Why is the US economy so bad?

Suburbanite · #41 (**permalink**) 03-26-2008, 05:34 PM

Quote:

Originally Posted by Istok

No need for name calling. This credit crisis gets everyones blood boiling especially with the bailout but we can remain civil about this.
There is an element of greed involved here. People bought beyond their means and did not ask questions about the financing.
Think about it this way if everyone was selling the Apple Iphone for $500 and someone you do not know offered it to you for $200 you would be suspicious right? You would wonder if it is used, broken, refurbished or stolen. You would ask questions and do a close up of the product and test it. Now this is a $500 item compared to a $500,000 house which is 1000 times the cost. Ok you can't do 1000 times the research but shouldn't you do at least 10 times the research? You could talk to a few more brokers or loan agents, read a book, talk to some friends even the government has great education for first time buyers. All people saw was square footage, granite counters, wood floors, Jacuzzi tubs and location location location. Greed drove them to get a loan at all costs even if it was for a variable rate loan that they could barely afford at that time not to mention now. People were blinded by the need to show off a nice new homes to friends, family, coworkers, fellow church members, you name it.
Come one Suburbanite, don't tell me you do not know someone who invited you to their nice new house and you know they were living above their means. They were all smiles and just so eager to show off their affluence. You know roughly how much they make and it was too little and they had one of those zero down, variable rate loans that allowed them to buy more due to the low rate. What did you do? You bought where it was feasible and within your means and now you are doing fine.
I do not feel pity for an adult that spends more time researching what type of television to buy than what home to buy and how to buy it.
Secondly it is not the end of the world. You move to an apartment, save your money and in five years you could afford something granted with a higher rate due to your bad credit. After making payments for a year or so you can refinance and lower your rate. So you will just have to save your money, like the rest of us, for a few years to afford a house.

The difference is, your average person understands an ipod. This stuff is written in a specific jargon to make it hard to comprehend. You're right, upon close inspection and research one perhaps could realize the inevitable, or, these are high risk candidates anyways, people with poor credit, for them this could've been their only chance to buy a house or get a loan. But this isn't the problem. The problem is two fold. First, geniuses like Emi here has no clue about the whats or whys of our economy, and instead of finding out, speculate and offer tradition, predictable, misinformation that then spreads to other morons. The second problem, is that it is evident to me, that the banks knew EXACTLY what they were doing, and that being the case, one can no blame a collection of individual people for the problems. Like I talk about in the race forum, the public and private are incommensurable, just because every action is the responsibility of an individual doesn't mean group behavior doesn't have a direct statistical correlation to concrete events taking place. For exmaple, poverty increases one's probability of being violent, but violent people are still responsible for their own actions. Yes, one on one, these people individually should've paid more attention, but the big crime is the one committed by people counting on the lack of diligence of others.

George O Well · #42 (**permalink**) 03-26-2008, 06:53 PM

Quote:

You do not care if your neighbors are killed by terrorists.

I don't care if they are killed by bogeymen, either.

wow · #43 (**permalink**) 03-27-2008, 08:58 AM

Quote:

Originally Posted by George O Well

I don't care if they are killed by bogeymen, either.

You can hide in your global warming bunker.

Qurmudjin · #44 (**permalink**) 03-27-2008, 04:45 PM

You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank. He then executes a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by your CFO who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on six more.

That's why the US economy is so bad...

Suburbanite · #45 (**permalink**) 03-27-2008, 11:23 PM

oh, i like that one! ill have to remember it

Istok · #46 (**permalink**) 04-11-2008, 11:04 AM

Quote:

Originally Posted by Suburbanite

The difference is, your average person understands an ipod. This stuff is written in a specific jargon to make it hard to comprehend. You're right, upon close inspection and research one perhaps could realize the inevitable, or, these are high risk candidates anyways, people with poor credit, for them this could've been their only chance to buy a house or get a loan. But this isn't the problem. The problem is two fold. First, geniuses like Emi here has no clue about the whats or whys of our economy, and instead of finding out, speculate and offer tradition, predictable, misinformation that then spreads to other morons. The second problem, is that it is evident to me, that the banks knew EXACTLY what they were doing, and that being the case, one can no blame a collection of individual people for the problems. Like I talk about in the race forum, the public and private are incommensurable, just because every action is the responsibility of an individual doesn't mean group behavior doesn't have a direct statistical correlation to concrete events taking place. For exmaple, poverty increases one's probability of being violent, but violent people are still responsible for their own actions. Yes, one on one, these people individually should've paid more attention, but the big crime is the one committed by people counting on the lack of diligence of others.

Oh I'm not letting the lenders off the hook, they took a great risk that could affect the borrowers and the economy. Whenever I hear of the impact on the economy though the talk is centered around not being able to take equity out of your home to spend??!!! Since when has it become mandatory to borrow money from your home to keep the economy going normally? So its not just the foreclosures that is the problem (or worry) its spending. Well if the economy grew at a more than normal rate due to people spending equity maybe it is time for a correction. We need a reality check in that normal corporate growth should be low single digit. I am sure you have noticed that most major media outlets do not care for the unsophisticated buyer, they are worried about the red ink in the business section.
I just refinanced my home and there was that mandatory page with the interest rate. Frankly it spells it out clearly what I was getting involved in.
I must say, it is unfair to lump all buyers in one category:
1. Buyer with conforming loan that pays on time and does not take equity. Good people like this who default I feel sorry for cause it is usually due to sickness or a job loss.
2. Buyer with conforming that takes equity and then defaults: Do they not know that a 50" plasma will have to be paid for? Is it difficult to understand that the Mercedes they are driving in will cost them 30 years of payments? I have little sympathy for this person who wastes.
3. Buyer with 100% loan who defaults. Maybe a little sympathy but when you see your payments going up refinance for heavens sake.
4. Buyer with 100% loan who takes equity and then defaults. F this person, they deserve some hard times for living it up while the rest of us work hard and live normally.

Think about the bright side, now the savings rate will go up in the US. What is it currently like -1%. Thats pathetic!

mulp · #47 (**permalink**) 04-11-2008, 10:58 PM

Quote:

Originally Posted by Istok

3. Buyer with 100% loan who defaults. Maybe a little sympathy but when you see your payments going up refinance for heavens sake.
4. Buyer with 100% loan who takes equity and then defaults. F this person, they deserve some hard times for living it up while the rest of us work hard and live normally.

Why? I mean why feel sorry, or angry?

Look, the mortgage company was making money writing those mortgages. The guy doing the work was getting paid a bonus for the larger loan amount and the variable rate that bumped up. The investment house that packaged them was making money. And the borrower was getting a house for six months for nothing, no obligation actually pay anything back because the loan was no recourse, and if the house went up in price, then he could refi, and everyone gets more money and it costs him nothing, or maybe he sells at a higher price and walks away with cheap rent plus money in his pocket.

And with credit default swaps, everything is no risk so no one is really losing anything.

Those guys on wall street have figured out how to give everyone a free lunch, and they have the Republicans to thank for making sure that wall street wasn't restricted by any stupid regulators or regulation who would prevent wall street from eliminating all risk and giving everyone a free lunch.

Thanks to the Republicans, wall street has been far more innovative than Ponzi ever was.

Maybe in the future we will talk about Greenspan schemes or Republican schemes instead of Ponzi schemes.

And you know, these schemes aren't that simple to figure out if Warren Buffett bought a pile of the garbage without realizing what he was getting until he actually owned Credit Re and really began to understand its finances.

mulp · #48 (**permalink**) 04-11-2008, 11:13 PM

Quote:

Originally Posted by World Hegemony

You people have to realize that at the beginning, almost everyone wanted this war. Even democrats. Now nobody wants it but we cant just get out or 4000 American lives have been spent in vain.

I didn't want the war, along with at least 25%. Only about 60% wanted the war, but I bet today very few will admit to it, especially if there was a tax law passed where you checked on your 1040: "I wanted to invade Iraq in 2003" and then later in the form is read, "if you checked the "I wanted war in 2003" box, add a 10% war tax surcharge.

Istok · #49 (**permalink**) 05-05-2008, 12:19 PM

Quote:

Originally Posted by mulp

Why? I mean why feel sorry, or angry?

Look, the mortgage company was making money writing those mortgages. The guy doing the work was getting paid a bonus for the larger loan amount and the variable rate that bumped up. The investment house that packaged them was making money. And the borrower was getting a house for six months for nothing, no obligation actually pay anything back because the loan was no recourse, and if the house went up in price, then he could refi, and everyone gets more money and it costs him nothing, or maybe he sells at a higher price and walks away with cheap rent plus money in his pocket.

And with credit default swaps, everything is no risk so no one is really losing anything.

Those guys on wall street have figured out how to give everyone a free lunch, and they have the Republicans to thank for making sure that wall street wasn't restricted by any stupid regulators or regulation who would prevent wall street from eliminating all risk and giving everyone a free lunch.

Thanks to the Republicans, wall street has been far more innovative than Ponzi ever was.

Maybe in the future we will talk about Greenspan schemes or Republican schemes instead of Ponzi schemes.

And you know, these schemes aren't that simple to figure out if Warren Buffett bought a pile of the garbage without realizing what he was getting until he actually owned Credit Re and really began to understand its finances.

Thats more of the credit crisis impact on the stock market. Those securities will drop and people will learn from this. The companies legitimately making money will eventually enjoy a restoration of the original stock price. Yeah there should have been oversight by the government but it appears, and there is good arguments, that both the lenders and homeowners just got too greedy. We have learned from this and with the lenders now requiring more documentation for larger loans, things will begin to self regulate.
Lets not forget that a lot of the homes going into foreclosure on the west coast and southwest are investors who bought with equity they should have never had. They took a risk for an even greater profit. Greed is a good motivator but it can really turn against you.

dlrrtx · #50 (**permalink**) 05-18-2008, 11:58 PM

Actually, isn't that the first, and one of the few responsibilities of the federal government, to protect us? To pay for a military, wars, etc? I don't think all the government programs created from the New Deal and Great Society era's (and the W era) were in the original constitution. Yes, the war has been expensive, the last 5 years, but those other programs, have cost us much more over the last 80 years. As I said, Bush has been nothing more than a liberal, with a Republican label (growing the fed gov by 40%). The Dems are trying to tie McCain to a Bush 3rd term, but I would argue (and many Democratic politicians have agreed with me in private, and laughed at the voters, because they know they have you snowed), that Obama will be much closer to Bush economically, than McCain. Obama will be Bush on steroids, HGH. He will grow the gov by 100%, and because of the "green" movement, fuel will soon be $8 a gallon. Actually, would find it rather entertaining if Obama gets elected.

BTW, the most serious issue with our current economy, is the fuel situation. We have no leverage with the oil producing nations, because we don't produce our own fuels anymore. Well, we are producing ethanol. I am glad that has been successful. The rest of that stuff is all political.