patrick.net

BoomAndBustCycle says

FortWayne says

When we lived in rent controlled building, our rent was approaching $500/month while new renters were paying over a $1000... that's why we ended up staying there so long, we couldn't get that kind of deal even if we were poor in section 8.

Kind of shoots down the notion that renters are mobile. If to keep your housing costs low, you have to stay put in your rental for years on end.. so much for job flexibility vs. a mortgage.

Not really. It's always been this way, some areas are just too expensive and families with certain incomes can't move into them. Place where we live it is not the case. But if you go north just 20 minutes on 101 you'll run into places that are too expensive for probably most Americans.

The point is that we should not have to work 2 or 3 jobs and give up having a family, having a pet or having a night out now and then. Incomes should reflect the current cost of living and allow at least a chance at an independent life free of government programs and hand-outs. We should not have to rely on anyone to help us pay our bills if we are working hard and often.

If those companies who took jobs out of the country would bring them back, it would be good for the country... but they don't care. They keep their fat bank accounts out of reach and don't even pay appropriate taxes. Our government made this possible. Lobbying for the rich is going to destroy our country. While a few lined their pockets with loads of pay-offs, the rest of us lost everything we had and worked so hard for.

I am not talking about lazy welfare-loving people with no ambition here. I mean people who paid into the system, worked their butts of for a good life and then lost it all due to the corruption in the banking and finance, real estate, and investment industries rush to profit.

If more jobs were in the USA that paid appropriately, then incomes would be more stable... then we could possibly buy some of the products those outsourced companies produced and the fate of our citizens would not be in the hands of corporate greed and banks who are well above their deserved profit margins.

Its easy for some one who has escaped a cut back or a lay off to tell another to 'get another job' when they are not feeling the sting of what is happening around them. It takes 6 to 12 months to get a job that pays even minimum wage ($7.65 per hour) where I am. Unemployment benefits are temporary and not what real working families need or want. We need to be able to take care of ourselves and our families. The current state of the economy has all but the wealthy in a state of emergency and hopelessness.

The example in this post does not include any type of emergency. Flat tire, new washer or dryer, renter's insurance etc. Anything can happen and any one of them could place the example household into complete failure. Its all broken and we need to fix it.

hj2222 says

The point is that we should not have to work 2 or 3 jobs and give up having a family, having a pet or having a night out now and then. Incomes should reflect the current cost of living and allow at least a chance at an independent life free of government programs and hand-outs.

That won't happen without tarriffs and protectionism. And the global banking elite won't allow tarriffs and protectionism.

hj2222 says

The point is that we should not have to work 2 or 3 jobs and give up having a family, having a pet or having a night out now and then. Incomes should reflect the current cost of living and allow at least a chance at an independent life free of government programs and hand-outs. We should not have to rely on anyone to help us pay our bills if we are working hard and often.

This is a reflection of:

a) The rich hoarding all the money for themselves.
b) People in other countries willingto do your job for less.
c) Increasing automation of meanial jobs.

I'm not concerned with the very poor.

Plus, my Randian Gospel tells me that they're poor for a reason, and my normal Gospel tells me that they're devil spawn.

hj2222 says

The point is that we should not have to work 2 or 3 jobs and give up having a family, having a pet or having a night out now and then. Incomes should reflect the current cost of living and allow at least a chance at an independent life free of government programs and hand-outs. We should not have to rely on anyone to help us pay our bills if we are working hard and often.

Communism failed. Forget it.
Income is earned, it does not come from thin air. So go to college, earn a skill, get a job and live within your means. That is what most people do.
The opportunities are there for everyone.

Raw says

Income is earned, it does not come from thin air.

Unless you've successfully enslaved most of the population via Crony Capitalism. Then income *does* come from thin air. Or more precisely, from the labor of others.

Did the big banks earn their bailouts? I didn't think so.

We made less then that for years and managed to save. But we did so making a few choices others probably wouldn't like.

1: Rent a room in a house with other housemates. Result: We never paid more than $600-$800 a month. Sure- you are sharing a house with other people. But that also reduces the cost.

2: Get a beater Honda or Toyota. 15MPG is pretty bad fuel economy. We've drive 30+ MPG beaters for years. Makes a big difference.

3: Shop at the discount grocery store: Some of them have pretty good food. Some of it is simply overstock from other stores. The prices are about 20-30% less.

4: Do your own maintenance. Wayyyy cheaper to do things like change your own oil, spark plugs, air filter, and other stuff. Buy a shop manual. It isn't that hard. and get yourself a basic set of tools. I changed the clutch myself on my small pickup for $300. Dealer or shop wanted $1,200.

5: Get a notebook or setup a spreadsheet to see exactly how much you 'reallllly' spend. Amazingly, a LOT of money you'll find goes for stupid stuff- like junk food, small things at the store, and so on. Find ways to eliminate those things.

Anyway, we make a lot more then that now and recently bought a house. But we still do those things and as a result we save a lot of money. Its not just for people who make less money. All people could benefit from simple common sense practices.

edvard2 says

1: Rent a room in a house with other housemates. Result: We never paid more than $600-$800 a month. Sure- you are sharing a house with other people. But that also reduces the cost.

This is also quite dangerous. Housemates steal or move out suddenly with no notice, leaving the place a mess as they go (sometimes with your stuff in tow). If you have to have a housemate, you're usually too poor not to do so, and this creates a trajedy of the commons mentality about where you live. It was never yours in any legal fashion, so why care for it? No, living like Mexican and Chinese laborers isn't the answer. Some of the other ideas, like downsizing one's car and learning to change your own oil and tires is a good plan, but housemates are trouble.

Housemates or rental mates can be ok, learn to check crime records, it's free if you know how to do it. And, become a better judge of people. Go look at the place so you can see what they live like, see if you can handle it, check out the neighborhood, etc. I can often tell allot just by talking to someone on the phone, but everyone is different. If your living with room mates your usually to broke to own anything of value so don't worry to much about getting ripped off. I was going to get a room mate, but was to shy about it, instead opting for a very small living arrangement.

futuresmc says

This is also quite dangerous. Housemates steal or move out suddenly with no notice, leaving the place a mess as they go (sometimes with your stuff in tow). If you have to have a housemate, you're usually too poor not to do so, and this creates a trajedy of the commons mentality about where you live

I did it for almost 14 years. Never had anything other than minor annoyances ( like people eating my cereal) and whatnot occur. On average we paid 50% less for rent than those who chose to rent alone as a couple. Result: we saved a lot of cash. Now we own a house. Had we not shared a house.... probably would still be renting.

By the responses above, we can clearly see who understands what the 'other' people are going thru and who is completely separated from it.

@Raw said "Communism failed. Forget it.
Income is earned, it does not come from thin air. So go to college, earn a skill, get a job and live within your means. That is what most people do.
The opportunities are there for everyone."

Income is earned? Maybe for some, but not those who are banking $3m in bonus every year. Those bonuses came from citizens of the USA... the taxpayers paid those bailouts. They certainly did not 'earn' them.

Go to college? Really? Sure, we don't have 2 pennies to rub together, but hey... let me quit one of my 3 jobs and get loans to the tune of $20k or more, keep my other 2 jobs while I am at school and just not sleep for 2 or 4 years, and then apply to every company that would respect my new degree and then have to take my old job back at McDonald's because there ARE NO jobs available for new graduates with no experience. In reality, companies are still managing the downsizing from 5 years ago and have another large round of lay-offs to manage. Lets not forget they are eliminating retirement packages and pushing early retirement to those who have been there the longest and make more money. They see the $$ in letting those loyal long-term workers go so they can hire 4 new starving-for-work employees at a fraction of the pay.

Live within your means. Well I believe that was the topic of this thread to begin with. These are not poor people as a rule. We are talking middle to middle-upper who have been devastated because of the schemes and bailouts and payoffs orchestrated by the wealthy and powerful.

Opportunities are NOT there for everyone. They exist, sure, but you have to have money and/or connections to have access to them. Unless you are a tech guru and make a killing online, the opportunities are not within reach of most of those who are affected by the economy.

@Edvard2...Rent a room? That is assuming there is a room to rent. Most rents are out of touch for anything more than 1 bedroom.

Getting an older car? The people I am speaking of don't even have a car. A monthly bus pass is $40. Having a car means insurance, gas and possibly a car payment along with upkeep and maintenance.

Shopping at a discount store. Again, really? Those I am speaking of get leftover Sunday papers on Monday from the stores that will allow it and use all the coupons they can find then only buy items on sale or that have a discount.

Get a notebook and see exactly what was spent? I don't see how that is useful when all the money you make goes on rent, utilities and food. There really is not much left to write down.

I sat with my 22 year old son and tried to help him work out what he needs to survive. With the figures we came up with, after rent $650, power $120, Phone (cell only) $110, food, $300, bus pass $40, clothes for work $50, Incidentals (shaving, bath laundry soap) $75, laundromat $60, save $200 a month for medical emergencies (no one will hire ft so no insurance benefits) That is $1605 outgo bare minimum.

TWO PT job 32 hours a week. All we have seen as far as job offers start at min wage. The jobs are announced and filled within hours.

$7.65 x 32 x 4=$979.20 - 25% (average taxes) =$734.40 x 2 = $1468.80

Still $136 shy but I guess he could eat less. So as you can see, this is working 2 jobs 64 hours a week and not even have enough left over to see a movie much less date or have a pet. Forget having a family.

My children are trying to live through this. My husband and I have been through it. I see it every day with my neighbors and the friends of my children. The setup is to fail. College is out of reach for most... and frankly its not realistic any more. That is now a privilege for the well connected and wealthy. The American dream is gone for all but the 'haves'. The 'have-nots' are stuck in an endless cycle of who to pay this month and what to give up so they can eat. Open those eyes and take a look around. How many times do you see entire families on corners begging for money? How many times do you see lines at the pawn shops with people selling anything they can just to pay the rent? You may not notice it in your personal life and in your circle of friends, but the rest of the country is SUFFERING and its only going to get worse.

I have no idea how to fix it. I don't want hand outs. My kids don't want welfare. My friends don't want to have to ask for help. We just want to be able to make a living without dying for it.

I blame:

Banks
Wall Street
Real Estate
Corporations
USA Government

I am frustrated with the comfortable people in this country who can't see past their noses even though they spend most of their time looking down them. This holier-than-thou, disrespectful and condescending banter is insulting. We work just as hard as those with money... and in most cases a lot harder. Large corps dont pay the same taxes. They dont pay the same fees. They get away with lies and schemes that cost people their entire life savings and they dont even get a hand-slap. Underhanded and deceitful. Selfish and greedy. THAT is why we are in the mess we are in.

So don't tell us to go to school because we cant afford it. Dont tell us to rent out a spare room because we dont have one. Dont tell us to get a cheaper or older car because we dont have one to begin with. Dont tell us to watch how we spend money because we pay the same 3 bills every month (rent, utilities, food). Do you understand?

See? That's the problem right there. You expect too much!

Americans don't feel comfortable living in squalor, doing their own car maintenance on a vintage pos, and eating crap food while working three shitty jobs. What's wrong with them!?!?!

Maybe the answer to high prices and the declining standard of living is some system of private group owned coops where goods are produced but cut out the wall street middleman rip-off profit. Imagine a group owned oil company that sold gas to its members for what it cost to produce... and so on. The coops would directly compete with corporations, most of which have little or no competition now.

hj2222 says

By the responses above, we can clearly see who understands what the 'other' people are going thru and who is completely separated from it.

@Raw said "Communism failed. Forget it.
Income is earned, it does not come from thin air. So go to college, earn a skill, get a job and live within your means. That is what most people do.
The opportunities are there for everyone."

Income is earned? Maybe for some, but not those who are banking $3m in bonus every year. Those bonuses came from citizens of the USA... the taxpayers paid those bailouts. They certainly did not 'earn' them.

Dear Hj2222,
I am truly sorry for your misfortune, but you really need to stop whining.
We live in a country that has one of the highest standards of living in the world. Everyday there are people risking their lives for a shot at the American dream. Would you want to trade places with them? If you cannot get optimistic and do what it takes to get your piece of the pie, then you have only yourself to blame.
I have known doctors who were dead broke in terms of net worth, and a garbage collector who had his little home almost paid off. How did he do it?
It's not how much you make, it's how you use what you make.
You need to change your lifestyle, save up some money

Lol. I see that emotionally unstable people are not exclusive to cancer postings.

I'm just imagining the furious hand and arm waving going on during these rants.

@dodgerfanjohn and @raw, You both are mistaken. My husband and I have managed to work it out, but we were lucky. We are far from where we should be at this point in our lives, but we are in better shape than those I speak of above. This should be evident since it is after library hours and I am clearly on the internet. This would be a frivolous extra expense if in the situation I am discussing.

My mother lost all of her retirement due to the fallout of Wall Street schemes and the investment company the hospital she worked at for 20 years chose. She is now living on $700 Social Security a month when she should be doing much better with all of her savings over the years. We are, of course, helping her.

We have several friends who were completely ruined by the banks and their packaged mortgages. Two lost their homes due to inflated prices and increases in mortgage payments every month. Another family is living in a home that they owe over twice as much as the value of the home. Also a Wall Street and Banking greed result.

I have several more examples, but I am hoping you get the gist of it.

What you are clearly missing is that its not just how you use what you make. Millions of people did the responsible thing and played the game as instructed. They were lied to. So, it is also what you have already worked hard, slaved, saved and earned that has been STOLEN from you.

That garbage truck person... he may very well be in the same boat as my friends are. Does he not deserve the same consideration? People work their entire lives and save for things that the wealthy toy with. We are all played and taken advantage of and the only ones who are not upset about it are the ones who came out of it without a scratch.

For so many of these families and individuals, it is too late to go back and start over. Their time is over. Either they are too old and can't possibly work and recoup what they lost, or they have simply lost too much and have no way to get back to where they were. For others they did the college thing, had a job, a home, a family and were doing just fine until corps took jobs away and Wall Street and banks played with our homes. They made SO MUCH MONEY! SO much! But at the cost of people who did the right thing.

"If you cannot get optimistic and do what it takes to get your piece of the pie, then you have only yourself to blame."

How about making the companies and organizations responsible for stealing millions of Americans' pies? I have no issue with taking a hit and standing back up, but when it is so blatantly unfair and underhanded to every person in this country... and benefits certain connected and wealthy groups.. it really makes me angry that people, like you, just stand back and basically say,

"yep little girl, you got gang raped by a bunch of huge fat rich men. Get over it. Be optimistic. Only you are to blame if you can't survive this."

What happens to this country when apathy gets the best of us? At some point, it will not matter who has money or what companies have the best products because there will be no one left that can afford to buy what the wealthy are selling! Our entire country is at risk and you want to tell people to stop whining?

I dare say that if you had lost your entire nest-egg and your home, you may be seeing things a little more clearly. Obviously you have not had the loss and have not been fired/laid-off and lost everything. Your credit has not been ruined and you still have a few extra dollars to go out on the weekend with your significant other. You still have those freedoms. NOT everyone has fared as well. Just because I am not living on a dirt floor and eating mac and cheese every night does not mean that what has happened to millions of others is OK. Not by a long shot. Those who have gained and profited by destroying American lives and families need to be held accountable.

Zakrajshek says

Maybe the answer to high prices and the declining standard of living is some system of private group owned coops where goods are produced but cut out the wall street middleman rip-off profit. Imagine a group owned oil company that sold gas to its members for what it cost to produce... and so on. The coops would directly compete with corporations, most of which have little or no competition now.

If this could be done, it might save the rest of us. If we could take control and say 'ENOUGH ALREADY" and take back our country, that would be optimal. Unfortunately, it would take an enormous amount of organizing and talent... and I am sure a lot of defending. The last thing the wealthy want is for us to do to them what they did to us.

It would sure be a powerful example of the resilience and determination of the 'other' American classes.

I would be in for sure.

hj2222 says

We have several friends who were completely ruined by the banks and their packaged mortgages. Two lost their homes due to inflated prices and increases in mortgage payments every month. Another family is living in a home that they owe over twice as much as the value of the home. Also a Wall Street and Banking greed result.

This sucks, for sure...I'd hate to find myself in that situation (unlikely), but what I don't understand is why it matters in the short term. If they bought a house they could afford to pay the payments on, and it tanked in value...they should still be able to afford the payments, right? I get it that in the long term they end up paying more than the house is worth, so it's a net loss to their net worth...but it shouldn't affect their situation now. Yes, they made a bad decision (and maybe were lied to), but they have 30 years to recover from it. Unless their payments went up when they were told they wouldn't...or something crazy like that.

hj2222 says

I dare say that if you had lost your entire nest-egg and your home, you may be seeing things a little more clearly.

Again, that would suck, for sure. But how did it happen? How is it that you lose your entire nest egg? Do you invest in the company stock where you work or something [really insane] like that? Yeah, my shit took a big hit when the economy tanked...but I mostly recovered...lost several years, but I was reasonably well diversified, so it's not that big of a deal -- certainly nothing _close_ to losing my whole nest egg...

Again, the losing of the house...I suspect they made some bad decisions along the way, and if they hadn't...maybe they'd be in a lot better shape today. It may not be fair, but some people are better at making complex financial decisions than others. It usually doesn't matter too much -- you overpay for a car by $2,000 because you got tricked into some fancy financing scheme...or whatever...but with a house, the stakes are very high indeed -- especially when you are buying something that is 5x your income (bad idea)...that's a lot of dough for almost everyone. If you screw it up, well...it's gonna hurt. Nobody made them buy the house at the inflated price, right?...Sure, the bankers and RE agents etc were happy to watch the prices get pumped up, but no one was forced into buy a house...

I do feel sympathy for the people who got ruined in the whole mess...but at the same time *they* are the ones that drove house prices up as to make them unaffordable for me. If they hadn't been making stupid financial decisions, the demand wouldn't have been there, and I could have bought a nice house by now. There is plenty of blame to go around, for sure, but I believe a meaningful portion of it falls on the home buyers. Sorry.

everything says

Housemates or rental mates can be ok, learn to check crime records, it's free if you know how to do it. And, become a better judge of people. Go look at the place so you can see what they live like, see if you can handle it, check out the neighborhood, etc. I can often tell allot just by talking to someone on the phone, but everyone is different. If your living with room mates your usually to broke to own anything of value so don't worry to much about getting ripped off. I was going to get a room mate, but was to shy about it, instead opting for a very small living arrangement.

Many people have good experiences with housemates, but many do not. 'becomet a better judge of people' is not something you can just do. Some people read new people better than others. People lie, so background checking is not always effective, and just because you're poor doesn't mean you don't have things that a roomate could steal. When you're that poor, replacing a $100 TV set can be a financial hardship, as can staying up all night to clean their mess and worrying whether or not you'll get a new roomate in time for next months rent.

If you know the person beforehand, or get a reference from somebody you know and who has known the person for years, housemates can be a good thing. Strangers always bring uncertainty.

bgamall4 says

Wall Street set up the easy money that drove the prices up.

It takes two to tango.

Wall street set up the easy money for me, too. My mortgage banker told me he could easily qualify me for 2x (if not 3x) the house I was looking at. I knew better, and bought something within my means.

Again, there is plenty of blame to go around on this mess, and the bankers deserve their share, too. The way they understand mistakes is when they pay for them, and they should. I don't know if letting them fail was the right path, but if they are TBTF, then they have to be subjected to meaningful regulation.

Back to the main point...they did enable the situation, but they still had to have willing borrowers. They supplied the crack, but they didn't make anyone smoke it. There has to be some responsibility/accountability with the borrower.

swebb says

They supplied the crack, but they didn't make anyone smoke it.

Actually, there are documented instances of them making people smoke the crack. So to speak, of course.

There was more than just sub-prime predatory lending. There were forged documents and outright sleight of hand as well.

dodgerfanjohn says

On $40k income a family of four doesn't pay federal or state income tax

They still pay payroll taxes, which, before the crisis, made up something like 34% of tax revenues. Incidentally, that's more than the corporate income taxes which presently make up 14.4 percent.

swebb says

hj2222 says

We have several friends who were completely ruined by the banks and their packaged mortgages. Two lost their homes due to inflated prices and increases in mortgage payments every month. Another family is living in a home that they owe over twice as much as the value of the home. Also a Wall Street and Banking greed result.

This sucks, for sure...I'd hate to find myself in that situation (unlikely), but what I don't understand is why it matters in the short term. If they bought a house they could afford to pay the payments on, and it tanked in value...they should still be able to afford the payments, right? I get it that in the long term they end up paying more than the house is worth, so it's a net loss to their net worth...but it shouldn't affect their situation now. Yes, they made a bad decision (and maybe were lied to), but they have 30 years to recover from it. Unless their payments went up when they were told they wouldn't...or something crazy like that.

Yes, fortunately he did not lose his job and they can afford the payments... which went up as the tax assessments increased, but that has leveled off for them finally. They are in better shape than the other 2 families, but as you stated, it has decreased their net worth which affects a lot of their financial options. Refinancing, auto loans, home improvement loans, credit reports etc. They look like they are a high risk now and can not look forward to any relief for at least 15 years. So, they are seriously affected by this.

Also I would like to note that in 1995 when I bought my first home, the guidelines and qualifications were in place to prevent the buyer (me) from getting in too deep. They took a good look at my finances, qualified me for a home I could afford and I was gently guided along the way to a perfect 30 year fixed mortgage. Alternatively, during the stampede that we all saw in 2005, the agents and mortgage companies took every applicant they could find and put them into the largest loans they could get the buyer to agree on. They lied and told the buyers that houses were going up and that they better buy now and they should buy large so that they can make a large profit on resale. They did not check incomes, they did not check jobs, they did not verify references. They used scare tactics and emotional tactics to make buyers feel like if they did not buy now, they could never afford a home. Meanwhile, the loan brokers were being paid huge bonuses for every loan and the bigger the loan, the more money they made. The Real Estate agents were getting huge commissions and the mortgage companies were making bank packaging these loans and selling them on Wall Street. Remember, these are new home buyers who relied on the Real Estate and Mortgage industry to guide them... as they were told by their parents they would be. The blame is clearly set on the agents, brokers and mortgage companies. They swindled buyers and lied to them. I know this first-hand because I was with one of my friends when they purchased. I was at the showings and the signing of the contract. I heard it all. Heck I was even drawn into the urgency of it. It was very well played.

So in the name of greed, in 10 years, the entire industry went from responsible and caring... watching out for the buyers, to completely destroying them in the name of greed.

swebb says

hj2222 says

I dare say that if you had lost your entire nest-egg and your home, you may be seeing things a little more clearly.

Again, that would suck, for sure. But how did it happen? How is it that you lose your entire nest egg? Do you invest in the company stock where you work or something [really insane] like that? Yeah, my shit took a big hit when the economy tanked...but I mostly recovered...lost several years, but I was reasonably well diversified, so it's not that big of a deal -- certainly nothing _close_ to losing my whole nest egg...

It was not me who lost it. It was my mother in the example above. She was divorced late in her life and knew nothing about money. She trusted the Investment Company that the hospital had hired to handle retirement plans. She knew nothing about diversifying and just let the fund grow. She did very well for a long time. Then the investment company went risky and put a large chunk of everyone's retirement into some type of stock. Some fine print somewhere said it was OK. So everyone there lost all of their retirement. What was not lost in the investment was lost covering negative balances from the stock investment. I am not sure how that all works, but they all lost everything. The investment company was not punished and made no excuse. They did what they did with other people's money. They had their butt covered with some clause. So again, the wealthy toying with us in order to increase their own wealth. This did not work out for the investment company, but they did not lose anything. It was other people's money they invested. I think that there should be accountability for this type of behavior. Causes should not be found in 20 plus pages of summaries and legal speak. These people were billing agents, janitors, x-ray techs, receptionists etc. They did not go to college to learn the ins and outs of financing. The expert is the one who should be watching out for the client. It should be an inherent responsibility.

swebb says

I do feel sympathy for the people who got ruined in the whole mess...but at the same time *they* are the ones that drove house prices up as to make them unaffordable for me. If they hadn't been making stupid financial decisions, the demand wouldn't have been there, and I could have bought a nice house by now. There is plenty of blame to go around, for sure, but I believe a meaningful portion of it falls on the home buyers. Sorry.

You are incorrect. Do we blame the student for what the teacher teaches? Do we blame the sick patient for the Doctor giving the wrong advice? This is an industry that has been backed by the government and has historically taken care of both buyers and sellers. Strict rules and qualifications to prevent foreclosure and default. THEY did this. Not the buyers or the sellers. The industry saw an opportunity to make a ton of money and they all jumped in.

bgamall4 says

CL says

See? That's the problem right there. You expect too much!

You would say that. That is a moronic thing to say. People need to have some expectations or they won't try harder. And it sounds like this person is trying and hustling. It is the fault of big business if this nation goes down because of a greedy 1 percent who cannot see the importance of a middle class.

Gary Anderson strategicdefaultbooks.com

CL was being sarcastic :)

bgamall4 says

Without securitization, the easy money would have stopped. You don't get it.

Yes, I get it...I just don't buy into it 100%. Sure the bankers planned it, so what? The used car salesmen plan "it" too...but the buyers still have a choice in the matter.

swebb says

The used car salesmen plan "it" too...but the buyers still have a choice in the matter.

This is a great analogy. Except that the used car salesman doesn't take insurance out against the lemon he sold you, which pays a tidy premium when the car has brake failure descending a steep hill. Also, the used car salesman doesn't have a big red hand in drafting policy designed to make the playing field uneven for the non-elite classes, tempting the larcenist in all of us. The behavior at the upper tiers of American industry abetted by the nonfeasance of our lawmakers creates a criminogenic environment in the rest of society. Larceny begets larceny.

hj2222 says

What happens to this country when apathy gets the best of us?

I'll tell you what happens: we become a bunch of Ayn Rand-reading, technocratic, antipathetic automatons pushed through our ruts by psychotic systems managers.

It's hot in Victorville tonight, and Jody's letting off some steam...

hj2222 says

Meanwhile, the loan brokers were being paid huge bonuses for every loan and the bigger the loan, the more money they made. The Real Estate agents were getting huge commissions and the mortgage companies were making bank packaging these loans and selling them on Wall Street. Remember, these are new home buyers who relied on the Real Estate and Mortgage industry to guide them...

Yeah, if they were looking to the RE agents and bankers for financial advice, I understand how that could go wrong. I guess that's a big part of my point -- that was a mistake. I guess in the past you could rely on them for disinterested guidance and advice, but that never crossed my mind when I was buying. Maybe it's too much to ask of the typical buyer, but I always saw the RE agent and the banker as my adversary, or at least as people who couldn't be trusted.

hj2222 says

So in the name of greed, in 10 years, the entire industry went from responsible and caring... watching out for the buyers, to completely destroying them in the name of greed.

I think you are romanticizing it a bit. Sure, it got a lot worse, but I've been hearing about how you can't trust a real estate agent for as long as I can remember.

hj2222 says

She trusted the Investment Company that the hospital had hired to handle retirement plans. She knew nothing about diversifying and just let the fund grow. She did very well for a long time. Then the investment company went risky and put a large chunk of everyone's retirement into some type of stock.

I think her employer (and certainly the investment company) failed her. That really sucks -- sounds almost Enron-esque. It's too much to expect everyone to be savvy with investments, so you do have to have a level of trust...sounds like these guys blew it.

hj2222 says

You are incorrect. Do we blame the student for what the teacher teaches? Do we blame the sick patient for the Doctor giving the wrong advice? This is an industry that has been backed by the government and has historically taken care of both buyers and sellers. Strict rules and qualifications to prevent foreclosure and default.

First, I don't see the parallel between the teacher or doctor analogy. I guess if I bought in to the "RE agent and banker are your friend" part of it, I would get it. The banker is going to be governed primarily by profit and risk -- in the past they had stricter underwriting, less government backing, so they paid attention and didn't loan to someone who couldn't afford it. They didn't do this because they were your buddy, it was the profit motive at work. We need to put the failure part back into lending. But at the end of the day if the people taking loans were making good decisions, this wouldn't have happened. I think what you are saying is that the people aren't capable of making these decisions...which I don't want to believe, but maybe you are right. Has the world become too complicated to expect people to be responsible for their own decisions?

Shit, am I turning into a Republican?

hj2222 says

@dodgerfanjohn and @raw, You both are mistaken. My husband and I have managed to work it out, but we were lucky. We are far from where we should be at this point in our lives, but we are in better shape than those I speak of above. This should be evident since it is after library hours and I am clearly on the internet. This would be a frivolous extra expense if in the situation I am discussing.

Oh Gawd. You should be a realtor. You could whine and whine until your clients bought something just to get you off their back.

swebb says

Yeah, if they were looking to the RE agents and bankers for financial advice, I understand how that could go wrong. I guess that's a big part of my point -- that was a mistake. I guess in the past you could rely on them for disinterested guidance and advice, but that never crossed my mind when I was buying. Maybe it's too much to ask of the typical buyer, but I always saw the RE agent and the banker as my adversary, or at least as people who couldn't be trusted.

You seem like a pretty savvy investor. You know your stuff. You know who to trust and what to believe. That is an awesome thing for you. However, there are a ton of other less informed people out here in the world who do not have your knowledge and we do rely on experts for guidance.

With the history being clear, that the agents, brokers and mortgage companies were responsible and careful in the complete history of lending, why would buyers have any reason to expect a complete turn around?

It would be helpful, in this discussion, if maybe you would realize that your knowledge is not the same as everyone's, and in knowing that maybe you would be able to see how so many were taken advantage of. I have specific knowledge about things that I am sure you do not have, but I would not belittle you or make you feel stupid for not knowing what I know.

swebb says

I think you are romanticizing it a bit. Sure, it got a lot worse, but I've been hearing about how you can't trust a real estate agent for as long as I can remember.

That's good for you, but not everyone has the same information.

swebb says

First, I don't see the parallel between the teacher or doctor analogy. I guess if I bought in to the "RE agent and banker are your friend" part of it, I would get it. The banker is going to be governed primarily by profit and risk -- in the past they had stricter underwriting, less government backing, so they paid attention and didn't loan to someone who couldn't afford it. They didn't do this because they were your buddy, it was the profit motive at work. We need to put the failure part back into lending. But at the end of the day if the people taking loans were making good decisions, this wouldn't have happened. I think what you are saying is that the people aren't capable of making these decisions...which I don't want to believe, but maybe you are right. Has the world become too complicated to expect people to be responsible for their own decisions?

Shit, am I turning into a Republican?

Regardless of the motive for being careful and selective, that was how it was done. This information was shared in family discussions and friendly advice. It was 'the norm'.

I am not saying that people are not capable of making decisions, but when you look to an industry that has been consistent since its beginning, there is a level of trust there that you will be protected from a bad purchase by the industry qualifications and guidelines. As I stated before, how would we all know that the game had changed unless we were told?

When this craze to make huge profits off unsuspecting buyers started, ALL the rules changed. But no one told the buyers. There were no warnings, news releases, articles... nothing to indicate that what was being said to them was a lie.

The doctor and teacher analogies make sense to anyone who is not as educated about the industry as you are. To me and millions of others, we relied on the agents and the mortgage companies to be mindful of our financial situations and selective about what we would be able to afford. They are the experts, after all. They have knowledge. There were formulas used when I bought. I had to tell them how much money I made, I had to give them copies of all of my bills and bank statements, I had to show them pay stubs and old tax returns. Credit reports with an explanation on every item showing on the report. That, IMO, was to protect me as well as the bank. They threw all of that out the window and new buyers who had never purchased a home before and even those who had were suckered into thinking everything would be fine and dandy.

People being responsible for their own decisions works both ways. They were irresponsible for doing what they did, yet they get a bailout for billions of dollars for making terrible loans to unqualified people. The people who were taken advantage of lost everything and are now blamed for being ignorant of the predatory practices and should have known better. That's just wrong.

I don't know what to tell you about the Republican thing. I wonder if there is a even a difference between parties any more.

Raw says

Oh Gawd. You should be a realtor. You could whine and whine until your clients bought something just to get you off their back.

Thank you for your adult and oh-so-valuable input on the subject.

JodyChunder says

hj2222 says

What happens to this country when apathy gets the best of us?

I'll tell you what happens: we become a bunch of Ayn Rand-reading, technocratic, antipathetic automatons pushed through our ruts by psychotic systems managers.

It's hot in Victorville tonight, and Jody's letting off some steam...

I have no idea what you just said, but I think I agree....

hj2222 says

With the history being clear, that the agents, brokers and mortgage companies were responsible and careful in the complete history of lending, why would buyers have any reason to expect a complete turn around?

I don't know this to be false, but I don't believe it to be true. It sounds like a fairy tale to me.

hj2222 says

if maybe you would realize that your knowledge is not the same as everyone's, and in knowing that maybe you would be able to see how so many were taken advantage of.

I get it. Where does it end, though? (the measures we should take to protect people from themselves...) You are saying, basically, that many people aren't savvy enough to buy a house or understand finances and their limits, and so there needs to be some mechanism that either helps them make the right decision, or doesn't allow them to make a bad decision. In the past, you suggest (I don't agree) that the lenders and RE agents filled this role. Now that morality has broken down (or something else happened) we need something else. What is it? More government oversight and disclosures? I'm sure there were plenty of people who got confused into the whole deal, but at the end of the day I still think people are responsible for their decisions. In many cases the should have known better, and probably did but just didn't have the self control to say no.

hj2222 says

I have specific knowledge about things that I am sure you do not have, but I would not belittle you or make you feel stupid for not knowing what I know.

I'm sure you do, and if I stepped into that realm to make a decision that would affect me in a meaningful way, I'd want to have some informed advice. I would try to avoid getting the guidance from someone who stood to gain from my decision -- isn't that something we can expect from people? A basic understanding of how the world works.

A few thoughts.

I understand your point and I am more sympathetic to them than it might appear.

This discussion has caused me to reconsider some of my biases. I know people who have made bad house decisions as well, but I can't think of any of them who didn't know / didn't understand what they were doing, they did it because they were irresponsible or didn't care. It's easier for me to blame them -- "they deserve whatever they get because they were willfully irresponsible"....As for the people who aren't sophisticated enough to understand what they were...yeah, that's a harder one. I'm not comfortable saying "they deserve it because they are dumb."

For the most part I consider how something affects the whole to inform my opinion on it. From that vantage point the idea of government controls over lending seems like a good idea -- prevent this mess for all of us from happening again. I do bristle at the notion of even more government control and oversight. It's a necessary evil in general, and maybe this is a good place for it.

I think our biggest disagreement is that the homebuying process was so different back in the day -- at least on the RE agent side. Even on the lending side I think it has often been easy to buy more house than you should. Maybe it just wasn't catastrophically more, so it all worked out ok.

@Edvard2

>Get a beater Honda or Toyota. 15MPG is pretty bad fuel economy. We've drive 30+ MPG beaters for years. Makes a big difference.

Especially with gasoline at $3.50+/gallon.

bgamall4 says

YOu still don't get it. By taking away the underwriters, the banksters were guilty of a scam, a fraud. They were the Madoff times a thousand and the victims were the people who had no idea that their loan would come back to bite them. Remember, the realtors were in bed with the banksters, because the banksters told them to tell them they could refi later.

It is a classic fraud.

I still contend that if the people taking the loans had made good decisions (which is possible to do), then it wouldn't have happened. Maybe people on the whole can't be expected to make good decisions. In the end, it still takes two to tango, and just because someone enables you to make a bad decision, nothing bad happens unless you make that bad decision. The guy on the street corner selling hookers and heroin enables you to do something destructive...but you walk past (I presume) because you know better.

swebb says

I get it. Where does it end, though? (the measures we should take to protect people from themselves...) You are saying, basically, that many people aren't savvy enough to buy a house or understand finances and their limits, and so there needs to be some mechanism that either helps them make the right decision, or doesn't allow them to make a bad decision. In the past, you suggest (I don't agree) that the lenders and RE agents filled this role. Now that morality has broken down (or something else happened) we need something else. What is it? More government oversight and disclosures? I'm sure there were plenty of people who got confused into the whole deal, but at the end of the day I still think people are responsible for their decisions. In many cases the should have known better, and probably did but just didn't have the self control to say no.

I think that any industry involved in a private person's purchase of a home should be made to be held accountable for everything they disclose to a potential buyer and that they should be made to have unbiased witnesses if there is any doubt of their honesty. A home is a monumental purchase to most people in this country. I think it is dangerous to our country to allow millions of Americans to be taken advantage of in such a large purchase. The entire country suffers when over half of America loses their good credit standing and every state is flooded with empty homes. You already know how that has affected the country. If the Real Estate and Mortgage industry had not played those games, and had continued to use the same standards and procedures they used in 1995 when I bought, this would never have happened. Home prices would not have skyrocketed, the banks would not have been tempted by the promise of extreme profit and empty homes would not be flooding the market. No one would have lost half their home value and things would be moving along as usual. We still have the problems with corps taking jobs away, so I believe we would still have economic problems, but they would not be the size of what we are dealing with now.

I agree that some people chose to look the other way and bought knowing that they would be in trouble, but the masses, at least in my opinion based on my own conversations with people I know, were tricked. I think if more were done to punish those who were blatantly dishonest with buyers, I would not be so passionate about the subject. But when I have seen it with my own eyes.. and heard the agent give a price and advise to go interest-only and that the payment would be $xxx, only to find that 2 months after the loan was closed that the payment went up to $xxxx, what else can I feel besides contempt and anger towards those who got paid while my friend got taken to the cleaners?

To find the blame, should we not look at who benefited from all of this? Real Estate agents in bed with mortgage companies and brokers got paid well. The mortgage brokers were paid well. The banks... well they got the loans, they made money selling the loans, they got a bail out when they could not make good on the securities they sold, they got interest on the bail out money because they did not loan it out for modifications as agreed, plus they get to charge higher interest for poor credit on all those who lost their homes. Oh, PLUS they GOT THE HOMES and many of them got paid by the mortgage insurance the buyer was forced to pay for. I never did understand that scheme or how it was even legal.

Regulation as far as integrity and accountability as well as complete disclosure for any home purchase would have my vote. Its too late for the millions who got taken and its clear no one will pay the price except the buyers at this point. Still, we must protect our country and our citizens from any type of corporate deception in the future. Especially now when almost every industry and corp has shown us their indifference to our suffering when it comes to their bank accounts.

swebb says

I think our biggest disagreement is that the homebuying process was so different back in the day -- at least on the RE agent side. Even on the lending side I think it has often been easy to buy more house than you should. Maybe it just wasn't catastrophically more, so it all worked out ok.

It is entirely possible that you don't see the difference because you knew what was going on and how to manage the purchase.

The Real Estate agent can only do what the mortgage company is willing to do.

But if you look at my example of my 1995 purchase and compare to the no-doc no-qual sub-prime loan factory we had operating in 2005, it is obvious that a lot had changed.

This has been a very nice discussion and I am glad that your prospective has changed even slightly.

hj2222 says

Regulation as far as integrity and accountability as well as complete disclosure for any home purchase would have my vote.

What was it that wasnt disclosed ?

Count the Thousands of readers on Pnet who knew of many others who denied the existence of a housing bubble. Their hunger for RE was bigger than their stomach.

I have known many who migrated to SFBA who actually believed $750K for a 1400-1500 sq ft 50s shack was normal. They couldnt understand such homes were a third of their purchase price a fews years earlier.

There just wasnt any amount of disclosure that would have prevented buyers from over paying/over borrowing. Where was the common sense among buyers ?

hj2222 says

I don't know what to tell you about the Republican thing. I wonder if there is a even a difference between parties any more.

One is ever so slightly more batshit than the other.

New renter says

Raw says

Get a second job. It's not a crime.

Now redo the math.

Or a third. Sleep is so overrated

I couldn't stop chuckling every time I think of this. Too funny. :)