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Author: susan400 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35244  
Subject: subprime Date: 3/1/2007 4:01 PM
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love the term - means people who are over extended , buying high priced property.

Anyways does anyone know where i can track this?

ABX I know is ths INDEX, but where can i get a quote on teh ABX? and how?

Thx
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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19930 of 35244
Subject: Re: subprime Date: 3/1/2007 4:54 PM
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love the term - means people who are over extended , buying high priced property.

Anyways does anyone know where i can track this?

ABX I know is ths INDEX, but where can i get a quote on teh ABX? and how?


Let's see. You're the kind of "greed is good" type of person who likes to make money when other people get hurt.

A lot of people, many of them the working poor or near poor, got seduced into buying into the American dream of owning a home with cheap money and fine print they didn't understand. Now, they are likely to lose their homes or be so strapped paying the loans they will have to work 3 low-wage jobs and have no money left to buy more than the barest necessities.

I really don't care if the sub-prime lenders go broke or those who invested in sub-prime lenders, who should have known better, go broke. I don't care if people who got into spinning houses with cheap money go broke.

I do care about the people who thought they could afford a house who couldn't.

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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19931 of 35244
Subject: Re: subprime Date: 3/1/2007 5:08 PM
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A lot of people, many of them the working poor or near poor, got seduced into buying into the American dream of owning a home with cheap money and fine print they didn't understand. Now, they are likely to lose their homes or be so strapped paying the loans they will have to work 3 low-wage jobs and have no money left to buy more than the barest necessities.
____________________________________________
And many others borrowed, not to buy a house that's too expensive, but to refinance or consolidate, a lot of credit-card or other consumer debt, into a loan where the interest is tax-deductible and work it down to a lower monthly payment. And then of course, start all over.

Those are the REALLY sub-prime loans, I gotta think.

Bill

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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19932 of 35244
Subject: Re: subprime Date: 3/1/2007 5:40 PM
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And many others borrowed, not to buy a house that's too expensive, but to refinance or consolidate, a lot of credit-card or other consumer debt, into a loan where the interest is tax-deductible and work it down to a lower monthly payment. And then of course, start all over.

Those are the REALLY sub-prime loans, I gotta think.


Well, I doubt the folks you're talking about will be in the tax-deductible category, but, yeah, another bunch in trouble who are likely to lose their homes.

The politics on this will be interesting to watch. For one thing, a lot of low end real estate (not to mention some higher end in the hands of those way over their heads) on the market is not good for the economy. I don't know where the money will come from, but don't be surprised to see some way to keep as many as possible from losing their homes, at tax payers expense, of course.

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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19934 of 35244
Subject: Re: subprime Date: 3/1/2007 11:37 PM
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And many others borrowed, not to buy a house that's too expensive, but to refinance or consolidate, a lot of credit-card or other consumer debt, into a loan where the interest is tax-deductible and work it down to a lower monthly payment. And then of course, start all over.

Those are the REALLY sub-prime loans, I gotta think.
==============================================
Well, I doubt the folks you're talking about will be in the tax-deductible category, but, yeah, another bunch in trouble who are likely to lose their homes.
==============================================
Well, actually, just about everyone with a mortgage itemizes deductions.
Even if all you have is mortgage interest and property taxes, you only need $10,300 in deductions to beat the standard deduction, and that's filing jointly.

Bill


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Author: kentm401 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19935 of 35244
Subject: Re: subprime Date: 3/2/2007 7:44 AM
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Which, of course, makes us <both> damned socialists......hehe....

A lot of people, many of them the working poor or near poor, got seduced into buying into the American dream of owning a home with cheap money and fine print they didn't understand. Now, they are likely to lose their homes or be so strapped paying the loans they will have to work 3 low-wage jobs and have no money left to buy more than the barest necessities.
I really don't care if the sub-prime lenders go broke or those who invested in sub-prime lenders, who should have known better, go broke. I don't care if people who got into spinning houses with cheap money go broke.
I do care about the people who thought they could afford a house who couldn't. - [And find themselves in thrall to the institutional investors - forever - with no way out of the "hole" the sub-prime lenders dug for them]
Lok
with editorializing by KBM


But there's nothing "new" there...... To parse myself......"There's no there there"

Been this way, since the late 70's, when the sub-prime lenders began their push into HELOCs & no documentations, both built around "inflated" valuations, "interest only ARMs", and greed, directed towards the bottom quartile of the "wage earning" base.

And "ALL" because this economy "invented" a means of laying off credit risk on somebody else through derivatives, spreads, repurchases, and the musical chairs of big money transfers of crewdit risk in-efficiency.

"There's nothing to fear but fear itself"

Somebody said that once.......but human behavior is a "funny thing". It colors "expectations" of future economic activity. Greed & fear.....the "only" two things that drive the markets. And accordingly, money managers react.

How do "we" game this? I know I can't...... What I do know.....is that the "carry trade" is over......proper "risk pricing" should begin to take over, as massive "debt fueled" liquidity begins to dry up and credit contractions begin to be felt in the general markets.

Bought the only way I can look at it. Right or wrong.....it is what is....within a capitalist driven economy. All I can hope for is that I won't get stuck as the "last one out the door" when the music stops.

KBM (cynical since 1968......;o)








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Author: SuaSponteMark Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19936 of 35244
Subject: Re: subprime Date: 3/2/2007 8:46 AM
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I have very little sympathy for them. There are numerous titles out there, and have been for years, espousing the wisdom of buying a house that is not more than 3x one's annual gross household income with 20% down before buying, but people have been thumbing their noses at that, and ignoring sky-high, unsustainable valuations, and buying with 103% mortgages, and being complete buffoons for years.

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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19937 of 35244
Subject: Re: subprime Date: 3/2/2007 8:53 AM
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Which, of course, makes us <both> damned socialists......hehe....

In the wing nuts' world view, anything but their god of market forces that provides law and order to capitalism is socialism.

The fact is we have laws against loan-sharking, as well as laws against drug-dealing and robbing banks ("some will rob you with a six gun and some with a fountain-pen.... I've never seen an outlaw drive a family from its home"). Caveat Emptor, a favorite wing nut slogan, is failed capitalism. Capitalism works by building better mousetraps, not by conning people into buying worse mousetraps.

Catholicism (as well a Islam) condemned "usury," which is why Jews were necessary in Catholic countries. People who have more money than they need at the moment lending money to people who have less than they need at the moment is common sense economics, and getting something in return (interest) is a necessary "evil." But lending works when those borrowing are in a position to pay off the loan, or those lending are in a position to write off a bad loan if calcuated risks don't pay off (e.g., Antonio's ships don't come in, and Shylock doesn't demand his pound of flesh).

Lending money to people who are unlikely to be able to pay off the loan under likely circumstances from the terms of the loan (e.g., jump-ups after introductory teaser rates) fits any ethical, if not legal, definition of usury or loan sharking. And a system that encourages high risk loans where the lender gets essentially bailed out in advance by the government (Fannie and Freddy buying the mortgages) is not capitalism—it is a variant of corporate socialism, as with government subsidies for big Agribusiness or drug companies building off tax-payer subsidized basic research or military contracting.


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Author: kentm401 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19938 of 35244
Subject: Re: subprime Date: 3/2/2007 8:58 AM
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Dead-on

Lending money to people who are unlikely to be able to pay off the loan under likely circumstances from the terms of the loan (e.g., jump-ups after introductory teaser rates) fits any ethical, if not legal, definition of usury or loan sharking. And a system that encourages high risk loans where the lender gets essentially bailed out in advance by the government (Fannie and Freddy buying the mortgages) is not capitalism—it is a variant of corporate socialism, as with government subsidies for big Agribusiness or drug companies building off tax-payer subsidized basic research or military contracting.


KBM (a "Shylock" bondie - dealing with corporate socialism since 1968.....;o)
PS: And fwiw - "risk averse"






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Author: markr33 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19940 of 35244
Subject: Re: subprime Date: 3/2/2007 9:16 AM
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I have very little sympathy for them. There are numerous titles out there, and have been for years, espousing the wisdom of buying a house that is not more than 3x one's annual gross household income with 20% down before buying, but people have been thumbing their noses at that, and ignoring sky-high, unsustainable valuations, and buying with 103% mortgages, and being complete buffoons for years.

Having sympathy or not isn't going to change the fact that you (and I) will help finance any possible government bailout to "keep folks in their homes".


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Author: NMTech74 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19945 of 35244
Subject: Re: subprime Date: 3/2/2007 11:35 AM
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I have very little sympathy for them. There are numerous titles out there, and have been for years, espousing the wisdom of buying a house that is not more than 3x one's annual gross household income with 20% down before buying, but people have been thumbing their noses at that, and ignoring sky-high, unsustainable valuations, and buying with 103% mortgages, and being complete buffoons for years.

I mostly agree, except for the "unsustainable" part. I've been hearing for over 30 years how home values in markets like San Francisco and Boston cannot be maintained at their levels. Clearly, they are sustainable.



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Author: Tredos1 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19948 of 35244
Subject: Re: subprime Date: 3/2/2007 1:57 PM
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I have very little sympathy for them. There are numerous titles out there, and have been for years, espousing the wisdom of buying a house that is not more than 3x one's annual gross household income with 20% down before buying, but people have been thumbing their noses at that, and ignoring sky-high, unsustainable valuations, and buying with 103% mortgages, and being complete buffoons for years.

I mostly agree, except for the "unsustainable" part. I've been hearing for over 30 years how home values in markets like San Francisco and Boston cannot be maintained at their levels. Clearly, they are sustainable.

While I agree in part, have you seen the kind of home you can get for 3x your basic salary in Silicon Valley? When I started here I made about 65k and we bought a house for 230k, made the payments no problem.
Sold the house after about 5 years for 460k and moved to Portland Or. Moved back this year, salary is up to 140k with all bonuses and stock bringing it closer to 200k. We bought a house for 850k. The house is 21 miles from work, takes me almost an hour to get there and is in a sketchy neighborhood with poor schools. I expect to make the payments no problem on top of sending our child to private school and making payments on a new car. We had to go with a no-doc loan because my salary history at the old job was not sufficient to get me the loan for the new house. We paid a slight interest rate premium because of that but didn't need to go subprime due to excellent credit. It could easily have been a subprime situation and we would still have no problem making the payments. So not all subprime mortgages are high risk, sometimes the situation just forces your hand.
On top of all that we're able to save about 40k/yr towards retirement, including company 401(k) match. It can be done.
Of course, maybe ya'll think I'm nuts :)

Tony


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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19954 of 35244
Subject: Re: subprime Date: 3/2/2007 9:43 PM
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Piece in Tomorrow's Post about new regulations, such as evaluating ability to pay higher rate after teaser rate ends (yes, Dorothy, that will make these loans unavailable to people who can't afford them).

http://www.washingtonpost.com/wp-dyn/content/article/2007/03/02/AR2007030201368.html

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Author: PolymerMom Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19955 of 35244
Subject: Re: subprime Date: 3/2/2007 10:10 PM
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While I agree in part, have you seen the kind of home you can get for 3x your basic salary in Silicon Valley?

So true! Prices in Silicon Valley are out of site to us staid Midwesterners.

We are in the final stages of selling my late sister's duplex in Silicon Valley. It wouldn't get a second look in the Midwest for the price range (850k-900k). The two units together total a tad less than 1900 sq. ft. on a lot that is a shade under the lower limit to rebuild a duplex on it. But its in a quiet residential neighborhood, close to somewhat decent schools, parks and the 101.

Financing is very different out there. Many of the offers were 100% financing, some of which requested cash back from us to pay down points. (We didn't accept them.)

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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19956 of 35244
Subject: Re: subprime Date: 3/3/2007 8:35 AM
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New Century (big sub-prime lender) investigated for book cooking:

http://www.nytimes.com/2007/03/03/business/03mortgage.html

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Author: WendyBG Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19958 of 35244
Subject: Re: subprime Date: 3/3/2007 5:29 PM
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<Well, actually, just about everyone with a mortgage itemizes deductions.>

In fact, close to half of households with mortgages do not itemize deductions. (Don't have the link, but read this information, a few months ago.)

That is because many mortgages are in low-cost areas of the country, and because of the many older mortgages, where the payment is mostly principal, not (deductible) interest.

One way that the government could immediately put money into the hands of the middle class would be to allow all mortgage interest to be deductible, outside of the standard deduction.

Wendy




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Author: WendyBG Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19959 of 35244
Subject: Re: subprime Date: 3/3/2007 5:34 PM
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<Lending money to people who are unlikely to be able to pay off the loan under likely circumstances from the terms of the loan (e.g., jump-ups after introductory teaser rates) fits any ethical, if not legal, definition of usury or loan sharking. And a system that encourages high risk loans where the lender gets essentially bailed out in advance by the government (Fannie and Freddy buying the mortgages) is not capitalism—it is a variant of corporate socialism, as with government subsidies for big Agribusiness or drug companies building off tax-payer subsidized basic research or military contracting.>

Lending money to people who are unlikely to be able to pay off the loan under likely circumstances from the terms of the loan is simply bad business, even for loan sharks. Loan sharks don't want to break their customers' kneecaps. They want to be paid back, so their customers will borrow more.

The system that encourages high risk loans where the lender gets essentially bailed out in advance by the government is, in my opinion, even worse than the loan sharks. At least, the loan sharks are bearing their own risk of loss.

I despise corporate socialism, in all its many forms...as I'm sure you do, also.

Wendy

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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19960 of 35244
Subject: Re: subprime Date: 3/3/2007 10:24 PM
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Lending money to people who are unlikely to be able to pay off the loan under likely circumstances from the terms of the loan is simply bad business, even for loan sharks. Loan sharks don't want to break their customers' kneecaps. They want to be paid back, so their customers will borrow more.

Good point. Loan Sharks are good businessmen.

I despise corporate socialism, in all its many forms...as I'm sure you do, also.

I don't know what we really mean by "corporate socialism." I think both laissez faire anarchism, with no government or taxes and market forces ruling by the invisible hand, and state socialism, with the means of production, and everything else, controlled by the state are nonsensical, dysfunctional, or both.

In prosperous nations, government and business work hand in hand, and that includes basic things like government building infrastructure, providing protection, and educating the workforce.

Where we get into what I would call corporate socialism/corruption is where government enables companies to make profits they would not make without government aid, with no clear benefit to the public as a whole.

Take the sub-prime loans to the poor and, especially, poor minorities. The excuse being made that these loans help these people buy houses is misleading, if these people can't pay back the loans, lose their houses, or keep there houses through government bail-out. Government, including through Freddy and Fannie, facilitating these loans lets businesses make a profit from loans they would not make without the government guarantee. So, the only way to legitimate this would be to argue that 1) enabling home ownership for these people is an appropriate government expenditure, and 2) backing loans and bailing out problem loans for homeowners worth saving is a more efficient form of government intervention than direct subsidies to homeowners.

There are certainly those in the urban planning world who argue for home ownership as better and cheaper than subsidized rental housing (i.e., housing projects). But, if that is the intent, then the question is how to get the best bang for the buck with the best supervision/auditing to optimize success (you don't just throw home ownership at people who don't have the skills or understanding to pull it off).

What makes me look at the sub-prime guarantees from government as corporate socialism is there is no admission this is a form of subsidy to impoverished would-be home owners, no support system to help the owners succeed, and no evaluation of how many successful homeowner will be produced for the amount of government spending. That means it's just throwing money a sub-prime lenders, letting them walk away with profits, and if some people who would not otherwise be able to buy homes end up as actual, successful homeowners, that's just luck.

If government set up a subsidized home ownership program for the poor, there would be some government auditor in charge of bang for buck issues (not that there is a great history of such auditing eliminating bad programs). With corporate socialism, typically there is no accountability, at least not till it reaches the scandal stage, and usually even then they hire the same contractor.


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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 19962 of 35244
Subject: Re: subprime Date: 3/4/2007 8:48 PM
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And now for something completely undifferent

http://www.nytimes.com/2007/03/05/business/05lender.html

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Author: susan400 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 20008 of 35244
Subject: Re: subprime Date: 3/15/2007 7:43 PM
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You or i or 100 DC politicians can't do anything about bad credits that have been extended.

As we go thougfh this crash phase, bidders will be needed,.

Someone who can bid, is called a good thing.

We, i , you don't have anything to do
with houses being bought that can't be afforded,

it happened.

Yes there has always been a kind of crowd here at TMF that thinks
what they think "I care" matters. Caring doesn't arbite or change anything.

Our culture is teh culprit. In teh 90s it was clintonisque, " it only mattters iof you get caught and maybe not even then", this decade its
"we all get rich owing RE, borrow abd bid!"

RE credit because a sales function I/O of credit quality function and
the natural result is boom, BUST! What else could happen?


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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 20009 of 35244
Subject: Re: subprime Date: 3/15/2007 8:47 PM
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You know, some basic literacy skills might help if you want to be taken seriously. Also try not generalizing. Sub-prime mortgages that have been packaged into bonds are one thing, regular mortgages are another. There are serious issues involving sub-prime mortgages, and fears the impact on the overall economy could be significant, but hype and panic are not helpful.

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Author: susan400 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 20103 of 35244
Subject: Re: subprime Date: 3/20/2007 11:26 PM
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Its not about being helpful or dishelpful.
I don't arbite anything.

100% loans to credits with no credit at inflated RE prices says to me as it unwinds, this paper will trade 25-30.



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Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 20105 of 35244
Subject: Re: subprime Date: 3/21/2007 11:37 AM
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Its not about being helpful or dishelpful.
I don't arbite anything.

100% loans to credits with no credit at inflated RE prices says to me as it unwinds, this paper will trade 25-30.


And what your comments say to me is I look at you as about as reliable as a day trader.

We all know that sub-prime mortgage bonds are high risk. There may be people, like Charlie when he was with us, who would be interested in trying to pick up some of these bonds at some point when they get low enough in values. If it were Charlie talking, I would find what he has to say about possible entry points for these bonds are interest, if I was considering taking on the risk, because we all trusted Charlie as a member of this community who had our best interests at heart and as someone who was pretty good at assessing junk (which doesn't mean he was right all the time). Charlie was also great at explaining how assessed junk, and didn't just throw out day-trader predictions.


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