|
Post by gailkate on Nov 9, 2007 10:35:11 GMT -5
I don't know what I'm hoping for from this thread, maybe just an opportunity to air my angst. We seem to be approaching a perfect storm (I know, a wretchedly overused cliche, but it may fit here) of grim economic forces.
Yesterday NPR and then PBS broadcast analyses that had me quivering. The huge number of empty houses bringing down property values across the country, the tight credit that caused those empty houses now causing business to slow, the rise in oil prices, the likelihood of our creditors - mainly China - deciding to move from dollars to euros, the Fed Chairman's tight-lipped forecast, the General Motors dive -- are we in trouble? Should we cash in our pitiful savings and light out for some 3rd World country where we'll feel rich?
|
|
|
Post by Jane on Nov 9, 2007 14:36:22 GMT -5
It's just scary (or "keery"). 1000 GM workers were just laid off in Lansing, adding to the generally dismal tenor of things here in Michigan.
|
|
|
Post by Brit on Nov 9, 2007 14:44:28 GMT -5
Well, over here, as a direct result of American's giving out loans left right and centre for house buyers, this has had a domino effect all round the world. A large UK Bank "Northern Rock" had to be rescued by the Government and Bank of England. All the news for the past two months has blamed America for the economic downturn. Some commentators suggest we (you actually) are heading for another 1930's style depression. I checked out Northern Rock on google and it linked me to this: en.wikipedia.org/wiki/2007_Subprime_mortgage_financial_crisis
|
|
|
Post by doctork on Nov 9, 2007 23:31:21 GMT -5
Ben Stein has written several upbeat columns in the Sunday NY Times, documenting how the sub-prime mortgage situation is less problematic than is made out in the news. The gist is that most mortgages are not sub-prime, and among those that are, "only" about 20% are in default. Though there is much misery for the displaced former homeowners, the risk is pretty well-layered and widely distributed amongst large professional investors who purchased the securitized mortgages.
I don't buy Stein's whole rose-colored glasses storyline, but his arguments have merit. I just hope that the administration doesn't engage in some expensive bailout (at taxpayer expense) to soothe the losses of wealthy professional investors, while letting the former homeowners who really might need/deserve a little assistance, languish homeless.
Liberal lending intended to increase home ownership among the lower income population has an ugly downside when the economy goes south. Many couldn't afford the loans they signed up for, especially when the rates and payments adjust upwards while home values, and jobs and salaries go down.
Many protections exist now that were not present during the 30's depression, so I don't believe we are headed for a repeat. We're a resilient populace, but the world is much flatter now, and US foreign policy coupled with indiscriminate borrowing don't bode well.
I don't think you have to sell out and move to a foreign country just yet - unless you were planning to do so anyway...
|
|
|
Post by Seattle Taz on Nov 10, 2007 21:51:50 GMT -5
Hoo boy, I'm going to have to do some reading and studying to understand the material the Brit is offering. I tend to trust foreign observations more than domestic, simply because an economy is a cultural consequence and such elements are always difficult to assess from the inside.
Generally my concerns are three fold.
1) When housing prices were rising I saw four problems.
a) they were building those oversized overpriced McMansions and selling them to starter couples because the value was going up so fast. The banks considered the difference between the purchase price and the supposed new higher value as money in the bank and went off to their[/] banks to borrow against it.
b) this discouraged any attempt to invest in lower priced housing.
c) in so many cases, the houses’ design and construction is so poor that they're not much use for any active living; underwired, underplumbed, and underducted for their size. Folks won't even be able to reduce room size, increase room number, or add bathrooms in the hopes of merging two generations of family or of renting a room or two out, to help with the mortgage payment. They’re also located in developments that restrict occupancy of 6,000 sq ft to the nuclear family!
d) many are badly built and will create a problem in the not-distant future. The contractors bring in a load of 2 x 6 for exterior framing, rip them in half for interior walls and rafters, slap a pre-hung molded door in every opening, get the rock up, and fill it with 'designer' rooms of furniture. It’s on the market 15 min later. Normally that's fine with me (except for those thin, uninsulated interior walls) and waverly roofs that are the legacy of rafters without perling, but the floor plans of these monsters are just awful, filled with faddish little "architectural features.” Code covers the minimum for the bones of the structure but not for any of the interior (except wiring and plumbing) and nothing about ease of maintenance or longevity of it or comfort within it. I fear we’re going to see some even worse fallout in the future.
2) Consumer debt is staggering. There is no[/b] room for shakiness. Jerry and I are buying this mfg home and putting it in a park in Auburn (still in King County, but south of Seattle). We’re borrowing 58% of the total we need. The bank was staggered. They had to consult left and right. They want us to borrow 90%. I pointed out we had a lousy credit record. Oh, no no no, they said, you don’t have any credit record. That’s different! Here, you can borrow money, lots of money, and you can buy this and buy that an… Sheeesh. I’m 63 y/o and have always paid cash. Do you really think we’re going to start borrowing now? As it is, I’m having to pay $23,000 over the 5 year life of the loan in interest. They even suggested that we would come out ahead if we borrowed from them to invest in stocks and bonds! I suggested that they could come out way ahead by not lending it to us at all but by investing it themselves.
(A truly tragic aside. One of the vendors in the Market, i.e. on my ‘beat,’ invested his savings during the dot-com bubble. He made so much money he borrowed against it to invest some more. When the bubble popped he lost his savings, had a staggering debt load, and had to pay taxes on all of the profit he’d made, even though he lost it again. He was able to go bankrupt on the one debt, but obviously not on the tax bill.)
3) National debt is staggering. We will not be prosperous again until our great grandchildren (my great great grandchildren) enter the work force. Worse, however, is that it’s China who owns our paper.
This because Bush wanted to have a big war, off the books where the voters wouldn’t feel it until he was safely out of office. He banned the sight of coffins of soldiers coming home dead, too. A young local woman lost her job when she took a picture of a plane load of coffins to send to her cousin. She just wanted him to see the respectful treatment the fallen soldiers received, with honor guard 24/7.
A local bus driver was fired from her job for giving the finger to Bush, who told a Republican Congressman, who used to be the sheriff and who therefore and thereby had the woman fired.
I’d be living in Dehra Dun right this minute if we could afford to fly the Montana family over once a year.
The Euro is strong. The Asian markets are remarkably strong and looking very good for future growth and strength; many of their transnational consolidations are comparatively old and are working very well. I worry that Bush’s antics have been just the whack on the rump that’s convinced folks around the world to disinvest in US leadership. Such shockingly bad behaviour has shattered any illusions about counting on the US. China is investing heavily in Africa. She’s already invested heavily in us. I don’t like the feel of that at all.
|
|
|
Post by joew on Nov 13, 2007 11:45:04 GMT -5
I really don't quite understand economics. Once in a while I seem to have a flash of understanding, but things like the subprime crisis are a mystery. But if I understood the Wikipedia article, it said that the subprime loans carry higher interest rates than normal loans because the borrowers are less crfeditworthy, making a higher risk for the lender, who attempts to decrease the overall risk by charging higher interest. So if the higher interest is being paid on the non-defauted loans, why is the crisis so bad? But even more, what sort of an idiot does a lender have to be to say, "You can't afford a loan at x%, so we'll lend you the money at x+y%?"
I also think I see a parallel to the stock market, where people get all excited during a bull market and buy stocks like mad. Then the bubble bursts, and they often sell at a loss. But then the market goes back up, and if they'd only held on they would have recovered their losses, as well as their lost profits. And if they had bought more stock near the bottom of the bear market, they'd have made a bundle. Same with the housing market. Prices will recover. The best thing to do is hold on and wait for prices to go back up.
People pay altogether too much attention to changes in the bottom line of the asset and liability statement. And they are looking way too much to make big bucks quickly through capital gains rather than getting income over the long haul.
|
|
|
Post by doctork on Nov 13, 2007 12:03:48 GMT -5
As I understand, the problem with sub-prime loans is that they have been securitized (packaged together and sold to investors) and rated more highly - ie, investment grade instead of junk bond - than was deserved, given the underlying risk.
"Teaser" low-rate adjustable mortgages were given to people who could not afford them once the rates adjusted upward. The presumption was that as long as prices kept rising, the homeowner could always sell the home at a profit, even if they could no longer pay the monthly payment. Now the house of cards is collapsing.
It appears that regulation of the investment raters has been lax, and banking regulators have been loose in allowing unqualified people to be granted loans they couldn't repay. In addition, mortgages are fairly complicated financial instruments to understand, especially "creative"ones. I think many consumers didn't understand exactly what they were getting into.
But you're right joew, it doesn't really matter as long as you have a stable mortgage interest rate, stable job, and stay put in your current home. However, if a family member develops an expensive illness, if you get laid off, if your job requires a transfer - all bets are off.
|
|
|
Post by gailkate on Nov 13, 2007 18:04:51 GMT -5
I started this and then got too bummed to pursue it for awhile. Everyone here is making fine observations about a combination of greed and short-sightedness. One thing I just can't comprehend is that there are supposed to be safeguards on the part of the lenders on behalf of their own investors. When I bought my first house I was confident that they wouldn't lend me more than I could repay. The house had to be appraised and they'd only lend as much as it was worth. I believed in this!! New buyers who were lured into questionable loans without being fully qualified should now be able to sue those lenders for fraud. Honestly, I think it's criminal. As I understand it, the issue has broad implications because the whole credit market gets tight - and we run on credit. So if you've got no connection at all to this sub-prime business, you may find yourself ruined by being unable to borrow for the trucks or seed or new computers you need or your kid's education, etc. And the stories about defaulters are not all about people thinking they could move into shoddy McMansions. As K says, a couple of health emergencies and you could be on the street. There are thousands of such stories, but our paper just carried one about a couple who had taken out a balloon equity loan when their daughter was diagnosed with a serious condition. They maxed out their credit cards, finally got this loan, another child got sick, and they're facing foreclosure. These people had met as waitstaff at a restaurant. They bought a typical small ranch in a low-end neighborhood. She quit to care for the sick child, so all they had was his income and minimal insurance. Further effects on the poor are the number of renters being locked out of housing that's been foreclosed through no fault of their own. There's no place for them to go. The ramifications are huge and as Taz said, our debt is leaving us vulnerable. But here's the good news: PBS's financial program (on here just before the Lehrer hour) had a guest hotshot last week whose predictions are remarkably accurate. He says there will be an upswing by the end of the year. Oh, one more thing. My answer to this is that whenever the markets start going crazy, some reasonably objective entity should just shut them down. "Take a sabbatical, guys, you're getting too squirrely."
|
|
|
Post by doctork on Nov 14, 2007 2:14:28 GMT -5
//One thing I just can't comprehend is that there are supposed to be safeguards on the part of the lenders on behalf of their own investors. When I bought my first house I was confident that they wouldn't lend me more than I could repay.//
That's the way it's "supposed to be." Used to be, you borrowed from the local banker who knew you, your company, and your neighborhood; he didn't loan to unreliable people, and certainly not for more than the property was worth, because he and his bank lost money if the loan went sour. Nowadays, the loan is sold off with thousands of others in a package, with falsely high investment ratings, with no one the wiser. Until a bunch of the loans go bad
//As I understand it, the issue has broad implications because the whole credit market gets tight - and we run on credit. So if you've got no connection at all to this sub-prime business, you may find yourself ruined by being unable to borrow for the trucks or seed or new computers you need or your kid's education, etc.//
Yup. Even worse, there is less money to lend because our domestic savings rate is so low, we have to borrow from the Chinese!
//And the stories about defaulters are not all about people thinking they could move into shoddy McMansions. As K says, a couple of health emergencies and you could be on the street. There are thousands of such stories, but our paper just carried one about a couple who had taken out a balloon equity loan when their daughter was diagnosed with a serious condition. They maxed out their credit cards, finally got this loan, another child got sick, and they're facing foreclosure. These people had met as waitstaff at a restaurant. They bought a typical small ranch in a low-end neighborhood. She quit to care for the sick child, so all they had was his income and minimal insurance.//
I believe the majority of $$$ in bad loans are to those who have not invested in spec houses or McMansions, but just ordinary family homes they had to stretch to buy, because they hold ordinary jobs. And the honest people you cite were actually trying to pay their medical bills by borrowing money (home equity loan) to do so. Sad to say, they should have kept the house with just one mortgage, and stiffed the hospital or clinic. I think in bankruptcy, they can at least keep their home, but discharge the medical bills. In the US, half of all bankruptcies are attributable to high medical bills
|
|
|
Post by gailkate on Nov 14, 2007 10:29:45 GMT -5
Lord, DrK, that makes me want to rage and cry. It's so fundamentally wrong. And the bankruptcy "reform" has limited what ordinary, responsible people can do along with the high-rollers who were abusing bankruptcy as a get-out-of-jail-free card.
|
|
|
Post by doctork on Nov 14, 2007 15:06:52 GMT -5
Lord, DrK, that makes me want to rage and cry. It's so fundamentally wrong. And the bankruptcy "reform" has limited what ordinary, responsible people can do along with the high-rollers who were abusing bankruptcy as a get-out-of-jail-free card. It makes me very angry too, which is why I keep on with my political activism for healthcare and health policy reform, even though progress is slow, and it can be very energy draining. Then I have to go volunteer in Afghanistan or Ghana or someplace, to remind myself that, flaws and all, we still have it really good in the US of A.
|
|
|
Post by Trusty on Nov 18, 2007 18:31:04 GMT -5
I really don't quite understand economics. Uhhh, joew, did working for the IRS have that effect on you?? ;D Or, were you hired because of it?? ;D (...having fun at your "expense"...) T.
|
|
|
Post by joew on Nov 18, 2007 21:22:38 GMT -5
You don't have to understand economics to tell people to give you money.
|
|
|
Post by gailkate on Jan 18, 2008 11:00:35 GMT -5
Time to resurrect this thread, as we have economic topics sprouting up with more to come. We may all be getting a "rebate" of sorts - money to spend recklessly. I love spending recklessly. I can't see how it will really help, but Krugman's article this morning www.nytimes.com/2008/01/18/opinion/18krugman.html?hp is somewhat comforting. He thinks things look bad, but he doesn't sound as worried as I am, so that's good.
|
|
|
Post by doctork on Jan 18, 2008 11:21:14 GMT -5
I think Krugman is right on; he probably read Ben Stein, and my posts #3 and #6.
I haven't decided about the merit of this tax refund, but I suppose at the least it depends on how "low and middle income" recipients are defined. It sounds like an election year perk tossed to the hoi polloi, in hopes it will buy a few votes in favor of continued Empire (corporatocracy). Dunno - the sun may already be setting.
|
|
|
Post by gailkate on Jan 18, 2008 11:58:41 GMT -5
I read they're talking about singles with incomes under $85K and couples under $110K, with no clear plan about allowances for kids and other encumbrances. I'm amused by Bernanke talking about immediate stimuli, as if the govt. can possibly send out checks at the drop of a hat.
$500 to $800 sounds like enough to spur some spending, but how much will be eaten up - literally eaten, as food prices continue to rise? How much will pay down credit card debt, which is what people should do but which won't encourage new business investment. It does look like a psychological boost more than anything else. The CPI is over 4% which is really troubling. The price of milk and eggs and bread must be seriously affecting families with several mouths to feed.
See, I'm talking myself into being fearful again. I should think about blowing $500 on books. That's it! We should all make a pact to spend our money on books from Dan and Tammy!
|
|
|
Post by joew on Jan 18, 2008 13:34:53 GMT -5
It's only money.
|
|
|
Post by rogesgallery on Jan 18, 2008 15:22:53 GMT -5
Taz wrote (with great eloquence)
Whoh That is an incredibly astute observation. Exalt Taz!!
I have been saying these things for years and have refused to work on the construction of this substandard housing. Taz left one thing out: Now that there is no longer lead in the paint there is nothing to hold them together when the occupants ignore or can't afford the proper maintenance. I do more repair on the newer houses than the ones built in the 50s and 60s. I could list the failings but I'll leave that for the poor construction thread that will someday appear.
|
|
|
Post by rogesgallery on Jan 18, 2008 17:34:12 GMT -5
Gail saidI think this statement and the banking debacle are an indication of the murky area we are in now as far as the general public goes. I hate to sound like a paranoid conspiritorialist, but I really have a hard time believing that this looming crisis was unforeseen. There are regular meetings of the world economic powers — The IMF and it's related organizations — www.imf.org/external/np/exr/facts/groups.htm Not to mention the Trilateral Commission, and The Counsel on Foreign Relations, and of course The Bilderbergers. And no one has seen the down sizing of middle class labor and manufacturing in this country as a precipitous move? And what about the flagrant cooking of corporate books and the inflated salaries of CEO's as a kind of an unspoken hush money.These people aren't stupid, they have to be aware of the perilous conditions that have been created in our economy. The appointment of the stooge Paul Wolfowitz to the head of the world bank pretty much cinched the conspiracy noose in my mind. Though I'm not sure if the US is attempting to retain it's status or if our leaders are complicit without seeming subversive. It is, as I see it, a calculated move toward a world economy. The US has too much, the rest of the world too little, and consumption in general is unsustainable. If you were part of an organization given control over the economic fate of the planet, what would your plan be to construct a world wide economic reorganization with as little conflict as possible? That said I don't think that the next ten years in this country will be easy, but then the last 100 have been pretty hard on the rest of the world. I certainly hope that the changes we see happening now will better balance the distribution of general wealth around the world without causing another cold war over Super Power status.
|
|
|
Post by rogesgallery on Jan 18, 2008 17:45:51 GMT -5
I read they're talking about singles with incomes under $85K and couples under $110K, with no clear plan about allowances for kids and other encumbrances. I'm amused by Bernanke talking about immediate stimuli, as if the govt. can possibly send out checks at the drop of a hat. Seems I remember something about the government packing, what was it 10 billion dollars, on pallets for overnight delivery to Iraq.
|
|
|
Post by doctork on Jan 19, 2008 1:12:11 GMT -5
Roges, just join me here in the Paranoid Conspiritorialist Corner (PCP - I like that acronym much better than Primary Care Provider). Only I think the goal is not balanced distribution of world wealth, but the opposite, increased concentration of wealth in the hands of fewer. The US and other western entities may need to duke it out with other contenders however, regarding nationality of the wealthholders. That may not matter, as it could indeed be a world economy, with a few wealthy and billions of poor and extremely poor, only some of them may be in North America, not just Africa and Asia.
Or maybe the rising Chinese and Indian middle classes will lead a revolt.
And yup, the Fed coughed up plenty of cash when needed for Afghanistan and Iraq. There were actually some legitimate reasons that needed to be done that way. Let's see what they can do here at home...
|
|
|
Post by gailkate on Jan 19, 2008 10:22:58 GMT -5
www.house.gov/paul/tst/tst2007/tst040207.htmI started trying to find a round number for our budget and got bogged down in various politicized reports. The White House and OMB will drown any reader in GovSpeak and cherry-picked stats. The above link will take you to Ron Paul's newsletter, which at least is entertaining. But his round number for the annual budget is 3 trillion. That's why I think McCain is making way too much of the 17 billion in earmarks he keeps talking about as a way to fix the economy. Bull -do. A middle-class revolt in China seems unlikely to me, as their willingness to put down any independent thinking is notorious. but are the old-guard leaders dying off? I don't know enough to comment. I'm just certain that we're headed for feudalism in new clothes.
|
|
|
Post by gailkate on May 11, 2008 19:19:08 GMT -5
I just got around to reading this column and it's a whiz-banger. I don't know how any of us can disagree with its main points, but probably I'll be wrong about that. Who Will Tell the People? By THOMAS L. FRIEDMAN Published: May 4, 2008 Traveling the country these past five months while writing a book, I've had my own opportunity to take the pulse, far from the campaign crowds. My own totally unscientific polling has left me feeling that if there is one overwhelming hunger in our country today it's this: People want to do nation-building. They really do. But they want to do nation-building in America.
They are not only tired of nation-building in Iraq and in Afghanistan, with so little to show for it. They sense something deeper - that we're just not that strong anymore. We're borrowing money to shore up our banks from city-states called Dubai and Singapore. Our generals regularly tell us that Iran is subverting our efforts in Iraq, but they do nothing about it because we have no leverage - as long as our forces are pinned down in Baghdad and our economy is pinned to Middle East oil. Our president's latest energy initiative was to go to Saudi Arabia and beg King Abdullah to give us a little relief on gasoline prices. I guess there was some justice in that. When you, the president, after 9/11, tell the country to go shopping instead of buckling down to break our addiction to oil, it ends with you, the president, shopping the world for discount gasoline.
We are not as powerful as we used to be because over the past three decades, the Asian values of our parents' generation - work hard, study, save, invest, live within your means - have given way to subprime values: "You can have the American dream - a house - with no money down and no payments for two years."
That's why Donald Rumsfeld's infamous defense of why he did not originally send more troops to Iraq is the mantra of our times: "You go to war with the army you have." Hey, you march into the future with the country you have - not the one that you need, not the one you want, not the best you could have.
A few weeks ago, my wife and I flew from New York's Kennedy Airport to Singapore. In J.F.K.'s waiting lounge we could barely find a place to sit. Eighteen hours later, we landed at Singapore's ultramodern airport, with free Internet portals and children's play zones throughout. We felt, as we have before, like we had just flown from the Flintstones to the Jetsons. If all Americans could compare Berlin's luxurious central train station today with the grimy, decrepit Penn Station in New York City, they would swear we were the ones who lost World War II.
How could this be? We are a great power. How could we be borrowing money from Singapore? Maybe it's because Singapore is investing billions of dollars, from its own savings, into infrastructure and scientific research to attract the world's best talent - including Americans.
And us? Harvard's president, Drew Faust, just told a Senate hearing that cutbacks in government research funds were resulting in "downsized labs, layoffs of post docs, slipping morale and more conservative science that shies away from the big research questions." Today, she added, "China, India, Singapore ... have adopted biomedical research and the building of biotechnology clusters as national goals. Suddenly, those who train in America have significant options elsewhere."
Much nonsense has been written about how Hillary Clinton is "toughening up" Barack Obama so he'll be tough enough to withstand Republican attacks. Sorry, we don't need a president who is tough enough to withstand the lies of his opponents. We need a president who is tough enough to tell the truth to the American people. Any one of the candidates can answer the Red Phone at 3 a.m. in the White House bedroom. I'm voting for the one who can talk straight to the American people on national TV - at 8 p.m. - from the White House East Room.
Who will tell the people? We are not who we think we are. We are living on borrowed time and borrowed dimes. We still have all the potential for greatness, but only if we get back to work on our country.
I don't know if Barack Obama can lead that, but the notion that the idealism he has inspired in so many young people doesn't matter is dead wrong. "Of course, hope alone is not enough," says Tim Shriver, chairman of Special Olympics, "but it's not trivial. It's not trivial to inspire people to want to get up and do something with someone else."
It is especially not trivial now, because millions of Americans are dying to be enlisted - enlisted to fix education, enlisted to research renewable energy, enlisted to repair our infrastructure, enlisted to help others. Look at the kids lining up to join Teach for America. They want our country to matter again. They want it to be about building wealth and dignity - big profits and big purposes. When we just do one, we are less than the sum of our parts. When we do both, said Shriver, "no one can touch us."
|
|
|
Post by Trusty on May 15, 2008 1:26:03 GMT -5
We need a president who is tough enough to tell the truth to the American people. Any one of the candidates can answer the Red Phone at 3 a.m. in the White House bedroom. I'm voting for the one who can talk straight to the American people on national TV - at 8 p.m. - from the White House East Room. I heard on the news this morning about all the countries that are looking to the next administration for the long-overdue truth. The desires of the American people have gone international big time.
|
|
|
Post by gailkate on Sept 22, 2008 9:24:41 GMT -5
I find it interesting that this thread started last November. After May we let it lag. I guess we just felt overwhelmed by one disaster after another and talked specifics like the rising gas prices. But in truth, the overall economic decline has been in the making for a long time,decades in fact - which is why the sudden rush to radical measures has me very worried. Some of you will be suspicious of anything printed in the Huffington Post, but please read it anyway. Then call you Congress people and tell them to Slow Down. www.huffingtonpost.com/jared-bernstein/watching-history-unfold_b_128116.html
|
|
|
Post by booklady on Sept 26, 2008 6:25:19 GMT -5
I'm getting very nervous.
Should we start putting our money in our mattresses?
|
|
|
Post by joew on Sept 26, 2008 10:44:27 GMT -5
I wonder if the $700,000,000,000 wouldn't serve the purpose better if it were given to the homeowners who are defaulting, which is supposedly creating the problem. Then they'd end up with their homes, and the institutions wouldn't have all the bad loans. But I suppose if this were a good idea somebody who knows something about economics would already have suggested it, and all the economists would have said, "Of course!" and the bill would be on its way to the President's desk. Whereas when you just bail out the companies, the homeowners are still facing foreclosure, aren't they?
IJDK
|
|
|
Post by rogesgallery on Sept 26, 2008 11:42:38 GMT -5
I find it interesting that this thread started last November. After May we let it lag. I guess we just felt overwhelmed by one disaster after another and talked specifics like the rising gas prices.
This thread may have started last November but the crisis was imminent a long time ago. First, when Metropolitan Mortgage failed in 2004 it was apparent that the lending industry was employing practices that were dangerous to the entire economy. Also if one company was employing those practices they were not alone. The Bursting of the 90s dot com bubble caused an almost immediate procession of cash and jobs from this country. This is one thing that the government could have and should have taken action against through tarifs and taxes. I just don't see how the financial world didn't see this coming. I'm getting very nervous.
Should we start putting our money in our mattresses? Yikes Booky! If your mattress isn't full yet you'll have to get in line at this point. Let me know if you need food. I'll send you a care package.
|
|
|
Post by rogesgallery on Sept 26, 2008 12:04:02 GMT -5
I wonder if the $700,000,000,000 wouldn't serve the purpose better if it were given to the homeowners who are defaulting, which is supposedly creating the problem. Then they'd end up with their homes, and the institutions wouldn't have all the bad loans. But I suppose if this were a good idea somebody who knows something about economics would already have suggested it, and all the economists would have said, "Of course!" and the bill would be on its way to the President's desk. Whereas when you just bail out the companies, the homeowners are still facing foreclosure, aren't they? IJDK I've heard thiis idea being bounced around. The fact is the money for any of these ideas doesn't exist at present. In fact we can't pay off what we currently owed before this crisis. If when the congress passes a bailout bill the treasury will print out money IOUs as needed and we will all be dead by the time anyone begins to pay them off. It's bandaid time. Some penicillin might be needed also. Hopefully generations of the future will learn a more lasting lesson from this than we did from our grandparents.
|
|
|
Post by doctork on Sept 26, 2008 19:52:36 GMT -5
I dunno if this will influence future generations, roges. This strikes me as another version of "I'm not surprised we shoot ourselves in the foot, just how quickly we reload."
I'm dating myself, but I was burned badly in a very similar mortgage crisis back in 1988 - early 90's (Silverado S&L crisis etc). I paid my mortgage just fine but had to sell my home that I had owned for 8 years at a price 10% below the mortgage balance. So I wrote a check at closing! No short sales or deed in lieu like today. Maybe Phil Gramm is right, we're whiners today - back then people just paid the bill if they owed it. And I had paid 20% down to boot and put $30,000 into remodeling the old place. Deja vu all over again today.
And then there is the gas crisis, though that has taken a back seat to the mortgage/financial situation at the present. We had the same thing in the 70's with many pledges to become energy independent through development of alternatives to fossil fuel. And here we are again.
|
|