This really chaps my ......
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Topic: This really chaps my ......
Posted By: oldpbnoob
Subject: This really chaps my ......
Date Posted: 18 February 2009 at 11:39am
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Great, so now I get to pay for everybody that took out a mortgage for houses that they can't afford. What the hell were my wife and I thinking when we bought a modest home that we knew we could actually afford, even when we were approved for considerably more?? So now, I get to foot the freaking bill for living within my means. Man am I pissed.
http://news.yahoo.com/s/ap/20090218/ap_on_go_pr_wh/obama_home_foreclosures - http://news.yahoo.com/s/ap/20090218/ap_on_go_pr_wh/obama_home_foreclosures http://news.yahoo.com/s/ap/20090218/ap_on_go_pr_wh/obama_home_foreclosures -
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Replies:
Posted By: Predatorr
Date Posted: 18 February 2009 at 11:45am
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Update, we are in trouble. My macro teacher calls this Intergenerational Theft. Basically, the government will issue bonds to pay for most of these bailout plans. These bonds will be paid for in time by more bonds. And more bonds. So the debt really never goes away. Unless, that is, somebody decides to tax everyone in America an insane amount of money. |
Posted By: brihard
Date Posted: 18 February 2009 at 12:08pm
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Pred, don't you realize that if your nation were anything other than the entity known as the United States of America, they would long since have defaulted on their debt and declared bakruptcy? U.S. government isued debt is now a house of cards. The bottom card has been taken away already, it just hasn't started to tople yet. Your nation is bankrupt. A ten trillion dollar debt is an absolutely ludicrous amount of money. America has no business continuing to incur a deficit. The rest of the world tolerates it and pretends the emperor isn't naked only because the remainder of the world's financial industries are dependent on the masses blindly continuing to accept the fiction of the American-centric world financial order. The financial practices of your nation's lending industry are equal in stupidity only to the fiscal policies of her successive governments for quite some time now. At this point I'd rather the entire system collapse and rebuild; we could have the world economy back on track within ten years. Unfortunately the world doesn't have the cojones to let the necessary happen. ------------- "Abortion is not "choice" in America. It is forced and the democrats are behind it, with the goal of eugenics at its foundation." -FreeEnterprise, 21 April 2011. Yup, he actually said that. |
Posted By: JohnnyHopper
Date Posted: 18 February 2009 at 12:25pm
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Same boat here. I'm also worried that my area may become a section 8 hell as the government doles out free homes that they bought. I'd rather face zombies than the random no warning crack attacks. It already sucks enough here with only a few houses and groups of young men standing around doing nothing from 11am to 2am. Thank God for the castle doctrine. ------------- My shoes of peace have steel toes. |
Posted By: Linus
Date Posted: 18 February 2009 at 12:32pm
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They bought the houses that they knew were beyond their means, so they should have to deal with losing the house. It'd be better for everyone if they got evicted--- they'd moved to a place that they could afford, and tax money that could be used elsewhere would be freed up.
"But that will hurt their credit". Too damn bad, they were the irresponsible ones. Why should the fiscally responsible citizens bail out the ones that are not? Now, I'm all for helping the people who got thrust into the situation, who are struggling to really try to do their job. THEY are the ones that deserve the help. If you got laid off and are struggling to make payments, then ok, you get help. ------------- 
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Posted By: oldpbnoob
Date Posted: 18 February 2009 at 12:38pm
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I guess what makes me the most mad is that people who overextended themselves and live in nicer houses than me are going to get to stay in these houses and get their payments lowered so that they can afford it? WTH? Instead, why don't they take what they can afford, and give them the option of moving to a lesser home? People made bad decisions and now, I get to live in my crappy (relative) house while these people get to live in much nicer houses.. AND I GET TO PAY FOR IT!. So, because I pay my bills, taxes and cover my expenses without help from the government, I get screwed. Nice! Guess I needs to go buy me a big ole house wit a poach , huge backyaad and a tree car gayrage. Aint gonna matter none if I caint pay fo it, cause da guvernmint is gonna has my back!
I think the worse part is that it is being taken from the 700billion Stimuloss that was done in Fall, so probably little if anything that anyone can do about it. It's a done deal. Statement is classic: "Obama said this change would come at "roughly zero" cost to taxpayers.". Umm, ok. Anyone want to explain this one to me?
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Posted By: tallen702
Date Posted: 18 February 2009 at 1:07pm
Bri, is the Canadian military a "don't ask don't tell" situation? Because I just might be gay for you after your last few political and financial posts. Seriously though. He's right. The US has been living a lie since about the mid point of George H.W. Bush's presidency. Our market isn't actually down. It's where it should be historically. Our who financial system has been inflated for 2 decades to the point where the smallest hiccup was bound to cause problems, let alone anything major like the mortgage crisis. That bad debt needs to go away the traditional way, by dropping the value of the market to the point where you'd be insane not to buy. The problem is that rather than making the individuals who made the mistakes live with the consequences, and making the banks that knew better than to give them loans, but did anyway, deal with it on their own, we're bailing them out. All this does is bring the values of those of us who are smart with our money down to the lowest common denominator. ------------- <Removed overly wide sig. Tsk, you know better.> |
brihard wrote:Posted By: oldpbnoob
Date Posted: 18 February 2009 at 1:19pm
| ^^^^^ So I get screwed again. Now, even though I have NEVER been late on my mortgage payments or other bills, due to bad loans by the financial institutions and the unavailability of cash, I may now have a problem refinancing my home to finally make some improvements. We have been putting these off for several years while we built some equity in our house. Gets better and better. |
Posted By: oldsoldier
Date Posted: 18 February 2009 at 1:23pm
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"Back in the USSA........" ------------- 
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Posted By: FreeEnterprise
Date Posted: 18 February 2009 at 1:47pm
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Its only been a few weeks... Give socialism a chance will ya... Its what we all voted for, remember? ------------- They tremble at my name... 
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Posted By: agentwhale007
Date Posted: 18 February 2009 at 2:12pm
But Adam Smith!  |
Posted By: Lightningbolt
Date Posted: 18 February 2009 at 2:20pm
| Musical chairs could be a possibility? Take people that foreclosed on houses that they couldn't afford in the first place and place them in another foreclosure house that fit's their income? It could potentially clean the pipeline up a bit. Just a quick brainstorm after reading the thread. |
Posted By: Bruce Banner
Date Posted: 18 February 2009 at 2:59pm
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I am witholding judgement until I get more facts, but here are two thoughts:
1. According to the press releases (as well as discussions during the election and since), the intent is not to rescue "irresponsible" homeowners, but rather to help responsible owners who fell on hard times. I don't know exactly what this means, but I can imagine, for instance, aid to people with reduced income due to job loss. Somewhat more controversial would be aid to owners with ARMs that recently escalated. That would lead to discussions about whether ARMs are responsible or irresponsible, and so forth.
2. Does it necessarily matter whether the homeowner is "deserving" or not? From a strictly pragmatic perspective, we ought to do what we can to stop an economic collapse. During the last year there have been two separate but related causes that are (IMO) primarily responsible for our current mess: credit shortage and dwindling property values.
When property values suddenly go down drastically, this has a very profound effect on the economy in many different ways. We are all accustomed to some variation, but when property values drop 15% in a year, that affects all of us, not just individual homeowners.
Similarly, credit shortages affect all of us, even if we aren't borrowing.
Now combine the two and add foreclosures and increased unemployment. When property values drop more than 10%, all of your "irresponsible" homeowners, but also a lot of people who were perfectly responsible, are suddenly owing more on their mortgage than the house is worth. When property values drop 15%, a whole bunch of people are in this situation. When property values drop 30+% (as they have in some parts), then a very significant chunk of the population owes more on their houses than they are worth.
When you are underwater AND facing other financial challenges, then walking away from the house suddenly seems like a good idea. We have already seen a lot of this happening. In the case of a walkaway, the property values just dropped a little bit more. More importantly, the bank lost money. That means that they now have even less money to lend for residential mortgages (or anything else), which aggravates the general credit crunch, and further depresses property values. And so on.
So - we can stand defiantly on the bow of the Titanic in moral judgement of the guy that didn't spot the iceberg, or we can get a bucket and start bailing, even if that means helping the people that led us into the crash.
I have little personal sympathy for those that make foolish personal financial decisions. I have even less sympathy for those who would allow our economy to tank out of spite.
I don't know if this plan will work, or whether we ought to do it, or do something else or nothing at all. But I DO know that the correct consideration has to be "will it work," not "will some fools be saved." ------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: oldpbnoob
Date Posted: 18 February 2009 at 3:15pm
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Again, so because some idiot in Central Florida paid $380k for a 1500square foot house with an ARM, and the house is now worth $150k (where it should have always been), I am supposed to pay to bail him out? We moved from CF 7 years ago and the housing bubble started to grow after we did. I really wanted to move back, but one of the reasons we didn't was because we didn't want to pay the inflated prices and get into a mortgage that we could not afford. Now if the bailout is to help people that may have lost their jobs... I am still not thrilled about it, but may have some sympathy. However, when they talk about lowering the value of the homes/amount of the mortgage to fit what the buyer can pay, this doesn't sound like it's going to be the case. Again, it sounds like bailing out people that should never have been approved for a house in the first place, or were over approved due to lax lending policies.
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Posted By: Mack
Date Posted: 18 February 2009 at 3:15pm
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While I am still mulling over most of what Bruce said, I have to comment on the part about "dwindling property values." I view them more as normalizing to where they should have been all along before government interference in the market and easy loan terms artificially inflated the values by disrupting the balance between supply and demand. Any government action aimed at maintaining those artificially high values (or that results in that) will only prolong the problems and perhaps cause them to reoccur. ------------- 
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Posted By: oldpbnoob
Date Posted: 18 February 2009 at 3:18pm
QFT! I tried stating this before in another post, but due to my lack of eloquence missed the spot.
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Posted By: Destruction
Date Posted: 18 February 2009 at 3:44pm
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LEGALIZE ------------- u dont know what to do ur getting mottor boatted Men are from Magmar, women are from Venusaur. |
Posted By: FreeEnterprise
Date Posted: 18 February 2009 at 3:56pm
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So bruce.
Did the governments focus on pushing banks into making easy loans to give "everyone" the right of home ownership, cause this mess?
You know the community reinvestment act. sponsored by groups like acorn.
------------- They tremble at my name...
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Posted By: oldpbnoob
Date Posted: 18 February 2009 at 4:09pm
Do not turn my thread into a Hannity regurgitation . Play nice or I will ask the mods to smite you with their God like powers.
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Posted By: Bruce Banner
Date Posted: 18 February 2009 at 4:10pm
I am not sure that is accurate. The "correct" value of property is decided by the market, which considers all known information. Property values were not "artificially inflated by disrupting the balance between supply and demand" - that doesn't make any sense, at least not in this context.
Supply and demand both respond to a variety of things - including government regulation, and not just Fannie Mae lending mandates or CRA rules. For example, if the income tax were instantly abolished and replaced with a consumption tax on everything except homes, the property values would skyrocket immediately. Those high values would not be artificially propped up, but would correctly reflect the new economic reality.
If the home mortgage interest deduction was abolished, property values would drop (IMO this would have a far more drastic effect on housing prices than anything we have seen so far). If a federal cap were placed on realtor commissions, property values would rise. If the interest deduction were extended to multiple homes (without current restriction), property values would rise. And so forth.
None of those property value levels would be any more or less "correct" than the other. They would all be where they were due to the combination of all known and relevant factors.
What WOULD truly constitute artificially propping up property values would be a mandated minimum sale price. Kind of like Manhattan rent control in reverse. But that is not what happened here. Yes, government action impacted the market. No, that does not make it "artificial propping." The government is a market player just like the rest of us, and the market responds to government action just the same as it responds to noise level, an extra bedroom or changing carpet fashion. It is an illusion to think that the government does not affect housing prices. IMO, Fannie Mae et al had far less effect on housing prices than a whole army of other current and potential government rules do or could.
Moreover, it is irrelevant. Regardless of WHY this is happening, and regardless of whether we think the new price level is more appropriate , the objective reality is that fast change is bad. It is objective reality that when housing prices drop a percentage amount greater than the level of equity held by many homeowners it is a very bad thing for the entire economy. If we were going to drop, it would have been far healthier to drop slowly, or better yet not drop at all, just slow the rate of increase to below inflation. Over the course of a few years, this would have gotten us to the same prices without the economic turmoil.
Change can be good or bad. Fast change is almost always bad. ------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: FreeEnterprise
Date Posted: 18 February 2009 at 4:15pm
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Old, don't be a whiner. You are sounding like your tagline... Seems to me if we had stayed at the 20% down for a home loan, a lot of this mess would have been adverted. ------------- They tremble at my name...
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Posted By: Bruce Banner
Date Posted: 18 February 2009 at 4:16pm
So... a federal mandate requiring a total loan-to-value ratio of 80% or less on all home loans?
------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: FreeEnterprise
Date Posted: 18 February 2009 at 4:21pm
Yes, that couldn't be "refinanced" to max out the equity, obviously. Not federally mandated, but a banking standard...
It would make people less likely to just "walk away" from their home, when they have to save up for years to be able to afford a house. Considering the median home price is around $275,000 now. ------------- They tremble at my name...
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Posted By: tallen702
Date Posted: 18 February 2009 at 4:24pm
Doubly QFT on this one. As I stated in my earlier post, the economy and ALL markets in the US were severely inflated due to the actions of various parties over the past two decades. If you bought a 1,500 sqft house for $400k, you weren't being responsible. I don't care how much you put down, how great an interest rate you have, etc etc. Unless that house has the best school district in the world and comes with a well in the back yard that magically fills with gold bullion every morning, you paid too goddamned much and THAT in and of itself is irresponsible. It only appeared to be a matter of supply and demand that was driving up prices but in all reality, it was the fact that people were willing to pay ANYTHING to get a house when they were never fiscally responsible enough to meet traditional mortgage terms. Even those that did go the traditional route paid too much in the past 3 years. They were warned that it was a housing bubble and they should have understood that this meant deflation was inevitable. I waited, hell, I'm still waiting because I know that people still think they're going to get far more out of their houses around here than they are actually worth. Here's what's going to happen when we start bailing people out of the housing crisis. Comp values will remain artificially high but the credit markets will go back to lending for the traditional mortgage (min 20% down at ~5%-6% for a 30 year fixed) but the people responsible enough to get that kind of money saved up and keep their credit high enough to get said mortgages are going to be too smart to pay for inflated comp values. So, the market will continue to decline and we'll have to throw good money after bad all over again. Credit crises never affect those with a good down payment, be it for a car, home, or any other kind of loan. The US needs to get back to traditional financial values. We need to start SAVING our money and living well within our means. We need to allow the system to reward the fiscally responsible and punish the financially irresponsible. This is how a free market works. It's even how a mixed free market is supposed to work. I can't wait for the values to drop even more around me! I'll be able to put my 20% down on a house and actually afford to live there rather than being "house-poor" like so many people are these days. The current crises suck for those who got caught up in them, but my credit is going up, my savings account is getting bigger, my business is booming, and all the things which were out of reach through no fault of my own just 2 years ago are suddenly becoming far more attainable. Let the market tumble! ------------- <Removed overly wide sig. Tsk, you know better.> |
Posted By: tallen702
Date Posted: 18 February 2009 at 4:27pm
I don't think the fed needs to get involved further than ensuring that the SEC does it's job and the banks stay honest. What really precipitated the whole mess was the mortgage brokerages working the way they did. They were worse than used-car salesmen. They'd get you a "liar's loan" to get the commission out of it and then hand off the bad loan to a bank. As I stated in my long post just above this. If we don't bail the situation out, people will still get loans. They may have to save some effing money first, but that is the responsible thing to do now isn't it? ------------- <Removed overly wide sig. Tsk, you know better.> |
Posted By: oldpbnoob
Date Posted: 18 February 2009 at 4:30pm
Interesting, thought only liberals called names...
Bruce, I am not a financial analyst, but I totally disagree. There may have been other factors, but I strongly beleive if banks would have had stricter loaning practices that the values of homes would not have gone up as fast and much as they did. Again, take Central Florida for instance. At no time was there a housing shortage, but home prices nearly tripled in 3-4 years time. If the banks would have been less loose with financing, people would not have been able to afford the excalated prices. If the market cannot afford the prices, they remain down. Lowered interest rates lowered payments getting people into higher priced homes. As the market heated up and they saw their houses skyrocket in value, people were selling their homes for ridiculous prices only to pay even more ridiculous prices for other homes. Now that the bubble has burst, we are supposed to pay for their greed and need for a mini mansion?
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Posted By: Bruce Banner
Date Posted: 18 February 2009 at 4:38pm
A "banking standard" you say. Whence cometh this banking standard?
------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: Bruce Banner
Date Posted: 18 February 2009 at 4:58pm
Hmm. There are many places in this country today, with today's deflated prices, where $400k will buy you an embarassing shack, and barely even that. There are places where $400k won't buy you any house at all. Simply declaring $400k for a medium house "too much" is meaningless and unfounded.
These numbers you guys keep throwing around are completely arbitrary. What buys you a massive mansion in one place buys you a studio apartment someplace else. Comparing them side by side is meaningless, because most people do not have the option to live anywhere they want. The market considers location more than anything else - you live in a place, tallen, where this is amply demonstrated by driving an hour in two different directions.
I am not sure what you mean here, but this strikes me as obviously and completely false. A credit crisis affects EVERYBODY. Individuals, companies, good credit and bad.
Moreover, credit crises obviously usually come hand in hand with higher unemployement (as we have seen here). Having made a down payment on your house won't save your job when your employer goes bust. You still can't make the mortgage payment. There are plenty of innocent victims in this housing and credit crunch.
I get annoyed at how this usage of the "free market" gets bandied about. Part of what has kept our economy stable for the last 70 years is tight regulatory control of the financial markets, including lending standards. Left to its own devices, the "free market" would NOT settle on a 20% down payment requirement. The free market would not require banks to maintain capital reserves. The free market would not prohibit kickbacks from mortgage bankers to realtors.
People toss about "free market" like they are longing for anarchy and all government intervention is bad, when in fact it is deliberate government regulation that has kept the economy stable and growing. Yes, we should harness market forces for our benefit. No, that does not mean that we should lift all regulation. ------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: Bruce Banner
Date Posted: 18 February 2009 at 5:14pm
This is obviously true. Easy access to cheap money increases prices. My point is that this is merely one of many things that impact housing prices. The interest deduction, for example. The specific impact depends on many factors, for instance, but for many people this deduction alone pays a full third of their mortgage payment. In theory, that deduction alone may be responsible for as much as a 50% increase in prices for some homes.
Highways and light rail. As these commuter networks expanded during the 80s, land that was previously very cheap became prime suburban real estate, often increasing tenfold in value within a few years. The same goes for the trend towards suburban corporate campuses rather than centralized office districts.
General economic conditions. When people have lots of money, property values rise - particularly in Central Florida, where there are vacation and retirement homes to be had. In the boom times those properties skyrocket regardless of lending standards. When the economy tanks, the vacation home is the first to go.
And so on. It is not hard to think of dozens of factors that have tremendous impact on housing prices.
If I were to pick a single culprit here, however, it would not be loan-to-value ratio standards, but percentage-of-income standards. Banks are supposed to make sure that your total debt payments for all debt stays under control relative to your income. The problem is that during boom times people and banks feel comfortable going to the max here, because incomes are generally on the rise. Then, when there is a downturn, things get tight even if you keep your job, simply because you didn't get the raise you were counting on (or, if you are a waitress or i-banker, your tips/bonus shrank). That's what puts the squeeze on, not the LTV ratio. Your mortgage payment doesn't care how much equity you have in your house. The mortgage payment gets paid from cash flow.
------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: JohnnyCanuck
Date Posted: 18 February 2009 at 7:23pm
\hijack\ I love that movie, orson welles was the man. ------------- Imagine there’s a picture of your favourite thing here. |
Posted By: oldpbnoob
Date Posted: 18 February 2009 at 7:57pm
Bruce, the numbers I was throwing around regarding value were actual and factual. I bought a house in 98 for $114k, I put $30k+ into the house and ended up selling it for $150k 3 years later. It sold 2 years after for $172k and was on the market 2 years later for $380k. It did not sell, but similiar houses in that neighborhood did. Several. Now am I supposed to feel sorry for individuals that paid those artificially inflated prices who cannot make their payments? Payments even I couldn't afford? Shouldn't the lending institutions, people who do this for a living, said "Hmmm, I wonder if that house should really be doubling in value in 3years? Maybe we should be a bit more careful about the loans we write." If you are saying the banks did nothing wrong because these people were able to afford the payments, than why aren't they? The banks screwed up, the buyers made bad investments and now you and I are paying for it. If they get a bailout, where's my upgrade? Oh, wait, I don't get one, because I planned ahead and made sure that even in a down market, as a major portion of my income is commission, I can still get by on mine and my wifes salary.
Oh, and keep in mind that is Florida, you can file bankruptcy and in most cases, keep your house and one car. Most people won't take this option, because they don't want to keep an over valued house, because they will lose their butts. So instead, we are going to revalue their house and now they get to not only stay in it, but get it for 1/2 price. Sweet. Guess, I'm the stupid one.
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Posted By: Evil Elvis
Date Posted: 18 February 2009 at 8:40pm
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Can we just "Hope" that all of this will "Change"?
If I'm bailing out all these dudes then I demand dibs on the stuff in their fridge and their wifes if they are hot. ------------- 
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Posted By: merc
Date Posted: 18 February 2009 at 8:52pm
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oldpbnoob, part of the problem with lending and inflation of home values was the govt telling the banks they had to lend...
my gfs dad bought her a condo (cash) as an investment and has lost ~30k on it so far, however as hes holding it the rent is paying his mortgage... A lot of people bought more than they could afford, a lot of lenders gave loans that were crappy to begin with, i say let the cards fall as they may and deal with it... im looking at homes in upstate NY right now that are on the market for 20k... $20,000, 20% down is $4,000 and 100$ a month... 3/4br can rent to college kids for 400-500$ a month easy. im really not adding anything to the post...i guess the point im making is, yea we got a crap deal for buying within our budget, but if you can spare some extra cash but something from someone who bought to much and dumped it. while they are getting hand outs to stay where they are we need to be looking for ways up. ------------- saving the world, one warship at a time. |
Posted By: Bruce Banner
Date Posted: 18 February 2009 at 8:56pm
I don't doubt the accuracy of the numbers. There have been many instances throughout history of real estate prices suddenly increasing or decreasing drastically. My disagreement with you here is your position that these higher prices were artificially inflated.
First, how do you know they were artificially inflated, rather than the prior prices being artificially DEflated? Who's to say what a house is "really" worth? Maybe $380k was the correct price, and you just got it at a bargain price?
Second, how can you declare this market effect "artificial?" As I said earlier, there are many factors indirectly playing in to the valuation of real estate by affecting supply and demand, and that have more impact on price than loose lending standards. Is easy credit any more or less artificial than a mortgage interest deduction? Heck, for that matter, isn't the very existence of mortgages (a legal artifice) the biggest enabler of all? Think how low prices would be if you had to pay cash in hand!
I am not sure that the point of this is to feel sorry for anybody, but frankly I have no problem feeling sorry for somebody who is about to lose their house because they got laid off, and the best replacement job they can get only pays half the wage. For instance. I don't know the makeup of the recipients of this proposed package, but I would not assume that they are all reckless fools.
Moreover, you seem very focused on the purchase price of the home. While this is part of the problem, it is not the main problem. The main problem is ARMs that recently flipped, resulting in suddenly increased mortgage payments. And here I share your frustration, as I find ARMs to be spectacularly irresponsible in the vast majority of cases.
I am most certainly not saying that the banks did nothing wrong. To the contrary, I think that aggressive lending is very much at the heart of the problem. This blame can be spread many different ways.
As an earlier poster pointed out, the mortgage brokers are basically used car salesmen, and they use very shady tactics to bully people into borrowing more than they can afford, often with ARMs or other evil things that many uneducated borrowers don't understand. They also notoriously leaned on appraisers to come up with high values to justify big refi loans. This misbehavior is/was compounded by the various mortgage buyers (Fannie Mae et al) going by a strict and simple checklist approach to determine whether a loan is "conforming" and therefore eligible for purchase.
If you snoop around, you will discover that the default/foreclosure rates are drastically lower with banks that issue and retain their own first mortgages.
Beyond the first mortgage, there is the second mortgage, and this is where the banks really stepped in it, IMO. A conforming loan generally only goes up to 80% LTV, but most banks will lend you an extra 10% on a home equity loan/line. The problem is that they assumes that your first must be ok, because it is a conforming loan, and assumed that this only takes you up to 90% LTV because you had an appraisal (from the first mortgage). If they didn't accept your prior appraisal they would get their own, but they would also lean on the appraiser to justify the new loan.
The old market forces at work, driving banks to issue riskier and riskier loans just to get the business.
And, of course, while banking regulations pretty much limit banks to 90% LTV, nothing said they couldn't lend you the last 10% unsecured. Which they did, based on your current or projected income.
And that's before we get to the really clever mortgage variations that would allow you to borrow more than the value of your house.
So yeah, I think the mortgage sector screwed up. I think they were blinded by fear of getting left out of the refinance bonanza that they threw caution to the wind.
But could you get by on just your your own, or just your wife's salary? The leading cause of mortgage defaults is divorce, followed by loss of employment.
I know plenty of people who think it is utterly irresponsible to be dependant on dual income. A friend of mine got divorced last year. When the divorce proceedings began, she realized that she could not afford her house on her income alone, and would have to sell. Devastation number one. Then, by the time the divorce was final the housing market had tanked, and she is deep under water on the house and now basically cannot sell. When they bought the house most people would have agreed that it was a rational purchase. A divorce, a housing slump, and a slowing economy later, the entire family is on the verge of ruin.
And, of course, we all know that people are losing their jobs. Many perfectly responsible people are struggling with their mortgages due to change in employment.
Every state has a homestead exemption for personal bankruptcy, and Florida's is the most generous of all. And perhaps bankruptcy is the correct solution, but that won't help the rest of us.
Because ultimately, this is not about bailing out individual homeowners, any more than TARP was about bailing out individual bankers. This is about stopping the downward spiral of the economy, and home foreclosures are one of the driving forces of that spiral.
Yes, it is frustrating to watch idiots get freebies while you worked hard and get nothing. But that is the wrong standard. We can point and laugh now as the fools are forced into homelessness and bankruptcy, but they will laugh right back at you when you join them after unemployment reaches 11% and home values have dropped an extra 30%.
This is not about helping fools but helping the economy. If we have to save the fools to do so, then so be it.
Will this help or work? I don't know - but I think they are at least on the right path, because it is pretty clear to me that spiraling home foreclosures could drag this economy a lot further down than we are now.
------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: Bolt3
Date Posted: 18 February 2009 at 9:04pm
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Bruce '16
------------- <Removed sig for violation of Clause 4 of the New Sig Rules> |
Posted By: Tical3.0
Date Posted: 18 February 2009 at 10:09pm
I read that and thought it was Mack
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Posted By: Mack
Date Posted: 18 February 2009 at 10:17pm
(Also, I would have come up with something wittier . . . like you better hope there's enough change in your couch cushions to buy food after the bailout.) Edit: Bruce, I'm going to have to disagree with you on this one. The law of supply and demand dictates that price movement will be based on the relationship between availability of an item and the want for that item. When availability is high and want is low, sellers are forced to drop prices to remain competitive, when the opposite relationship exists, sellers are able to raise prices and find out how much the market will bear. I should note that in the housing market, there are psychological factors that come into play as well: Namely, the fact that owning a house has been burned into everyone's mind as the "American Dream" and the repetition everyone has heard about a "house being an investment." As home prices climb, these facts tend to make people even more desperate to participate in home ownership. As far as an artificial inflation of house prices, I see it this way. Easy to get loans and loans to people who wouldn't have qualified under previous standards meant that more people could "afford" to buy homes. This increased the demand side of the equation without increasing the supply side. With more people competing to purchase homes, the sellers of such homes found themselves in the enviable position of having something a lot of people wanted; allowing them to hold out for higher offers. Such offers were forthcoming and housing prices skyrocketed. I would say that the effect on housing prices of the current economic situation provides sufficient anecdotal/indirect evidence to support such a theory. Do I think the housing/loan market is the only cause of our current difficulties? No, there are quite a few causes; but, most of them are related to the fact that we, as a nation*, do not seem to be very smart regarding credit and debt. What I do think is that the housing market was the trigger event and has the potential to repeat if the market is not allowed to correct; no matter how painful that correction may be. On a side note, I worry about the psychological effects if by some miracle this all works out and everyone keeps their homes, gets their jobs back and the economy zooms back to its previous level. I think a lot of people would use such an outcome as a justification to be even less frugal in the future since the government will fix it anyway if anything bad happens. *Including people as individuals, groups and the government. We, as a nation, do not seem to be very smart about debt. -------------
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Posted By: tallen702
Date Posted: 18 February 2009 at 10:30pm
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Bruce, the numbers I was posting were directly related to the average price of a 1500sqft house within a 30 mile drive of the incorporated limits of a major metropolitan area for 2007 ('08's data is not available yet for obvious reasons) Thus, on average, $400k bought you 1500sqft within a 30 mile radius of all major metropolitan cities averaged out. Obviously CA and NYC both bumped it up, but other major areas like Detroit dropped it down, so I think it's a pretty fair number to look at. Will 400k buy you a lot more in BFE? Yep. But the majority of the population of the US lives within close proximity to metropolitan areas and their suburbs, so again, it's a pretty fair number to use as a benchmark.
As for the free market. You know very well that I don't bandy that phrase about like many others. I know exactly what a truly free market is, and if you read my post clearly. I also stated that a mixed market which is founded on the free market principals (which our markets are) will behave in a similar way. There's no one thing to point the finger at in this situation and say "It was that which caused this crisis!" but the major culprits are clear. To claim that so-called "tight" regulations kept our financial markets in check over the past 70 years is to turn a blind eye to the completely different set of personal finance standards which the previous generations held and which the newer generations have forsaken. Back in 2000, my finance professor discussed the direction that the Gen-X "fast money" lifestyle would take our economy. He was 100% right in his call. Is part of the reason that the public could do so much damage to the economy due to a relaxing of regulations? Yes, but it still takes the greed and fiscal ineptitude of the masses to take advantage of those lax regulations. As for the credit crisis affecting everyone. It may affect you, it may affect people you know. But you can still get a mortgage with 3% down if you have good credit. You can still get a car loan under 3% if you have good credit. You can still get a line of equity or even a straight line of credit, but again, only if you have good credit! I've yet to see anyone turned away from a mortgage that they would have qualified for 10 years ago under the old standards. I know plenty of people taking advantage of the housing slump who have gotten mortgages. They've all put money down and they've all got good credit. Heck, my credit isn't stellar by any means, but I just got a new line of credit just last week. My fiancee has banks ready to shell out the whole cost of a new car, no down required, and it's not through a financing company related to the car company! My business, yep! We've got lines that we can dip into no problem and have banks willing to loan us the capital to expand. Again, we've got lots of liquidity and a good credit rating. Sure, not everyone is in the same situation we are, but it does go to show that if you have liquidity, a good down payment, and a good credit rating. The banks WILL lend you money. ------------- <Removed overly wide sig. Tsk, you know better.> |
Posted By: Bruce Banner
Date Posted: 18 February 2009 at 11:03pm
Whoa - big edit. :)
I agree completely. But neither supply nor demand are fixed, but are instead affected by a myriad of factors
Yep. Demand increases. That demand is very real. Does it matter whether you desperately want a house because Clinton told you so or because your dad told you so? Is one desire more artificial than the other?
No doubt. But how is this artificial? Or rather, how is this any more or less artificial than slightly different lending standards? By some standards, the home mortgages issued in the 60s and 70s were incredibly loose. By other standards they were bizarrely tight.
There are also different lending standards around the world, and not just for real estate. In Japan, for instance, it is only very recently that basically every loan was not 100% secured by hard assets (usually real estate). The "business plan loan" that fuels the entrepreneurs of America would be unheard of under those rules.
There is no objective standard for lending rules, above or below which movement (and effect) is "artificial." That is an artificial distinction.
Absolutely the market needs to correct. It is the PACE of the correction that is the problem. Change isn't the problem, but FAST change is the problem. Housing values decreasing 40% over the course of a decade - no problem. Housing values decreasing 40% over two years - disaster.
I share your fears, and this effect should certainly not be undervalued. But I suspect it might be overwhelmed by a countereffect - the shock of many who thought the future would always be bright, who now suddenly realize how fragile their existence really is. Hard to say.
Agreed.
------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: Bruce Banner
Date Posted: 18 February 2009 at 11:34pm
Agreed. $400k for midsize suburban home is a fair number. My point was that it is a fair number for an example, but to imply some type of absolute meaning of that (or any other) number would be a mistake, simply due to the drastic location-based value differential across the country, even within short distances.
Not to mention that if you look beyond the borders of the US (which we should) then the variation gets drastically greater. All of which gets back to my point: Declaring any particular pricepoint as "overpriced" in an absolute sense is incorrect.
I do, and my semi-rant wasn't really aimed at you. I got a bit carried away.
Clearly there are multiple causes and counter-causes at work, including a culture shift.
My point here was to point out that banking regulation (which has taken a beating in public recently, as well as in this thread) has been a force for good. A much more free-market approach to banking was a major contributing cause to the crash in 29, and thanks specifically to bank regulation that particular event will not be repeated.
People get carried away with the mantra of "free market uber alles" and forget/ignore that there are indeed times when reigning in free market forces is a very good idea. And nowhere is that more true (IMO) than in banking and financial markets.
As compared to the greed and fiscal ineptitude of the masses in the 1920s? While I do not dispute a recent culture change, I do sense a bit of Socrates coming on here as well...
I was taking a broader view. Unemployment is up. A contributing factor to that is layoffs. Many of those layoffs were caused by perfectly fine companies having their working lines of credit cut off or limited - not because the companies were particularly risky, but simply because the banks did not have enough money to lend.
To give you a sense of how bad it is, we have started including "general unavailability of financing" as an event of force majeure in big contracts. This is unheard-of. Failure to get financing has never, ever been an excuse in the memory of anybody I know. It is usually specificially called out as NOT an excuse to performance.
There are many good deal not getting done, companies going under, loans getting denied - not because of anything wrong with those deals, companies, or loans, but simply because of the flat out unavailability of money at the banks.
And THAT affects all of us.
I could name a dozen powerplants and infrastructure projects that were supposed to begin construction last fall. Instead, they have been twiddling their thumbs. These are good projects, and completely "shovel-ready" in the literal meaning of the word. They were all supposed to close their construction financing in July, August, or September. They all got the same call from their bank: "Sorry - no money left. Check back in the Spring."
THAT affects all of us.
The credit crunch is the ultimate problem here. This is why the gubmint is throwing tons of money at the banks, more than anywhere else. Fixing the banks has to be the number one priority, because without the banks we are all doomed.
Depends on what you mean by the "old standards." Again, you are arbitrarily picking a moment in time and declaring those standards the good standards.
Sure. Heck, I'm thinking of buying a bigger house just as an investment, since they are so cheap now.
You were fine until the last paragraph. Yes, banks are still lending money. But they are lending LESS. Much less. At the individual level I suspect the impact is limited, since the pool of qualified applicants just shrank a lot.
But at the big corporate level things have changed a LOT. Those powerplants I mentioned are all deals with gold-plated sponsors, plenty of equity involved, and generally good investments. The banks would love to invest - they just can't shake loose the money. We have had Fortune 500 companies call us in a panic because their bank just informed them that their $500MM line of credit will not be renewed, and they have not been able to find a replacement bank with that much capacity to spare.
Just in my little corner of the universe, those projects alone represent billions of dollars not getting invested in American infrastructure and not providing work to American workers.
This is a HUGE problem, and it affects all of us. ------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: FreeEnterprise
Date Posted: 19 February 2009 at 7:36am
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The real question is, did all of you on here, that saw how the market was obviously climbing at rates unheard of.
Did you go out and buy and sell a few houses? Or do you just look at the history now and talk about how you "saw" it but didn't react in time?... ------------- They tremble at my name...
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Posted By: oldpbnoob
Date Posted: 19 February 2009 at 10:37am
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Bruce,
I really didnt want to go point by point due to the ever expanding size. However a couple of points that I have:
1. Taking the example of Central Yes, I think the pricing in CF was artificial. I think that, because the prices are now back down to just above where they were before they skyrocketed. 30-35% annual growth on property values cannot be sustained. And if you look around Central Florida, there isnt a shortage of land!
2. As for property values dropping by 30%... Not where I live in Ohio they haven't. Our property values have stayed relatively flat. I would venture a guess that most people sitting in a house that they are upside down on, purchased within the past couple of years and IMO, made unwise purchases. I feel for them, but should I pay their burden?
3. Regarding your friend getting a divorce. I am truly sorry to hear that, but also think it's unreasonable to expect to sustain a lifestyle based on two incomes when 1/2 of it bails. I would expect divorce to be a major contributing factor. Unfortunately, again, that isn't my problem that people didn't choose their spouse wisely or haven't been able to work things out. I am already supporting enough "stay at home moms" and their bastard spawn down the street in the government assisted housing. Now I have to pay for divorcees losing their homes?
I may seem callous to you, and maybe I am a bit. Understand, I am not crazy about putting families out on the street because they lost their jobs and can't pay their (reasonable) mortgages. But how do you distinguish this from the boobs that made bad decisions? I can understand perhaps, giving some grace to those that lost their jobs, and temporarily lowering or maybe even suspending their payments, but to permanently adjust the value of their homes from a price that they agreed to pay is exceedingly unfair to those of us that chose not to play "keep up with the Joneses". If they want to lower the payments, make it temporary, but as soon as their salary hits the mark again or whatever standard they want to use, make the payments go back up! I guarantee no one will accept this, because they do not want to continue paying for a house that is now worth 30-50% of what they paid for it. They will still choose the option to walk away.
I think there was more, but I walked away from this for a bit to do some work and lost my place.
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Posted By: oldpbnoob
Date Posted: 19 February 2009 at 10:40am
I saw it and chose not to participate. More than anything, for the past 6 years or so my wife and I wanted to move back to Florida, but refused to do so because we knew that if we purchased, we would have gotten screwed and ended up upside down in whatever house we were in.
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Posted By: tallen702
Date Posted: 19 February 2009 at 10:56am
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Bruce, I think that the contract clauses about the availability of funds/credit are much more a caveat for safety's sake should things take a turn for the worse than any particular worries dealing with the current situation. As for the power-plants you're talking about which now have no funding to be built. I wonder how much of this is truly affected by a "lack of money" and how much of it is the banks hedging their bets.
With the exception of some local banks and credit unions, I doubt that very many banks were not guilty of getting us into the current crisis and are trying to look as conservative and responsible in their lending as possible. The credit markets have the ability to loosen up on their own over the next year or so. They will never be as loose and easy to access as they were over the past decade, but there is good reason to be glad that they won't! I also understand that the jobless rate is linked to the current credit crunch, but it goes much farther than companies not being able to take on new jobs because they can't get the credit to fund them. This, however, is a discussion for another thread. As for my finance professor. He is a very very very smart man who discussed the carry-over of over-inflated stock prices from the .com boom into the current (then 2000) market. He used to be a chef who took his money and made a fortune short-selling during the .com boom of the mid 90's and knew to get out when the getting was good. He had a very good grasp on the over-valuation of the market and kept himself very liquid. I'm sure he's doing just fine right now due to that fact. ------------- <Removed overly wide sig. Tsk, you know better.> |
Posted By: Mack
Date Posted: 19 February 2009 at 11:26am
I think Bruce and I are going to have to agree to disagree on the size/nature of the part that over-valuation played in the current crisis. That said, I agree with the part below about banking regulations 100%.
In fact I would postulate that it was the loosening of these regulations (in regards to easier credit) that have led us to where we are today. The banks looked at what was a well meaning (but, in my opinion, poorly conceived plan) plan for making housing more affordable and the greed factor kicked in when they realized the money that could be made financing/reselling such loans. Unfortunately, the collateral for such loans were the houses themselves, which leads me back to my opinions on over-valuation. The point about us being able to avoid a repeat of '29 is something I'm not so sure about. On the plus side, the interdependence of the world's economies today may help in avoiding some of the protectionist measures that helped make a bad situation worse back in the '30s. On the other hand, what the government ends up doing could worsen the problem. I had a Newsweek around here that had a few paragraphs on this in an article related to the bailout but I can't find it. In lieu of that I offer the http://online.wsj.com/article/SB123353276749137485.html - following . (It is an interesting read for those interested in economics; especially the parts about unions and state failure to enforce labor law.) -------------
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Posted By: FreeEnterprise
Date Posted: 19 February 2009 at 12:06pm
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Hey Obama, are you listening?
http://www.cnbc.com/id/15840232?video=1039849853 - http://www.cnbc.com/id/15840232?video=1039849853 ------------- They tremble at my name...
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Posted By: oldpbnoob
Date Posted: 19 February 2009 at 12:13pm
| I remembered, one of the points that I forgot when I went back and read Bruces reply. It was regarding bankruptcy. My point being, that we could have filed bankruptcy even though we were current on our payments and basically walked away from a ton of debt, while still keeping our house. But we didn't. We sold our house, terminated our lease vehicle (and paid penalties), cashed in part of a 401k and moved still keeping a ton of debt that to this day, we are still paying off. Does it suck? Yes. Am I asking the government to bail me out of my past stupidity? No. |
Posted By: FreeEnterprise
Date Posted: 19 February 2009 at 12:29pm
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This guy is a genius. (and thats not just because of his first name...)
http://www.glennbeck.com/content/articles/article/198/21647/ - http://www.glennbeck.com/content/articles/article/198/21647/
------------- They tremble at my name...
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Posted By: Bruce Banner
Date Posted: 19 February 2009 at 12:33pm
Probably a good idea. My apologies. There are couple of things that I truly can go on about, and this is one of them.
I think you and I just disagree on the meaning of "artificial." I will certainly agree that the increase in housing prices was unsustainable. I think we all knew that at the time as well.
There is significant variation. SoCal prices have dropped more than 40% in some places, whereas Manhattan prices have not dropped much at all. Here in Milwaukee we have seen negative change from 10-20% over the past two years, and we expect another 5-10% this year. Obviously, markets with the biggest runups have had the biggest drops, and the segments most hurt have been the upper-middle-class suburban family home. Based on appraisals, I have lost about 22% in my home in the last 18 months. I have lived in my house for 8 years, and I very possibly may be underwater at this point.
I certainly will not dispute that many of the sufferers here made unwise decisions in the past. But as I said in my earlier post: 1 - many of the sufferers did not make unwise decisions, and 2 - this is not about them anyway, but about staving off a total collapse.
The couple in question will not qualify for any aid at all, and they pay more taxes between them than most people in this thread combined - they will certainly not be a drag on anybody. My point there was simply to note that you claim you are being responsible while admitting that you depend on a two-income household. Given that roughly 50% of marriages end in divorce, I am not sure that betting on a coinflip constitutes responsible. Besides, people die. Would your wife's life insurance pay down the mortgage?
The large issue here is that it is easy for us to sit in judgement of the fools that are losing their homes, but the reality is that the overwhelming majority of Americans could go from total security to total poverty in a matter of months. Everybody laughs until it happens to them. Are there some fools out there? Yes - millions. But I refuse to paint with broad brush on this issue.
I share your frustration, but ultimately I come back to the central issue: This is not a rescue plan for homeowners, any more than TARP was a rescue plan for bankers. This is a purely selfish plan for self-preservation, and I refuse to go down in flames just to avoid bailing out a few undeserving fools.
------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: agentwhale007
Date Posted: 19 February 2009 at 12:35pm
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http://www.azcentral.com/news/articles/2009/02/18/20090218prez-whoqualifies0219-ON.html - So, flippers are not getting any help. Good move? |
Posted By: FreeEnterprise
Date Posted: 19 February 2009 at 12:46pm
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DUR!
"For this group, the federal government will provide matching funds to lenders to lower interest payments on loans. The plan requires that http://www.azcentral.com/news/articles/2009/02/18/20090218prez-whoqualifies0219-ON.html# - - payments be no more than 31 percent of monthly incomes."
Everyone deserves a home... I'm going to quit my job and get a job at the local paintball field... And my mortgage "by law" can't be more than 31 percent of my monthly income...
and again.
DUR! ------------- They tremble at my name...
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Posted By: oldpbnoob
Date Posted: 19 February 2009 at 12:56pm
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Posted By: oldpbnoob
Date Posted: 19 February 2009 at 1:05pm
Somewhat had me until this statement:
Unless she is mistaken, this is exactly what I am talking about.... |
Posted By: Bruce Banner
Date Posted: 19 February 2009 at 1:53pm
That is not the case. In a normal acquisition agreement, there are certain conditions and excuses that allow the buyer to step away from the deal. These are negotiated for each deal, but there is a fair amount of consistency from deal to deal. Prior to last August, proposing a "lack of financing" condition would get you laughed out of the room. Usually the exact opposite is spelled out. Starting last August, however, we had to begin proposing these exact provisions, and for the first time in my recollection people too us seriously. I now have two acquisition contracts with exactly those provisions in them - provisions that would have been completely and utterly unacceptable just last year.
This is a MAJOR shift in acquisition risk allocation.
Banks are required by federal law to maintain certain capital reserves, and their ability to lend is confined to a set multiple of those reserves, also set by law. There is a total max dollars of debt that a bank can have outstanding at any given time, and that limit varies depending on the assets held by the bank.
When the mortgage-backed securities tanked last year, an accounting rule called "mark to market" required all holders of these securities (including banks) to revalue them internally at market value, which was very low. As a result, many banks saw their assets shrink drastically in value literally overnight. As a result of that, their total lending limits shrank drastically as well. By law, the total amount of money that could legally be lent by banks dropped drastically and instantly.
This was not just cautious behavior, but a direct legal result of the housing collapse. Quite literally, the total pot of available money for borrowing in the United States shrank by a very significant percentage. As since the banks are always close to their reserve limits on purpose (they make money by lending, not by not lending), many of the commercial banks in the country were prohibited by law from lending any more.
This effect was broad and immediate. Right about the time of the Lehman collapse, every single deal I was working on (including the 12 powerplants above) had their financing pulled within days of each other. My talks with the bankers were the same each time - great project, want to lend, but no money.
You are right about all of that, but it does not change the reality that there simply is less money.
The "credit markets" is a very broad term. Some lending is tightly regulated, some lending not so much. Banks are very tightly regulated indeed, and they do not have the ability to unilaterally loosen their standards.
Agree on both counts - but people consistently and vastly underestimate the impact that "big finance" has on the entire economy. ------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: Bruce Banner
Date Posted: 19 February 2009 at 2:06pm
Not douchey at all. I put a lot of money into upgrades, and refinanced up to 80% 18 months ago. The house is worth more now than when I bought it, and 18 months ago it was worth more than what I paid + all my upgrades. Not sure if that last part is true any more.
Good for you. Seriously. Many people don't think about life insurance, particularly for stay-at-home mothers or part-time workers, or they don't get enough.
My point here was that "responsible" is relative. Very intelligent people can disagree on what constitutes responsible personal finance. FE and I, for instance, appear to disagree on the proper use of credit. My brother-in-law buys all his cars cash. Different people carry different amounts of insurance.
It is difficult to nail down a set of requirements for what exactly constitutes responsible behavior.
I agree with all of that. My sympathy level is relatively low across the board. Where we differ is that I honestly fear that we could have a situation in a couple of years that is drastically worse than where we are now, and I fear that we are on a downward spiral of housing prices, foreclosure, job loss, credit shortage, and perhaps even deflation that will drag us all down if we don't stop it.
I am not willing to watch that happen, even if it means that some fools get unjust rewards.
------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: Bruce Banner
Date Posted: 19 February 2009 at 2:19pm
Yeah... because I know I like to base my policies on the opinions of traders...
------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: oldpbnoob
Date Posted: 19 February 2009 at 2:35pm
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Posted By: Bruce Banner
Date Posted: 19 February 2009 at 2:45pm
Correct on both counts - and that's the point. A direct effect of an economic downturn is that more people need to sell or refinance their houses (due to job loss, relocation, whatever), and suddenly find that they cannot. Being underwater when things are good is no biggie - being underwater when things are bad can be a disaster. Your savings are wiped out just when you needed them.
This effect is a multiplier on other economic problems, which is why it is part of the spiral.
And, in fact, I was considering selling, just to take advantage of the down market. After the appraisal results, I may need to hold off on that plan.
And that also could happen, and I fear that as well.
We are in uncharted waters here, and intelligent people can disagree on the correct course of action. My only real point is that we ought to take action based expected results, not based on a value judgement of other people's behavior. ------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: FreeEnterprise
Date Posted: 19 February 2009 at 2:48pm
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Rewarding bad behavior results in worse bad behavior... ------------- They tremble at my name...
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Posted By: Bruce Banner
Date Posted: 19 February 2009 at 2:56pm
Applying simplistic analysis to complex problems leads to disaster.
Look, I can use goofy logic too. Hypothetical:
You are on a fishing trip with your son, out in a small boat. Your son is bored and decides it would be fun to make a hole in the boat with an axe.
Water starts rushing in, and the boat is sinking. Thankfully, you have a patch kit and can easily stop the leak.
Do you:
A: Fix the leak.
or
B: Not fix the leak, so that you and your son both drown, which will teach him a lesson.
------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: FreeEnterprise
Date Posted: 19 February 2009 at 2:59pm
good example of liberal "logic"...
Why would you have an axe in a small fishing boat. (conservative logic) ------------- They tremble at my name...
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Posted By: oldpbnoob
Date Posted: 19 February 2009 at 3:03pm
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C. Fix the leak and then beat the snot out of him for hacking a hole in the bottom of a perfectly good boat. Than make sure he pays for the repairs by doing chores for the next couple of years. And I wouldnt go out in a boat if both of us didnt know how to swim.
Sorry, couldnt resist.
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Posted By: FreeEnterprise
Date Posted: 19 February 2009 at 3:03pm
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But, I'll play...
Why would you let your kid wack at your small boat with an axe? As a conservative, I wouldn't let him get that far...
I guess because he went to a poor educational system like the public school system... And you being a liberal, you would let him... What would you do if he decided to hit you with the axe? survival of the fittest and all...
Why would your son be bored? If you were successful, you would be catching fish, and your kid wouldn't get bored.
------------- They tremble at my name...
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Posted By: Bruce Banner
Date Posted: 19 February 2009 at 3:04pm
I swear...
Did you notice the part where I declared the logic "goofy"? This was me providing an example of how insipid it is to oversimplify, by applying your oversimplification in a goofy manner.
As to the axe - maybe we are thinking different kind of small - I would expect to find a wide variety of tools on a fishing vessel, certainly including numerous axes. But details. Besides, it is a goofy hypothetical - go with it.
More importantly - I get the idea that you consider me "liberal." Assuming this is the case, and at the risk of hijacking the thread, what exactly about me makes you classify me so?
------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: Bruce Banner
Date Posted: 19 February 2009 at 3:04pm
That's what my dad did.
Wait, did I say that?
------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: PaiNTbALLfReNzY
Date Posted: 19 February 2009 at 3:04pm
In case you run into Dick Cheney while he's hunting. |
Posted By: Eville
Date Posted: 19 February 2009 at 3:05pm
Because you can. (libertarian logic) |
Posted By: Mack
Date Posted: 19 February 2009 at 3:12pm
Being responsible and knowing that I would be out on a body of water, I planned ahead and took swimming lessons and brought a life vest so I choose D: Put on the life vest and swim to shore while leaving those who didn't plan ahead and caused/contributed to the problem to their own devices. -------------
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Posted By: Bruce Banner
Date Posted: 19 February 2009 at 3:15pm
I presume you also obtained loads of insurance coverage for the boat and the boy?
------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: Eville
Date Posted: 19 February 2009 at 3:15pm
but they drove you and had their car keys in their pocket when they drowned. Your only reliable means of getting back to civilization is effectively 30ft under water, along with all of your survival and fishing gear. |
Posted By: FreeEnterprise
Date Posted: 19 February 2009 at 3:17pm
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And the water is just above freezing... Since its February and I'm in Ohio... ------------- They tremble at my name...
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Posted By: Mack
Date Posted: 19 February 2009 at 3:23pm
Just on the boy*, having it on both would arouse too much suspicion. *It's okay, if he's silly enough to hack holes in a boat, he's obviously not really my son. (The woman liiiiied!)
Not gonna happen. Rule 11 of horror movie survival is always drive yourself to secluded places in the middle of nowhere. (Plus, having issues with locking myself out of vehicles in my foolish youth, I always have a spare key handy.) -------------
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Posted By: oldpbnoob
Date Posted: 19 February 2009 at 3:25pm
I have to admit, I would have a hard time leaving my kid in a boat to die, thus preparing and making sure he knew how to swim as well would be a good plan. However goofy this analogy is, it does point to another basic problem with American society; Too many of us look at the goverment as a parent who is there to hold our hand and solve our problems when we get in over our heads. I think they should be treated more like the body guard that is there to keep someone from kicking sand in my eyes, run errands for me and make sure my car is warmed up for me in the morning so I can get to work, to make money, to pay him for the things he does for me.
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Posted By: Eville
Date Posted: 19 February 2009 at 3:30pm
and now your hatchet is gone. shame. |
Posted By: FreeEnterprise
Date Posted: 19 February 2009 at 3:31pm
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Bruce,
We can both agree that California's budget is a mess.
Do you think they should uncap the existing oil wells and use those revenues to help pay their ever expanding bills?
Or should they increase taxes to make up for the shortfall?
------------- They tremble at my name...
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Posted By: Mack
Date Posted: 19 February 2009 at 3:36pm
I LOLed pretty hard--pure win. -------------
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Posted By: Bruce Banner
Date Posted: 19 February 2009 at 3:42pm
I am not familiar with the budget. I am not familiar with the details of the California economy. I am not familiar with the background on the oil wells of which you speak. I do know that "increasing taxes" is a meaningless generalization.
So I can't really offer an opinion on this question.
------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
Posted By: Bruce Banner
Date Posted: 19 February 2009 at 4:55pm
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------------- Waste and excess are not conservative family values http://www.nytimes.com/ref/opinion/07opclassic.html - Nature is not a liberal plot http://pickensplan.com - A Good Energy Plan |
