Buy My Sh*t Pile, Henry!

September 23, 2008 5:05 AM

Buy My Sh*t Pile, Henry!With our economy in crisis, the US Government is scrambling to rescue our banks by purchasing their "distressed assets", i.e., assets that no one else wants to buy from them. We figured that instead of protesting this plan, we'd give regular Americans the same opportunity to sell their bad assets to the government...
posted by jim in austin (47 comments total)

I didn't lol but I definitely chuckled
posted by matteo at 5:25 AM on September 23, 2008

I was wondering, would there be huge negative consequences for the Fed to buy up all the defaulted mortgages and give away the houses to the current owners, provided that when they resell half the money from the sale goes back to the govt? (or some similar schemes)

It seems to me that this would really help out the US population rather than a 700 billion dollar bailout fund that few people truly understand.
posted by Vindaloo at 5:36 AM on September 23, 2008 [1 favorite]

I chuckled too. But not as much as I did when I first saw it in the lolfed comments.
posted by PeterMcDermott at 5:39 AM on September 23, 2008

It seems to me that this would really help out the US population...

Well there's your problem. How does this address the pressing needs of the truly poverty-stricken, i.e. those making less than $5 million/year?
posted by DU at 5:41 AM on September 23, 2008 [1 favorite]

After a while, comments like that just seem like self-parody.
posted by smackfu at 5:53 AM on September 23, 2008

It seems to me that this would really help out the US population...

Well there's your problem. How does this address the pressing needs of the truly poverty-stricken, i.e. those making less than $5 million/year?

Well, I'm not sure how many of the 5 mil./yr are defaulting on their mortgages but I suspect there ain't a whole lot. So, the idea would be to help those who are losing their homes as opposed to helping the lender who has no house to lose.

Plus, how will the 700 billion dollar payout help the poverty stricken? Me thinks not at all.
posted by Vindaloo at 5:54 AM on September 23, 2008

Oh, wait a minute... you were being sarcastic weren't you? Silly me...
posted by Vindaloo at 5:55 AM on September 23, 2008

Hmm.. The shitpiles seem to be drastically overpriced. Will the shitpile bubble be the next to burst?
posted by jlowen at 5:59 AM on September 23, 2008 [1 favorite]

Vindaloo, thanks for positing that. I have been thinking that since this whole $700 billion thing came up. I would love for someone to explain it to me . . . Mutant? You around?

Oh, wait. I know why that would never happen. It might benefit someone who is not a giant corporation or a controlling party thereof. Never mind.
posted by fiercecupcake at 6:19 AM on September 23, 2008

Don't be silly. The shitpile is contained.
posted by Asparagirl at 6:21 AM on September 23, 2008

Things must be bad. They're already rationing the letter i.
posted by ardgedee at 6:31 AM on September 23, 2008 [2 favorites]

I hope so, because as I look around my house I see that I am deeply invested in shitpile.
posted by jlowen at 6:43 AM on September 23, 2008

> Well, I'm not sure how many of the 5 mil./yr are defaulting on their mortgages but I suspect there ain't a whole lot.

Alot of houses were bought by investors as income properties. With little to nothing down, rental income to pay the mortgage, and seemingly no end to rising house prices, it was a no-brainer investment (for while, anyway).

I'll bet a box of donuts that the above property investors have been and will continue to be the first to default on their mortgages (in states where they can get away with it), just as soon as their tiny calculators tell them that they're starting to lose money.

Joe Average, on the other hand, still needs a place to live, doesn't usually have a hoard of cash to fall back on, and often has this stubborn moral streak that compels them to fulfil their obligations. Silly poor people!

I sincerely hope that any direct mortgage assistance is only available to a person's principal residence, and that the property investor has to take their lumps like any other gambler investor.
posted by Artful Codger at 6:48 AM on September 23, 2008 [1 favorite]

What a droll commentary on public policy and moral hazard. Bravo!
posted by a robot made out of meat at 6:50 AM on September 23, 2008

I would be happy to buy those homes for pennies on the [millions of] dollar[s]. Email in profile.
posted by blue_beetle at 6:57 AM on September 23, 2008 [1 favorite]

I am frantically working on putting up a shitpile derivatives website. The quality of our offering will be so questionable that we are skipping over the intermediate stages and going directly to offering Colostomy Bags...
posted by jim in austin at 6:59 AM on September 23, 2008 [1 favorite]

I was wondering, would there be huge negative consequences for the Fed to buy up all the defaulted mortgages and give away the houses to the current owners, provided that when they resell half the money from the sale goes back to the govt? (or some similar schemes)

What about the portion of the population that didn't leap into the obviously inflated market and buy a house that they couldn't afford? Would we get to buy a house for 50% off as well? Or would we have to continue renting while the less financially responsible get rewarded for their recklessness?
posted by Thoughtcrime at 8:19 AM on September 23, 2008 [6 favorites]

I was wondering, would there be huge negative consequences for the Fed to buy up all the defaulted mortgages and give away the houses to the current owners, provided that when they resell half the money from the sale goes back to the govt? (or some similar schemes)

It seems to me that this would really help out the US population rather than a 700 billion dollar bailout fund that few people truly understand.

I said the same thing on my blog yesterday. Don't reward people who can't be trusted with money by giving them more money.
posted by Alexandra Kitty at 8:31 AM on September 23, 2008 [2 favorites]

"Wanna buy my house for a dollar? I'll buy yours for a dollar too!"

"Cool, let's do that"

"Dear government, here's my $0.50, and here's $0.50 from that guy over there."
posted by DreamerFi at 8:38 AM on September 23, 2008

People, people, there is nothing to worry about. The fundamentals of our shitpiles are strong.

Now my opponents may disagree. But that corn, that fiber that holds it all together, those are the fundamentals of our shitpile and I think they're strong.
posted by formless at 8:46 AM on September 23, 2008

"Our shitpile, I think, still, the fundamentals of our shitpile are strong."
posted by Artichoke Dance Off!! at 8:46 AM on September 23, 2008 [1 favorite]

missed it by that much.
posted by Artichoke Dance Off!! at 8:48 AM on September 23, 2008

What about the portion of the population that didn't leap into the obviously inflated market and buy a house that they couldn't afford? Would we get to buy a house for 50% off as well? Or would we have to continue renting while the less financially responsible get rewarded for their recklessness?

If the idea was to reduce the mortgage by a largish fraction of the lost property value, they wouldn't be getting rewarded so much as not completely destroyed. Let's say the gov gives you back 75% of the lost property value in exchange for a lien; you're rescued from bankruptcy (your payments will go down; your net worth won't be -$500k) but still on the hook for some of the loss and have lost whatever equity they had. You haven't gotten anything for free; you're where you were in 2004 or a little lower.

It's true that the responsible would be eating some fraction of the bubble, but much of that would have been gone when the moron got foreclosed on and the house sits on the market and fetches little after 10 months. It gets spread around, since the banking system managed to sell the entire financial industry a slice of the turd-pie. I've been renting and saving responsibly, but I'm taking a big hit when the market tanks.

If the irresponsible can't afford the post-bubble house price, they're still screwed. The responsible people can be alerted to houses for sale (prices will, in fact, be significantly lower). The point is to avoid massive loan failure which swamps the ability of the real estate market to handle and destroys the banking sector without creating too much moral hazard.
posted by a robot made out of meat at 9:16 AM on September 23, 2008

I have no doubt that somebody is already putting together the Shitpile Hedge Fund, which will make millions speculating on the rising values of the shitpile, then millions more shorting the shitpile, before finally dumping all shitpile assets and walking away with a shitpile of filthy lucre.

Meanwhile, my shitpile is still worthless.
posted by junkbox at 9:27 AM on September 23, 2008 [2 favorites]

Translation: yes, you'll probably still have to rent, and you'll have to bail out the guy who bought a house.
posted by zippy at 9:34 AM on September 23, 2008 [1 favorite]

Plus, how will the 700 billion dollar payout help the poverty stricken? Me thinks not at all.

The bailout helps the poverty-stricken mainly by averting a near-total collapse of the international financial system, a very good thing for those of us without armored-ATV, sawed-off shotgun, and spiked leather clothing investment portfolios. There's more here.

In short: yes, you're paying to save rich assholes with more money than sense, and no, it's not fair, but if the system collapses, the poor will have a lot more to worry about than where their taxes are going... especially since many poor neighborhoods have little or no access to local food and water.
posted by vorfeed at 10:08 AM on September 23, 2008

Meh, if things get bad enough, I'd worry more about the rich than the poor. The rich have more meat on their bones, and in a pinch, they're edible.
posted by jamstigator at 10:20 AM on September 23, 2008 [1 favorite]

The bailout helps the poverty-stricken mainly by averting a near-total collapse of the international financial system

This is the propaganda we've been sold at least, but it's more a rhetorical sales-technique on the part of the Fed and Treasury to push Congress to "act fast, before it's too late," than a meaningful evaluation of where we go from here. After all, the Paulson/Bernanke plan is unfettered much in the way of specifics, and both men in the Senate Banking Committee hearings today adamantly opposed attaching any new regulation, punitive measures, or anything else to the bailout plan. It really is a request for a blank check, with only the vaguest of assurances that Paulson have king-like control to do with the money as he sees fit.
posted by ornate insect at 11:10 AM on September 23, 2008 [1 favorite]

It's not a bailout it's ransom. Paulson is demanding $700 for his wallstreet buddies, no strings attached (not even on executive compensation). And if we don't hand it over they take "their" ball -- our economy and go home.

Well fuck that. Who needs this international financial system. The government could take that $700 billion and start their own investment bank, and lend money directly to consumers and corporations at reasonable rates. They could buy the lending operations of other investment banks as the collapse and go bankrupt. In other words, create a financial firewall around the shitpile, and let it burn itself to oblivion.

Now, maybe that's kind of socialism, but we are being offered here is a kind of reverse communism, It's a revolution, wall street drove the economy over the cliff and is now demanding we mortgage our nations future or they claim they'll destroy the economy.

Now, what I would prefer is something like the Biden plan that would cover any losses with equity in the banks themselves. If the Banks end up making a profit after offloading their garbage, then that profit (up to the value of their bailout) should go to the taxpayer, not their stockholders.
posted by delmoi at 11:26 AM on September 23, 2008 [4 favorites]

Paulson keeps forgetting, he works for us (the US taxpayers.) If anybody in Congress had a pair, they'd tell Paulson "This is the deal you're getting. There will be oversight, there will be transparency, and the deal won't be signed until you help us write some legislation that would actually prevent this all from happening a second time. And oh, there's a ceiling on how much you can actually spend. If you don't like that deal, we can certainly find someone else who will help us spend this $700 billion."

Dorking around with punitive measures and executive pay limits are populist measures but don't get us any closer to actually having fixed the thing that was broken. We shouldn't allow the country to be railroaded into a fleecing the way it was railroaded into a war.
posted by newdaddy at 11:35 AM on September 23, 2008 [1 favorite]

Bwahaha:

A demonstrator holds up a sign behind Henry Paulson (L) and Ben Bernanke (R) (img). From this article.
posted by delmoi at 11:35 AM on September 23, 2008 [1 favorite]

So on the front page there now is "Obama's Dinner" which is a bucket of KFC chicken. Stay classy, guys.
posted by maxwelton at 11:37 AM on September 23, 2008

If you owe the bank $1000, it's your problem.
If you owe the bank $1,000,000,000 it's the bank's problem.
posted by limited slip at 11:44 AM on September 23, 2008

I have no doubt that somebody is already putting together the Shitpile Hedge Fund

I am disturbed the the irrational exuberance being displayed by investors in the Shitpile market. We don't want to have a shit bubble bursting and pushing our already turbulently liquid economy even further down the international finance alimentary canal.
posted by MikeMc at 11:47 AM on September 23, 2008 [1 favorite]

Paulson keeps forgetting, he works for us (the US taxpayers.)

I don't think he forgot. You have to know something @ some point in order to forget it.
posted by MikeMc at 11:49 AM on September 23, 2008

Treuth, Fyfe billion in mynte gold certeyn soundis a myght of moneye assembled, but be ay redy, ye shul assaye fortune by wey of somme goynge shitel bestes. I wull make money off my javeloth oxyn to kepe with my promys.
(For right as men blamen an auaricious man by cause of his scarsitee and chyncherie, in the same wise is he to blame that spendeth ouer largely.)
posted by Smedleyman at 12:10 PM on September 23, 2008 [1 favorite]

A demonstrator holds up a sign behind Henry Paulson (L) and Ben Bernanke (R) (img). From this article.

"Oh fuck, the internet is here!"
posted by TheOnlyCoolTim at 12:31 PM on September 23, 2008 [2 favorites]

This is the propaganda we've been sold at least, but it's more a rhetorical sales-technique on the part of the Fed and Treasury to push Congress to "act fast, before it's too late," than a meaningful evaluation of where we go from here.

I agree that we need a better long-term plan, but IMHO, we could also use something in the very short term, and that's where this bailout comes in. Regulation, spending caps, oversight, starting our own investment bank, etc etc all depend on there being a decent economy left to manage.
posted by vorfeed at 12:45 PM on September 23, 2008

I think wall street is pulling a fast one by pretending this is about the housing bubble.
They're asking for a $700 Billion Bailout, right? The median home price in the US is somewhere around $225k, and the average is around $300k. Which means we could buy somewhere around 2-3 million homes with our tax dollars. That's a fully paid house for every hundredth person, or one fully paid house for every 33 households. Alternately, we could pay off 25% of the house price for every 10th household (I'm thinking of a number from 1 to 10...).

Sure, there's alot of troubled mortgages out there, but do we really believe it's that bad?

It's possible this is just a wall street problem. They went nuts on Credit Default Swaps (CDS), and now they're in trouble.

Here's a good analogy: let's pretend I sell mortgage insurance. If you can no longer pay your mortgage and you have my insurance, I'll pay you the outstanding balance. Now Pretend you bought insurance on your neighbors mortgage, and if your neighbor gets foreclosed, I owe you the outstanding balance of his mortgage. Seeing a possible windfall, you buy insurance on every mortgage on your block, and so do 9 of your friends. I'm now on the hook for 10 times the actual value of mortgages I insure.

If no one goes belly up, I'll make a huge profit. If they all go belly up, I'd be in some serious hurt. Luckily, my buddies who rate these sort of things say your block is a triple-A block, and only 2% should ever go into foreclosure. But whoops, my buddies were wrong. Seriously wrong, and 10% are being foreclosed on. So now I'm going bankrupt. Luckily, I'm too big to fail! Instead, let's ask the tax payers to come in and take over the insurance policies so they can pay you and your 9 friends off on your policies. We'll still foreclose on 10% of the houses on your block, but screw the home owners, right? This is how Credit default swaps work.

And the insurance (i.e. Credit Default Swaps) wasn't just sold on Mortgage backed securities, they were sold on just about every type of security out there. For owners of the actual security, it made sense, but the problem is the large number of speculating that was being done by people who didn't own the underlying debt.

So my question is, instead of letting the debts fail and making the payoffs, how much would it cost to prevent the debts from failing in the first place? The gov't shouldn't be buying up failing CDS'. Instead, we should allow people to pay us to take the debt off their hands (since without govt interference, the debt will default and they'll be on the hook for the full payout). This way, the companies stupid enough to sell large numbers of CDS (cough AIG cough) pay a severe penalty. If the company can't afford to pay us to take the debts, the govt should take full ownership of the company. Then, we should use the payout plus some of the $700 billion to prevent the debt from failing. The buyers of CDS will cry foul (they're missing out on a huge payday), but fu@k the speculators. Problem solved, and I bet this would cost a hell of alot less in the long run. Sadly, no one gets rich off this plan, so there's not alot of support behind it.
posted by ShadowCrash at 1:48 PM on September 23, 2008 [2 favorites]

SUBJECT: REQUEST FOR URGENT BUSINESS RELATIONSHIP

DEAR AMERICAN:

I NEED TO ASK YOU TO SUPPORT AN URGENT SECRET BUSINESS RELATIONSHIP WITH A TRANSFER OF FUNDS OF GREAT MAGNITUDE.

I AM MINISTRY OF THE TREASURY OF THE REPUBLIC OF AMERICA. MY COUNTRY HAS HAD CRISIS THAT HAS CAUSED THE NEED FOR LARGE TRANSFER OF FUNDS OF 800 BILLION DOLLARS US. IF YOU WOULD ASSIST ME IN THIS TRANSFER, IT WOULD BE MOST PROFITABLE TO YOU.

I AM WORKING WITH MR. PHIL GRAM, LOBBYIST FOR UBS, WHO WILL BE MY REPLACEMENT AS MINISTRY OF THE TREASURY IN JANUARY. AS A SENATOR, YOU MAY KNOW HIM AS THE LEADER OF THE AMERICAN BANKING DEREGULATION MOVEMENT IN THE 1990S. THIS TRANSACTIN IS 100% SAFE.

THIS IS A MATTER OF GREAT URGENCY. WE NEED A BLANK CHECK. WE NEED THE FUNDS AS QUICKLY AS POSSIBLE. WE CANNOT DIRECTLY TRANSFER THESE FUNDS IN THE NAMES OF OUR CLOSE FRIENDS BECAUSE WE ARE CONSTANTLY UNDER SURVEILLANCE. MY FAMILY LAWYER ADVISED ME THAT I SHOULD LOOK FOR A RELIABLE AND TRUSTWORTHY PERSON WHO WILL ACT AS A NEXT OF KIN SO THE FUNDS CAN BE TRANSFERRED.

PLEASE REPLY WITH ALL OF YOUR BANK ACCOUNT, IRA AND COLLEGE FUND ACCOUNT NUMBERS AND THOSE OF YOUR CHILDREN AND GRANDCHILDREN TO [e-mail] SO THAT WE MAY TRANSFER YOUR COMMISSION FOR THIS TRANSACTION. AFTER I RECEIVE THAT INFORMATION, I WILL RESPOND WITH DETAILED INFORMATION ABOUT SAFEGUARDS THAT WILL BE USED TO PROTECT THE FUNDS.

YOURS FAITHFULLY MINISTER OF TREASURY PAULSON
posted by empath at 1:51 PM on September 23, 2008 [13 favorites]

I have no doubt that somebody is already putting together the Shitpile Hedge Fund

Here at Shitwell®, we evaluate the many, many Shitpile Hedge Fund (SHF) options that confront you, the ignorant, innumerate consumer, and, using our patented Shitpile Pancake Algorithm®, select the SHF that maximizes your reckless, ill-conceived, doomed dumbass investment.

No, really, no need to thank us. Just don't be taking your business to those charlatans at Shitpile International.
posted by FelliniBlank at 2:36 PM on September 23, 2008 [2 favorites]

I don't correctly recall how many shitpiles I own. I'll have my girl get back to you on that.
posted by turgid dahlia at 3:13 PM on September 23, 2008

I don't see Buy My Sh*t pile on lolfed? But I'll be watching you rocks.
posted by jeffburdges at 6:43 PM on September 23, 2008

If the idea was to reduce the mortgage by a largish fraction of the lost property value, they wouldn't be getting rewarded so much as not completely destroyed. Let's say the gov gives you back 75% of the lost property value in exchange for a lien; you're rescued from bankruptcy

And what about the people who paid cash for their properties, seen it treble in assessed value and now should see the value fall.

The plan is to only reward the people who borrowed - who opted by the act of borrowing to enrich the bankers in the 1st place?
posted by rough ashlar at 10:12 PM on September 23, 2008

A lien on your property isn't exactly a reward...
posted by ShadowCrash at 9:00 AM on September 26, 2008

I think that Ashlar was saying that the plan as I described it would selectively do nothing for the people who bought their property outright (but were not selling a comparable property) during the asset bubble. Their net worth would be much less, especially if they have to sell their home soon. I don't know that first-time all-cash homebuyers during the bubble who need to sell soon are a very big population.
posted by a robot made out of meat at 9:44 AM on September 26, 2008

Home mortgages are tax deductible, so the precedent of rewarding borrowers has already been set. I don't really see an issue with rewarding them more, at least if the alternative is to just give the cash directly to the bankers.
posted by ShadowCrash at 10:58 AM on September 26, 2008