patrick.net

Saving is a winning strategy if you save so much that most of your income comes from passive investment and therefore is only subject to meagre capital gains tax. Then if you make more than a million a year, you are subject to even lower cap gains tax than someone making $300K a year.

If you are rich, congrats, you will get richer by design. If you are just a upper middle class, swim harder and make sure you become rich, cos else the IRS will come right after your ass.

If you are middle class, the odds are, your future is doomed (unless you hit a jackpot of course), you will descend to the working class. If you are working class, oh well, shit happens, try again next life.

If you make no income at all and cannot fit into any classification stated above, congrats again, that may be a sweet spot to be in.

Conclusion: either become rich or nothing matters.

This is not incompatible with my anti-401k stance. It is not possible to get rich from contributing to 401k. However, contributing to 401k takes away current opportunities. Hence 401k is useless.

Not investment advice.

Economic stimulus money should not go to people who read this board anyway; it’s counter to the goal of the government. The goal of stimulus is to give money to people who will immediately waste it in stupid stuff, creating economic “stimulus”; that means poor and dumb people. If any stimulus money finds its way into the hands of people who are financially non-retarded and/or remotely responsible, it’s either a distribution failure or a side-effect of some republican’s seemingly-outdated notions of fairness, equality, capitalism, and/or financial responsibility, all of which are shunned by all the stimulus plans.

Furthermore, as several people said, this is only the beginning. I’d be shocked if the government is not literally printing money to pay off home loans for morons with no business buying the home being paid off by the time this is done. This is an election year, and the democrats couldn’t even spell financial responsibility, much less comprehend the long-term effects of printing money to appease their supporters.

“It’s good for homebuyers who have prime credit, have some money to put down and can meet tougher underwriting standards that are in place now,” said Guy Cecala, publisher of Inside Mortgage Finance, a trade publication. For homeowners with blemished credit who are struggling to pay their mortgage bills, the change offers little benefit, he added.

This is the key point. Therefore raising the limit - just by itself - will have a very low impact. If they start changing the guidelines - that is allow higher LTV and/or DTI then it's bad.

People, please realize this. Very very few folks would qualify for a 600K loan on the agency guidelines. Only dual income techie kinds.

Of course the next step might be to relax the guidelines. That does scare me.

It has become crystal clear that our government wants only to continue to push the day of reckoning off as long as possible. This is exactly what they are doing with entitlements (SS and Medicaire), and now they want to do this with the much-needed swift kick in the arse the consumer-based debt economy needs.

Maybe these kinds of measures will push the problem off enough so it won't come home to roost in our lifetimes, but to be sure, there will be a day of reckoning. The longer it gets pushed off, the bigger the likely crash and burn. We really don't give a shit about our kids, do we? It's pathetic.

We really don’t give a shit about our kids, do we? It’s pathetic.

Boomers really do care about their kids. They have created the so-called Trust Fund Generation.

Of course they don't care about your kids.

Bap33 Says:
January 24th, 2008 at 4:50 pm
"a lanlord license - $500 per unit, per year.
a rental tax - 10% of total rental GROSS income
each county / city will designate “rental districts” that will be levied a tax to off-set the high cost of police and other public services (grafitti removal for example) that come from rental areas - $2 per square foot, per year.
All SFH’s built in the last 5 years, and going foreward from hence MUST be OWNER OCCUPIED for the first 10 years of occupation. Period. "

Great ideas, they are very easy to pass on to the renters. I'm all for that.

"I like my ideas because nobody has to fund the game that is not involved. Let the rich pay-2-play."

I like them too, they make barriers to entry difficult for my competitors and then I just recoup from the tenants.

OO you are correct, the "band gap" between the rich and everyone else in the US is widening rapidly. And the "band gap" between say, working-poor and lower-middle-class is widening at least as fast.

It really is becoming a matter of become rich if you CAN or stop beating yourself up working so hard and become a happy bum.

People who can save for a downpayment and want to remain in an area should buy houses. Everyone else should continue to rent.

If the the gov sponsored cheap credit and emphasis on "everyone should own" did not occur, both the costs of renting and the cost of buying would be lower. People would still be loathe to spend more than one third of take home on straight housing costs.

each county / city will designate “rental districts” that will be levied a tax to off-set the high cost of police and other public services

I distinctly bought my rental SFHs in predominantly "ownership" areas, so I guess I would miss paying the levy. Also, no SFH area is completely rental, so those who are owner/occupiers in such a "rental" SFH area would get hit.

Just scrap Section 8!

Just scrap Section 8!

Agreed.

I hate fake compassion anyway. Let's all agree that self-interest is the driving force of humanity.

But I really do not understand liberalism. :(

It is pointless to debate the merits of any proposal to lower housing prices. No politician that wishes to be re-elected would ever dare utter such a desire in public. Thet'd be better off getting caught in a public restroom with Larry Craig, Britney Spears, and a bag of crack.

As a practical matter, lowering housing prices is easy: stop the enormous volume of subsidies and taxpayer risk underwriting (GSEs, FHA loans, MID, 1031, 24-month club, etc.) and let Mr. Market do his thing.

Preventing a NEW housing bubble from forming in the future is also easy: ban stated-income, $0-down, I/O and neg-am loans altogether. Basically, reinstate Glass-Steagal. Oh, and don't allow the Fed to push short rates below general inflation, or do something even more stupid and reckless, like instituting ZIRP a'la Japan.

Too bad housing prices isn't a practical matter --it's a political matter.

There is another nice article by Jon Markman on MSN Investor site. Some time ago he wrote about the whole CDO/CDS mess based on his talk with Satyajit Das. This is also based on his talks with the same person. Highly recommended.

HARM, are you in the Bay Area already?

But I really do not understand liberalism

Compassion overcome by greed. If I see a person I think is needy, I can use my personal resouces to help. But if I do not want to share, I can claim compassion by voting for people who will promise tax money to help.

HARM & family are now in the Mighty Bay Area. We are homeless renters living in temporary housing. Does anyone in the East Bay have a refrigerator box they can lend us?

Why do people even want to have compassion? Do they sleep better at night? Why don't they get a white-noise generator instead?

Blog party?

As soon as the HARM family has secured adequate rental accommodations, such as aforementioned refrigerator box, or a nice, toasty freeway underpass, then yes, a Blog Party sounds like a plan.

HARM :

Welcome to Bay Area. May you buy a home using the stock options and start your unstoppable journey on the road to limitless wealth.

Thanks, SIBA! I feel richer already --just being near Google, Yahoo, Apple, etc. However, I'm not close enough to Marin & the Marina to get a full dose of smug. We'll chat later --gotta go put another nickel in the meter so my "house" doesn't get towed away.

HARM - just look alongside the 101 just south of Mathilda. Look for the Silicon Way Inn. Then go next door, to the place that's owned by the same family of chindians and a few bux a night cheaper. It'll be about $40 a night and they really won't care how big a family you cram in there. Turn the TV up so the endless drug deals at night don't bother you. I spent a week there when I first arrived in Silly-Con Valley and it was a good intro to BA culture. Oh, the ppl running it are really nice (white family who are doing pretty well getting to clean rooms, that's a good job for white folks) but the guy manning the desk drinks and gets MEAN at night so just shrug off anything nasty he says to you when the sun's down - all will be forgiven and it will be peaches'n'cream in the morning.

Congrats on your move - suckers.

PeeterPee 'n' Headset - I knew someone on Section 8, she had a huge apartment for which she paid about $350 a month, ok so far as that goes, but then she turned around and spent another $350 a month on storage for a bunch of..... utterly useless shit. I mean, that stuff was not worth dollar one. So, she was still shelling out $700 a month, and probably could have rented something OK for that. Plus her place was full of junk, there's such thing as having TOO MUCH room I think!

Guess I'm just bitching because with my WASP last name I'll never get Sec. 8 even if I might need it sometime.

Welcome HARM!

Welcome HARM to the mighty Bay Area, please get yourself acclimatised to the price tag.

Oops, I just realized that the conforming for the Bay Area could be $729K, because we are "high cost" area.

It looks like the US government is very determined to make our median home price as close to $1M as possible.

What shall we do now? Shall we join the dark side, go out and borrow as much as can? Idiots have hijacked America, let's join the idiots.

Looks like 20 days of recession are over. Happy days are here again. I will continue to rent for the rest of my life, while my interest only buddies keep refinancing their 800k condos.

I feel like crap for moving my 401k etc. to money market/treasuries. What madness!

Also, why don't they mail prepaid VISA cards instead of checks? That way people will not risk saving the money and will spend it for sure. Heck, a $1600 Walleymart gift card would rock.

625k is still insane conforming limit. 7 years ago it was 220k!

Median price in CA tracks the conforming limit loosely. But now that prices are going down they have too goose the limit up to keep housing growing to sky.

So long term what is the effect of 625k jumbo limit? everyone in the world will 'fix their credit' temporarily to qualify for a conforming loan. Then FNMA and FREDDIE will be stuck with 'a paper' with sky high defaults. But thats 2 years from now, who cares right?

While we are making pointless suggestions to modify the tax code to fit our own self interest I propose LOWERING the conforming limit to 200K. And it never ever ever goes up from there.

HelloKitty,

you can move to France now, I misread it, we are most likely going to have $729K as conforming limit.

Might as well move to France. If im gonna rent 4evar paris sounds nice.

Im basing that on the vegs casino verson of paris - how different could the REAL city be?!

729?!?! Why doesnt the gubbermint just underwrite the loans too, I should be able to go direct to FNMA and not pay all those fees to CFC and Wells...no one is proposing THAT. Again only losses get shoved to taxpayer.

There's a place in France
Where the ladies wear no pants
And the men don't care
'Cause they like to see them bare...

People ....

Increasing the limit is one thing, but the real problem is QUALIFYING.

Common, the conforming part only reduces the interest rate. That is not the problem why people cannot refinance to avoid foreclosure. The real reason is they cannot qualify due to tighter requirements.

This will definitely help people with solid credit, who have saved large down payment and are WILLING to buy at these prices in this changed world. Yes, it will help all 7 of them.

It will definitely fool BA sellers into thinking that they can now get their wishing price and give a false sense of hope for a while.

Most likely the lenders will find some way to off-load their unwanted toxic junk on to Fannie Mae. Not sure how true that speculation is. We will know soon.

Start worrying when the agencies relax the qualifying criteria. It is very much within the realm of possibility.

@Randy H, Bap33, OO, Peter P, SIBA, etc...

Thanks! I'll be in touch soon, once we're a little more settled.

It looks like the US government is very determined to make our median home price as close to $1M as possible.

What shall we do now? Shall we join the dark side, go out and borrow as much as can? Idiots have hijacked America, let’s join the idiots.

Honestly, at the rate the R&S bailouts are coming (and growing in scale/magnitude), I'm starting to wonder why I'm *still* solvent and responsible. I know it's really all about bailing out the banksters, not Joe Homedebtor, but there are times when I feel like saying "F**k it --let's go out and get Mr. & Mrs. HARM the biggest McCrapshack we can find with a $0-down NINJA-ARM --while we still can!"

The people that predict BK for FNMA and freddie will be glad to see the conforming loan limit rise- this increases chance of huge losses for them. Even if the 'genuises' and FNMA can see thru the crap loans CFC will refi in conforming and deny them.....in declining housing market Prime borrowers default in high rates too....and declining market with recession and job loss? 5% down payment doesnt give you any security- they should only take 25% down payment loans/75% max LTV.

But we all know conforming loan standards will be eased and ez to lube your way into the rear of. Hopefully not.

But we all know conforming loan standards will be eased and ez to lube your way into the rear of. Hopefully not.

Xactly. Everyone who keeps insisting that 'There Will Be No Bailout' (including, strangely, Ben Jones) forgets that the same asshats who are jacking up the conforming loan limits can *also* change the rules re: borrower qualifications at will.

FHA/GSE underwritten neg-am $0-down NINJAs? Not impossible.

HARM, welcome. What are you doing in South Bay, do you have a job there?