All Forum Posts by: Jimmy Oldrich

Friend of mine at a major investment bank justifying the bailout: "Isn't there a moral hazard in standing by to allow the U.S. credit system to crash?"

Everyone't got a perspective...

ObDisc: I am neither an economist nor an ethicist.

Doesn't "strategic default" open the door to the following scenario? Buy a house for a cash discount. Refi at 80% ARV. Use the proceeds to flip a house or two or three, never making payments on the financing. Essentially walking away from the first house and playing with the bank's money. First flip or so may get you your 20% back. All very businesslike... The math is inexact, and I'm new, so I don't know how much friction is in the transactions (liquidity, fees, blah, blah).

It does feel wrong to me. People trade stocks on margin all the time. When the margin call comes, you liquidate the position, and sometimes you get clobbered. I understand that home ownership is different, but this is an investors community, right?

Isn't this what credit scoring agencies are supposed to control against?