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kevinan108

Why We Regulate - NYTimes.com - 0 views

www.nytimes.com/...krugman-why-we-regulate.html

banking America JP Morgan derivatives PaulKrugman

shared by kevinan108 on 18 May 12 - No Cached
  • He has, however, been fond of giving Gatewood-like speeches about how he and his colleagues know what they’re doing, and don’t need the government looking over their shoulders.
  • So there’s a large heap of poetic justice — and a major policy lesson — in JPMorgan’s shock announcement that it somehow managed to lose $2 billion in a failed bit of financial wheeling-dealing.
  • In the 1930s, after the mother of all banking panics, we arrived at a workable solution, involving both guarantees and oversight.
  • ...4 more annotations...
  • It probably won’t last; I expect Wall Street to be back to its usual arrogance within weeks if not days.
  • As far as we can tell, it used the market for derivatives — complex financial instruments — to make a huge bet on the safety of corporate debt, something like the bets that the insurer A.I.G. made on housing debt a few years ago.
  • This system gave us half a century of relative financial stability. Eventually, however, the lessons of history were forgotten.
  • No loopholes, no exemptions, no exceptions, no compromise, no ambiguous language. Until Congress reinstates it, moral hazard governs and the losers will be the Americans taxpayers. History will keep repeating itself unless politics and money are taken out of the equation.
stefan ayache

Mortgages: More than half of Canadians to carry household debt into retirement | Mortga... - 1 views

business.financialpost.com/...to-retire-with-mortgage-survey

shared by stefan ayache on 17 May 12 - No Cached
  • The one thing Canadians won’t be retiring anytime soon is their mortgage debt
  • Bank of Montreal says 51% of Canadian homeowners plan to carry their mortgage into their retirement
  • times have changed and he believes Canadians can handle the burden
  • ...12 more annotations...
  • People are more sophisticated in their approach to personal finance today than the previous generation
  • People are living longer, working longer and making real estate plans longer or further into their lives
  • Another trend, one which was not considered by the industry before, is people moving into more expensive, upscale homes after retirement
  • Another part of the trend could very well be strategic. With rates on a five-year closed mortgage at about 3.5%, paying down that debt might not seem as high a priority for many homeowners
  • The extremely low level of interest rates is acting both as an inducement for people to take on more debt than they would have in the past and on the flipside not encouraging them to save as in the past
  • People could end up working longer and it might also mean there will be that much less equity in the home you’ll be leaving to heirs
  • could also reflect the longer amortizations the mortgage industry saw
  • Traditionally, mortgages were amortized over 25 years, but that number ballooned to 40
  • the issue is how it’s affecting retirement with half of Canadian homeowners saying their debt load was hindering their ability to plan and save
  • Canadians need about 70% of their pre-retirement income to maintain the same lifestyle
  • By 60 to 69, 25% of those people still have a mortgage
  • real estate prices continue at all-time highs
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