Comments on: What is Free Trade?

By: elzr

elzr — Tue, 17 Jun 2008 03:56:20 +0000

I loved your definition and found it useful but how about something pithier: "Free trade is when a trade doesn’t need the consent of anyone but the traders." More on http://elzr.com/posts/what-is-free-trade

By: Per Kurowski

Per Kurowski — Sun, 15 Jun 2008 08:51:46 +0000

I am not given an opinion on whether the development it good or bad, but a couple of decades ago the interest rates applied were much more equal, for instance, 5 to 7%, and not like today, 4 to 13% and which all meant that before there were much more limits on the amounts that you could award a doubtful risk than now, when you have a lot of debtors paying higher rates to make up for the shortfall of others.

By: BoscoH

BoscoH — Sun, 15 Jun 2008 01:10:21 +0000

Ridiculous Per. The so-called "predatory rates" of which you speak were the norm for the most credit worthy not 20 years ago. The problem comes down to payments, with people taking on bigger payments than they could afford over the term of their loans. If the rates for poor credit applicants were lower, the problem would have been worse by driving prices even higher. Even for the most strident critics of mortgage lenders, "predatory" has never had anything to do with rates. It's been about the terms (such as ARMs) and the attitude that foreclosure was part of the business model.

By: Per Kurowski

Per Kurowski — Sat, 14 Jun 2008 19:09:37 +0000

"And if cracking down on so-called predatory lending makes credit less accessible to the 90+% of people who are credit worthy, you've failed."
Posted by: BoscoH

You are right, in one sense, but please chew on the following:

Every creditor who at predatory lending rates has been able to show himself credit worthy is also evidencing that he should in fact not been charged those rates to begin with and that what he is doing is paying the cost of those creditors that confirmed they were not credit worthy... at least while paying those predatory interest rates.

By: Per Kurowski

Per Kurowski — Sat, 14 Jun 2008 19:01:18 +0000

For the large part, those purchasers did not depend on the credit rating agencies. Mortgage backed securities underwent a lot of due diligence, looking into exactly the mortgages that were pooled together. Purchasers knew, or had the opportunity to know, exactly what they were buying. If these securities had been registered and sold to the public, I would agree with you. But, they weren't.
Posted by: Chris | Jun 14, 2008

Sorry to say you are absolutely misinformed. It was the credit rating agencies, those appointed by the regulators survey the risks, that gave this securities AAA and with that wings to fly all over the world offering such a juicy bargain as “good returns with no risks” and so much did they fly that the first bank that went broke because of investing in those securities was a German bank that had never given a mortgage in Germany.

And now Merkel, the German Chancellor (and with the French doing the same) is even asking for a European credit rating agency so as to correct the bias that exists by which she must mean she wants European bias.