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A way OUT

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Riick

Elite Member
Joined
Aug 14, 2007
Professional Status
Certified Residential Appraiser
State
Delaware
I just came across the following TESTIMONY. LINK
It's worth a read. This is one man who makes some sense, probably most innovative idea I saw was:

Countercyclical Management of LTV Ratios
As asset prices rise in a bubble, more debt and leverage always looks better.
The lack of defaults seem to confirm the success and accuracy of the models.
All that pushes prices and inflates the credit bubble, so, the inevitable bust is even worse than it would have been

"A rational, countercyclical management of LTV behavior would reduce LTV ratios as the price of the asset inflates beyond its trend--this is the opposite of what in fact occurs. "
 
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c w d

Senior Member
Joined
Oct 2, 2006
Professional Status
General Public
State
Florida
I just came across the following TESTIMONY. LINK
It's worth a read. This is one man who makes some sense, probably most innovative idea I saw was:

Countercyclical Management of LTV Ratios
As asset prices rise in a bubble, more debt and leverage always looks better.
The lack of defaults seem to confirm the success and accuracy of the models.
All that pushes prices and inflates the credit bubble, so, the inevitable bust is even worse than it would have been

"A rational, countercyclical management of LTV behavior would reduce LTV ratios as the price of the asset inflates beyond its trend--this is the opposite of what in fact occurs. "

Rational......logical.....good common sense.......It'll never work!
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
Long Term Capital Management -- "When Genius Failed"
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
It seems that anytime a philosophy or change is proposed, it takes months or even years to implement. By that time, market forces have likely changed. That is the problem with government intervention.
 

c w d

Senior Member
Joined
Oct 2, 2006
Professional Status
General Public
State
Florida
It seems that anytime a philosophy or change is proposed, it takes months or even years to implement. By that time, market forces have likely changed. That is the problem with government intervention.

Yes....and we all know the "market" handles it better. Allow me to use a symbolic example: I'd rather that my trip across the country take me 3 weeks in a car (this is the government) with many many unneeded stops on the way than rush across the country only to crash and burn before we reached our destination (this is a free market economy).
 

NC Old Guy

Junior Member
Joined
Jan 16, 2002
Professional Status
Certified General Appraiser
State
North Carolina
cwd
No. Free market economy typically should mean without interference by the government. Your example has a major fallacy. If there is a crash & burn, those that have benefited from the "rush across the country" than suffers the penalty of crashing. With our current system, there can be the "rush..." but without the fear of the punishment because one knows the govt will come in with the fire house to prevent those who have made millions from now losing some or all of those millions. Isn't that the argument behind the phillosphy that we've allowed our financial institutions become "too big to fail". If you doubt that, ask yourself why we are now having the bailouts at many levels? Why CEOs can cook the books, walk away with millions & then have a fine that is only a fraction of what they walked away with?

Really want to screw up gas prices. Why, just let the govt in to help you out. Let them set prices. After all Nixon did that with price freezes. What happened? Did we have plenty of gas? Oh heck no. There are some on this board old enough to remember the long lines early in the a.m. They didn't really turn away people because they ran out of gas. They turned them away because they had sold their allocation for the day. It was nonsense then--it is nonsense now. (and took about a decade to get back to "normal" once they figured out it didn't work.) The only reason we don't have the lines is because the penalty of driving more than needed is paying for the pricey gas. But those that need the gas to stay employed (like appraisers) can get it. Let the price system work. While this may look off topic, it really isn't as we are talking about govt at it worse when you start messing with prices. After all, don't you really want the govt to tell you what your profits should be from your business?
 

c w d

Senior Member
Joined
Oct 2, 2006
Professional Status
General Public
State
Florida
Trusting a system that benefits the few at the expense of the many is foolhardy.

Government does work. The problem right now and in decades past is that it works for big business and not for the people. Please tell me how the government isn't working for big business when it's there to bail them out. Sounds like it's working perfectly. Stop running from the government. That is exactly what big business wants.
 

leelansford

Elite Member
Joined
Mar 29, 2002
Professional Status
Certified Residential Appraiser
State
Illinois
I just came across the following TESTIMONY. LINK
It's worth a read. This is one man who makes some sense, probably most innovative idea I saw was:

Countercyclical Management of LTV Ratios
As asset prices rise in a bubble, more debt and leverage always looks better.
The lack of defaults seem to confirm the success and accuracy of the models.
All that pushes prices and inflates the credit bubble, so, the inevitable bust is even worse than it would have been

"A rational, countercyclical management of LTV behavior would reduce LTV ratios as the price of the asset inflates beyond its trend--this is the opposite of what in fact occurs. "


If you can figure out a way to eliminate GREED from the equation, you would be on to something.

But, given that greed has always been with us, significant and long-term change will not occur.
 

Riick

Elite Member
Joined
Aug 14, 2007
Professional Status
Certified Residential Appraiser
State
Delaware
No one can remove greed from the equation, it's part of how human beings are built;
it's one of the reasons communism/socialism doesn't work.
Crazily, it's also one of the reasons capitalism does work.
When it runs amok - as in this current fiasco, or Enron, etc., etc., ad infinitum - THAT's when it's hurtful.

I have a bad attitude, and I make a poor employee if you're for a "subordinate", and I heartily dislike government.
Still, government has it's uses.
IF it were not in bed (and in wild lust) with the Corporations and their money,
(( there it is, greed again )) government could put such a set of negative-feedback limits in place.

Anyone remember "Mr. Smith Goes to Washington" ??
Where is Jimmy Stewart when you need him?

Government: Two wolves and a sheep, deciding what's for dinner.
 

Louis Pompeo

Member
Joined
Nov 23, 2007
Professional Status
Certified General Appraiser
State
Mariana Islands
Its 7a.m.I can't get my brain around the OP.

Reminds me of the description of the game of baseball....

This is a game played by two teams, one out, the other in. The one that's in, sends players out one at a time, to see if they can get in before they get out. If they get out before they get in, they come in, but it doesn't count. If they get in before they get out, it does count. When the ones out get three outs from the ones in before they get in without being out, the team that's out comes in and the team in goes out to get those going in out before they get in without being out.
When both teams have been in and out nine times the game is over. The team with the most in without being out before coming in, wins, unless the ones in are equal. In which case, the last ones in go out to get the ones in out before they get in without being out.
The game will end when each team has the same number of ins out, but one team has more in without being out before coming in. :mellow:
 
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