More Meltdown Finger Pointing from Citigroup's Pandit and Columbia's Mohanram

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  psd1941@...10/17/08 Report as spam
  1

  RE: More Meltdown Finger Pointing from Citigroup's Pandit and Columbia's Mohanram

  TOTALLY MISLEADING !!
  If Mohamram is Pandit, he sure is a Pandit in shrewedly misleading the gullible investors and consumers, who are unaware of the Demand and Supply principle of the Economics.
  
  I totally disagree with the theory of Mohanram professed in this article, who tried to divert the blame of the Financial Mis-managers (rather Financial Damagers) on the crisis stricken gullible investors, whom such like Pandits (Citigroup is one of them) first overload them with indebtedness through lavish loans and then try to befool them by blaming they have been fully successful in picking their pockets through heavy interest rates.
  
  About his point of ???imbalance??? where he has stated, ???There???s just too much housing compared to the demand,??? he is just trying to give a clever diversion from the failure of the so called ???Financial Pandits??? against the principle of Demand and Supply of the Economics. In fact it is not a case of imbalance on account of housing compared to demand, but it is a case of imbalance of the forecasting capabilities of the so called Financial Pandits, who have the vision how to spread the indebtedness amongst the common masses, but don???t have the foresight for the resultant volume of foreclosures when all the financial institutions enviously tread the same path. So, either he is weak in the theories of Economics or he is unaware of the demand statistics, or alternatively he just tries to divert blame of his foresight lacking community members towards the public (the last one is evident). Every person needs a house for his family and Mohanram should have compared the # of available housing units and the # of families, at least in USA, if not in the World. Housing demand of course remains there but the shortage of funds prevailed that put an embargo on the pursuit of the said demand due to unwisely and uncontrolled glut created by the finance companies led by the so called Financial Pandits on account of their own shortsightedness.
  
  Again, the consumption/saving imbalance is also not the result of ???Everybody thought they were saving because their housing prices were going up,??? as he stressed. It is a case of his own misconception. No one thinks that he is saving in the shape of increased value of their housing units, as the increased value of a house cannot be cashed instantly at the time of their need, and more so till the house is a mortgaged property. This type of imbalance is also a creation of their lack of foresightedness by spreading the lavish indebtedness first on housing loans against the capacities of the borrowers and then keeping open the floodgates of credit through credit cards thereby increasing the uncontrolled consumption power of the borrowers to compel them to pay their hefty installments. Thus, the borrower consumers first become defaulters in credit card payments that puts an embargo in their repayment capacities resulting in to defaults in non-payment of housing loan installments and ultimately resulting in to creation of the mass scale foreclosure cases and the financial companies losing their own grounds in controlling that situation.
  
  About ???Leverage,??? although he has admitted, ???When you look at the financial system around the world, [it became] overloaded over a period of time. They have to figure out how to de-lever themselves,??? but the question arises, who has to leverage that? A common man or a Financial Institution, which has recklessly decontrolled and scattered his finances, just for the sake of profiteering for the time being without foreseeing the results of their own reckless credit policies and lavish expenditures or filling up the coffers of their CEOs out of the hard earned money of the gullible investors who put their faith on them? Naturally, this advice is for the Financial Pandits only and not for the public.
  
  So, it is better the so called financial pandits should admit their own fault and review their own functioning styles, rather than blaming comsumers.

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  SKPrasad10/17/08 Report as spam
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  RE: More Meltdown Finger Pointing from Citigroup's Pandit and Columbia's Mohanram

  Things have gone wrong with the world economy because of the sheer complexity of the instruments and processes that we have built around us in the race for creating more and more exotic products and offerings. Often the chains are so long that the leadership at top has only a foggy idea of what is happening at the grassroot levels. It all seems fancy as long as the bluff is not called, but ultimately many of the behemoths collapse like a house of cards. It is time organizations learned to be a little conservative and adopt the KISS principle (Keep It Simple, Stupid).
  
  Sushil Prasad

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  steve.mathys10/17/08 Report as spam
  3

  RE: More Meltdown Finger Pointing from Citigroup's Pandit and Columbia's Mohanram

  Actually, the whole mess stems from just one thing: GREED.
  
  Greed on the part of home purchasers who thought buying a house valued at 6x their annual salary is a good thing.
  
  Greed on the part of "mortgage brokers" who had no stake in whether or not making such a financial decision was really wise.
  
  Greed on the part of lenders who wanted to get rich quickly and cheaply by lending to these borrowers and passing the risk to Fannie Mae and Freddie Mac.
  
  Greed on the part of Fannie Mae and Freddie Mac shareholders for higher stock price, higher dividends, and higher bonuses.
  
  Greed on the part of GOVERNMENT for avoiding the situation so they could sit there and collect continued kickbacks for misusing government funds for such programs.
  
  Greed on the part of "Rating" agencies who were getting paid to simply re-evaluate someone else's work without their own due diligence.
  
  Greed on the part of general investors buying such CDOs and CMOs to "increase yield" without recognizing the inherent risks of it all.
  
  But, mostly, GREED from us all for wanting something so badly that we had to have it now, so we borrow to buy it rather than saving and waiting for it. I point the finger at myself here, too. I've got a hot tub, my own office furniture, a nice new display cabinet for my wife's doll collection, a Wii, and almost no savings outside my 401(k). I'm learning my lesson the hard way - we're stopping our use of credit cards and going back to the "if I don't have it, I don't spend it" mode. I'm guilty of greed, too, but I'm changing my ways. Unfortunately for "the economy", that's exactly what we need.

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  edresnick10/17/08 Report as spam
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  RE: More Meltdown Finger Pointing from Citigroup's Pandit and Columbia's Mohanram

  I don't think greed is the proper term for what caused our problem. I think it is entitlement. Americans feeled entitled to large houses, cars they can't afford, $100 month cell phones, and a whole host of other material items. The financial markets created instruments to feed this entitlement (exotic mortgages, zero % 7 year car loans, etc.). The American people need to take some responsibility for their actions. Is it all the peoples fault, absolutley not. A system that focuses on where the next buck is coming from forces a short term agenda at the detriment to long term performance. Eventually the reality catches up and disaster strikes. Of course we are now setting our selves up for a bigger crises down the road with the enormous government budgets we are creating. Unless we get back and solve the real problems of a lack of savings by Americans, a system that rewards the short term over the long term, and a government that has no fiscal responsibility, will we be able to reduce the liklihood of another financial collapse.

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  gtgilbert10/17/08 Report as spam
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  RE: More Meltdown Finger Pointing from Citigroup's Pandit and Columbia's Mo

  edresnick, you nailed it. The real problem is
  the lack of savings.
  
  When Clinton took office in 1992, the rate of
  savings in the US was between 7-8%. When he
  left in 2000, it was below 1%. Is that all
  Clinton's fault - not likely, but during that
  time the economic policies encouraged
  consumerism beyond our means that created this
  drop, which of course contributed significantly
  to where we are today. Think about how much
  safer everyone would feel today had they saved
  an extra 6-7% of their income for the last 16
  years.
  
  I also think there is merit to the arguement
  that businesses, and especially wallstreet -
  mostly driven by traders looking at the short
  term - have focused on the wrong metrics to
  evaluate business and stocks. The incessant
  focus on 'earnings' and not asset profitability
  is what created many of these overly complex
  instruments. It's certainly time for that to
  change, and to reset the way we all think about
  business. That's why I am happy that I don't
  work at a publicly traded company. Here we
  have the freedom to not chase revenue just to
  hit an earnings target if the cost of that
  revenue is greater than it's benefit.
  Shouldn't everything be that way...

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  clarkm10/21/08 Report as spam
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  RE: More Meltdown Finger Pointing from Citigroup's Pandit and Columbia's Mohanram

  What world does psd1941 live in? I don't have facts and figures (neither does he) to back my position but where I live there is most certainly a glut of houses on the market. Hard to deny the current market trend, don't you think. Comparing total housing available to the number of people in the world needing a home is a ridiculous analysis, what good is an available home if it's a state or country from where you live? Let's not forget that 80% of the population is feeling the pinch but isn't really in dire straights as the media would have you believe.
  
  Only a true liberal would absolve the poor "gullible" consumers and blame the evil financial managers. People only sell what others are willing to buy. The consumers have been stupid, don't blame others for taking advantage of their willingness to invest blindly. All parties are to blame.

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  Raj Dubey10/25/08 Report as spam
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  RE: More Meltdown Finger Pointing from Citigroup's Pandit and Columbia's Mohanram

  I tend to agree with the view that the greed is the single most important reason for this mess. I would term it slightly differently as " Competitive Greed". As long as the other guy does not possess a thing, greed is dormant. But when your neighbour or friend or collegue at office has embarked on a money multiplier scheme which looks very promising in the initial stages, the dormant greed resurfaces out of the soil and waits for the right conditions. These conditions are provided by the environment, ie the object of desire - I have to have that object because others are having it, the suppliers or feeders- financial companies doling out the cash, the analysts giving an optimistic picture based on partial data, the media glorifying the rise and rise of stock indices and connecting it with success of the company, Govt and economy and then the people themselves glorifying the rags to riches tales of some known and some fictitious entities so that those who are not a part of this greed bandwagon, feel left out as if they are impoverished by not taking part in the gold rush. Earning through hard work is scoffed and lottery becomes the wagon for success.