Good read. Click for a peek.
Posted on 04/14/2012 6:48:29 AM PDT by edcoil
his is awesome. It shows when the people DO STAND UP they have more power and win against the corrupt bankers and politicians of a country. Iceland is forgiving and erasing the mortgage debt of the population. They are putting the bankers and politicians on the "Bench of the Accused." Which means I assume they are putting them on trial for corruption.
(Excerpt) Read more at sherriequestioningall.blogspot.co.uk ...
Good luck. Most economists are tied to the federal government in some way.
I think the solution is classic liberalism. Focus on economic growth. Encourage investment and innovation. Make sure small, growing businesses have a level playing field. In contrast, the corporate welfare program for the largest businesses hasn't worked out so well, has it?
I have to see hw this unfolds. Iceland got hosed big time in ‘08.
Something for nothing is never a good economic policy.
Corporations that “re-organize” under bankruptcy are making a common-sense business decision.
But individuals who, under terms of the signed agreement, stop paying on an “asset” that is worth less than the loan value and relinquish the property are “running away from their obligations”.
Investors who put money into a “sure thing” like mortgage backed securities get upset when the investment goes bad.
Property buyers who put money into a “sure thing” like owning a home get upset when the investment goes bad.
Get the government completely out of the housing market, NO Fannie, No Freddie, NO government guarantee with the exception of opportunities for UNIFORMED military (we owe them anything we can do).
Stop all the whining. If you want to put your money into PRIVATE mortgages, go ahead. But don’t bitch when someone decides to choose “option B” and give the asset back.
If you choose to invest in a home, don’t ask me to bail you out when your “investment” turns upside down.
Individual responsibility, PRIVATE property rights and liability laws provide for remedies to all this nonsense.
Agreed. This doesn’t pass the sniff test.
“EU officials and others are threatening Iceland with international isolation.”
I envy Iceland.
his story seems to be fake,
You would think such a monumental event like this would be news around the world, but besides Youtube and a few blogs it’s nowhere
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.
Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.
“You could safely say that Iceland holds the world record in household debt relief,” said Lars Christensen, chief emerging markets economist at Danske Bank A/S in Copenhagen. “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”
The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates. It costs about the same to insure against an Icelandic default as it does to guard against a credit event in Belgium. Most polls now show Icelanders don’t want to join the European Union, where the debt crisis is in its third year.
The island’s households were helped by an agreement between the government and the banks, which are still partly controlled by the state, to forgive debt exceeding 110 percent of home values. On top of that, a Supreme Court ruling in June 2010 found loans indexed to foreign currencies were illegal, meaning households no longer need to cover krona losses.
LETS SEE OBAMA DO THAT!........no wait.....
Read the comments at the original story. I didn’t think that people could be that stupid.
Not at all. One of the biggest contributors to the collapse of the U.S. real estate market in the last few years was the fact that the people who lent the money weren't lending in good faith. It's not so much that these banks were out to screw the borrowers, but that they lent the money while knowing full well that they had no intention of keeping the loan on their books. The real estate collapse was not a real estate crisis ... it was a banking crisis. Banks extended loans under very easy terms because they knew they had no long-term exposure ... since they intended all along to package the loans into mortgage bonds and sell them to investors.
It sucks if you were one of the ones without a house or a mortgage. Just imagine if you were saving to buy one. Socialism at its best. Many non-deserving people are going to be rewarded for this.
Just think if you knew ahead of time then you could go out and buy a house that is 10 times what you could afford, and it would just be handed over to you debt free. How many people in America have done that. They would like to do this here too. The responsible and the prudent are punished to the max.
So if you defaulted on a debt in year 1 you had 49 years of servitude for you and your family. In year 2 you had 48 years and so on.
As the Jubilee got nearer the amount of the loan you could take out got smaller and smaller.
The Almighty never intended us to be thieves either.
>they lent the money while knowing full well that they had no intention of keeping the loan on their books. The real estate collapse was not a real estate crisis ... it was a banking crisis. Banks extended loans under very easy terms because they knew they had no long-term exposure ... since they intended all along to package the loans into mortgage bonds and sell them to investors.
What? Where did you find this? DU?
You need to go farther back to get to what actually happened. There’s a lot more to it, and much of it involves the government forcing banks to make loans to people who were awful credit risks. This lead to the invention of MBS as a way to compensate for that mandatory exposure.
However the nonsense about banks being wrong for making loans which were not on their books is bunk. A person who signs the mortgage contract is being lent the money with the expectation that they repay the loan. It doesn’t matter who owns the loan in the end, that’s pure rationalization.
Now were there some shifty lenders who lent the money because they didn’t have exposure? Probably, but the biggest one of the (Countrywide) ate it in the process of the bubble bursting, so it’s not like they didn’t end up with exposure.
Let me break a piece of reality to you, banks always have and always will act as a conduit of money from investors to borrowers. The mechanism in question may vary, but that is a constant. The ‘investor’ can be via a savings account, a money market fund, or a MBS. That doesn’t make a heck of a lot of difference. The real problem in this particular case was the egregious quantity of government intervention in this market via regulators mandating bad loans to ‘underprivileged’ groups and the dynamic duo of Freddie and Fannie.
Blaming bankers for a situation they didn’t set up is bunk, and rationalizing theft is even worse.
Ha! They're not the only ones, y'know. What do you think protecting student loans and credit card debt and tax debt and anything at all from bankruptcy discharge is all about?
If we succeed in bringing back debt slavery then every creditor will be happy to loan you money, secure in the knowledge they can enslave you if you can't pay...and we already know how that turns out...
Securitization insulated mortgage originators from the consequences of underwriting a bad loan.
It took two to tango. The financial industry is just as culpable as governmental regulatory agencies.
It's absolutely true.
You need to go farther back to get to what actually happened. There’s a lot more to it, and much of it involves the government forcing banks to make loans to people who were awful credit risks. This lead to the invention of MBS as a way to compensate for that mandatory exposure.
Much of this is either exaggerated or downright false. If the real estate collapse had been confined only to those high-risk mortgages that were extended under some kind of idiotic Federal mandate, then we'd be in far better shape right now than we are. The reality is that the biggest contributor to the mortgage problem is the underwater mortgage that was originally extended to someone who was perfectly capable of paying the loan at the time, but ended up in arrears as the economy collapsed and the value of the home plummeted.
Mortgage-backed securities were not originally invented to compensate for the higher risks of loan exposure. At the time the first large-scale mortgage securities were created in the 1970s, the market was limited to government-backed securities like GNMAs because these were the only mortgages that were capable of being securitized in a way that provided investors with the protection they needed against the borrower's default.
The MBS market exploded in the 1980s largely as a result of shifting demographics and a weakness in traditional banking practices tied to growth patterns in the U.S. A simplistic (but accurate) summary of the U.S. banking industry in the early 1980s would be this: (1) it was dominated by small regional banks and savings & loan (S&L) institutions; (2) a typical bank or S&L in older regions like the Northeast or Rust Belt had an imbalance of depositors vs. borrowers (i.e., they had far more deposits on their books than demand for new mortgages); and (3) a typical bank or S&L in fast-growing regions like the Southwest had an imbalance of borrowers vs. depositors (i.e., the demand for new mortgages outstripped the cash deposits on their balance sheets).
The MBS market in the 1980s was created to address the imbalance I described in Items (2) and (3) ... by allowing banks in Region (2) to effectively lend money to the customers in Region (3) by purchasing securitized mortgages from banks in Region (3).
However the nonsense about banks being wrong for making loans which were not on their books is bunk. A person who signs the mortgage contract is being lent the money with the expectation that they repay the loan. It doesn’t matter who owns the loan in the end, that’s pure rationalization.
It's not rationalization at all. A mortgage contract is predicated on the assumption that the borrower will pay back the loan, but also on the assumption that the lender is going to engage in sound lending practices when they review a loan application. Anyone who lends money at a 100% (or more!) loan-to-value ratio, or lends money to illegal aliens who don't even have a legal right to be in this country (neither of which was all that uncommon by the mid-2000s), is out of his/her mind. My own bank had almost no fallout from the real estate collapse because: (1) they rarely (if ever) package and sell their loands, and (2) related to (1), they have very rigorous lending practices and make borrowers jump through hoops before getting a mortgage approved.
I agree with the other posted above who pointed out that "low-risk" investing still involves risk, and if you're not willing to deal with the consequences of that risk then you should probably stuff your money in a mattress.
Bingo. This is the quote of the thread right here.
Ironically, securitization also made it increasingly difficult for the investors who were left holding the bad loans from exercising their rights to take possession of the asset in the event of a foreclosure.
There was a fascinating case working its way through the Utah court system last year, in which the borrower in default had been able to successfully fight a foreclosure action because the loan originator (his local bank) had securitized his mortgage and sold it off to an institutional investor who had no legal standing to initiate a foreclosure proceeding under Utah banking law.
I don’t blame Iceland, but welching won’t work here. In Iceland’s case you’re looking at money borrowed from other Europeans that were STUPID ENOUGH to use their banks. In this country it’s savings accounts and pension funds that go broke.
If you owe a bill you owe a bill.
Did that government just award homes to people who took loans for free and then not give all non home owners any home?
If so, this is very a very biased way to do things.
Also who the hell is paying there for that, taxpayers?
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