Hands off our homes

chewmylegoff

FTBFun wrote: »

A buyer's strike? Moaning incessantly on internet forums?

i have got it all planned out. i just need to save up another £20k or so and then i'll be able to afford an Alt-A Time Bomb, which I will then drop on the most expensive prime central london property I can find. this will reverse the "displacement effect" and cause prices to fall by 50% overnight.

coinciding with my investment strategy of gambling my deposite in the precious metals and equity markets by "buying the the dips" and "selling in the troughs", this will place me in a position to buy Number 1 London by this time next tuesday.

FTBFun

Serious question time - what on earth was this "Alt-A Time Bomb?"

Loughton_Monkey

FTBFun wrote: »

Serious question time - what on earth was this "Alt-A Time Bomb?"

It's just jargon for the risks associated with mortgages given with unsupporting paper evidence of wealth.... but that's not important right now.

Chewy's post - if you study it - is a completely senseless load of absolute drivel - signifying nothing, except that I put it down to one of the following alternatives:

1. Chewy is indeed a sock puppet of G_D, in which case the post is quite 'normal' and 'ordinary'.

2. Chewy has finally 'lost it'. After a succession of reasonably rational and constructive comments, he has succumbed to a bout of (what we doctors call) "Pleb Post Poisoning" - a rare but serious disease of the brain.

3. Chewy is simply trying to underline the inanity of both a buyers' strike and moaning on Internet forums by putting up an inane post himself. [or possibly read too many of my own inane posts].

4. Chewy means what he says. In which case don't worry. His strategy of buying the dips and selling the troughs is unlikely to succeed. He will be bankrupt by Christmas. His computer will be re-possessed and we will hear no more of him.

Whichever it is, I wouldn't worry about it.

HAMISH_MCTAVISH

FTBFun wrote: »

Serious question time - what on earth was this "Alt-A Time Bomb?"

The credit crunch was caused pretty much exclusively by the misallocation of risk on American sub-prime mortgages.

Absolutely guaranteed to default NINJA loans (no job, no income, no assets) were packaged up, mixed with half decent loans, and sold as AAA investments to banks and financial institutions around the world.

It wasn't actually the defaulting of these NINJA borrowers which brought down the global financial system. It was the fact that nobody knew who held those loans, nobody knew how much of them were mixed up with otherwise good loans, and thus nobody knew who would be left holding the bag when the music stopped.

The easiest way to picture it is to think of 1000 people holding a grenade each. Only 100 of the grenades are live. The rest contain a $100 bill. The grenades are on random timers set to explode any time from now until 5 years from now. There is no way to tell which grenade you have until it either explodes and kills you or many years have passed.

What would you do if you were holding such a sub-prime grenade?

The only rational answer is to throw it away and run like hell.... The small profits involved in holding it are not worth the chances of getting killed. And this holds true, despite the fact that 900 out of 1000 of these grenades will actually turn out to be profitable if you did keep holding it.

That, in a nutshell, is what brought down the global financial system with the American sub-prime crisis.

Most of the lending in the world is fine, will perform fine, and will ultimately deliver a profit. But hidden away in the vast stockpile of global mortgage debt are enough American Sub Prime grenades that the entire category has been thrown away.

Alt-A is just another category of US mortgage loan. It's a level above sub-prime, and not quite prime, as determined by the credit score of the borrower.

There was a theory running around the boards and blogosphere that the Alt-A borrowers would be next to default en-masse and that these bundled loans would be the next "time-bomb" to hit the world markets, causing another, bigger, credit crunch as there were vastly more Alt-A borrowers than sub-prime borrowers.

That theory turned out to be complete and utter nonsense and the bears who were incessantly promoting it quietly started to shut up about it over the last year or so, which is why it's used to poke fun at the people who were the worst offenders.

Think of it as a more generic version of Brit1234's "50% off by Xmas 2009" line.

chewmylegoff

Loughton_Monkey wrote: »

It's just jargon for the risks associated with mortgages given with unsupporting paper evidence of wealth.... but that's not important right now.

Chewy's post - if you study it - is a completely senseless load of absolute drivel - signifying nothing, except that I put it down to one of the following alternatives:

1. Chewy is indeed a sock puppet of G_D, in which case the post is quite 'normal' and 'ordinary'.

2. Chewy has finally 'lost it'. After a succession of reasonably rational and constructive comments, he has succumbed to a bout of (what we doctors call) "Pleb Post Poisoning" - a rare but serious disease of the brain.

3. Chewy is simply trying to underline the inanity of both a buyers' strike and moaning on Internet forums by putting up an inane post himself. [or possibly read too many of my own inane posts].

4. Chewy means what he says. In which case don't worry. His strategy of buying the dips and selling the troughs is unlikely to succeed. He will be bankrupt by Christmas. His computer will be re-possessed and we will hear no more of him.

Whichever it is, I wouldn't worry about it.

It is 1(a) - I am wotsthat's sockpuppet.

Loughton_Monkey

HAMISH_MCTAVISH wrote: »

.....What would you do if you were holding such a sub-prime grenade?

The only rational answer is to throw it away and run like hell.....

I sold mine to Northern Rock.

HAMISH_MCTAVISH

Loughton_Monkey wrote: »

I sold mine to Northern Rock.

Oh dear....