The Greenspan Depression?

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Sorry Lim: (Which came first, the chicken or the egg?)

Underwriting rules (judgment) are paramount, not the market cost-of-capital.

If interest rates for mortgage loans were pegged at 25% per year--and underwriting rules suspended, (permitting 'No Documents' liar loans) then we would still be in the same place, albeit on a lower unit volume.

After the feds lower rates, yet again, refi's wll again be possible as well as home transactions (buy/sell) for those who have adequate income flows.

The folks who lied to get credit (rates were NOT relevant) will still NOT get credit in the lower interest rate environment. (rates can't fix all lies)

If banks colect origination fees based upon permitted lies, low rates do not matter--only ticket volume.

The losses are in the multiple TRILLIONS and will take 20 years to amortize.

Glad to be of service to you. This was how Lance & Jan became heroes--via mythology, not facts.




Untrue Hein mate.

The abandonment of mortgage rules is the result of the creation of cheap credit.
Not the other way around.

The creation of cheap credit made the market for mortgages more competitive and that's when the banks started to give mortgages to people who's ability (inability) to repay was manifest.
The policy of cheap credit (by the Fed) was the catalyst : Bernie and Greenspam create the environment and the banks adapted to that environment.
Sure the banks are culpable and sure the poor bastards who purchased over valued real estate are culpable too.
But a credit bubble only existed because the rate of interest set was so low
in the first place.

I don't think this crisis is over by a longshot.
Sure there was smidgen of good news which lifted equities on Friday : but the banks haven't told us the whole story.
I reckon that the full extent of this debacle won't unravel for some time.
In the meantime, the banks ain't telling us how much their losses are on these
financial instruments.
Those losses are unquantifiable as of now.

Sorry Lim: (Which came first, the chicken or the egg?)


Hein : this ain't a chicken/egg scenario.

There is no ambiguity.

If cheap credit wasn't the order of the day, we wouldn't have mortgages being issued to people who couldn't repay.





Underwriting rules (judgment) are paramount, not the market cost-of-capital.

If interest rates for mortgage loans were pegged at 25% per year--and underwriting rules suspended, (permitting 'No Documents' liar loans) then we would still be in the same place, albeit on a lower unit volume.


Hein - you wouldn't be in the same place.
If interest rates were maintained at realistic levels - and not deliberately slashed by the Fed - you'd have fewer people applying for/receiving capital from the lending institutions.
If interest rates were maintained at realistic levels - you wouldn't have financial institutions "securitising" loans using instruments like CDO's at the level that they were (when the rates were slashed).
If interest rates were maintained at realistic levels - you wouldn't have other institutions purchasing those instruments in the hope of recouping their face value, + a %.

House of cards, Hein.



After the feds lower rates, yet again, refi's wll again be possible as well as home transactions (buy/sell) for those who have adequate income flows.

.

Bernie/Greenspam is playing roulette : he's cutting rates to bail out US banks.

He should follow what the wisemen of Threadneddle Street are doing : give the banks their funds at 1-2% about the interbank rate.
The wisemen are making the banks pay for their mistakes.
They're letting the banks take the pain for their greed.
Bernie should do the same.






The folks who lied to get credit (rates were NOT relevant) will still NOT get credit in the lower interest rate environment. (rates can't fix all lies)
.

The rates were the relevant issue.
And they were the catalyst.
With rates plummeting, banks were fighting for market share.
In a market awash with liquidity, banks have to flog loans, to earn income, to get a return on their cash.

If the rates were higher, liquidity would be less, credit less free.
This elementary, grade school stuff.

Lim:

No wonder you have such a tough time with Jan Ulrich or T-Mobile, preferring instead to scapegoat an elusive phantom. (evil global interest rates) A child could see that too.

Before Greenspan RAISED rates---CDOs were NOT a big problem. Actually, there was a terrific marketplace for trading them. Later--after the stock market bubble popping, Greenspan lowered rates---but it was the NO-DOC lending practices combined with Wall Street CDOs risk shifting that created long-term trouble in real estate land.

Sorry---it was the waiver of underwriting rules and the clever repackaging of junk loans into CDOs (collaterized debt obligations) which was, and still is, the root cause of tody's financial meltdown. Much of these dishonest products were doomed to fail at some point even if rates had remained low. A liar borrower is still a fraud, just as a TDF Champion running a Political Cancer fund is. Media cover up retards the disclosures, but eventually the truth comes out.

Interest rates INCREASE or DECREASE velocity. Exactly as cow blood and blood transfusions make Tour de France winners.

Low interest rates can speed up commerce like EPO, RSR-13 and blood packs, and high rates can set-off a Pantani-like stroke.

But those illegal doping methods are NOT the root cause---rather it is human greed and wholesale abandonment of traditional rules and ethics.

Keep you eyes on the ball--else you will be surprised every week.

Global rates will be cut. Should come as no surprise. There will be far fewer banks left in the global game (Barclay's already is gone) so competition is NOT a factor, if it ever was.

Lim:

No wonder you have such a tough time with Jan Ulrich or T-Mobile, preferring instead to scapegoat an elusive phantom. (evil global interest rates) A child could see that too.



Hein mate - stay on topic.
And speaking of being childish - you're one to talk.
You can't grasp even basic economics.


Lim:
Before Greenspan RAISED rates---CDOs were NOT a big problem.


Finally - you acknowledge that it was low rates that was the catalyst.
I told you this earlier.


Lim:
Later--after the stock market bubble popping, Greenspan lowered rates---but it was the NO-DOC lending practices combined with Wall Street CDOs risk shifting that created long-term trouble in real estate land.


The root cause was the slashing of interest rates by the Fed in the early to mid part of this decade, to historically low levels.

Cheap money, led to loans being given to all and sundry.

In a competitive market, this led to credit being practically given away.
Banks had to fight for market share and in doing so, securitised those loans using various financial instruments such as CDO's.

CDO's are all very well if the CDO value is premised upon an asset which maintains it's value or is increasing in value (bubble).
But when the asset that the CDO is premised upon starts to fall (default/foreclosure), then the CDO losses it's value.

When people started to default on loans - because of the increase in interest rates in the US - the CDO's value started to erode.
Problem is no one can quantify how many CDO's are being held throughout the financial system.
Which means, Heuston, we have a problem.

Bernie's trying to bail out the lenders : the same lenders who caused the problem in the first place.



Lim:

Interest rates INCREASE or DECREASE .

Interest rates were only increased by the Fed over the past 17 months, Hein.
Only when the interest rates increased - and people started to default and banks started to foreclose - did the CDO's begin to lose their value.

If proper stewardship of interest rate policy had been exercised by the Fed : there would be fewer dodgy loans, fewer defaults, few foreclosures and fewer CDO's backing depreciating assets.

Bernie's been left to try to cleanup after Mr.Greenspam.





Keep you eyes on the ball--else you will be surprised every week.

Global rates will be cut. Should come as no surprise. There will be far fewer banks left in the global game (Barclay's already is gone) so competition is NOT a factor, if it ever was.

The ECB (European Central Bank) have stated that they intend to maintain or increase interest rates at their next meeting in September.
Your own media reported this as well
http://edition.cnn.com/2007/BUSINESS/08/02/interest.rates.ap/index.html?eref=edition_business

Suggest that you keep your eye on the ball.

Lim:



financial fraud, cover stories, structured finance-CDO packaging, hedge funds/Big Bank partnering, central bank scapegoating, media myths, --all on topic here.

We're moving you closer to the light.

1) A corrupt chicken came first (underwiting rules were suspended). Interest rates were NOT connected to lying, liar lending, liar borrowing, waived off underwrting, risk dumping onto thrid parties, up-front fees booked as profit, loss loss accounting banking rules dodged.

2) Then the egg followed. Lower interest rates increased velocity of sales.

The problem was with issuing the junk paper in the first place, not the charging rent. (interest = rent)

Please stay on target.

This CDO fraud was NOT invented by Greenspan or his Federal reserves, rather the fraud invented in business schools and effected by Wall Street (the great used car sales broker/dealer network) But, mortgage regulators were corrupt too. There was no compliance on any level.

Slapping lipstick on a pig and selling it as a thoroughbred race horse. Wall Street will always steal as much money as possible at all times.

This deceptional sale remains a fraud at one Euro or 100,000 Euro. The level is irrelevent, the fraud is still at the core.

Lim:
financial fraud, cover stories, structured finance-CDO packaging, hedge funds/Big Bank partnering, central bank scapegoating, media myths, --all on topic here.


Some of this is on topic.
Other parts are factually incorrect Hein.



Lim:

1) A corrupt chicken came first (underwiting rules were suspended). Interest rates were NOT connected to lying, liar lending, liar borrowing, waived off underwrting, risk dumping onto thrid parties, up-front fees booked as profit, loss loss accounting banking rules dodged.


hein : deliberate policy of low interest rates by the Fed - resulted in cheap credit.
Banks fought for market share and thus loaned money recklessly.
Low interest rates/cheap credit : everything else that followed is built on that
reckless policy.








This CDO fraud was NOT invented by Greenspan or his Federal reserves, .

Hein - I never suggested that CDO's were invented by Greenspam or Bernie.



Lim:

Slapping lipstick on a pig and selling it as a thoroughbred race horse. Wall Street will always steal as much money as possible at all times.


No disagreement there either, Hein.

Wall St has a history : Drexel Burnham etc.


Lim:
This deceptional sale remains a fraud at one Euro or 100,000 Euro. The level is irrelevent, the fraud is still at the core.

Fraud would suggest that there was an intent to deceive from inception.
This sub-prime crisis was never an issue of fraud : this crisis inception is as a result of incompetence with regard to interest rate policy at the Fed AND
the loaning of cheap money to people who did not have the wherewithall to repay that money.
Q.E.D.

Lim:

Really. Wake up and smell the fraud. No need to reach back to Michael Milken and LBOs gone bad. Plenty of active crooks operating now. Just lik doping in sports---fraud has ALWAYS been active at all times.

Wall Street has a history all right. Every firm cheats to some degree.
Audit profession has a history too--every public CPA firm cheats too.
Corporate lawyers aid (mask) the cheating in exchange for big fees.
Bribing University Dept Heads to write flattering articles for industry.

Without cheating--there would be no need for:
1) Grand Cayman off shore tax-free accounts
2) fake audits
3) hedge funds devoid of disclosure rules
4) SPE (special purpose entities)
5) risk dumping junk paper into funds w/o accounting valuation rules (mark-to-market)
6) DOJ discourgement deals with KPMG and a $600 MILLION fine for tax evasion schemes
7) Harvard MBAs dominating Enron's finance department
8) leveraged CDOs Hedge Funds of Funds (Bear Stearns)
9) Goldman & Sachs
10) Mother Merrill
11) The NYSE black box of skimming

In TV-based sport--the financial conflict (leading to fraud) is the athlete endorsement, event underwriters and TV rights all owned by the same party--or related parties. That my friend is known as a 'FIXED OUTCOME EVENT"

Many parallels between cheating in the Capital Markets and Cheating to win a TDF or an Olympic Gold Medal. Same work ethic.



Some of this is on topic.
Other parts are factually incorrect Hein.





hein : deliberate policy of low interest rates by the Fed - resulted in cheap credit.
Banks fought for market share and thus loaned money recklessly.
Low interest rates/cheap credit : everything else that followed is built on that
reckless policy.








Hein - I never suggested that CDO's were invented by Greenspam or Bernie.





No disagreement there either, Hein.

Wall St has a history : Drexel Burnham etc.




Fraud would suggest that there was an intent to deceive from inception.
This sub-prime crisis was never an issue of fraud : this crisis inception is as a result of incompetence with regard to interest rate policy at the Fed AND
the loaning of cheap money to people who did not have the wherewithall to repay that money.
Q.E.D.

The abandonment of mortgage rules is the result of the creation of cheap credit.
Not the other way around.

I disagree--sort of. The two are somewhat disconnected. The abandonment of mortgage standards could have occurred without cheap money, but in this case the profits derived from cheap money acted as an incentive for relaxation once the low hanging fruit from cheap credit had been picked.

In the U.S. there has been a two step process. More accurately it was a series of small steps, but it is easier to discuss if it is envisioned as two steps. The first was AG lowering interest rates and keeping them there for far too long. The cheap money inflated the value of assets, the easiest of which to see was housing prices. This would have had ill effects, as a credit bubble always has.

The second step was massive fraud that came about due to complete lack of oversight and regulation. The easy credit created a boom in the lending industry. People were macking it hard, the people at the bottom with commissions and the people at the top with bonuses and stock grants. This would have ended much earlier than it did, resulting in a smaller bubble, but the industry moved to fraud as a way to keep the spigot flowing. There was a steady progression of ever more risky loan products being created and the industry dug further and further in the barrel. They started scraping the bottom early this year.

The current crop of bankrupt lenders and hedge fund implosions are not due to cheap money. These are the companies and funds that were taking the most risk, they knew exactly what they were doing, and they are just the first dominos to fall. They were killed because of fraud. The bankruptcies that come about and could be said to be primarily from cheap money instead of fraud will come later in the cycle.

I disagree--sort of. The two are somewhat disconnected. The abandonment of mortgage standards could have occurred without cheap money, but in this case the profits derived from cheap money acted as an incentive for relaxation once the low hanging fruit from cheap credit had been picked.


The low interest rates - cheap money - required banks to compete to extend their loan books in order to secure more and more business.

CDO's, various financial instruments derived ultimately from the policy of cheap money.
Waiving the regulations - not checking peoples ability to repay - were all products of cheap money.

The low interest rates - cheap money - required banks to compete to extend their loan books in order to secure more and more business.

CDO's, various financial instruments derived ultimately from the policy of cheap money.
Waiving the regulations - not checking peoples ability to repay - were all products of cheap money.
I agree with the first statement but as for the last, I guess it depends on what the definition of "product" is. My chief point is this: Even though the Fed pursued a policy of easy money after the dot com collapse, the goverment could have mitigated the effects by effective regulation. The disciples of Milton Friedman, of which Greenspan was one, are at fault for the extent of the damage.

I'm not disagreeing with you : the banks took risks when offering loans.
And banks who bought CDO's, based upon those loans, were taking even greater risks when purchasing these instruments.

All they were interested in was getting a return.

Derivatives, financial instruments etc : this whole area is a mindfield.
There is no clarity to any of it.

It's the poor bugger who took out the loan from the bank and who's nowbeing foreclosed that I feel sorry for.

It's the people who placed their pensions with financial institutions who invested in these "instruments" - who's pension value could now be zero - that I feel sorry for.

Derivatives, financial instruments etc : this whole area is a mindfield.
There is no clarity to any of it.
Yup. Warren Buffet has been calling for derivatives to be reigned in for years. There is a huge systemic risk that no one really understands. It violates the principle of transparency that should exist in an efficient market.

It's the poor bugger who took out the loan from the
bank and who's nowbeing foreclosed that I feel sorry for.
Some innocent people will be hurt. In many cases the home owners are far from innocent. They were part of the fraud. They inflated their income with liar loans, they took out ARM/interest only mortgages thinking they would make minimal payments and sell for a large profit in a couple of years, they fooled themselves into buying vacation homes that were really bought for investment purposes, they lied to banks that their investment homes would be owner occupied, etc. There is a large percentage of people I don't feel sorry for at all. I hope they burn.

The people to feel sorry for are the naive and possibly stupid people who were taken advantage of or who did realize what was going on. A couple of weeks ago I had a conversation with a friend who laid out his plans for the next eighteen months. They involved selling his house next Spring, which he had bought recently for the proverbial "$50K under what it was worth", and going to grad school to get an MBA in a year long program. He is not working now because he figures that he is making money from his house. I tried to advise planning for the worst and looking for a job because the housing market is cooling, but he is so convinced that his house is worth $150K or so above what he paid he is not open to discussion. I did not feel like depressing him by telling him he was doomed. I feel sorry about his wife and little daughter.

Then there is my brother's neighbor who has not really worked since he got laid off at the end of the dot com meltdown. He was lucky enough to have bought a vacation condo in a bubble market and his own house has also gone up. Evidently he has spent the last five years living on housing equity.

It's the people who placed their pensions with financial institutions who invested in these "instruments" - who's pension value could now be zero - that I feel sorry for.
A lot of people will be hurt when their "safe" investments evaporate.

Some innocent people will be hurt. In many cases the home owners are far from innocent. They were part of the fraud. They inflated their income with liar loans, they took out ARM/interest only mortgages thinking they would make minimal payments and sell for a large profit in a couple of years, they fooled themselves into buying vacation homes that were really bought for investment purposes, they lied to banks that their investment homes would be owner occupied, etc. There is a large percentage of people I don't feel sorry for at all. I hope they burn.


If it's an consolation we had the same people doing the same thing here.
People who should have known better.

They deliebrately lied on their mortgage application - inflated their pay - to buy the proverbial "holiday home" - which they only occupy for two weeks per year but which they can boast about to their neighbours!
Like you I have no sympathy for them.

But I do have sympathy for the first time buyers who, trying to get their starter home, had to pay over the odds for an asset (house) which was inflated in price because "demand" for houses was high.
They're now being burnt - they're paying more for a value that is falling.




The people to feel sorry for are the naive and possibly stupid people who were taken advantage of or who did realize what was going on. A couple of weeks ago I had a conversation with a friend who laid out his plans for the next eighteen months. They involved selling his house next Spring, which he had bought recently for the proverbial "$50K under what it was worth", and going to grad school to get an MBA in a year long program. He is not working now because he figures that he is making money from his house. I tried to advise planning for the worst and looking for a job because the housing market is cooling, but he is so convinced that his house is worth $150K or so above what he paid he is not open to discussion. I did not feel like depressing him by telling him he was doomed. I feel sorry about his wife and little daughter.

Then there is my brother's neighbor who has not really worked since he got laid off at the end of the dot com meltdown. He was lucky enough to have bought a vacation condo in a bubble market and his own house has also gone up. Evidently he has spent the last five years living on housing equity.


The old "I can release equity from my home" theme.
We have that here too.
After you've made inroads on the repayment - the bank comes along and says "why not release the difference between the house value and the remaining outstanding balance - to fund a lifestyle choice".
Been happening over here for the past 5 years or so.

Your friend is like a lot of people : they assume that property is a oneway street.




A lot of people will be hurt when their "safe" investments evaporate.

yeah, I just wonder how much "blue-chip" is really bluechip?
Enron would have been viewed as bluechip at one point.

This is a house of cards.
Problem is that the banks will not, will not, fess up until the horse has well and truly bolted.

Did anyone notice how 2 years ago when the (anti)Bankruptcy Law was passed, that was when subprime loans really took off?

Did anyone notice how 2 years ago when the (anti)Bankruptcy Law was passed, that was when subprime loans really took off?
I am sure it was a complete coincidence. We all know that a lender stupid enough to give additional credit cards to people staggering under the weight of their current debt should be protected. It is all the fault of those who take the credit not those who extend it.

Excellent example of lack of understanding how the mortgage origination business actually worked over the past ten years.

Banks prefer NOT to carry mortgage loans directly anymore--chosing instead to dump (sell/spin off) the collection risk onto others. (Hedge Funds, CDO, Pension Funds, SIVs, etc...) Paradoxically, many large banks did lend money to these very same hedge funds which, in turn bought CDOs. This is a loan loss accounting problem and a 'mark-to-market' issue.

Interest rates had NOTHING whatsoever to do with loan fraud, no doc applications, stated income, wholesale suspension of underwiting standards.
Liar loans can be made with neg-amortization high rates, or zero interest. No relationship with rates & fraud. They remain different concepts.

The only competition was to find a dishonest hedge fund, which was quite easy to do. Just like finding suckers to root for Team CSC or Lance.

This is NOT a subprime credit crisis, it is a PRIME commercial lending crisis. And that is why all central banlers will intervene with stimuli.

Central banks will bail out these broken credit markets w/o fixing the problem without any rule enforcement.


The low interest rates - cheap money - required banks to compete to extend their loan books in order to secure more and more business.

CDO's, various financial instruments derived ultimately from the policy of cheap money.
Waiving the regulations - not checking peoples ability to repay - were all products of cheap money.

I am sure it was a complete coincidence. We all know that a lender stupid enough to give additional credit cards to people staggering under the weight of their current debt should be protected. It is all the fault of those who take the credit not those who extend it.

That's what I thought - utter coincidence. The same type of coincidence that keeps medical care excessively high/unaffordable, and why about 1/2 of all non-commercial bankruptcies are medical-related.

That's what I thought - utter coincidence. The same type of coincidence that keeps medical care excessively high/unaffordable, and why about 1/2 of all non-commercial bankruptcies are medical-related. There are a lot of coincidences that occur when the middle class gets robbed. If you did not know better, you might think that corporate crooks were making the laws to benefit their scams. That could never happen in our democracy though. Never, ever, ever.

We all know that an introductory college textbook on physics should cost $150. Even though it has the same Newtonian physics, electromagnetism, and optics that were being taught fifty years ago, and anyone can go to Barnes and Noble to pick up books on the most fringe of subjects for thirty or forty bucks.

Bro, those guys have to recover their costs. Do you realize how much bribery they have to partake in to get their book on the recommended text list? Or is this the subtle point that I missed in your post?

We all know that an introductory college textbook on physics should cost $150. Even though it has the same Newtonian physics, electromagnetism, and optics that were being taught fifty years ago, and anyone can go to Barnes and Noble to pick up books on the most fringe of subjects for thirty or forty bucks.

Hein-V, the Wall-Streeter's are somewhat to blame yes, but I would say that Greenspan has never been seen sporting a halo, (at least not by any of the Great Unwashed):

...Amy Gluckman, an editor of Dollars and Sense, reported in the November/December 2006 issue: “During the Clinton administration, Greenspan was relatively ‘unembedded’—averaging only one meeting per month at the White House….

“But when George W. Bush moved into 1600 Pennsylvania Ave., Greenspan’s behavior changed. During 2001, he averaged 3.3 White House visits a month, more than triple his rate under Clinton and much more often with high-level officials like Vice President Cheney. His visits rose to 4.6 a month in 2002 and 5.7 in 2003.

“Whatever White House officials were whispering in Greenspan’s ear, it worked: Greenspan abruptly changed his tune on tax cuts, lending critical support to Bush’s massive 2001 and 2003 tax giveaways, and he loosened the reins by cutting Fed-controlled interest rates repeatedly beginning in January 2001, a gift to the Republicans in power.”

...

http://globalresearch.ca/index.php?context=va&aid=6239

and,

...The underlying problem is not simply the Fed’s reckless increases to the money supply, but the growing “wealth gap” which is undermining solid economic growth. If wages don’t keep pace with productivity; the middle class loses its ability to buy consumer items and the economy slows.

The reason that hasn’t happened yet in the US is because of the extraordinary opportunities to expand personal debt. The Fed’s low interest rates have created a culture of borrowing which has convinced many people that debt equals wealth. It’s not; and the collapse in the housing market will prove how lethal that theory really is.

To large extent, the housing bubble has concealed the systematic destruction of America’s industrial and manufacturing base. Low interest rates have lulled the public to sleep while millions of high-paying jobs have been outsourced. The rise in housing prices has created the illusion of prosperity but, in truth, we are only selling houses to each other and are not making anything that the rest of the world wants. The $11 trillion dollars that was pumped into the real estate market is probably the greatest waste of capital investment in the nations’ history. It hasn't produced a single asset that will add to our collective wealth or industrial competitiveness. It’s been a total bust.

The Federal Reserve produces all the facts and figures related to the housing industry. They knew that trillions of dollars were being diverted into a speculative bubble, but they did nothing to stop it. Instead, they kept interest rates low and endorsed the lax lending standards which paved the way for millions of defaults. Now the effects of their "cheap money" policies have spread to the hedge fund industry where hundreds of billions of dollars in pensions and savings are in jeopardy.

Alan Greenspan played a major role in the housing boondoggle. On February 26, 2004, he said, “American consumers might benefit if lenders provide greater mortgage product alternatives to the traditional fixed rate mortgage. To the degree that households are driven by fears of payment shocks but willing to manage their own interest-rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home.”

Greenspan tacitly approved the whacky financing which produced all manner of untested loans—including ARMs, piggyback loans, “no doc” loans, “interest only” loans etc. These loans are a break from traditional financing and have contributed to the increase in bankruptcies.

Millions of people who were hoodwinked into buying homes with “interest-only”, “no down” loans will now either lose their homes or be shackled to an asset of decreasing value for the next 30 years. They've been tricked into a life of indentured servitude.

...

http://globalresearch.ca/index.php?context=va&aid=6209

...with a bit of help from the (anti)Bankruptcy Law of 2005 of course, which Greenspan AND Wall Street well knew was going to shift the onus from the predatory lenders to the under-compensated worker/credit-maxxed consumer.

So! Easy credit for all and a chicken in every pot.

Until the sh!t hits the fan and you find that the Fed now won't let you wipe the slate clean through bankruptcy, but they WILL be nice enough to let you spend the rest of your life paying it off.

A great scheme, as long as you're not on the wrong end.