Let the "good" times roll!

[MrFun]

right, DanS?

America's Mortgage Crisis

[DAVOUT]

I would like to hear the market lovers explaining how this is part of the game.

[DinoDoc]

Originally posted by DAVOUT
I would like to hear the market lovers explaining how this is part of the game.

It's what happens when stupid people decide to get houses they can't afford and other stupid people decide to let them.

[Dinner]

This is what happens when arrogant politicians claim regulations of the market are unnecessary or undesirable while arrogant businessmen bribe politicians to remove needed market regulations.

[DinoDoc]

Bush isn't to blame for you deciding to get a stupid loan. You and the person who gave it to you are.

[Rufus T. Firefly]

Originally posted by DinoDoc
Bush isn't to blame for you deciding to get a stupid loan. You and the person who gave it to you are.

You're right: screw the mortgage brokers, and screw the foolish borrowers. But if the article's correct -- and I have no idea whether or not it could be -- then the stupid loans will drag down the rest of the economy, harming lots of people who were not in any way stupid.

[Dinner]

My loan is current and paid in full. The problem is the lenders and people who qualified for loans who, by regulations prior to 1994, wouldn't have legally been able to make or accept such loans. There has been progressive watering down of loan standards in the US over the last 15 years due almost entirely to ceaseless advocacy by lenders to remove regulations. Those regulations were in place to prevent a repeat of the 1987 Savings & Loan crisis which cost US tax payers over $120 billion yet just 7 years later we saw Congress removing those regulations, claiming regulations were unnecessary, and now we are in the EXACT same boat once again.

We need to stop this idiocy of removing needful regulations simply for ideological reasons and realize that many regulations are there for a VERY good reason. The Republican war on needed regulations must stop.

[Dinner]

Originally posted by Rufus T. Firefly


You're right: screw the mortgage brokers, and screw the foolish borrowers. But if the article's correct -- and I have no idea whether or not it could be -- then the stupid loans will drag down the rest of the economy, harming lots of people who were not in any way stupid.

The bail out will come just like it did in 1987 and every 20 years prior to that. The question do we just, once again, bail out the banks who deliberately made loans to people they knew had little chance of meeting the terms (as we have in the past) or do we structure the bail out in such a way as to not force people out of their homes. Since both ways will soak the tax payers equally I see no reason to continue the pattern of bailing out rich money men while ****ing over the common man. The bail out should be structured in such a way that people get to remain in their homes.

[DAVOUT]

All this was also encouraged by the current economic credo : whatever it is made of, growth is good, and, consumers spending is the main engine of the economy. This resulted in households debt indefinitely increased, enormous trade balance, rate of growth artificially increased, and profits of banks reported at historic heights for the last years, and brutally corrected so dramatically that stars of the industry need foreign help for survival.
We should be reminded that the consumption is the purpose of the economy, not the cause. The real engines of the economy are the production and the savings.

[Dinner]

We certainly need more savings. The US has had a negative savings rate for years do to no forced savings mechanism, as other countries have, and a credo that consumer spending should be encouraged to speed economic growth. How about we use the tax laws to encourage or even force savings?

[Patroklos]

The good time are rolling for fiscally responsible people. Soon, if not already, all of us who refused to buy into an inflated market and suffered through rentals for years will be able to get cheap homes bought with loans half the size of the ones people would have needed a year or two ago, AND a sweet fixed rate to boot.

I say **** the banks and **** the irresponsible home owners. The simple fact is that both groups need a reality check. The mortgage crisis is only one section of the economy, and I will take a limited recession if it 1.) helps break the habit of runaway debt and credit consumerism that every class of our society is a slave to 2.) properly punishes willfully blind rich/middle class/poor people who put themselves under these circumstances through their own choices 3.) leaves all of us with good credit and sound financial habits smelling like roses.

Don't bail a single person out. Only a mental ****** would sign an APR loan after reading any basic description of what it is. Only a mental ****** would sign a loan for over 30% of their income per month.

Only a mental ****** would offer an APR loan to someone they know didn't for see the consequences of an interest hike when you KNEW, KNEW for years the market was inflated. Only a mental ****** would offer a loan to someone if it the mortgage would be more than 30% of their monthly income.

Its time for some tough love. Freedom of choice is a *****, time for Americans to learn about consequences

How about we use the tax laws to encourage or even force savings?

Because that is another example of taking away every ones freedom because some can't handel the responsibility. How about we let people with he same mental facilities of everyone else make their own decisions, and suffer the consequences when they play dumb?

[Imran Siddiqui]

Here's the problem with that attitude, the fiscally irresponsible people make it suck for the fiscally responsible people. What happens if banks go under as a result of this? Fiscally responsible people suffer for something they had no part in.

So how do you protect the fiscally responsible from getting hurt in a recession or bank problems caused by fiscally irresponsible people?

[Patroklos]

You don't. The exagerations of what the effects of this mortgage crisis will cause economy wide are laughable sometimes.

In any case, as in any recession, even those not responsible for it will take a hit. That is the case with any recession, and one is going to come soon regardless of what the trigger is. And if we use this as the trigger it looks to be a mild one. Lets face it, people forclosing on their houses were tapped out anyway. For those of you who bought and can afford your payments but are watching your home price decline be patient, unless you really need to move your home value will recover in time.

This isn't 1929, the banks are not going to close. Hell, there are a thousand market based solutions that can prop them up long before we are even enter the realm of government bailouts (foriegn capital infusions most recently). The simple fact is that as banks feel the crunch, it is their fiscally responsible customers that will see them through. They NEED people with good credit and sustainable debt/income rations. They will FIGHT to keep them or attact new ones.

Case in point. In less than a year the amount of house loan I can get has risen 50-75K depending on the bank. The interet rate I can get, fixed, is down .5%. Now I, unlike what all the people currently ****ed would have thought 2 years ago, have no intention of using the extra money I qualify for, because at the same time the houses that were 50-75K out of my price range are now magically in my original price range. I can actually buy, if I wanted to, 50% more house by doing nothing but having good credit and not overextending myself. Oh yeah, and while I wasn't paying for more house than I needed/could afford the past 4-5 years, I have saved enough to put down 20-30% easy.

You can't always bail people out, or they might, you know, act irresponsibly because they know you will bail them out.

[Imran Siddiqui]

And if we use this as the trigger it looks to be a mild one.

Eh... perhaps not. This mortgage crisis is far more serious that those who would shoo it away realize. No one says it is 1929, but in the S&L crisis, tons of S&Ls closed up shop and caused some massive turmoil before the aid package (which, admittedly wasn't thought through propery, but may have staved off something bigger).

I mean, I can see this crisis ending up like a 70s type recession. And the problem is that the people who will be hit most by it will be the fiscally responsible folks. Like you said, the irresponsible ones are tapped out anyway.

So, you can just completely sit back and do nothing and hope it all comes back. You have to use monetary policy first of all and perhaps some targetted aid to prevent anything major from happening. That way you may be able to have a much softer recession (though a recession is probably unavoidable).


The Economist had a good article on how this crisis resembles the Japanese property crisis:

http://economist.com/research/articlesBySubject/displaystory.cfm?subjectid=348876&story_id=10286992

And they are still trying to get over it. Now the Economist said that is partly because the government didn't help out the banking system until years after the crisis hit.

[LordShiva]