Instead of bailing out the morons that overextended themselves with no economic foresight, how about giving those of us that make our mortgage payments on time (or even overypay them) a bonus?
no, it doesnt piss me off... inflammatory threads offering nothing, filling up room on the intraweb does though... maybe congress can do something about that!
no, but i do have a heart... anyone who honestly believes the mortgage (and credit card industries for that matter) are not predatory are crazy. And if no politicians are willing to tackle the real problems with the industry, this is the only responsible step left to be taken. Frankly, comments like 'pay your god damn bills, everyone else has to' piss me off the most. Be sure to remember you all believe that when you truly cant make ends meet anymore.
I agree with you in that they should have addressed the real problem - not allowing the banks and mortage companies to due this type of predatory financing. There were signs the whole time that this would be bad for the economy. Unfortunately they are only doing what they are doing now to bail out the big players in the whole mortage mess.
A friend of mine was telling me about the hedge fund industry and how it is basically set up that the government is forced to bail out the big guys if something goes wrong due to the fact that so much of our $$$ in tied up in these things. Basically, if you are dealing in hedge funds, you cant loose.
Anyways, it does suck for the little guy, but they were playing with fire (and knew it). There is a reson I didnt buy a $800,000 house on my salary
the government can't bail your stupid ass out, but the federal reserve sure can, especially if you are a fat cat with a lot of money tied up in the stock market. oh and by the way, the dollar is now at an all-time low against the euro. may i suggest putting your money into foreign currencies rather than the stock market? or is that being anti-american?
j, that is a blind read of what is going on. this country has a major credit problem. it's not just the subprime market; it goes all the way up to the middle class and beyond. this rate cut is trying to encourage people to spend who are already up to their ears in debt. the only people that benefited from this rate cut were the wealthy who do not have money tied up in debt. when the fall comes, it's going to be that much harder now, and in the meantime, inflation is continuing to climb. i'm stunned by the stupidity of this move by the fed.
the fact that people 401k, mutual funds, etc are tied up in these loans, many of which were generated by the mortage companies to be 'flipped' by investors aint a good thing either
to put this debt situation into some perspective, consider the amount of debt you have personally - mortgage, student loans, credit cards, car payments, etc. that all amounts to money that you cannot afford to put back into the economy, leading the way towards a recession. so who is benefiting from this debt and driving the current illusion of economic expansion? banks and the credit industry are making a killing off of interest payments. now maybe you're into old school reagan-omics and really believe that that money is going to trickle back down to you. me, i'm not holding my breath.
I love when people say lenders are predatory and evil. Just like the "big oil" companies are fixing the price of oil. They didn't hold a gun to anyones head and force them to take out a loan. Ignorance or greed is no excuse in my book.
"Fixing the problem" by tightening lending standards would have everyone screaming that the lenders are racist or classist or something like that.
Simple fact is that the public demanded easy money to live a lifestyle they couldn't afford. If you are living a lifestyle beyond your means thanks to credit cards and subprime mortgages you deserve to loose everything. Maybe then you'll learn.
On a related note, I'm also against the Fed cutting the rate by 50 basis points to bail out Wall Street.
i agree with you up to a point, aquap, and i think your point is particularly relevant with mortgages, but what about student loans?
frequently, student loans are presented to students as an "investment" in their future. you get into some debt to make more later on. i don't disagree with that. the problem is that many students are taking out ridiculous amounts in loans; architects with $100,000+ debt. so where do you draw the line? $20,000 in debt is acceptable? $40,000? most students particularly when they are 18 or 19 and making these huge decisions do not have any idea how much they're going to be paying per month after they graduate, how much they are going to be making after graduation, what $300/month means, etc. hindsight is always 20/20, but it seems to me there needs to be a much more intense education earlier in the process. that's where i fault banks and the credit industry (and universities) for starting people out in life without the tools to make better decisions about their finances.
it's also why i believe the credit problem is going to have a much larger effect on the economy than many anticipate. baby boomers are really blind to the massive debt problems 20-somethings are getting into. the baby boomers can only control the economy for so long; if the next generation is on very shakey economic ground, it does not bode well for the larger economy.
Too bad our economy is based off consumerism. Boomers are in massive debt themselves. How many boomers' retirement plan is selling their house, which just lost a lot of value?
So the feds go more in debt, raising our national debt, helping bail out Americans that made a stupid move with their money and putting them in debt?
Is it just me, or is this country completely "owned" already? Our government is in massive amounts of debt, and we're in debt. That can't be healthy economics.
You know, I was thinking about this on my drive into work this morning.
Maybe I'm thinking in far too extremes, but it seems this could be, in fact, a very slippery slope.
Follow me, briefly...
Consumer takes out loan to buy BIG house he can't afford. Government invents a way to help Consumer out of debt. Since the government is really the People, that means that WE are paying for Consumer's house, and what makes that different from what happend in Russia when they took peoples moneys and gave them to those who didn't have any? What happend to Earning, and working for things?
I realize that this is extreme, but fundamentaly, is it the same?
the thing is, its a feedback loop. If your in debt, and the government which is in debt bails you out by taxing other consumers that are in debt and increasing borrowing eventually the whole system would seem to get to a point resembling that of two homeless guys asking each other for change.
For precedents, you can check out the Savings and Loan crisis of the 70's and 80's and the Home Owner's Refinancing Act of 1933. Social Security even operates the same way.
the problem is that the government is taking your and my $$$ to bail out the big guys who are really going to get screwed by this whole mess. It is the banks and mortage companies (as well as the home building industry, which has a surpluss of millions of homes) that will get out of the mess.
Not extreme, but mostly correct Sarah. Your tax dollars at work.
And to pile it on, the money the gov't uses to bail out people means there's less money in the pot to spend on "worthy" programs like solving the healthcare issue, social security, medicare, homeland security, police & fire, education, national parks, roads & transit, disaster relief, medical & science research & funding, border security, etc, etc.
It boggles my mind sometimes how little architects know about business, gov't, and how the real world works.
The govt bail-out isn't a new concept either - usually happens once or twice a decade no matter who's president.
I'm not exactly sure how this bailout works, but I THINK (in simple terms) that some loans will get refinanced by FHA - most likely reducing monthly payments to help homeowner's avoid foreclosure, by extending the terms of the loans, so maybe you are paying for 40 years instead of 30 or something. And they will take your ARM and make it fixed at a low rate with no penalty. And these "bailouts" aren't for everyone, they are for people that have always made their payments on time, and have a certain amount of equity in their homes already - not every joe schmoe who took out a fancy loan. Disclaimer: above is what I THINK.
What it does for me that I am not too happy about - it still artificially inflates housing prices to that way beyond the average income. It erodes my cash savings by increasing inflation.
Don't keep savings in a savings account! The interest rate is a joke. Put it in an MMA (money market account) that has a interest rate matched to inflation!
the problem is real and it will impact the lives of many people, even those who have exhibited wisdom in their personal financial dealings. poor lending practices played a huge role is sending america into the economic depression of the 1930s and it could very well happen again.
in the boozy haze of the 1920s, credit (to buy stocks) was freely extended to nearly everyone because of the widespread belief that 'the market' would always continue to rise. the lenders of the era should have known better and many of them got burned as well as the average joe who fell for that specious line of thinking. after the market crash the federal government has little choice but to enact numerous rules on these lending practices (i.e., 20% cap on buying stocks on margin).
similar delusions have been percolating throughout the american mindset in recent years with regard to real estate investment/home ownership, ergo the recent emergence of the subprime market. the economic hardship generated by this could easily surpass that of the depression 1930s. financial instituitions and lenders should rightfully take the blame for much of this as many of them have a fiduciary responsibility to themselves at least...if not necessarily those people that they loaned money.
i suspect, however, that it won't be quite as obvious as the breadlines of that era. real estate is much more nuanced than stocks and a "crash" is not nearly as obvious. for instance, location still matters in real estate and a dollar invested in manhattan real estate will always be better than a dollar spent in bumblefuck, pennsylvania. additionally, housing still retains value beyond its monetary value in that it continues to provide shelter for occupants. unlike a stock, if the value of a home crashes the owner wouldn't necessarily look to unload the property.
i suspect that rather than a crash it will play out as a long term squeeze and a slow decline into compromised lifestyles for many. small decisions that will slowly lead to absurd circumstances such as people retaining ownership of large homes but being unable to properly heat them or even feed themselves. downsizing doesn't sit well with the proud & the optimistic.
LOL, that'll be the day. I'm not quite sure how this current instablity could lead to another Great Depression, i'm not saying it couldn't but i think your standard 1987-esque or 2001-esque recession is more likely.
wow, j, that's a pretty extreme libertarian position to take. i personally disagree with it on many levels, but to each, his own.
the matter of fact i disagree with in your argument is your contention that "a relatively small portion of the population" is causing the current crisis. i'll agree that the recent spike in home forclosures is related to a relatively small portion of society, but the larger issue of credit-related debt is much wider spread, and that is what is going to take the greatest toll on the economy.
now where i disagree with you on a matter of principle is that an eighteen year old is wholely responsible for the bad financial decisions that will affect him or her for the rest of his or her life. first, the credit industry is targetting this demographic, largely because they know how inexperienced they are with their finances. you know those guys on college campuses with the tents and the sign up for a credit card and get a free t-shirt pitch? our parents didn't have to deal with that crap. universities need to take a stand to get those guys off campuses, but the credit industry is in the pocket of university. the amount of greed around the whole mess stinks. and who are the losers? largely average middle class people.
their problem becomes everyone's problem when those people have to start filing for bankruptcy, and the economy slows to a trickle because spendable income is no longer available to buy that new hummer h2. it's all cyclical.
count on the government to bail your stupid ass out
does this piss anyone else off????
Instead of bailing out the morons that overextended themselves with no economic foresight, how about giving those of us that make our mortgage payments on time (or even overypay them) a bonus?
no, it doesnt piss me off... inflammatory threads offering nothing, filling up room on the intraweb does though... maybe congress can do something about that!
lletdownl
you in foreclosure?
becoming a "Rights Without Responsibilities" nation if you ask me. Pay your god damn bills. Everyone else has to.
no, but i do have a heart... anyone who honestly believes the mortgage (and credit card industries for that matter) are not predatory are crazy. And if no politicians are willing to tackle the real problems with the industry, this is the only responsible step left to be taken. Frankly, comments like 'pay your god damn bills, everyone else has to' piss me off the most. Be sure to remember you all believe that when you truly cant make ends meet anymore.
buyer ignorance?
I agree with you in that they should have addressed the real problem - not allowing the banks and mortage companies to due this type of predatory financing. There were signs the whole time that this would be bad for the economy. Unfortunately they are only doing what they are doing now to bail out the big players in the whole mortage mess.
A friend of mine was telling me about the hedge fund industry and how it is basically set up that the government is forced to bail out the big guys if something goes wrong due to the fact that so much of our $$$ in tied up in these things. Basically, if you are dealing in hedge funds, you cant loose.
Anyways, it does suck for the little guy, but they were playing with fire (and knew it). There is a reson I didnt buy a $800,000 house on my salary
If a house is foreclosed on, does that mean they will have to move into an ...... apartment????
I don't understand this phenomenon of homeownership in America, especially in suburban areas. The additional costs of upkeep can be astronomical.
the government can't bail your stupid ass out, but the federal reserve sure can, especially if you are a fat cat with a lot of money tied up in the stock market. oh and by the way, the dollar is now at an all-time low against the euro. may i suggest putting your money into foreign currencies rather than the stock market? or is that being anti-american?
j, that is a blind read of what is going on. this country has a major credit problem. it's not just the subprime market; it goes all the way up to the middle class and beyond. this rate cut is trying to encourage people to spend who are already up to their ears in debt. the only people that benefited from this rate cut were the wealthy who do not have money tied up in debt. when the fall comes, it's going to be that much harder now, and in the meantime, inflation is continuing to climb. i'm stunned by the stupidity of this move by the fed.
the fact that people 401k, mutual funds, etc are tied up in these loans, many of which were generated by the mortage companies to be 'flipped' by investors aint a good thing either
to put this debt situation into some perspective, consider the amount of debt you have personally - mortgage, student loans, credit cards, car payments, etc. that all amounts to money that you cannot afford to put back into the economy, leading the way towards a recession. so who is benefiting from this debt and driving the current illusion of economic expansion? banks and the credit industry are making a killing off of interest payments. now maybe you're into old school reagan-omics and really believe that that money is going to trickle back down to you. me, i'm not holding my breath.
how about keeping the oil flowing cheaper? ;)
money as debt. great movie
I love when people say lenders are predatory and evil. Just like the "big oil" companies are fixing the price of oil. They didn't hold a gun to anyones head and force them to take out a loan. Ignorance or greed is no excuse in my book.
"Fixing the problem" by tightening lending standards would have everyone screaming that the lenders are racist or classist or something like that.
Simple fact is that the public demanded easy money to live a lifestyle they couldn't afford. If you are living a lifestyle beyond your means thanks to credit cards and subprime mortgages you deserve to loose everything. Maybe then you'll learn.
On a related note, I'm also against the Fed cutting the rate by 50 basis points to bail out Wall Street.
reason why i dont have a credit card.....
i've seen my sister go through the whole foreclosure thing/etc cause her and her husband (ex) thought that buying a big home was "cool"...wtf....
rule of thumb..... use 2 checks per month to pay all your bills ...the other 2 checks are savings/extra
if i didnt need to have a shop space, i would buy a small house...and build a big garage....
b
i agree with you up to a point, aquap, and i think your point is particularly relevant with mortgages, but what about student loans?
frequently, student loans are presented to students as an "investment" in their future. you get into some debt to make more later on. i don't disagree with that. the problem is that many students are taking out ridiculous amounts in loans; architects with $100,000+ debt. so where do you draw the line? $20,000 in debt is acceptable? $40,000? most students particularly when they are 18 or 19 and making these huge decisions do not have any idea how much they're going to be paying per month after they graduate, how much they are going to be making after graduation, what $300/month means, etc. hindsight is always 20/20, but it seems to me there needs to be a much more intense education earlier in the process. that's where i fault banks and the credit industry (and universities) for starting people out in life without the tools to make better decisions about their finances.
it's also why i believe the credit problem is going to have a much larger effect on the economy than many anticipate. baby boomers are really blind to the massive debt problems 20-somethings are getting into. the baby boomers can only control the economy for so long; if the next generation is on very shakey economic ground, it does not bode well for the larger economy.
Too bad our economy is based off consumerism. Boomers are in massive debt themselves. How many boomers' retirement plan is selling their house, which just lost a lot of value?
Never take financial advice from a broker or realtor. Never. Ever.
So the feds go more in debt, raising our national debt, helping bail out Americans that made a stupid move with their money and putting them in debt?
Is it just me, or is this country completely "owned" already? Our government is in massive amounts of debt, and we're in debt. That can't be healthy economics.
we'll all be speaking chinese in 10 years anyway...
that's what figure.
^excuse me, that's what I figure
You know, I was thinking about this on my drive into work this morning.
Maybe I'm thinking in far too extremes, but it seems this could be, in fact, a very slippery slope.
Follow me, briefly...
Consumer takes out loan to buy BIG house he can't afford. Government invents a way to help Consumer out of debt. Since the government is really the People, that means that WE are paying for Consumer's house, and what makes that different from what happend in Russia when they took peoples moneys and gave them to those who didn't have any? What happend to Earning, and working for things?
I realize that this is extreme, but fundamentaly, is it the same?
the thing is, its a feedback loop. If your in debt, and the government which is in debt bails you out by taxing other consumers that are in debt and increasing borrowing eventually the whole system would seem to get to a point resembling that of two homeless guys asking each other for change.
For precedents, you can check out the Savings and Loan crisis of the 70's and 80's and the Home Owner's Refinancing Act of 1933. Social Security even operates the same way.
the problem is that the government is taking your and my $$$ to bail out the big guys who are really going to get screwed by this whole mess. It is the banks and mortage companies (as well as the home building industry, which has a surpluss of millions of homes) that will get out of the mess.
Not extreme, but mostly correct Sarah. Your tax dollars at work.
And to pile it on, the money the gov't uses to bail out people means there's less money in the pot to spend on "worthy" programs like solving the healthcare issue, social security, medicare, homeland security, police & fire, education, national parks, roads & transit, disaster relief, medical & science research & funding, border security, etc, etc.
It boggles my mind sometimes how little architects know about business, gov't, and how the real world works.
The govt bail-out isn't a new concept either - usually happens once or twice a decade no matter who's president.
I'm not exactly sure how this bailout works, but I THINK (in simple terms) that some loans will get refinanced by FHA - most likely reducing monthly payments to help homeowner's avoid foreclosure, by extending the terms of the loans, so maybe you are paying for 40 years instead of 30 or something. And they will take your ARM and make it fixed at a low rate with no penalty. And these "bailouts" aren't for everyone, they are for people that have always made their payments on time, and have a certain amount of equity in their homes already - not every joe schmoe who took out a fancy loan. Disclaimer: above is what I THINK.
What it does for me that I am not too happy about - it still artificially inflates housing prices to that way beyond the average income. It erodes my cash savings by increasing inflation.
Don't keep savings in a savings account! The interest rate is a joke. Put it in an MMA (money market account) that has a interest rate matched to inflation!
(most of it is in a money market)
the problem is real and it will impact the lives of many people, even those who have exhibited wisdom in their personal financial dealings. poor lending practices played a huge role is sending america into the economic depression of the 1930s and it could very well happen again.
in the boozy haze of the 1920s, credit (to buy stocks) was freely extended to nearly everyone because of the widespread belief that 'the market' would always continue to rise. the lenders of the era should have known better and many of them got burned as well as the average joe who fell for that specious line of thinking. after the market crash the federal government has little choice but to enact numerous rules on these lending practices (i.e., 20% cap on buying stocks on margin).
similar delusions have been percolating throughout the american mindset in recent years with regard to real estate investment/home ownership, ergo the recent emergence of the subprime market. the economic hardship generated by this could easily surpass that of the depression 1930s. financial instituitions and lenders should rightfully take the blame for much of this as many of them have a fiduciary responsibility to themselves at least...if not necessarily those people that they loaned money.
i suspect, however, that it won't be quite as obvious as the breadlines of that era. real estate is much more nuanced than stocks and a "crash" is not nearly as obvious. for instance, location still matters in real estate and a dollar invested in manhattan real estate will always be better than a dollar spent in bumblefuck, pennsylvania. additionally, housing still retains value beyond its monetary value in that it continues to provide shelter for occupants. unlike a stock, if the value of a home crashes the owner wouldn't necessarily look to unload the property.
i suspect that rather than a crash it will play out as a long term squeeze and a slow decline into compromised lifestyles for many. small decisions that will slowly lead to absurd circumstances such as people retaining ownership of large homes but being unable to properly heat them or even feed themselves. downsizing doesn't sit well with the proud & the optimistic.
Todays McMansions will be the multifamily housing of tomorrow. Or at least multigenerational. Heard it here first.
LOL, that'll be the day. I'm not quite sure how this current instablity could lead to another Great Depression, i'm not saying it couldn't but i think your standard 1987-esque or 2001-esque recession is more likely.
wow, j, that's a pretty extreme libertarian position to take. i personally disagree with it on many levels, but to each, his own.
the matter of fact i disagree with in your argument is your contention that "a relatively small portion of the population" is causing the current crisis. i'll agree that the recent spike in home forclosures is related to a relatively small portion of society, but the larger issue of credit-related debt is much wider spread, and that is what is going to take the greatest toll on the economy.
now where i disagree with you on a matter of principle is that an eighteen year old is wholely responsible for the bad financial decisions that will affect him or her for the rest of his or her life. first, the credit industry is targetting this demographic, largely because they know how inexperienced they are with their finances. you know those guys on college campuses with the tents and the sign up for a credit card and get a free t-shirt pitch? our parents didn't have to deal with that crap. universities need to take a stand to get those guys off campuses, but the credit industry is in the pocket of university. the amount of greed around the whole mess stinks. and who are the losers? largely average middle class people.
their problem becomes everyone's problem when those people have to start filing for bankruptcy, and the economy slows to a trickle because spendable income is no longer available to buy that new hummer h2. it's all cyclical.
In the grand scheme of things, is a minor depression a bad thing?
Couldn't the populace stand to consume less, by force or not?
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