No Subprime Bailout!
By Patrick on Wed, Mar 28th, 2007 at 2:08 pm | 170 views | rss | email this | add comment
Why should everyone who was responsible and did not borrow too much for a house be asked to bail out the gamblers who did?
This is the worst kind of government interference with taking responsibility for your own actions. Sure, some poor old people will be trotted out to get sympathy for the proposal to bail out the cynical gamblers who were flipping properties until they got burned. But there are better ways to help than redistributing the tax money from the rest of us to everyone who speculated on housing.
Check out http://patrick.net/housing/contrib/nobailout.html and please make suggestions on how I can make it more effective.
Patrick
Joined: April 6th, 2006
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I’d heard in FL builders are offering “abandoned” deposits in an effort to lure new potential buyers. And… whatever, I’m o.k w/that. As long as the incentives come from the industry, not the gub’ment I’m all about charity!
Joined: September 26th, 2007
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probably want to put somewhere in that sample letter that if there is a bailout that homes will conitune to be artifacially high. The bail out would price out forever responsible people. For homes to be affordable again many people will have to lose there homes.
These people can always buy a home, just a much cheaper one
Joined: June 6th, 2008
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The letter to our reps
should include
(1) No bail out ! We are on that page
(2) Stop the fraud, cash back apprasial fraud and blind multiple bidding fraud. Get the govt to investigate NAR.
Simple saying no bail out aint going to help stop all the other things that need fixing.
Joined: June 14th, 2005
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Please be rest assured that there will be a bailout of some sort, especially if things do get out of hand.
Joined: April 8th, 2006
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It’s pretty hopeless, they’re the majority.
I’d better start on those applications for Australian citizenship soon (right after I finish my taxes).
Joined: April 7th, 2006
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(2) Stop the fraud, cash back apprasial fraud and blind multiple bidding fraud. Get the govt to investigate NAR.
Right. Remember who is #11 on the list of lobbyiests.
http://www.publicintegrity.org/lobby/top.aspx?act=topcompanies
I sure hope there’s no bail out - but my cynical self says that there will likely be some “Save American/Californian Homes” act - with bailout money coming from renters and children.
Joined: April 6th, 2006
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Space_Acer,
Thanks for saying that. Many of the trolls that torment themselves here must have the impression that prices (and prices ALONE) are the only thing we take issue with. What they fail to realize is that prices are the end result of a rigged system. Thanks again,
DinOR
Joined: April 8th, 2006
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The better question might be how to subvert the process…how to work out a process where the taxpayers pay as little as possible while the FBs and the RE industrial complex pay as much as possible.
Joined: April 6th, 2006
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Why don’t the builders and lenders take some of that “First Time Buyers Assistance” money and beef it up with the “war chest” they are assuredly funding and use THAT for the bail-out?
See? Everybody’s hap hap happy!
Joined: April 28th, 2008
Posts: 0
Comments: 2
Dragged out of the previous thread because no one reads those, do they?
DinOR: “appropriately diversified among asset classes”
“sleep like a baby”
“no such thing as a free lunch” (yawns)
So it’s boring. So what? I don’t invest my money or my client’s money for excitement. If I want excitement, I go sailing in a gale or skydiving. I invest to make money, not so I can study the financial pages or troll stock sites ad nauseum looking for an edge. I would rather go for a walk than read the business pages. The business pages are the equivalent of People magazine for those who are more interested in numbers than blond Hollywood bimbos.
Actively managed funds/portfolios don’t HAVE to outperform year in and year out to establish their value to clients. Even one break out year can have a meaningful impact to your net worth over time.
It could but it may not too. If you’ve got negligible net worth, then sure it’s worth trying to shoot the lights out. Try it while you’re young because, if you win, you could be set for life while, if you lose, you just have to work a few more years or a little bit harder. But nobody whose portfolio is even a relatively small multiple of their annual income should be aiming for “break out years”. If your portfolio is 5x your income, trying for a home run (let’s say a coin flip for doubling or halving the portfolio) is somewhere between expensive entertainment and just plain nuts.
Punchbowl, since no one here has shared that they will be inheriting huge gobbs of cash is your position that if we were born without money then we weren’t meant to have any? Younger investors SHOULD be more aggressive! Why is that such a revelation to you?
Younger investors should be more aggressive. Did I say otherwise?
The media has the tail wagging the dog by being solely focused on expenses.
An unpleasant fact about expenses is that they are a constant drip-drip-drip that will still blow a hole in your portfolio. 1% a year sounds so minimal, so irrelevant, so “what the hell, that can’t hurt”. Over a working life, say 40 years, 1% a year cuts about 1/3 out of the ending value of a portfolio. You need to get really lucky with “breakout years” or “breakout funds” to make up for that sort of haircut.
Peter P: My instinct tells me that a passive, buy-and-hope, index-investment strategy is not very good.
Your instinct is wrong. Passive buy and hold index investment strategies have a history of producing better results than a very large fraction of other strategies. Think 50th percentile after 1 year, 75th percentile after 5 years, 90th percentile after 10 years, 99th percentile after 20 years. Hope is what’s required by non-indexers: the very low probability hope that they will somehow beat the index.
Joined: April 8th, 2006
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I still think there’s a way to convert “FB help” into debt peonage.
Joined: April 8th, 2006
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Punchbowl,
Excellent post. Thank you for posting here.
If I wanted my *investments* to be exciting, I would play craps in Vegas.
Joined: June 14th, 2005
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Passive buy and hold index investment strategies have a history of producing better results than a very large fraction of other strategies.
What history? We have been in a giant bull market for how many decades?
Are the results risk-adjusted? With a low-drawdown strategy one can use leverage to multiply returns effectly.
Not investment advice
Joined: June 14th, 2005
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Moreover, many funds are after non-correlated returns, not index-beating results. Why are the indexers comparing oranges to apples?
Joined: April 8th, 2006
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NYT does the stereotype black people foreclosure story - with attractive, artfully light black people.
http://www.nytimes.com/2007/03/28/nyregion/28debt.html
Joined: June 14th, 2005
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Over a working life, say 40 years, 1% a year cuts about 1/3 out of the ending value of a portfolio.
IF that 1% gets you 2% of excess return, who cares?
Joined: April 8th, 2006
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Peter P,
If a 10% fee would consistently get me an extra 11% return, that feewould still be worth it. That a separate issue from arguing that a 1% fee is irrelevant to cumulative returns.
Joined: June 14th, 2005
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That a separate issue from arguing that a 1% fee is irrelevant to cumulative returns.
Of course. Only the ends matter.
Joined: June 6th, 2008
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Astrid said:
“NYT does the stereotype black people foreclosure story - with attractive, artfully light black people”
You should have seen the CNBC story on how loans were being yanked… It wasnt some minority poor person either. This was all upscale mansions.
Major massive mansion! Woof!
Joined: April 8th, 2006
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-light
+ lit
Sorry for any confusion
Joined: April 28th, 2007
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Patrick, you should include something about how ‘losing a home to foreclosure’ is not the same as being homeless. Anyone saying that these people are going to be out on the streets is full of it. The majority of them still have the jobs they had when they bought the house. They just return to the rental market.
Also, what the government MIGHT do to hasten the recovery is have a guarenteed 3 month ‘window’ for people who mail back their keys before they have to move. 3 months rent free while they find a new place to live isn’t so bad, plus it screws over the lenders and not the tax payers. And it’s what would happen ANYWAY as it takes forever to evict people. If they set up a ‘window’ program that let them off the hook for long enough save up first/last month deposit before booting them out, and promised an EZ payment schedule for their debt forgiveness tax, it might help the FBs face up to what’s coming faster.
Joined: April 6th, 2006
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“Show your NOD and get the first month rent FREE!!!!”
Love it!
Joined: April 6th, 2006
Posts: 1
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Punchbowl,
Last time, o.k?
I think you’re confusing “preserving wealth” (critical mass) and g r o w i n g wealth? Yeah, charging people 100 bps. for a return they can get themselves at www.treasurydirect.gov probably DOES look expensive!
I can’t imagine anything more boring (yes boring) than a book of old conservative clients. They belong working “with that nice young man from the bank” not a brokerage firm. (That’s where nobody notices a muni is called/matured until AFTER an excess of cash shows up in the client’s mmkt). Hmm? Let’s check the acct. activity page. Oh! Maybe those annoying e-mails from that pesky bond dept. ARE important. THEN we’ll figure out how to redeploy the assets!
But I sure wouldn’t want to interrupt anyone’s walk.
I’m done.
Joined: April 30th, 2007
Posts: 0
Comments: 1736
We will need to deal with a bailout because we are social animals.
I don’t think Patrick’s idea of no bailout will get much traction. When massive foreclosures happen, what people like Patrick worry about is not whether he can take advantage of the situation and get a cheap house, but whether he can hold down a job that will pay his mortgage. Even if he has saved up enough $$$ to buy a house free and clear, he’d be worried about crime spurred by the skyrocketing unemployment rate.
I don’t care about the housing price going up and down, because one can always position his investment correctly to take advantage of the situation either way. But I do care about the employment rate. I don’t want to deal with a 30% unemployment rate, a place with 30% unemployment rate is simply not safe to live in. Neither do I want to deal with massive financial collapse, if you have enough financial stake, you won’t like this idea either.
So if things are ugly, I am pro bailout. Bailout doesn’t mean that FBs get to walk away debt free, they will still lose their homes, blemish their credit scores (which is a big event in a post-crisis environment). Anti-deficiency for main residency is already a sort of built-in bailout. FDIC, SIPC are other forms of automatic bailout. A society without bailout at all is simply a scary society and I won’t want to leave a dime there, because it may be my money, not the FBs’, that will go down in the next crisis.
The ultimate function of the government, is to step in as the lender or guarantor of last resort to keep the society stable.
Joined: April 30th, 2007
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I am not referring to subprime particularly, because it may be contained, it may not be. If it proves to be self-contained, then fine, let the subprime market crumble who the heck cares?
If it spreads, then we will have to come out with a reasonable bailout plan acceptable to most, not all, parties.
Joined: January 2nd, 2007
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No Bailout and they should have to wear a scarlet letter type of I.D. I was thinking a T-shirt with a monitoring device that signals if they take it off. It should say” FB’er I participated in the Housing Bubble.” Or ” Ex Flipper.. Easy Come Easy Go.”
OT applied for a apartment this week awaiting application approval. I must be the luckiest person or something. I found a 1/1 in Brentwood 700-725 sq. ft. in a good area Between Barrington and Bundy 5 min from Santa Monica and 10 min from the Golden Triangle (Beverly Hills) for $1200 a mo. I thought moving back to So Cal would be astronomical but I’m finding some rental bargains if you look hard enough. Bonus, it’s in a rent control area. The outgoing tenant told me some of the tenants who’ve been there 7 + years are paying $700 a month because of rent control.
Joined: April 6th, 2006
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OO,
I actually disagree. I think Patrick has already had an impact. Like a lot of folks here I’ve read Caroline Baum for YEARS! Never have I heard her go at a topic with such conviction. It’s the kind of affirmation one gets from already seeing the concepts in print BEFORE weighing in on an issue.
I don’t think she travels in circles where people know what a loan work-out or loss mitigation are? I mean she really ripped into these “players”.
Joined: April 6th, 2006
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HK,
No, no you’re not.
Joined: April 30th, 2007
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DinOR,
I don’t mean that the government should step in right now, because after all it is just the subprime, so far. People gamble and lose their money, BFD.
What I am referring to is, when subprime starts to spread, what should we do? At that point, I am not so sure if the government should stand at the sideline and let the panic take over.
Senators who are making subprime bailout an issue are just trying to win over some marginal votes. I won’t take that too seriously.
PS. I hate Hillary with a vengeance, even though I despise Bush with almost the same conviction, I will gladly vote for Bush 3rd term than Hillary. That uber bitch just gets on my nerves whenever she opens her mouth.
Joined: October 28th, 2005
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How about start with this a$$hole
I’m sure that there are enough of them still out there….lets turn them upside down and shake all the $$$ out of them; there is your bailout!
Joined: July 30th, 2007
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No bailout for no one. NBNO.
If there would be a bailout why didn’t they tell me a few years ago.. instead of renting, I would have bought a couple of houses then, and I’d seek a bailout now.
Why didn’t the government regulate then? Didn’t they hear of no doc loans then?
Are we not living in a market driven economy? My health insurance premiums have soared in the last few years and am I expecting the government to subsidize it???
My suggestion to the sub-prime borrower: sell your home at a loss, go rent or go live with your mom, do your day/night job, eat, sleep and forget your american dream.. why do you need a house anyway? you work 8 hours a day, commute 2 hours a day, you spend about 12 hours a day away from your home…all you need is a place to come back in the night and leave for work in the morning. And of course the weekends you need. So why did you pay a ridiculous price to buy a home you could not afford. When someone gave you a nodoc loan, you knew you got something that you didn’t deserve….
This housing market needs to crash to come to sustainable levels…type in a home address in zillow.com and see the home price graph ….you’ll know what i mean
sorry for the rant.
Joined: October 28th, 2005
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Senators who are making subprime bailout an issue are just trying to win over some marginal votes. I won’t take that too seriously.
They certainly lost my vote!!!
PS. I hate Hillary with a vengeance, even though I despise Bush with almost the same conviction, I will gladly vote for Bush 3rd term than Hillary. That uber bitch just gets on my nerves whenever she opens her mouth.
If Ron Paul is running for president, he’s got my vote! He is aginst all this wasteful spending and wants to abolish the federal reserve.
Joined: June 18th, 2007
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The outgoing tenant told me some of the tenants who’ve been there 7 + years are paying $700 a month because of rent control.
How ironic–home “owners” with ARMs have to deal with escalating monthly payments while renters get to “lock in” a low monthly payment with artificially low inflation adjustments. My next apartment will be in a rent control area–you get the housing inflation hedge without the mortgage albatross.
Joined: October 28th, 2005
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All these subprime people are hopeless anyway.
Lets say we paid off the mortgage for ALL of them.
In 2 years you would find most of them got a fresh HELOC, quit working, bought a new car, boat, plasma, and are once again facing foreclosure with some shitty subprime loan. AGAIN. Am I wrong?
Exactly, and not only that, they will be back here trolling around telling us we are all JBR’s!
Joined: March 23rd, 2006
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Comments: 2103
I have my doubts that a subprime end-user (ie, FB) bailout will occur to any degree of significance. As a cynic, just think about this. Who are these FBs? They’re the peons of this credit Ponzi scheme. They likely (I have no data to back this up) don’t vote to a high degree, and they have no influence in the government. Grandstanding blowhard Dems like Dodd, Frank, Schumer, etc. are currently calling for a bailout, but they are just posturing to give themselves more kind-hearted liberal street cred.
In the end, a bailout requires the rest of Congress to go along, and Congress is in the pockets of corporate America, who doesn’t give a rat’s a$$ about bailing FBs out. They’d say, sacrifice this group - there will be a new crop of FBs to replace these suckers. The true bailout will be when this whole thing leads to real problems with the banking industry and the investors who will be holding the MBS bag need a bailout. Then there will be both a need and the influence in Congress to make it happen.
Joined: October 28th, 2005
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We will need to deal with a bailout because we are social animals.
I don’t think Patrick’s idea of no bailout will get much traction. When massive foreclosures happen, what people like Patrick worry about is not whether he can take advantage of the situation and get a cheap house, but whether he can hold down a job that will pay his mortgage. Even if he has saved up enough $$$ to buy a house free and clear, he’d be worried about crime spurred by the skyrocketing unemployment rate.
How come we didn’t have a bailout for the stock market crash? Many people lost alot of money and we didn’t see much of a crisis! Most of the people that went into foreclosure had very little stake in the house; maybe just a few mortgage payments which they would have spent on rent anyway. These people can just go back to renting.
If there is a bailout, there will be an avalanche as this will push more people over the edge that are already overstretched but otherwise managing and others who get paid off the books will see a free lunch and throw in the towel as well. There would be no way to really verify who isn’t able to pay. There will be a whole new level of fraud! A bailout would be a serious disaster IMO.
Joined: April 30th, 2007
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Comments: 1736
Most of the subprime FBs are new immigrants or illegal immigrants who don’t even get to vote, at least this is the case in California. Therefore, I don’t see a bailout targeting subprime debtors as a consideration that our power elites would even entertain. The subprime debtors are going to bite the dust no matter how you cut and slice it.
However, when massive amount of subprime loans (mind you, at least 20% of total mortgage amount taken out in California since 2004) go into default, somewhere up the financial food chain will be affected, maybe CFC, WAMU will be on the hook, maybe Bear Stearns, Citi will be in trouble, at that point, a bailout plan may start to make more sense.
Then, as layoffs in the financial industries and housing-related industries start to spread, and the alt-a and prime debtors start to have trouble paying their mortgage, I am sure a general bailout plan will be a very likely venue at that point.
I already heard from a friend that the some insurance companies are already asking their employees to take a general paycut of 15%-20% across the board, no layoff yet.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
The subprime bailout may be important, but we must be vigilant against other attacks on reason:
http://tinyurl.com/32kjea
Some science-type is saying that beef is bad.
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
allah,
Nice link to that loser’s craiglist post. WTF is the “Wall Street Financial Corp” ??? Given Mr. Brancaccio is from Joisey, it’s probably a money laundering front for the Sopranos!
Joined: April 28th, 2007
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Kind of big news on the economic front: the bond yield curve un-inverted itself this week. Kind of funny since even the mainstream business media is talking about a recession now.
My guess is that we are finally starting to see the effects of China diversifying their holdings. They still have $200B/yr of dollars they need to invest, but they have started buying Euros with half of it, instead of all long US bonds. I think this was at least part of the reason the 10 year was so low.
This is good for JRBs, because increasing interest rates are sure to cause homes to drop more. On the other hand, when you finally do buy, your mortgage rate is going to be higher.
Joined: April 28th, 2007
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Comments: 190
I agree with skibum on the bailout thing: FBs will not get a bailout, if the problems spread to the big banks, they will get bailed out.
Joined: June 14th, 2005
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Comments: 15465
This is good for JRBs, because increasing interest rates are sure to cause homes to drop more.
Increasing interest rate may cause prices to go higher because people on the sidelines will have an excuse to act soon.
Joined: October 28th, 2005
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Comments: 1320
Nice link to that loser’s craiglist post. WTF is the “Wall Street Financial Corp” ??? Given Mr. Brancaccio is from Joisey, it’s probably a money laundering front for the Sopranos!
Skibum,
You would think at a time that they’re talking about a taxpayer bailout that you wouldn’t see anything like this anymore, but it’s still all over the place! “Wall Street Financial Corp”, maybe the reason wall street isn’t buying anymore loans is because they find it more profitable to cut out the middleman and originate the loans themselves (WSFC)…..and since there is talk about a bailout, it’s just another incentive for them to continue business as usual!
Joined: October 28th, 2005
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Allah, there was a massive dotcom bailout. Greenspan dropped the rate through the floor to flood the market with liquidity. As was mentioned in a previous thread, market-wide P/E ratios never returned to historical trend lines. So we have an irrational housing market and *still* have an irrational equities market. Meaning, if we have a true recession/depression, it could totally devastating.
Careful Jon, I only made that last paragraph.
That wasn’t a taxpayer bailout going directly to people who lost money. I lost a good chuck of my money in the stock market, I haven’t seen any checks in my mailbox.
Joined: April 30th, 2007
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Comments: 1736
allah,
that will be the same way with the FBs, even if there is a massive bailout, these FBs won’t see a single check mailed to them, instead, they still have to mail their key back to the bank.
Don’t forget the Bush tax cuts, who do you think will pay for these short-term tax cuts? Dropping rates to the floor means making money free, money is by nature expensive, if the government is making it free, who is going to pay for it? The result of making interest rate drop is INFLATION, inflation is a sort of consumption tax.
Bailout almost always comes in the form of inflation. People who owe money still owes, just that they owe less in terms of purchasing power. People who ought to go bankrupt still do.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
Owning a home means you need a basicially stable income FOREVER. It just cannot happen for 100% of households.
You can surely change jobs if you have a mortgage. Just make sure you make more.
That should obviosly be part of the Sierra Club/Green platform. To ENCOURAGE RENTING. TAX WRITE OFFS FOR RENT! Really the ‘2 mile commute’ to work is an awsome lifestyle AND environmentally friendly.
Long commutes mean time for audio books.
Joined: April 7th, 2006
Posts: 3
Comments: 1160
You should have seen the CNBC story on how loans were being yanked… It wasnt some minority poor person either. This was all upscale mansions.
Major massive mansion! Woof!
Did it feature the guy featured in this Onion video?
http://www.theonion.com/content/video/immigration_the_human_cost
Joined: October 28th, 2005
Posts: 0
Comments: 1320
that will be the same way with the FBs, even if there is a massive bailout, these FBs won’t see a single check mailed to them, instead, they still have to mail their key back to the bank.
That’s not what the liberal politicians want. They want to rescue the FB’s from foreclosure. In other words, after the 1 lbs bag breaks from stuffing 10 lbs of $hit into it, they want to duct tape it with our tax dollars.
Don’t forget the Bush tax cuts, who do you think will pay for these short-term tax cuts? Dropping rates to the floor means making money free, money is by nature expensive, if the government is making it free, who is going to pay for it? The result of making interest rate drop is INFLATION, inflation is a sort of consumption tax.
Very true, but if the rates are dropped to the floor again, the dollar will be history.
Joined: April 7th, 2006
Posts: 3
Comments: 1160
In the end, a bailout requires the rest of Congress to go along, and Congress is in the pockets of corporate America, who doesn’t give a rat’s a$$ about bailing FBs out.
Apparently you didn’t see my lobby link.
NAR, Freddie Mac, and Fannie Mae.
Bail out city here we come!
Joined: April 30th, 2007
Posts: 0
Comments: 1736
Home ownership is the #1 tool in social engineering. It is for social stability. It is the best way to have everyone pledge their loyalty, whether by choice or not, to the existing way of life, so that no Lenin can easily amass enough number of people around him to topple the existing social order.
Nobody likes to live in a neighborhood full of renters, because renters don’t care, they may trash the home, pick up and leave tomorrow. So encouraging home ownership is for social good. Stability, or the feeling of stability has a price tag.
Home ownership is also a more expensive way or renting, which means more industries can benefit from it, the mortgage lending industry, the realtors, the MBS bankers, the interior designers, the landscapers, the list goes on and on…Renting kills most of these industries and discourages employment. Why do you need an interior designer or landscape artist if you are just renting?
So there is nothing wrong with subprime market which helps a different breed of people to achieve their share of the dream and not become a destabilizing factor for the rest of us. However, the risk should be priced in. The only thing wrong with the subprime is that the risk is NOT priced in. If they were charging subprime borrowers 10% more and can get away with such loan, I am all for it.
Joined: June 15th, 2007
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Comments: 760
Whoops, I got stuck on the last thread. This oughtta do wonders for those subprimers and Alt-A folks needing appreciation.
Latest S&P Case-Shiller Home Price Index numbers are out. Charlotte is the only city not declining. Looks like Shiller is doing a victory lap in the press release. DinOR should be happy — Seattle finally (barely) turned negative and Portland continues to decline.
“The annual declines in the composites are a good indicator of the dire state of the U.S. residential real estate market,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC. “ The 10-City and 20-city Composites are both showing negative annual returns, a striking difference from the 15.1% and 14.7% returns they reported this time last year. The dismal growth in the 10-City composite is now at rates not seen since January 1994.”
The decline in the returns of the composites is led by Detroit and Boston, starting their year with annual declines of 6.9% and 5.6%, respectively. Seattle and Portland – having shown some resistance to the sharp downward trend - have reported their second consecutive flat or negative monthly returns. With Phoenix and Tampa now reporting negative annual returns, 11 of the 20 metro areas are now in year-over-year decline.
Joined: July 5th, 2005
Posts: 119
Comments: 4739
So there is nothing wrong with subprime market which helps a different breed of people to achieve their share of the dream and not become a destabilizing factor for the rest of us. However, the risk should be priced in. The only thing wrong with the subprime is that the risk is NOT priced in. If they were charging subprime borrowers 10% more and can get away with such loan, I am all for it.
Yes. The gross misalignment of risk and reward is simultaneously the biggest single cause and most unjust macroeconomic consequence of the housing bubble.
–If Greedspan had not lowered FF rates to 1% and held it there for nearly 3 years, we would not be where we are today.
–If Greedspan had actually tightened reserve requirements and set minimum lending standards vs. shamelessly pimping option-ARMs at the worst possible moment, we would not be where we are today.
–If Congress had not raised the cap gains exemption in 1997/98 to $500k/250k and relaxed it to include any flip-house held for 24 months, we would not be where we are today.
–If the GSEs, FCBs & hedge funds had converted $Trillions of toxic loans into MBS/CMO paper (thanks to perceived low risk/implicit taxpayer underwriting), we would not be where we are today.
–If there had been a clear personal financial and/or legal downside for originating NINJA loans and actively encouraging fraud on the lenders’ part (i.e., having to personally make good on the defaults), we would not be where we are today.
Instead, we got a perfect storm of reckless borrowing, pass-through risk, vanished lending standards and endless bidding wars, where the market-clearing price was set by irrational speculators and unqualified borrowers. A complete systemic failure –mostly by government– to properly align risk with reward. Classic moral hazard scenario: privatize profit & socialize risk.
The only thing worse than the mess the government already created would be for it to bailout these crooks and idiots by levying a direct or indirect tax (inflation) on the rest of us. Sadly, it’s in its nature to do just that.
Joined: April 6th, 2006
Posts: 1
Comments: 1687
EBGuy,
You’re a mensch!
I can’t expect BA folks to be doing back flips over this but in time they’ll come to appreciate this was a real hurdle! It proves that NO PLACE is immune and just b/c your further back in line for the “initiation” don’t go gettin’ the idea it will hurt any less!
“Thank you sir. May I have another?”
Joined: July 5th, 2005
Posts: 119
Comments: 4739
LOL! Reason and accountability is not one of the qualities many women have to begin with.
Huh??
Joined: April 6th, 2006
Posts: 1
Comments: 1687
HARM,
Now THAT’S a post! Christian Weller said in an interview earlier today that he actually felt the bubble started in the mid-late 90’s. When you lay it out as logically as you have, there were any number of places we could’ve pulled over and gotten a taxi!
Joined: January 1st, 2008
Posts: 0
Comments: 0
Thanks for opening this important topic. If the bailout is seriously discussed in congress I think we should try to steer it in the right direction rather than opposing it. It may be the opportunity to end the unjustified perks that not only the true homeowners, but also the 0 down investors and speculators enjoy.
I personally believe that any mortgage interest writeoffs and Prop 13 protection should apply to the primary residence only. Any profit from the sale of a primary personal residence should be fully taxed, it’s a profit as any other after all. The extra federal taxes collected could save the troublem banks and the extra local taxes could help save many troubled families in the neighbourhood. In the meanwhile the house prices could gently return to the mean and stubborn renters would start buying again. How can any reasonable polititian seriously not consider this kind of bailout?
Joined: July 9th, 2005
Posts: 0
Comments: 41
A bailout is having your cake and eating it too!
What about all the people that hung back and played by the rules?
Should they be punished for acting sanely and not purchasing, while the insane are rewarded for their excesses and living beyond their means?
(Hurls a chocolate chip cookie at his neighbor’s house in disgust).
Joined: July 21st, 2008
Posts: 0
Comments: 0
I think the real estate bubble will turn this country into a depression not a recession. but wait there’s more
All the bad “juju” the USA has sowed under the guise of “terrorism” and with “Operation Bite” coming April 6th to Iran, planet earth is in for some big changes.
It has only been 400 years since Jamestown was settled (1607) and in the grand scheme of things that is but a speck in time.
Along with FB JBR POS LOL NIMBY NINJA DINK WASP SOL FU ad nauseum -the letters USA will become “U Sorry Azzes” for the way we have behaved since stealing this land from the Indians. Yes “We the People” ahem “illegal immigrants” stole this land-FACT !
Do you believe that our ancestors got title insurance ?
Our lives as we know them are in for a change.
The big easy life is coming to an end I fear.
I am preparing myself by being armed and hoarding water.
Would like to see more info on how to live in USA after the apocalypse hits.
Quit talking about what etf to buy or sweat about the FDIC or negotiations on a home. Discuss how to build a teepee.
How to hunt and kill for food. Crops to grow thru a nuclear winter. Alt medicinal therapies. How to play and bid bridge slams. Proper methods of deciding who should live when supplies dwindle. Cannibalism? How to measure radiation. How to test if water is safe to drink.You folks are smart I know you can help PLEASE
This is an urgent appeal to impart your knowledge to help with important life sustaining info before the www goes offline.
FWIW I will start by saying something to help like-minded people who want to survive
1- It might not be wise to live anywhere near east LA
TIA bruceb
Joined: April 8th, 2006
Posts: 15
Comments: 4854
All this reactionary yakking make me want to reconnect with my progressive roots. See you all later.
I think I’m going to make a $30 contribution to the Edwards campaign.
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
TOS,
The “JBRs” aren’t the only ones pi$$ed off. There are millions of “real” homeowners who have paid their fully amortizing mortgages diligently, resisted the temptations of MEWs, and pay their fair share of taxes. Do you think these people will also stand by and let their tax money go to bailing out irresponsible FBs?
Besides, this whole subprime bailout drivel is way too premature. The subprime mess is only the first card to fall in this whole credit-housing bubble house of cards. There will be much much more to come shortly. You ain’t seen nothin’ yet.
Joined: October 28th, 2005
Posts: 0
Comments: 1320
(Hurls a chocolate chip cookie at his neighbor’s house in disgust).
Hey don’t waste those man! They may be a valuable commodity some day.
Pay no attention to TOS, (s)he is just trying to taunt you. A bailout of FB’s is too complex and would cause more problems than it will solve. I really don’t think it’s going to happen.
Joined: September 21st, 2005
Posts: 45
Comments: 4425
tOs
Appealing to reality with half-truths again are we?
* Yes there will be a bail-out, probably both nationally and in many states.
* No it won’t do shit to help the FBs. The majority if they get anything directly at all will be mere tokens; I’d be surprised if it were even $1,000 per.
* Most of the bail-out will go directly to the investment banks and other big bank lenders.
* Some states will be aggressive in their bail-outs, but most of that will go to the poor who bought houses, not the working-class or middle-class who bought houses. “Poor” is a very very low threshold. We’re not talking about anyone who theotherside sold to — those people will get very little to no help.
* The whole thing will be named something Orwellian, like “The Responsible Borrowing and Lending Act”.
…and finally…
* After it all theotherside will still be here, spouting anomalous studies and half-completed financial math which proves that somehow the “bail-out saved all home-buyers” and that “it’s always a good time to buy”.
Joined: April 7th, 2006
Posts: 3
Comments: 1160
What about all the people that hung back and played by the rules?
Should they be punished for acting sanely and not purchasing, while the insane are rewarded for their excesses and living beyond their means?
Are you kidding? This is America!
-Bill Clinton’s acceptance speech to 1992 Democratic Convention
Joined: June 22nd, 2007
Posts: 0
Comments: 311
OO Says:
> Home ownership is the #1 tool in social engineering.
> It is for social stability. It is the best way to have
> everyone pledge their loyalty, whether by choice or
> not, to the existing way of life…
One of the reasons that people in San Francisco are so liberal is that we are the only major city in America with a majority of renters. There is a statistically significant correlation between left wing wack jobs (like the guys who say that cell phone antennas are slowly melting people’s brains) and renters. Most people that call themselves “activists” (a synonym for nutball) are renters…
> So there is nothing wrong with subprime market which
> helps a different breed of people to achieve their share
> of the dream and not become a destabilizing factor for
> the rest of us. However, the risk should be priced in.
Subprime lending is a bad idea since most (but all) people don’t change. If a 40 year old guy has gone BK twice and been in and out of AA twice I’ll make the bet that he will go BK again (and/or start drinking again). On the flip side the guy that has never made a late payment at 40 will probably die (baring Alzheimer’s) without making a late payment…
P.S. Earlier in the thread someone mentioned the “one paycheck away from homeless” line we hear so often. I’ve made enough deposits in the “favor bank” where I’m sure that I could easily live for the next decade rent free (or for the rest of my life if I decided to trade my home improvement and mechanical skills for room and board) so this concept seems strange to me. I’m wondering if anyone one out there is certain that every door they knocked on would be slammed in their face if they had $73 in cash and lost their job tomorrow…
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
OT, but I just finished yorking… If any of you want to do the same, go and watch KQED RIGHT NOW (HARM, especially) - it’s a special show documenting the Boomer generation. Of the 10 minutes I just saw, it’s a bunch of self-congratulatory, smarmy crap. What a bunch of BS!
Joined: June 22nd, 2007
Posts: 0
Comments: 311
allah Says:
> Pay no attention to TOS, (s)he is just trying to taunt you…
I have the feeling that ToS is a 40 something female SF Realtor trying to get by after she was dumped for a Bowling Trophy Wife (with thanks to SF Woman for perfect word to describe so many woman) by her Middle Management/Associate that will never make Partner etc. husband a few years back. Every time she posts I think of someone like this:
http://tinyurl.com/2bccwv
Joined: June 16th, 2007
Posts: 0
Comments: 477
There isn’t going to be a bailout for FB’s. Do you know why? A bailout would cause inflation. It would also punish responsible homeowners, particularly those with major equity in their house.
In other words, a bailout would shaft retirees and boomers. It would be political suicide. People on fixed incomes would suffer inflation, and boomers would have their biggest retirement asset devalued. Any party who pisses off the Silent Majority gets canned almost immediately. Proof? George Bush Sr.–”Read my lips, no new taxes.” The guy actually won a war in Iraq, and he was still pitched because the Silent Majority got saddled with taxes (and for other justifiable reasons as well).
The Democrats probably have this election in the bag, as long as they stay away from ridiculous themes like a subprime bailout. They just need to put forth a reasonable candidate (NOT Hillary) and count the votes correctly. But if they push an agenda that smells like taxes and welfare, the retirees and boomers will revolt and go Republican yet again.
There will be no bailout. It’s fun to be jaded and bitter about the possibility, but it is completely unrealistic.
Joined: April 30th, 2007
Posts: 0
Comments: 1736
FAB,
I’d venture to guess maybe NYC has a higher ratio of renters than SF…
Joined: June 16th, 2007
Posts: 0
Comments: 477
You know what? The government doesn’t give a crap how much houses appreciate. It didn’t care how much people lost by speculating in the stock market, nor tulip bulbs, nor oceanfront land, nor any of the dozen other bubbles in the blip of time that is the U.S. equities market. The federal government isn’t interested in trying to prevent real or nominal price declines in houses. Why? Because it can’t prevent those things anyway.
The government will also not give special loans to a bunch of deadbeat borrowers. Individuals cannot be reliably regulated, and the banking functions of the federal government won’t waste our money recklessly. If the FED bails out banks, it will give the money to them directly, and it will in all likelyhood start running that lender’s show from that point forward. And actually, the government won’t interfere until it looks like a large number of major banks are threatened. Its mission is to ensure the stability of the overall banking system, not to subsidize a bunch of math-impaired borrowers and their greedy lenders. Outfits like New Century took huge risks and blew up in a free market system. Don’t expect to see the government come riding in atop a white horse until something like Citi or Wells Fargo bursts into flames. And that isn’t going to happen, because those firms are massively diversified.
If they did burst into flames, it would be the result of severe damage to the U.S. and world economies, and not the cause.
The government is responsible to support the infrastructure that enables our free society. It keeps gas in the gas stations, planes in the air, liquidity in the banks and good weapons in military hands. It will bail out Delta, Raytheon, Citi and other key supports of our national infrastructure. But should those stocks crater in the process, the government certainly isn’t going to send a check to anyone who lost money.
The government already has programs to deal with FBs. Those programs consist of welfare, social security, unemployment and other social services.
Joined: September 21st, 2005
Posts: 45
Comments: 4425
athena, my fair goddess, you didn’t actually think we live in a Capitalism did you? What you’re suggesting downright reeks of free markets and efficient allocation of capital. Shame on you.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
My question: after this housing bubble, how much faith in humanity do you still have left?
Joined: June 14th, 2005
Posts: 112
Comments: 15465
If a bailout would enrage you, I suggest that you enroll yourself in an anger management program right away.
It is not fair, but that will happen. However, no bailout will stop the bubble correction. It will just be dampened a bit. Relax.
Joined: April 7th, 2006
Posts: 3
Comments: 1160
I’d venture to guess maybe NYC has a higher ratio of renters than SF…
I’d say so too:
That reminds me of this Slate piece:
http://www.slate.com/id/2161834/
“Why home ownership causes unemployment.”
Joined: April 7th, 2006
Posts: 3
Comments: 1160
I didn’t see the Boomer show, but here’s a URL for it:
http://www.pbs.org/boomercentury/tenthings.html
Including these fun facts:
Boomers who reach age 65 in 2011 can expect to live, on average, at least another 18 years.
No. 5
Four out of 10 boomers have less than $10,000 in retirement savings.
No. 6
One-third of boomer households today have at least $100,00 in investable assets.
No. 7
About one-third of baby boomers think they will have enough money to live comfortably once they retire.
Joined: July 3rd, 2006
Posts: 2
Comments: 1665
Peter P Says:
My question: after this housing bubble, how much faith in humanity do you still have left?
My question: after Peter P, how much faith in humanity do you still have left?
Joined: July 9th, 2005
Posts: 0
Comments: 41
Lawyer 99 Says:
“Homeowneship…(posted for brevity) THEM…”
_____
WTF?
I read the whole post, and I still don’t know what dude’s talking about.
Joined: April 6th, 2006
Posts: 1
Comments: 1687
So… there’s a pretty clear consensus here and I have to agree. Bail out will likely not happen, shouldn’t happen and even if it did, it’s probably a day late and a dollar short?
If it actually did occur I imagine *gyges is correct. 30 year loans will become 40’s … 40’s will become 50’s and previously issued MBS will be retired etc.
Joined: June 15th, 2007
Posts: 0
Comments: 86
Oh yes Muggy, those wonderful Buckeye fans. I remember when I lived in Ohio for a while I couldn’t fathom the number of people who were Buckeye fans - because most of them didn’t even go to Ohio State. And why do they hate Michigan? Michigan is quite lovely. Can’t we all just get along?
Joined: November 10th, 2005
Posts: 2
Comments: 162
The bailout will happen, and every homeowner in the country will vote for it, because they’re trying to bail out their own retirement plan (most of which is their house which they were planning to dump to a GenX/Yer at an exorbitant price).
I’m not so sure whether any bailout will actually work long-term, though. The laws of gravity still apply.
Joined: September 12th, 2006
Posts: 0
Comments: 89
Ohiogrl sez: We the people are going to pay for this crisis whether the borrowers are bailed out or not.
This is true…..
We will surely pay for this just like we pay for shoplifters because merchants have to markup their goods to cover the losses. We’ll have artificially high interest rates and fees to make up for MBS and bank losses. Does anyone want to make the argument our taxes aren’t higher in order to pay for waste/corruption/bailouts/subsidies/social programs?….and the list goes on.
SOMEBODY will have to pay for this mess and the only people they can collect it from are those with money….those who are responsible citizens…..those who pay their taxes…..those who work for a living.
I’ve said this before. The Katrina bailout is in full swing and the bill grows daily. You can all it “recovery” or “rebuilding”; but it’s a bailout. Who do you think is going to pick up the tab? Who’s paying higher insurance premiums to cover the industry’s losses?
Get this….the latest demand from social activists in N.O. is a $200k check for each resident. The Gov just dropped out of the race because she got so much heat for not getting MORE money from the Feds and could not win re-election. John Breaux is trying to pull a Clinton and run. If he does, he’ll win. If he wins, all his years in the Senate and all his connections will mean lots and lots of add’l dollars for the state. Before this is over it might rival the cost for the Iraq War……and that is scary.
I’ll shut up before I blow a gasket.
Joined: October 28th, 2005
Posts: 0
Comments: 1320
I see….so, responsible homeowners like myself who have repeatedly done the right thing financially (like saving and taking out traditional mortgages) over many many years should lose our shirts, and that’s perfectly acceptable?
If you bought the house before the bubble, or you bought it for a non-bubble price, then you will be just fine as long as you didn’t pull out the imaginary equity. If you paid the bubble price for the house, then you are one of the contributers to the bubble; in this case, you will be underwater.
It’s not just whether you bought using a traditional mortgage, it also has to do with the price that you paid for it. A popping Real estate bubble is not an isolated event where only subprime borrowers get burned; prices will fall in all bubble areas across the board and depending on how much you put down and how much over what you should have paid will determine whether or not you will be underwater.
Joined: April 6th, 2006
Posts: 1
Comments: 1687
Doug H,
Good to hear from you! 200K per resident? Sounds reasonable enough. Do you have any idea just how much you could party w/200K!?! Man, I’ll bet that could last several years!
Joined: October 28th, 2005
Posts: 0
Comments: 1320
You can join Michelle Singletary in live chat, she is discussing this issue right now.
Joined: April 6th, 2006
Posts: 1
Comments: 1687
allah,
Good points! I think the MEW (extraction operations) “could” be a major factor in determining eligibility. Wait, you bought a house you could well afford on fixed terms, then decided you needed a “lifestyle upgrade” and now find yourself in an unworkable situation? Uh… we’re sorry but…
Joined: September 21st, 2005
Posts: 45
Comments: 4425
Ohiogrl
Whereabouts in Ohio?
Joined: September 21st, 2005
Posts: 45
Comments: 4425
The upper Midwest did not participate much in the bubble, except in some suburbs of the larger cities. But most areas saw only slight increases above historical averages.
What is hitting OH, KY, MI, IN — the states which have by far the worst mortgage delinquency and foreclosure rates — is good, old fashioned bad local economy. This region is seeing ever mounting job losses. Some areas have over 2X national average unemployment. And wages are stagnant and losing ground to inflation. In fact, most of the upper Midwest is very deflationary, regardless of housing.
We talked a while back how there are negative yields in states like IN. In Indiana it is significantly cheaper to own than rent. Owners of rental units there demand a premium as a percentage of their tenants income for a variety of reasons, not the least being their capital investments are expected to return less, and carry more risk. I would say that unless you have a very long term horizon — long enough for a full regional economic cycle to pass — or your real estate includes arable land suitable for corn, then you should plan on your home-wealth slowly evaporating over time.
Joined: April 6th, 2006
Posts: 1
Comments: 1687
kahunabear/Person,
That’s just it. These HELOC/flippers were hardly innocents! Let me get this straight, they were sophisticated enough as borrowers, contractors and businessmen but all of a sudden they don’t understand jack?
This is the corner you get painted into when you turn a blind eye to people being able to treat “various” homes as their “primary” residence. Had this been monitored more closely (or at all) perma-bulls wouldn’t be contending w/massive inventory right now.
Oh and btw, “the bail-out is coming wether you JBR’s like it or not” is one HELL of a bullish defense, don’t you think?
Joined: June 22nd, 2007
Posts: 0
Comments: 311
DinOR Says:
> If it actually did occur I imagine *gyges is correct.
> 30 year loans will become 40’s … 40’s will become
> 50’s and previously issued MBS will be retired etc.
There is not a huge difference in the payment when you go from 30 to 40 or even a 50 year am.
Let’s say I had a $1mm 6% loan on a crappy little Mill Valley 3br 2ba:
Payment at 30 year am: $5,995/month
Payment at 40 year am: $5,502/month
Payment at 50 year am: $5,264/month
Joined: October 28th, 2005
Posts: 0
Comments: 1320
DinOR,
This is how alot of people think. They can’t understand that when the prices on houses that were purchased with subprime loans fall as a result of being resold, the houses that were purchased with prime loans will fall as well.
It is comps that reflect market prices; these comps compare the location, number of beds,baths, sqr footage, but they don’t differentiate between “previously owned by” “subprime/prime”.
I see how people think when they read some of the sob stories out there; here is an example. Some of these people think they are safe because they have good credit and good jobs and were able to get a traditional mortgage. The fact is that these people bought a lesser house than they really should be getting for the amount they paid; when it all hits the fan, they will realize that they could have done alot better, but they still can afford the payments on their overpriced shack.
Joined: April 28th, 2007
Posts: 0
Comments: 195
Ohio girl,
No matter how horrible the housing market becomes, prices aren’t going to tank to below the price of a car unless the area goes into a severe depression after having overbuilt. And a bailout won’t help the responsible home owners there if that happens anyway. Detroit prices hit that low IN THE MIDDLE of the bubble. You can’t make money selling one of 100,000 houses in a place that has 70,000 households with only 55,000 of them regularly employed.
The only way to bail out the FBs is to give them each enough money to pay down their mortgages to a point where they can afford them. Actually, you’d have to pay the money directly to the bank, because the FBs have proven themselves financially irresponsible.
So these jerks that bought a house 50-300k too expensive for them to afford should be given free money? Fine, let’s say we do that. How does that help the current house owner? The housing prices are going to fall because credit is getting tightened, cutting demand, the prices are still way to high vs renting, cutting demand, the prices are too high vs. wages cutting demand, and people have realized it’s not a ‘ticket to millions, cutting demand.
Housing prices are going to tank back to the mean. If you are planning on retiring in the next few years, yes it will hurt you. If your goal is to retire in 10-20 years, you’ll be fine. Unless you bought in the last 3-4 years, in which case if you CAN make your payments, you’ll be fine in 15-20 years.
Houses are retirement investments ONLY because they provide a rent free place to live eventually. They have NEVER been efficient wealth creation vehicles. The last 5 years made people THINK they were, which made them want houses, which was a self feeding cycle that has hit its limits.
Responsible home owners are not going to be hurt by the ‘evaporation’ of funny money that never existed. If you think that housing is going to crash to being worth nothing, you are over reacting.
Joined: June 22nd, 2007
Posts: 0
Comments: 311
Randy H Says:
> What is hitting OH, KY, MI, IN — the states which have
> by far the worst mortgage delinquency and foreclosure
> rates — is good, old fashioned bad local economy.
My real estate friends in OH, KY, MI, IN agree with Randy that the economy is bad but tell me that they expect to see more foreclosures than ever primarily due to:
1. More Little to No Money Down Purchases (in the old days when you put 20% down Uncle Pete would sell a cow to help you protect your down payment)…
2. More loans that reset (Even people with solid jobs who have been getting 5% per year raises will have a tough time when the loan goes from neg am IO to fully am 27 year)…
Joined: April 6th, 2006
Posts: 1
Comments: 1687
FAB,
Oh I absolutely agree! This is what my father often referred to as “getting the sleeves from the vest” yet pols will consider this a “significant” step!
ABC ran a piece on couples in NC that were defaulting b/c their payment adjusted up $178? I’m not proud to admit but we’ve all had months where we spilled that much booze on our ties (and I don’t spill much)
Joined: April 6th, 2006
Posts: 1
Comments: 1687
allah,
Ah yes, the Sneary’s! In ways I resent the MSM depiction b/c this is the very demographic Dodd is feeding off of. I hate to say it but these folks were up to their nose in water and the slightest ripple (I think she had a car accident?) and they’re underwater!
What is more interesting to me anyway is FAB’s #2 above. There’s no increase in income (that I’m aware of) that’s going to off-set going from neg. am to fully amort. loan! All of these loans were funded under the delusion that rising equity would provide the cushion (and revenue to the firm) to re-fi, yes, once again.
Joined: September 21st, 2005
Posts: 45
Comments: 4425
FAB
I didn’t mean to imply that stupid loans weren’t a problem there. Only that there is the highest conforming loan foreclosure rate in nearly 30 years there too, so it’s a perfect storm brewing. Even Uncle Pete selling a couple heads and a half dozen pigs isn’t helping the 20% conforming prime borrowers in many cases. Add to that all those who never should have been given a loan in the first place who’re all but guaranteed to fail and it’s looking pretty grim for the Midwest.
I’m always trying very hard to not be a doomster, but it’s tough when talking about that area. I think it will recover — but it will probably be a very long time. Probably it will take a generation and a full cleaning house of local politicians, plus a half million other factors.
Joined: October 28th, 2005
Posts: 0
Comments: 1320
Houses are retirement investments ONLY because they provide a rent free place to live eventually. They have NEVER been efficient wealth creation vehicles. The last 5 years made people THINK they were, which made them want houses, which was a self feeding cycle that has hit its limits.
Not if you live on Long Island where the taxes on a basic house are almost what you would pay in rent.
Joined: April 6th, 2006
Posts: 1
Comments: 1687
allah,
That can be true. My wife and I looked at many a’ golf course community and the taxes, HOA’s (and other assorted fees and assessments) came to $600 on the low end to over $1,000 on the high end. So even had you paid cash for the damn house you’re hardly “home free”!
Joined: April 28th, 2008
Posts: 0
Comments: 2
Peter P: IF that 1% gets you 2% of excess return, who cares?
You have to love hypotheticals. There’s one that starts, “IF pigs had wings” too.
DinOR: I sure wouldn’t want to interrupt anyone’s walk.
Touchy, touchy, D. I see no point in getting into this with you, because I like you (or at least your patrickpersona). You think I’m wrong on this subject and vice versa. Doesn’t mean we can’t shake hands and continue to tan the hides of idiot housebubbleriders everywhere.
Oh …. does there have to be something on topic in a message? Like something about bailouts? I’m sure y’all realize that the bailouts your darling elected representatives are discussing have nothing to do with poor Gramma and the house she might lose because, let’s face it, Gramma has one vote and one vote is worth dick. OTOH, the people who lent Gramma the money - knowing in the back of their minds that there was no way she was going to be able to pay - have buckets of ducats, a part of which they are willing to pour into politicians’ pockets to ensure that the taxpayers can be looted so that Gramma can refill those buckets.
The only way to stop this train is to have big media pointing out that it’s not Gramma being bailed out, it’s Bear Stearns and Morgan Stanley. Forget writing Washington. Start writing letters to the editor.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
You have to love hypotheticals. There’s one that starts, “IF pigs had wings” too.
If pigs have wings, I would like some grilled pig wings.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
My question: after Peter P, how much faith in humanity do you still have left?
Let me buy you beer.
Joined: October 28th, 2005
Posts: 0
Comments: 1320
Check it out, looks like an FB support group.
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
allah, DinOR,
RE: the Sneary’s SSOTW, here’s the REAL reason they are facing foreclosure:
Their fathers were best friends, “two old hippies who partied together.”
Boomer values passed on to the kids!
Joined: June 14th, 2005
Posts: 112
Comments: 15465
Boomer values passed on to the kids!
LOL
Joined: September 7th, 2005
Posts: 3
Comments: 147
I completely agree with Patrick in his post. Anyone familiar with Japan knows a big part of the problem in their crash was the unwillingness of the government to let big lenders and businesses fail, abetting the hiding of huge non-performing loans, or just ignoring the debts for years.
And fiscally, Japan was and is in a far stronger position than the US.
Something similar would be a disaster for the US.
If subprime takes down soe financial giants, let the wolves tear the carcasses and make room for something new.
Joined: September 23rd, 2005
Posts: 23
Comments: 1852
Dear Senator Boxer,
I am a long time supporter. My wife and I are currently unable to afford housing despite the fact we both are Professionals. This is a direct result of the greed displayed during the “housing boom”. We were not willing to become a liar to get a loan, nor were we willing to take on debt we could not afford. We only wish to purchase a house to live in and raise our family. With the market coming back to reality we may now have a chance.
Please do not support the efforts to bail out subprime borrowers with my tax dollars. As a responsible citizen, I do not feel it is right for you to ask me to pay for other peoples’ financial mistakes.
I appreciate the intention of helping people to have access to housing. However, the money would be much better spent in creating more affordable housing for everyone, including renters, the elderly, minorities. The proposed subprime bailout will only reward people who acted irresponsibly, and punishes people who carefully manage their
finances by not buying houses they can’t afford.
The housing market has begun a process of correction. This is necessary in order to keep housing affordable in the long-term. Let the market correct so we can achieve stability again, and people are able to save and afford the house of their dreams over time. That’s the way it has always been.
I do believe there should be punishment for those who pushed these toxic loan products.
Sincerely,
Dr. Surfer-X
Santa Barbara CA
Joined: April 6th, 2006
Posts: 1
Comments: 1687
Punchbowl,
If I seem touchy about it that’s b/c I get plenty of “index devotion” in my regular vocation (I actually come here to escape it?)
Here’s the problem I have. Post teck wreck anyone w/a Series 7 figured out a transactional based business model wasn’t going to cut it. In ways, they were right. So the wirehouses went head long into a “managed account platform” or seperately managed acct. campaign or whatever they’re calling it today. Coupling acct. performance w/market performance practically eliminates “their” liability. That’s the big driver here.
So now the guys that didn’t become annuity salesman or that “nice young man at the bank” went the managed route. Almost exclusively built on negotiated fees and “shelf products” that were meant to “warehouse assets” that were in excess of say 250K. Investors below that threshold got routed to Merrill’s “call center”. What’s left is a bunch of basically “salary” guys that have NO interest in ever graduating to the next step and are solely there to raise assets for the firm. Or uh… basically robots w/zero profit motive. They get paid on AUM and couldn’t give a rip about performance b/c Bob Doll at Merrill has a total focus on “managing clients expectations”.
The “wires” love it b/c the AE is now totally dispensable! Let’s face it, anyone just getting out of college has the cards stacked against him from jump street so why make it harder having these poor kids beat their head against the wall just so some “senior consultant” can pilfer the kid’s book when they cut him loose?
This is exactly what the NASD and the wires wanted. Salaried automotons. Now they learn valuable skills like calming clients down when the market is down 15% but they are only down 12% and explaining how they are “outperforming” the market? The last bastion of free enterprise but we had to shut that down too.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
If subprime takes down soe financial giants, let the wolves tear the carcasses and make room for something new.
Sure. Andrew W. Mellon, banzai!
Joined: June 14th, 2005
Posts: 112
Comments: 15465
Dear Surfer, you are not going to sign the letter as Surfer-X.
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
This article:
http://www.boston.com/business/articles/2007/03/29/mortgage_crisis_hits_million_dollar_homes/
is EXACTLY what I was talking about earlier in this thread (in response to TOS, in fact). The subprime crisis is only the tip of the iceberg. “Professionals” and “six figure income” folks are facing foreclosure:
An excerpt:
California, with 3,384 foreclosures of higher-scale homes since December, is leading the nation, followed by Florida and New York, according to RealtyTrac. The MBA doesn’t track foreclosure data by home value.
Josh Rosner, managing director at investment research firm Graham Fisher & Co., says the growing numbers of foreclosures outside the subprime market is just the start.
“To define the problem as a subprime problem is short-sighted,” Rosner said. “It’s really seeing the tip of the iceberg as the iceberg.”
Compounding the risk is the nature of homebuyers of higher-end homes, says Rosner. About 40 percent of homes bought last year were second homes or investment properties. Speculative buyers may be more at risk, he said.
Standard & Poor’s said on a conference call on Thursday that foreclosure rates are likely to surpass levels last seen during the 2001 recession.
“That giant ATM you’ve been living in has just shut down,” said David Wyss, chief economist at S&P in New York. “Consumers are in debt and we’ve been living beyond our means for some time.”
No $hit buddy!
Joined: June 14th, 2005
Posts: 112
Comments: 15465
I think subprime will soon be a relative non-issue. Let the prime game begin!!
Joined: October 28th, 2005
Posts: 0
Comments: 1320
Believe it or not, there are still people pushing those “get rich quick real estate” schemes
Joined: July 5th, 2005
Posts: 119
Comments: 4739
@Surfer-X,
That letter was incredibly restrained, constructive, polite and –dare I say?– completely out of character! ;-). But it is exactly the kind of letter that might actually get read (at least by an assistant). As they say, it’s easier to catch flies with honey than vinegar.
Joined: October 28th, 2005
Posts: 0
Comments: 1320
Surfer-X,
Excellent letter! You should probably add to it that there are plenty of potential buyers like yourself out there who are financially responsible and ready to buy at rational prices AFTER the correction.
Joined: April 6th, 2006
Posts: 1
Comments: 1687
skibum,
Thanks for the article! This is the “wicking” process I’ve been waiting to see. We’ve talked a lot about “smugness” but the majority of the subprime “playahs” we more “savvy” or opportunistic. For the most part they knew they had a horse shoe up their @$$.
The Alt-A and up crowd was where the smugness really came from. Is this the part in the movie where the villain tempts rats with blood on the rope suspending our hero?
Joined: June 14th, 2005
Posts: 112
Comments: 15465
Perhaps the need to bailout prime borrowers will get the attention of policy makers instead.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
THE LOOSERS ARE FINANCIALLY SAVY PEOPLE WHO DID NOT REFINANCE OR BUY DURING THE BUBBLE.
AND THOSE WHO TYPE WITH CAPS ON.
Joined: April 6th, 2006
Posts: 1
Comments: 1687
Lisa,
Nice rant. With your solving all of our economic woes I was able to take an extra 5 minutes for lunch!
Isn’t that what they call the “broken window” theory of economics?
Joined: June 18th, 2007
Posts: 0
Comments: 57
Conservative estimates show that the Kennedy-McCain Illegal Alien Amnesty will add over 200 million filthy, impoverished, uneducated, illiterate immigrants to the current US population of 300 million in less than ten years.
We can do without the filthy, uneducated rants.
Joined: July 5th, 2005
Posts: 119
Comments: 4739
DinOR,
I guess I can see how the shift in retail focus to index funds (away from active management trading) would be perceived as a negative for a new graduate wanting to climb the investment broker ladder. However, as a retail investor, I find them incredibly liberating and empowering.
Before VG-style low-cost index funds started in the mid-70s, where else could you build a broadly diversified portfolio with an expense ratio averaging .18 - .25% ? A: Nowheresville.
I get a cheap and easy-to-maintain portfolio with hundreds of index funds and ETFs to choose from, that can be constantly reabalanced/customized according to my appetite for risk and asset class bias. The loads don’t eat heavily into my compounded returns, the way actively
churned, er “managed” funds do. What’s not to like (for retail investors)?Joined: June 14th, 2005
Posts: 112
Comments: 15465
Isn’t amnesty a bigger issue than subprime bailout?
I am all for the guest worker program but an all-out amnesty would be the mother of all moral hazards.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
Before VG-style low-cost index funds started in the mid-70s, where else could you build a broadly diversified portfolio with an expense ratio averaging .18 - .25% ? A: Nowheresville.
How about BRK? If you had bought it in mid-70s, you would be a very happy man.
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
Lisa,
Nice rant - all I have to say is, God Bless Amerika!
But what’s up with the double posting? I hope you’re not a ranting jukobox.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
jukobox? Is that a new version of jukubot?
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
jukobox? Is that a new version of jukubot?
Sorry - typo…
Joined: June 14th, 2005
Posts: 112
Comments: 15465
No, it is a good name. I just need to come up with a product and market it.
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
Here’s another “Emperor’s New Clothes” thought RE: the subprime bailout. Isn’t it funny how there’s all this outcry about the subprime FBs getting shafted and needing a bailout b/c of loan resets, when all that’s really happened so far in the overall RE market is a return to low appreciation rates to slightly negative appreciation rates in depending on the particular market? What would/will happen if/when prices REALLY decline? Not much robustness in this system, is there?
What a house of cards this whole thing is!
Joined: April 6th, 2006
Posts: 1
Comments: 1687
HARM,
Oh I agree. My wife had money at Vangard for years and was always quite happy! Punchbowl is actually fairly accurate in his description of most actively churned (managed) accounts not keeping pace with their benchmarks. However, about 30% DO outperform. Since I use ETF’s almost exclusively I’m not sure how I got painted into a corner and being an industry shill for the fund companies to begin with?
Active management in many ways is already a thing of the past. With advancement in technology and better educated investors A/M will probably be completely phased out in the next several years.
In the end it’s all about liability for the firms.
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
No, it is a good name. I just need to come up with a product and market it.
How about jukobox = an X-box blog troll game? Maybe market it into “Second Life” somehow (sorry Randy)?
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
Check it out, looks like an FB support group.
allah,
Check back at that link again. Guess which comment is the one I just posted!
Joined: June 14th, 2005
Posts: 112
Comments: 15465
Not much robustness in this system, is there?
It was a stable disequilibrium. We have said nearly two years ago that the whole thing relies on accelerating appreciating to sustain and that even a slow down will cause the whole scheme to collapse.
It is now becoming an unstable disequilibrium, on its way to a new equilibrium. A bailout will make that equilibrium ever more elusive.
Falling asset prices always cause credit crunches, which in turn cause asset prices to fall further.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
How about jukobox = an X-box blog troll game? Maybe market it into “Second Life” somehow (sorry Randy)?
Interesting. I will be a troll in second life. You know, the one that “really” lives underneath a bridge.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
Active management in many ways is already a thing of the past. With advancement in technology and better educated investors A/M will probably be completely phased out in the next several years.
Perhaps A/M will just be in the hands of retail investors using daytrading technologies? God help them.
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
This just out at mercurynews.com under the category of, “no $hit, Sherlock!”:
http://www.mercurynews.com/breakingnews/ci_5548990
Valley middle- and lower-income families facing tough times
Despite job growth, challenges loom
Some GREAT points from this study to rebuff the BA RE Bulls here:
- Paychecks have failed to keep pace with the cost of living. Wages for the valley’s working class has grown only 2.9 percent since the tech bust, while the costs of health care, gas, child care, higher education and housing have all grown at more than 10 times that rate.
- In 2005, just 49 percent of the county’s high school graduating class enrolled in college - the only time in 20 years that less than half of graduates have enrolled in higher education.
- In February 2007, Silicon Valley provide 156,500 fewer jobs that in February 2001. The job level was still down from 1997.
So much for the increased jobs leading to increased housing demand idea. The only conclusion: the RE price runup in the BA was NOT based on economic fundamentals of supply and demand.
I also find it surprising and alarming that less than half of Santa Clara Cty’s HS grads go on to college. At least based on this wording, you can add on top of that all those who failed to graduate HS. No wonder all the immigrants are trying to cram themselves into the perceived educational lifeboat known as “Cupertino Schools.”
Joined: June 14th, 2005
Posts: 112
Comments: 15465
I have a better idea. Double Amnesty. Under this proposed scheme, any illegal alien will be given a green card after he has
1. assumed a delinquent loan with a balance of $250K or higher, and
2. paid off the said loan in full.
Happy ending for everyone.
Joined: June 15th, 2007
Posts: 0
Comments: 86
“I also find it surprising and alarming that less than half of Santa Clara Cty’s HS grads go on to college.”
Maybe they just get their realtor license instead…
Joined: October 28th, 2005
Posts: 0
Comments: 1320
allah,
Check back at that link again. Guess which comment is the one I just posted!
Well, its got to be either the last one or the one before.
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
Maybe they just get their realtor license instead…
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
allah,
It’s the second-to-last post. The last post is way too constructive and sympathetic to be from me.
Joined: June 22nd, 2007
Posts: 0
Comments: 311
skibum Says:
> In 2005, just 49 percent of the county’s high school
> graduating class enrolled in college - the only time
> in 20 years that less than half of graduates have
> enrolled in higher education.
> I also find it surprising and alarming that less than half
> of Santa Clara Cty’s HS grads go on to college. At least
> based on this wording, you can add on top of that all those
> who failed to graduate HS. No wonder all the immigrants
> are trying to cram themselves into the perceived educational
> lifeboat known as “Cupertino Schools.”
I just did a search and found out that Santa Clara County has about a 15% dropout rate much better than the ~30% nationwide, ~32% in California, ~40% in San Francisco, and ~60% in Oakland. It’s scary but probably only about 20% of the kids that graduate really go to “college” since someone decided to call the “adult day care centers for dumb kids” “Junior Colleges” years ago…
One of my Dad’s dive buddies used to work at the “College” of San Mateo (known to locals as “Harvard on the Hill”). He said that 80%+ of the kids that enrolled (in non vocational programs) checked the box to say that they planned to transfer to a real college after 2 years, but less then 10% actually transferred…
In America today it is hard to comprehend that there are so many people who don’t understand how hard it is to make it without a college degree. It makes me sad to think that we have millions of kids coming home and saying “Mom I decided to drop out of High School” and the “Mom says great, get me another beer and get out from the front of the TV”…
Joined: October 28th, 2005
Posts: 0
Comments: 1320
Did you hear they are working on doubling the FHA mortgage limits?
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
I just did a search and found out that Santa Clara County has about a 15% dropout rate much better than the ~30% nationwide, ~32% in California, ~40% in San Francisco, and ~60% in Oakland.
FAB,
Please correct my math if I’m wrong, but that means only about 42% of Santa Clara Cty children go on to college of any kind. If you happen to know what percentage go to community college as opposed to a four year college, that would be interesting as well. No wonder The “Valley” has to import skilled workers from the rest of the country and the rest of the world.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
In America today it is hard to comprehend that there are so many people who don’t understand how hard it is to make it without a college degree.
It is hard to make it without what it takes to complete a college degree.
The degree itself is over-rated.
Joined: October 28th, 2005
Posts: 0
Comments: 1320
The degree itself is over-rated.
I agree 100%!
Joined: September 4th, 2007
Posts: 0
Comments: 2
Bailout bills are coming at your local governments.
http://www.eagletribune.com/punews/local_story_086115432
Joined: October 28th, 2005
Posts: 0
Comments: 1320
In America today it is hard to comprehend that there are so many people who don’t understand how hard it is to make it without a college degree.
It should read:
“In America today it is hard for human resources ‘executives’ to comprehend that there are many non-degreed individuals who can outperform their degreed counterparts.”
Joined: September 21st, 2005
Posts: 45
Comments: 4425
Again, look at the video Money and Debt at itulip.com and then come to the shocking realization that we are all screwed and will continue to be screwed for generations
Amazing! 47:07 minutes of footage that does a terrible job of explaining “What is money”.
Rather than dumbed down, cartoon, biased, propaganda for goldbugs, one could spend significantly less than 47:07 of their life actually reading:
_macroeconomics_ 5th ed., N. Gregory Mankiw
pp76-81; Section 4-1.
As an added bonus, if you keep reading on, you’ll learn what inflation really is and exactly *how* money works (and consequently why gold-standard commodity backed fear mongering is complete bullshit).
Hey, I at least one one of those Daddy Warbucks top hats the goldbugs always put on the heads of bankers (the one’s they don’t accuse of being a global conspiratorial jewish cabal that is).
Joined: October 28th, 2005
Posts: 0
Comments: 1320
Here’s another you may want to read.
WASHINGTON (AFP) - US lawmakers voiced alarm Tuesday about surging home foreclosures, as over 500,000 Americans face losing their homes, and debated reforms to boost policing of mortgage lending.
Congress is worried about spiking home foreclosures and the collapse of several mortgage lenders, fearing it could worsen a housing slump and derail the world’s biggest economy.
Over 500,000 mortgages, or 1.19 percent of all loans, were in foreclosure at the end of the fourth quarter of 2006, according to the Mortgage Bankers Association, and studies suggest over two million Americans could lose their properties.
Foreclosure rates on some mortgages have hit “peak levels” last seen during the 2001 recession, according to Goldman Sachs, and alarm bells are ringing loudly in Congress.
Government regulators at the hearing admitted worries, but some industry executives cautioned Congress against over-reacting.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
Public still believes about the “immunity” of the Bay Area home prices
People believe what they want to believe. Reality always asserts itself over wishful thinking.
Joined: September 21st, 2005
Posts: 45
Comments: 4425
The iTulip propaganda attacks the fractional reserve banking system and fiat money on the grounds that it “creates debt”.
This ignores the other part of the theory of money equation: velocity.
Back when everyone dressed up like the cartoons in the video, the velocity of money was very very very very very very very very very low. In some areas it was close to 0. There were no electronic communications, no standardized financial instruments, no credible counterparty systems. In fact, they are mostly describing a feudal European system of money in which currency seldom transacted between fiefdoms. (They ignore the grand civilizations of antiquity which actually did have fiat money — even as they had lots of gold — yet they flourished without a gold standard).
Today the velocity of money is very very high, and it is accelerating very very very very very fast. And there is no limit to how far it can accelerate: the boundary is infinity. With very high velocity, artificially limited quantity (either by lack of multipliers or lack of monetary inflation) would guarantee permanent, long-run deflation until the limit of velocity finally started approaching 0 again.
It’s like someone read one too many Vonnegut books and wants to go smash all the automatic vending machines.
Joined: June 20th, 2007
Posts: 0
Comments: 17
I would hope that something is done (legally) to punish those who have perpetrated mortgage fraud and prevent it in the future, however, there should be no bailout for people who made poor financial decisions and ended up losing (I say this knowing my own mother could be hurt in this mess).
And the natural bursting of this bubble happen.
You don’t serve the economy or the nation well by keeping housing unaffordable for those of us who are responsible with our money.
I realize I am probably reiterating what Patrick and others have already said, but it feels good to get this off my chest.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
It’s like someone read one too many Vonnegut books and wants to go smash all the automatic vending machines.
You mean those vending machines in Japan that sell certain used garments.
Joined: April 18th, 2006
Posts: 0
Comments: 316
Carl,
I think we all have friends (or relatives) who’ve bought recently, and at least some of us aren’t wishing them ill. That said, renting is always an option. “Losing a home” is often painted as a horrid option, but when it really means “going back to renting”, it seems a perfectly appropriate consequence.
Joined: March 16th, 2006
Posts: 0
Comments: 139
Sen. Ronald Rice, D-Newark, said Wednesday that he plans to introduce a measure that would allow the state’s housing agency to borrow at least $100 million to offer 30-year fixed-rate loans to homeowners facing foreclosure.
LOL, $100mm will help, what, like 200 families? That’s chump change.
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
I’ve been posting about housing on a thread at a more general, review-driven SFBay website—it’s really interesting (annoying) to hear what John Q. Public still believes about the “immunity” of the Bay Area home prices: http://tinyurl.com/32ypfm
Mark,
I took a look over there. Sheesh, that Vu dude is quite the tool. He won’t know what hit him when this whole thing shakes out. They really give eburbed a hard time, don’t they!
Joined: April 21st, 2005
Posts: 0
Comments: 7
Who is called a home owner.
1) The one who bought the house with a loan from bank and rented it out to someone else. Why should you bail out this person.
2) Why should you bail out a person who has more than one house in his family (Spouse + Kids under 18 considered)
3) Why should you bail out a person who bought the house more than 5X times the family income without any downpayment.
Already these people are getting subsidy with not tax on intrest paid for not only the primary residence but also on the investment houses where as no other thing including the medical care which is is essential is tax free.
If homeownership is the American dream only the primary residence should get those incentives of tax break and only one house sale profit should have tax benifit per person in a lifetime.
Bailout is an option at this time but we know the mighty wins.
Yes there might be some genuine cases where help is needed when home equity is used for a genuine case.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
Errr… if you want the bubble to correct more quickly you do want more of those sob stories in MSM.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
The stories that paint people as victims and deserve a huge bailout like the ones proposed and linked above.
So what? They send a big chill down the spine of someone who is still lookining to buy now.
Let them paint the FBs as victims. Psychologically, people do not like to become victims and they will avoid housing. Naturally, that serves us better.
Joined: April 21st, 2005
Posts: 0
Comments: 7
Yes housing crash stories are needed more than the sob stories
Joined: June 14th, 2005
Posts: 112
Comments: 15465
Yes housing crash stories are needed more than the sob stories
No. People do not care about economic theories. They need psychological conditioning.
Joined: April 21st, 2005
Posts: 0
Comments: 7
The more sob stories lead to bail out as sympathy grows for them
Joined: June 6th, 2008
Posts: 0
Comments: 4
Mark Says:
“I’ve been posting about housing on a thread at a more general, review-driven SFBay website—it’s really interesting (annoying) to hear what John Q. Public still believes about the “immunity” of the Bay Area home prices: http://tinyurl.com/32ypfm ”
Yea! I met a few like that… their young and full of dreams! Fact is many are not from the Bay Area and have not seen economic recessions like the one we had back in 1991 and 2001 or are prepared to understand anyone of the many in the future yet to come.
You tell them …
‘The current high prices are in fact forcing many employers out of the state to cheaper costing areas, because we are competing in a global
markets where our goods and services are undercut by cheaper rivals.’
Just watch them look at you with a blank stare! I guess they never heard that on MTV!
Joined: June 14th, 2005
Posts: 112
Comments: 15465
The more sob stories lead to bail out as sympathy grows for them
You are overestimating the capability for sympathy in the American public. The worst case scenario is a bailout. So what? That will not stop the correction. Let them have some hope before all is lost. I do not mind.
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
Since 9-11, has there been more tragic a plight than that of Katrina survivors? All THAT sympathy led to (some appropriate, some inappropriate) bailout money. Look what’s happened there - lots of waste and not much benefit for the victims. All I’m trying to say here is that if indeed a bailout happens, we can at least count on the government to screw it up and have the money evaporate into the mist among the intermediaries, scammers, and government beaurocracy. As someone said earlier, I doubt any bailout will net the typical FB any more than a few hundred to a few thousand dollars.
Joined: June 22nd, 2007
Posts: 0
Comments: 311
I wrote:
> In America today it is hard to comprehend that there
> are so many people who don’t understand how hard
> it is to make it without a college degree.
Then allah Says: It should read:
> “In America today it is hard for human resources
> ‘executives’ to comprehend that there are many
> non-degreed individuals who can outperform their
> degreed counterparts.”
Since “smart people that get it” know that they will have a hard time getting a good job without a degree (and a real good job without an advanced degree) most (but not all) go to college. Smart people that get it will also know that they will have a hard time getting a job if they don’t dress appropriately for job interview, so most (but not all) try and look presentable. Most firms will hire the guy with the college degree in the blazer before they hire the guy who never went to college wearing the Circle Jerks T Shirt and a kilt (even if the kid in the kilt will outperform the clean cut grad in the blazer)…
Joined: April 21st, 2005
Posts: 0
Comments: 7
I hope so Peter P.
But a falling house prices will also keep the specuvators and FB away without thinking about a bail out option
Joined: June 14th, 2005
Posts: 112
Comments: 15465
FBs will get spiritual support. Heck I will even give them sympathy in spirit.
Most Americans are non-FBs. Senior citizens (aka voters) are non-FBs. You think they will approve substantial monetary help?
Just let the politicians have their moments. Just let the FBs have some hope and feel some warmth.
Then they will feel the futility and humility.
Joined: June 6th, 2008
Posts: 0
Comments: 4
I ment to say please post my links to your comments..
http://www.yelp.com/topic/rDp0r5MtesBaUfS6ee1TpQ
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
Most firms will hire the guy with the college degree in the blazer before they hire the guy who never went to college wearing the Circle Jerks T Shirt and a kilt (even if the kid in the kilt will outperform the clean cut grad in the blazer)…
Despite that smarmy movie “The Pursuit of Happyness”
Joined: April 7th, 2006
Posts: 3
Comments: 1160
I just did a search and found out that Santa Clara County has about a 15% dropout rate much better than the ~30% nationwide, ~32% in California, ~40% in San Francisco, and ~60% in Oakland. It’s scary but probably only about 20% of the kids that graduate really go to “college” since someone decided to call the “adult day care centers for dumb kids” “Junior Colleges” years ago…
I know this is hard to believe, but I actually went to a PUBLIC high school where 70%+ went to a 4 year college.
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
Then they will feel the futility and humility.
I sense your anger. Embrace the Dark Side!
Joined: July 5th, 2005
Posts: 119
Comments: 4739
New thread: Gallery of Unlikely Bubble Victims
Joined: June 6th, 2008
Posts: 0
Comments: 4
“Make the scum bag lenders”
For what it worth many are already under and gone…
Office closed, employees laid off, office for rent sign posted by landlord.
Any receivable (loan) they had was already sold off to the next guy.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
Embrace the Dark Side!
Fake P called me Darth Bubblehead.
Joined: April 7th, 2006
Posts: 3
Comments: 1160
Fact is many are not from the Bay Area and have not seen economic recessions like the one we had back in 1991 and 2001 or are prepared to understand anyone of the many in the future yet to come.
Most of the people I know where here for 2001. That doesn’t really register to them. It was but a blip, and if anything indicated that that was the low point in the economic model. Right now is the midpoint. And once we get to full tilt, condos will start at $1mil.
Joined: October 28th, 2005
Posts: 0
Comments: 1320
Most firms will hire the guy with the college degree in the blazer before they hire the guy who never went to college wearing the Circle Jerks T Shirt and a kilt (even if the kid in the kilt will outperform the clean cut grad in the blazer)…
Most firms will hire the guy with a degree with no working experience over the guy who has 20 years of proven experience on the job no matter what either of them are wearing.
Joined: June 20th, 2007
Posts: 0
Comments: 17
@requiem
Mom will be fine.
She might lose her most recently bought FL condo (or not), but she can always move back into one of her other rentals or the house she owns outright in VA.
Joined: March 23rd, 2006
Posts: 2
Comments: 2103
Anyone who can do the job without the degree is too open-minded and canthink for themselves which is dangerous for corporations.
That’s why the ideal corporate hire would be a college grad who went through the Cupertino school system. They probably wouldn’t mind life in a (shared) cubicle.
Joined: March 16th, 2006
Posts: 0
Comments: 139
Most firms will hire the guy with a degree with no working experience over the guy who has 20 years of proven experience on the job no matter what either of them are wearing.
Probably true. But if I’ve got 20 years of experience, and I’m still competing for the same job as a new grad, then maybe something is wrong with me, and the firm is correct in their assessment of me & my abilities.
Joined: October 28th, 2005
Posts: 0
Comments: 1320
Probably true. But if I’ve got 20 years of experience, and I’m still competing for the same job as a new grad, then maybe something is wrong with me, and the firm is correct in their assessment of me & my abilities.
Say you are working for a company. You don’t have a degree, You work for a company for 20 years and in that time you study on your own and develop many sucessful products for the company to become one of their best Engineers; then, one day the company goes under and you no longer have a job. You go out looking for a job, but everywhere you look you see that a certain degree is required. So just getting through the door is a challenge. It doesn’t matter if you have the brain of a rocket scientist and the capability to outperform most other people with degrees.
It’s the anal corporate empire that measures a persons intelligence by a piece of paper. These clipart clipping, paper shuffling, “human resource executives” as they call themselves don’t know the difference between an Engineer and a cellphone and yet it is they who decide who’s resume will be passed down to those who actually do the hiring.
Joined: April 28th, 2007
Posts: 0
Comments: 195
Infidel,
I worked with a ton of ‘no degree’ people back when the internet bubble demanded bodies to fill seats and everybody who could breathe and write some HTML was a web-programmer.
99% of those non-degree holders blew goats. With degree holders, it was more like 30% goat blowers. So… hire a guy who’s almost certainly going to fluff goats, or a guy who probably won’t. Very hard decision there.
On the other hand, I know two ‘no degree’ people who are still in the business because they kick butt at their jobs. They are the 1 in a 100, and they both got ‘in the door’ because of the boom and personal recommendations. They stayed when the shake-out came. These guys would have been just as good of employees had they gotten degrees. Not having a degree was just another hurdle for them to jump to get in the game they wanted to be in.
Not having a degree is not an indication that you a free thinking awesome employee. It’s more likely an indication that you’re a shiftless underachiever. Not that there aren’t shiftless, underachieving degree holders, it’s just that having a degree cuts out a bunch of them.
Casey Serin doesn’t have a degree. Why don’t you hire him as your finanacial advisor? He’s definately ‘free thinking.’
Joined: April 28th, 2007
Posts: 0
Comments: 195
I garnered no debt on my degree. Never took out a school loan. Had a scholarship for the first degree. I went back for a second degree because I enjoyed it. I got paid the second time around.
Joined: March 16th, 2006
Posts: 0
Comments: 139
Allah,
But in those 20 successful years, that high quality engineer should have developed a lot of contacts in the industry, many of whom have moved on to bigger and better companies, and some will be in decision-making positions. Just call them up and bam, you’ve got yourself a job.
Maybe I’m just naive, but that’s how I see myself getting my next job.
Joined: March 16th, 2006
Posts: 0
Comments: 139
because for most jobs you really don’t need any experience because 90% of corporate jobs are mindless paperpushing monkey tasks.
That’s something I agree with. So if I ever have a company, I will only have positions that require mindful paperpushing monkeys.
Joined: March 16th, 2006
Posts: 0
Comments: 139
moderate infidel Says:
I own one of those companies and I offer health benefits and above average salaries.
Got any openings?
j/k
I’ve come to the conclusion that entrepreneurs are just a whole different breed of people. Doubt higher education contributes much to their success or lack thereof. What’s education, really, but a collection of knowledge you take in. I posit that you can learn anything any school teaches at any halfway decent library. What someone does with that knowledge is up to them.
Joined: June 6th, 2008
Posts: 0
Comments: 4
eburb writes:
“Most of the people I know where here for 2001. That doesn’t really register to them. It was but a blip, and if anything indicated that that was the low point in the economic model. Right now is the midpoint. And once we get to full tilt, condos will start at $1mil.”
LOL! Its a pity they didnt experience the early 90s recession. It was a long drag out painful one… many locals left California altogether.
So when you say …Condos will start at $1M ….surly you jest sire…
Like I said eburb …
‘The current high prices are in fact forcing many employers out of the state to cheaper costing areas, because we are competing in a global
markets where our goods and services are undercut by cheaper rivals.’
Why is it we dont manufacture microprocessors in the Bay Area anymore?
Its not a brainless job! You can make or break $1M worth of product in an hour.
Joined: April 28th, 2007
Posts: 0
Comments: 195
Moderate I. :
See… I’d be happy to generalize about frat boys. I’ve only really met one who was worthwhile, degree or no.
Joined: October 28th, 2005
Posts: 0
Comments: 1320
But in those 20 successful years, that high quality engineer should have developed a lot of contacts in the industry, many of whom have moved on to bigger and better companies, and some will be in decision-making positions. Just call them up and bam, you’ve got yourself a job.
Not if the company they work for has a policy that states the applicant must have a degree.
Joined: September 21st, 2005
Posts: 45
Comments: 4425
Randyman - where in the video were they touting gold - the one I watched never mentioned going back to the gold standard and gave the impression that metals as monetary commodity was a bad idea and unsustainable. Did you actually watch it?
About 4-5 minutes into it they begin the standard “all the trouble began when…” stuff about how feudal monarchs and goldsmiths began spending more than they had in reserve.
Since both situations relate to gold as currency-backing, show multiple cartoons of guys in robes with crowns and big piles of shining yellow stuff in piles, I guess I might have jumped to conclusions.
I did not watch all 45 minutes, admittedly. I watched about 25 minutes, and lost interest after the fifth time the narrator recounted the evils wrought by fiat currency.
Joined: April 8th, 2006
Posts: 15
Comments: 4854
I’m pretty non-conforming, but anybody who shows up in an interview with a kilt or greasy hair demonstrates contempt for people who are interviewing. It’s bloody easy to get a college degree in this country, people without a degree better supply a good excuse for not having one. I’m friends with a few brilliant dropouts - awesome people, terrible employees.
SFBB,
Goat blower…I must remember that one…maybe expand it to “blow great big fat tail goats”.
Joined: April 8th, 2006
Posts: 15
Comments: 4854
Maybe voluntary sterilization in return for debt relief…
Joined: July 30th, 2007
Posts: 0
Comments: 20
I’ve done my constructive part. Thanks to Patrick, I’ve sent the message to my representative and senators Boxer and Feinstein.
Joined: April 8th, 2006
Posts: 15
Comments: 4854
moderate infidel,
As mentioned by Peter P, a degree is a screening tool. If you can’t be bothered with college, it is highly likely that something is wrong with you.
If I were an employer, I would be happy to accept experience (demonstrating responsibility, reliability, knowledge and a certain broadmindedness) in place of degree. But I find these characteristics to be quite rare amongst non-college educated people, especially in white collar job situations.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
It is fine to forgo a degree if you have something better to do, especially with the escalating costs. The challenge of going through college is strictly financial anyway. How difficult can classes be?
BTW, I judge people by instinct only.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
Again, the most successful people in world do not have degrees. One notable exception is Warren Buffett (MS Economics) though.
Joined: April 28th, 2007
Posts: 0
Comments: 195
Moderate Infidel,
Maybe you’re equating all degrees with MBAs or something, but most of the jobs I’m interested in having require extensive training beyond what you can get in highschool. I have degrees in Comp Sci and Biophysics and the jobs I’d get hired for with those degrees are not doable by people with no training.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
My theory: if at all possible, one should pay for the child’s education in full. Otherwise, the kid will have to work through college doing low-paying jobs in school.
Here is the twist: there are other relatively lucrative, full-time semi-careers (like waiting tables, selling electronics, etc.) out there; it is just too easy to be tempted away from school.
I am not saying that sidetracking from school is necessarily bad, but one must have enough discipline to make the next leap or he will be stuck in semi-careers for life.
Joined: June 14th, 2005
Posts: 112
Comments: 15465
I have degrees in Comp Sci and Biophysics and the jobs I’d get hired for with those degrees are not doable by people with no training.
Training is over-rated. I have a degree in Computer Science and I am certain there are tons of HS kids out there with 10 times my technical knowledge.
Passion is more important.
Joined: July 5th, 2005
Posts: 119
Comments: 4739
Training is over-rated. I have a degree in Computer Science and I am certain there are tons of HS kids out there with 10 times my technical knowledge.
I do not receive my degree in CS, but self-trained and obtained industry certifications later as an adult. And most of what I learned is already obsolete. Working in IT field requires constant retraining and new learning. It’s the career equivalent of being a shark –keep moving or die.
No degree will ever teach you everything you need to know. However, any good college or university should be able to at least show you HOW to educate yourself and think more critically –skills that are broadly useful in life (and woefully lacking among the general populace). That ability alone will help set you apart from non-grads, though is far from a guarantor of success. As Peter P likes to say, the rest is mostly luck.
Joined: April 8th, 2006
Posts: 15
Comments: 4854
moderate infidel,
Of course there’s nothing wrong with non-college graduates if they’re motivated enough to do something with their life.
Hell, even non-motivated non-college graduates are fine, so long as they don’t expect SUVs, 3,000 sq ft homes, and brain dead $150,000/yr job to be waiting for them.
Perhaps things will return to normal once realt-whores are out of the running.
Joined: October 10th, 2007
Posts: 0
Comments: 6
The market needs to crash and crash hard. Homes are not investments, they are consumables akin to cars. Logically, they should depreciate, as they age and things start falling apart. They are places to live, not things to profit off of.
The sooner that “investors” and “speculators” get hit hard, and the sooner they are kicked out of housing, the sooner real people can afford to live in reasonable homes. I have no sympathy and little compassion for those who profit off of destroying the middle class.
Joined: August 31st, 2007
Posts: 0
Comments: 1
NO BAIL OUT, AND HERE IS WHY. About 3 years ago my wife and I had finally saved 20% of the average home value where we lived. I was in my mid forties and it had taken that long to save the money. Then we went home shopping. We had excellent credit and both worked for legimitate employers, with good paying salaries. However, in the 2 consecutive cases we tried to buy a home, we were shut out at the last minute by speculators, because they paid FULL CASH and WAIVED THE HOME INSPECTION. I was extremely bitter, especially because I recognized that “our” real estate agent was encouraging a bidding war. At that point, I realized what kind of dirty game it was. I was also aware that many people elected to take out riskier loans, and were willing to buy homes with little or no money down. I’m sympathetic to anyone gullible enough to believe that such decisions do not carry high risk, but that does not mean I am willing to pay for their bad judgment. Bailing them out will only reinforce their perception that they did the right thing (buying with no money down, with a variable rate, bidding up the price, etc). That in turn will encourage more predatory lending and predatory real estate agents, who will simply resume targeting hopeful but gullible people.
Joined: September 5th, 2007
Posts: 0
Comments: 1
this is ridiculous. My family income is over 110k year in LA but cannot afford a good size of home for my two new borns. Using our tax dollar to bail out those flippers that make us homeless. I will vote against those supporting bail-out.
Joined: September 21st, 2007
Posts: 0
Comments: 5
Any effort to make houses more “affordable” (including the Mortgage Interest Deduction) simply causes house prices to rise. Even though I personally have benefited from the Mortgage Interest Deduction, I would love to see it eliminated.
The thought of a bailout for people with mortgages they can’t afford makes me want to cry. It’s the most obscene thing I’ve ever heard of.
How about a refund of excess property tax because my house was overassesed? My little florida shack that I spend 1/4 of my time in isn’t worth its valuation. But because flippers with fraud mortgages pumped what was essentially printed money into the area, myh property taxes go up every year. And nobody cares about me.
I’ve been a Democrat since I first registered to vote. These proposals will have me switching parties and allegiances.
Joined: September 21st, 2007
Posts: 0
Comments: 5
THere’s a very simple point that we should all be writing letters to every representative about:
Anyone who put a “stated income” on a government-backed mortgage application needs to pay their federal income tax on that “stated income”. Or go to jail.
Joined: March 18th, 2008
Posts: 0
Comments: 1
Wait… how about just the poor out there? Like me. Who did not lie on any application. Who selected the cheapest house. We are getting screwed. The pricing on houses is through the roof. What I paid in LA for mine, I could have 3x’s the house in TX… Lenders suck big. They lie to and cheat everyone.
Joined: September 24th, 2008
Posts: 0
Comments: 1
Give it up! A bailout is inevitable. But it’s the investment banks and financial institutions that will be bailed out. Otherwise, credit in this country would disappear, and you would never be able to sell your house, or maybe even use your credit card. Yes — you would be hurt without this bailout!
There will be some home buyers that will get a deal, and that’s not fair. But who guaranteed you that life was fair? About 10% of the mortgages in the US are in trouble. The really lousy creditors, and the house flippers still stuck with houses, have already gone. The next group, if they can hang on, will get a deal from this. No, not fair.
What’s really not fair is my children and grandchildren getting stuck with the resulting Federal debt payments. At least this will hopefully be the death of the Republican belief in unfettered free markets.
Joined: September 30th, 2008
Posts: 0
Comments: 1
If you don’t understand the loan papers then don’t sign. If you cann’t make the payments then don’t sign. What is hard sbout those questions.
No excuses and no bailout.