[arin-ppml] Will the price per IP really be affected by thetransfer market introduced in 2009-1?

Tom Vest tvest at pch.net
Fri May 15 16:08:22 EDT 2009

The real Real problem was the enthusiastic embrace by the financial  
industry members of commercial practices that allowed them to achieve  
their own objectives (e.g., satisfying ever-growing international  
demand for $US denominated securities), and enabled them to help out  
with other people's problems (e.g., clearing an ever-expanding supply  
of stuff that the largely stagnant US wage base could not by itself  
support), but in ways that absolutely destroyed whatever level of  
visibility that each industry member had into the others.  
Progressively less external regulation over the last decade or so,  
leading to ever-diminishing transparency for non-insiders, finally  
capped by the knowing/willful abandonment by the insiders themselves  
of any surviving, effective mechanisms for "counter-party scrutiny"  
that might have helped protect them (or the rest of us) from each  
other in the past.

Not really all that different from the story of how our last bubble  

Batter up...


On May 15, 2009, at 3:37 PM, Ted Mittelstaedt wrote:

>> -----Original Message-----
>> From: Stephen Sprunk [mailto:stephen at sprunk.org]
>> Sent: Friday, May 15, 2009 9:02 AM
>> To: Ted Mittelstaedt
>> Cc: 'Joe Maimon'; 'ARIN PPML'
>> Subject: Re: [arin-ppml] Will the price per IP really be
>> affected by thetransfer market introduced in 2009-1?
>> Ted Mittelstaedt wrote:
>>> I don't say though that I believe the idea that the more you
>>> interefere the worse the comeuppance is at correction time.  The US
>>> financial sector is a prime example of an industry with very little
>>> interference and terrible comeuppances at correction time, just ask
>>> Benie Madoff
>> The real estate market arguably has the most government
>> interference of any market in the US, and that is the root
>> cause of our current financial problems.  The FHA, FNMA,
>> FDMC, and VA were originally chartered to "stabilize" the
>> market, and they did an excellent job at that "interference"
>> with the market's previously wild swings.  However, in the
>> 90s, they were rechartered to get _everyone_ a house, and
>> banks were forced by law to give mortgages to people who
>> couldn't afford them.
> I've heard that fairy tale before.  The problem is that people
> who have actually looked at this theory have disproven it by
> comparing the foreclosure rates on CRA (Community Revitalization
> Act) loans against the standard loans, they are an order of
> magnitude lower.  Plus the CRA (ie: "forced loan") stuff
> initally sold for a lot less and resale under foreclosure is
> a lot quicker and much less of a loss for the bank.  And
> this is as you would expect because poor people with bad
> credit who got an opportuity to get a loan typically bought
> a much cheaper house.
> The real culprits were the army of home flippers out there who
> were (and are) typically mid to upper middle class people buying
> second homes for $300K and putting 100K into them and expecting
> to get $600K a year later.  When the market tanked they all walked
> away from their loans (or short-sold them) and the banks had to
> eat it, initiating the subsequent bailout.
> This is why the current government programs to help out foreclosures
> aren't working - because all of them prohibit assistance if the
> foreclosed property is a second home bought for speculation, and
> it is precisely those homes that are driving the foreclosure rates.
> The home flippers were mostly using ARMS (why would you pay principle
> on a home your expecting to sell in a year) and it is the bundling
> of those ARMS and subsequent resale as unregulated securities that
> caused a bubble in the stock and bond market, when that bubble
> burst the stock speculators paniced and shoved money into commodities
> speculation, which pushed gasoline to $4 a gallon last year,
> contracted consumer spending, and that contraction caused a shortage
> of buyers for flip homes which triggered the collapse of the housing  
> prices.
>> The result was widespread marketing of
>> ARMs and "subprime" loans, and that huge increase in
>> artificial demand directly created the real estate bubble.
> The artificial demand was from home-flippers buying more
> properties to flip, and using ARMS to do it.
>> When all those ARMs reset at higher rates (due to the
>> bubble), we saw record levels of foreclosures and prices
>> dropped back towards where they would have been all along if
>> it weren't for the government's interference.
> Most ARMS reset at the 3 year mark and the collapse was underway
> long before.  Before the crash back in 2005/2006 it was very common
> for home flippers to complete a sale BEFORE their ARM reset.
> The resetting of the ARM rates was just a byproduct
> of the crash, and it happened because nobody was buying for so
> long that the home flippers were sitting on property.  It was the
> trading of unregulated securities that were FUNDING the arms that
> started it.
> Google up "Enron loophole" for a better understanding of the
> problem.  What your doing is simply repeating a line the US
> Republican Party has dreamed up in their constant war against
> governmental regulation, a line that is absent many critical
> things.
>> The financial sector simply took advantage of the
>> government's interference,
> No, the financial sector in conjunction with the land speculators
> took advantage of the UNREGULATED market.
> This is why last year the feds forced all of the trading houses
> to either collapse or recharter as banks - because that was the
> quickest way to bring them under regulation.
> Ted
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