battles and did not "walk away". Congratulations young man and please keep up the good work and remain strong in your convictions. Our nation needs more like you.

17. Happy (6 weeks ago) Is this Spam?

    It's Funny, Sad, and Fortunate, but...
    
    Each and every one of us living in the US are spoiled little trust fund babies. ALL OF US. THe rich, the poor, all of us are spoiled little trust fund babies. Why?
    
    Because each generation before us was greater, stronger, mostly more hard working. They built us the greatest country in the world. They built something we are all living off of. Remember, a trust fund baby can still be someone who works 16 hours a day every day. They still have the trust fund, or in this case, the U.S. But trust funds can be depleted.

16. Marty (6 weeks ago) Is this Spam?

    Great stuff,
    
    
    
    That's 100% bullish for the portofolio!

15. John (6 weeks ago) Is this Spam?

    I agree with you about not walking away from one's debts and obligations. There's a moral issue here which society seems to be also walking away from these days.
    
    
    
    But you may be off the mark about inflation coming. Due to the fractional reserve banking system by which a $1000 deposit becomes $9000 or so of new money supply by bank loans, the effect of defaults is the same thing in reverse -- that is, a $1000 default subtracts $9000 out of the money supply, resulting in deflation, not inflation. All the money in circulation is simply an IOU, a bank note from the Federal Reserve. Without debt, money cannot exist under our system. The more debt there is, the more money there is. That's the way our corrupt monetary system works, and will continue to work against us to transfer wealth to the banksters who own the Fed (yes it's privately owned, not part of the govt.), till we repeal the Federal Reserve act and outlaw fractional reserve banking, and put money making power back in the Treasury Department where it belongs. That's the kind of thing Andrew Jackson and Abraham Lincoln were doing, but Lincoln got assasinated before his reforms in monetary policy took root.

14. Dylan (6 weeks ago) Is this Spam?

    Ethan,
    
    
    
    Thanks for the warm welcome back! It's good to be back in the game!
    
    
    
    Dylan

13. Joe (6 weeks ago) Is this Spam?

    I have a simple solution for these deadbeat thieves -
    
    
    
    If someone can afford to pay for their homes yet chooses to walk away they should lose their right to vote. If they find it so hard to accept personal responsibility for their actions, they should lose the privilege of citizenship.
    
    
    
    At least the people I've heard discuss this wouldn't care anyway. They all seem to have one thing in common - an ability to conveniently "forget" that it was they who borrowed the money in the first place. Almost to a person each of these people have a list a mile long of people to blame for their decision (bankers, lawyers, Congress, you name it) and somehow the list never includes themselves.
    
    
    
    Anyone in that kind of denial probably wouldn't even notice it if they lost their right to vote as screwing their fellow citizens seems to come very easily to them.
    
    
    
    Joe M.

12. Dylan (6 weeks ago) Is this Spam?

    Dear UN-HAPPY,
    
    
    
    I'm not saying that homeowners who are underwater should take it on the chin while the morons who loaned them the money in the first place - the bankers, mortgage brokers, etc - walk away scott-free.
    
    
    
    I'm not trying to guilt-trip the "little guy" to be a financial slave to the big banks who themselves walk away from bad investments when it suits their interest. In no way, shape or form am I suggesting a double standard that thrusts Judeo-Christian guilt on one group of people while another group of people gets to ignore it completely.
    
    
    
    And it makes perfect sense to do it. Any rational actor whose underwater by XX% will walk away from a home if for nothing more then to save $1,000 or so per month in expenses. This savings can be used to fund the education of their children or whatever.
    
    
    
    So it makes perfect sense. And a bank that was stupid enough to make a bad loan in the first place has to live with those consequences.
    
    
    
    What I happen to be saying is that my generation - whether it be homeowners, bankers or whomever - has become waaaay to comfortable with the idea of being able to simply walk away from their responsibilities.
    
    
    
    What signal does that send to our creditors? Perhaps you haven't noticed but the only way we're able to pay our bills is by borrowing money. Show a lender that you have no problem walking away from a loan and you won't see a lender much longer.
    
    
    
    But more importantly, what does that teach our children? By walking away from debts we've agreed to take on we tell our children that our word is only as good as it is convenient.
    
    
    
    Play the tape on that one for a generation or two and tell me you'll be happy with the country we've left to our grandchildren. If so, we have two very different views of what makes a country great.
    
    
    
    -Dylan Jovine

11. Happy (6 weeks ago) Is this Spam?

    With Earl on this one...
    
    Why should the game of musical chairs end with the homeowner (no matter what kind, wealthy, investment savvy, 21 year old kid, banker, whatever) having no seat? What's different between the homeowner and the Banks who avoid paying for their mistakes? Except that the homeowner will pay for this in future taxes, and future prices, ANYWAY?
    
    Why should they be the one to be stuck with that bill?
    
    Lots of people who were financially irresponsible ended up poor, with bad credit, many because they just didn't pay dues, or follow the rules etc. They ended up as people who couldn't afford to buy a home. They didn't wanna save. They didn't wanna pay their credit card bill. They didn't wanna study to get the good job. They wanted to smoke pot and play video games.
    
    Along comes "affordable housing" (now referred to as "predatory lending"). You have places like ACORN or the like forcing banks to make loans to people who should never have had them to begin with.
    
    This was made possible through pressure on banks and politicians. But often this was done with bribery, contributions etc. Politicians got taken care of. And those who had crap credit scores and no savings got taken care of. (Down the road, someone has to be the sucker that pays for it).
    
    THen you had the mortgage "boiler rooms" of the 21st century, cold calling etc. People like Barney Frank pushing for minimal regulation of the mortgage industry. forget partisanship here, the point is, however, mainly democrats get millions from the mortgage companies. So there is less regulation making it possible. (someone has to pay down the road. Someone has to be a sucker.).
    
    If they were writing these loans, they should have cared. but they wrote them and passed them down the pike. They knew it was musical chairs at that point.
    
    The story goes on and an, and you can "ad libb" the rest to custom fit your own argument. But the bottom line is the (sucker seat) gets passed down the pike for a decade. Starting with democrats who wanted votes from constituents, and big "contributions" from those who profited from the "predatory - oh, I mean, "affordable housing".
    
    SOMEONE has to be the ucker who absorbs this hit. Whos it gonna be?????
    
    Why should it be the homeowner?
    
    I mean, the homeowner is usually the more unsophisticated (on a % basis). That should relieve some responsibility.
    
    But what happens here, the bottom line is, the entire country will have to pay for it in hire taxes. Higher prices. If I'm a homeowner who is thinking of walking away somehow, I know I am ALREADY paying for it - maybe because I lost my Job, maybe because my mortgage ARM just readjusted higher, maybe because commodity prices will spike and DEFINITELY because we will have enormous taxes down the road. So why wouldn't I stick it to the bank? Because Uncle Sam is bailing them out? Because US (citizens) bails out banks, that's why the homeowner should eat the hit that came down the pike?
    
    Screw that. The homeowner has to be as "savvy" as the banks that worm their way out of this.
    
    What it boils down to, if you want to take this from the VERY BEGINNING and bring it all the way to the end.....
    
    The politicians got (in the grand scheme of things) a small chunk of money to exploit the values of greatest source of wealth (citizens' Real Estate). That's the beginning of this.
    
    That created huge losses which are now going to be absorbed by the taxpayer. That's the end result.
    
    So for what really amounts to be PENNIES, politicians set the country back 10 years. THey did it for votes from those who have no understanding of global financial markets, about how the government works, people who are largely uneducated, and mostly - NOT ALL, but mostly - just irresponsible.
    
    You want to know the sick part of it? The sick part of it is, as sad as it is, that this happened because everyone has 1 equal vote. Perhaps those who vote should have to pass a test first. The government manipulates. (Both Left and Right side). But they manipulate the uneducated very easily. They convince them "the man" keeps them down. They get votes that way.
    
    For the votes, and for the cash, this chain of events was started.
    
    Why should the homeowner be the one who flips the bill? Why should the homeowner be the one - the ONLY ONE - who doesn't walk away?
    
    When a business wants to survive - they cut 5,000 jobs. THEY don't just take the losses. They take away people's jobs. THey don't flip the bill.
    
    When costs go up, the business passes it down to the customer. They don't eat it.
    
    If I'm a business, and I want to compete, I will try to put the competition out of business. I don't care that I evaporate a company that someone built. I don't care that those people lose jobs. It's just business.
    
    If I own stock in a company (the one I describe above) I hope every day that they crush the competition. That's just business.
    
    If I can walk away from a $250k debt, that's just business. Why did the banks write these ridiculous loans? They screwed themselves. Why not walk away?

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