Let the "good" times roll!

[Cort Haus]

Originally posted by Patroklos
BTW, unless you are ... an idiot who bought a value inflated home, how has the bust hurt you again?

For those needing to buy, it's been a little hard not to buy a value-inflated home over the last year, what with there not being many uninflated-value homes to choose from.

People of a certain age who did not have the opportunity to buy earlier in life reach a now-or-never point where they either buy or remain propertyless for all their lives.

It's easy for young people to wait for the adjustment in property prices, but there comes a point where you can't wait forever. For those that bought at the crest, perhaps after waiting for years for a downturn, they are not necessarily idiots, but they could be considered unfortunate.

[Patroklos]

People of a certain age who did not have the opportunity to buy earlier in life reach a now-or-never point where they either buy or remain propertyless for all their lives.

I can empathize with them, but everyone knew this was coming, for years. If you bought in the last few years either you reconciled yourself with having to ride this out and planned accordingly, or you were willfully blind to the obvious.

And nobody needs to own a house. That is another consumer centric myth, like diamond engagement rings. A nice to have, assuming you planned correctly and didn't take stupid teaser rates, sure. A requirement for a happy life, no.

People who think like that are living the dream, and it turned out to be just that.

The simple fact is that when this is all over the market will be awash in moderatly discounted homes that will be attainable for far more people, and only to those who really can afford them this time. Time for the medicine America, take it and be done with it.

[PLATO]

Wow.

I had no idea that there was such an uninformed opinion out there.

Well...such is Poly.

[DanS]

I see no reason to overmanage the unwinding of this bubble and view most of your cures as much worse than the disease. I will say that I advocate more transparency, such as requiring banks to show these directed investments on their balance sheets for the world to see and evaluate. That would have tempered demand somewhat and would have given banks more confidence in each other's true health. But these are primarily questions of accounting rules.

The unwinding of the bubble may create a recession, but it may not as well. You hear lots of people in housing moan and groan, but realize that they are but one portion of the economy. You also often hear Wall Street folks groan because their stocks are off of historic highs. But realize that most here on Poly would benefit by lower house and stock prices, since we're young and will be net buyers of these items for a long while yet.

There are countervailing forces at work in our economy, such as corporate profits at historic highs, healthy wage and salary growth (even for the middle and lower classes), and booming exports.

So don't hang yer heads. Rock on and Happy New Year y'all!

[Saras]

We should also have regulated excessive tech VC and IPO's in 1995 - 1999 that caused the 2000 bubble burst

[Ãskallin]

Bah thats nothing compared to the icelandic house market... Today the average rent for a house in ReykjavÃk is way above the minimum wage.
Taken from wikipedia on the problems the economy faces in 2008

Inflation over 2006 topped at 8.6%, with a rate of 6.9% as of January 2007. Standard & Poor's reduced their rating for Iceland from AA- to A+ (long term) in December 2006, following a loosening of fiscal policy by the Icelandic government ahead of the 2007 elections.[1] [2]Foreign debt has risen to more than five times the value of its GDP, and Iceland's Central Bank has raised short-term interest rates to nearly 15% in 2007.

The inflation is bound to get worse because of overgrowth in the economy. Interest rates are sky high, the highest by far in the OECD. he icelandic people are the most debt ridden in recorded history.

So yeah, let the good times roll

[Dinner]

Originally posted by Patroklos
you are not huring unless you pulled an Oerdin but didn't have his responsible planning, or are a bank who ****ed themselves. FACT.

Dude, my mortgage is current and paid in full and ,unlike other people, I have the income to make up the extra cost of higher interest rate payments. I'm not sure what you're getting at by continually bringing this up but it's clear you've failed to connect any dots if you think a liquidity crisis is good.

I believe there will be few buyers who can take advantage of lower prices given that lenders now have a hard time raising capital and thus have little money to lend even for homes which have been slashed in value. Reread the thread and think about it a bit more before posting again.

[DanS]

Keep in mind that most people have time horizons that are longer than months in the future. In 3 or 4 years, the prices will be more reasonable and ample credit will be available.

[Dinner]

Japan found that it took 12 years to over come the effects of their crash. It seems like the do nothing approach makes the hang over last longer while smart intervention can lead to a quick recovery.

[DanS]

You are revising history I'm afraid. Japan's problem was that it didn't allow the bubble to burst and the correction to run its course.

The fact is that US real estate is still way too expensive in many places to clear the market. No intervention will fix that.

[Ben Kenobi]

Exactly. They also killed the interest rate. The big problem with Japan wasn't so much the bad loans, but the deflation. When your money is worth more every year by not doing anything, that will kill investment. Lowering interest rates to 0 doesn't help anyone.

[Patroklos]

Dude, my mortgage is current and paid in full and ,unlike other people

Yeah, that whould be why I said this...

"you are not huring unless you pulled an Oerdin but didn't have his responsible planning, or are a bank who ****ed themselves."

You are in such a hurry to be a douche you can't even be a compliment.

I believe there will be few buyers who can take advantage of lower prices given that lenders now have a hard time raising capital and thus have little money to lend even for homes which have been slashed in value.

Yeah...very few...like I said. Or in other words, the fiscally responsible buyers, which unfortunetly are a minority at the moment. Banks have less capital, not no capital, and they still need to move/invest it. Now, however, they need to be careful who loan it to and only people with exceptional credit and a good debt to income ratio need apply. Banks require these people, and will fight for them.

So lets recap shall we? Despite all your flailing there are two simple observations that make you wrong.

1.) The amount of a loan I qualify for has gone up 75K

2.) The fixed interest rate I can get has gone down .5%

How can that be given your fear mongering Oeridn? I mean, you just stated the 7th seal of an economic apocalypse has been broken and everyone, including fiscally responsible people like me, should be wallowing in a sea of bankrupcy and foreclosures?

[Dinner]

Originally posted by Ben Kenobi
Exactly. They also killed the interest rate. The big problem with Japan wasn't so much the bad loans, but the deflation. When your money is worth more every year by not doing anything, that will kill investment. Lowering interest rates to 0 doesn't help anyone.

You have it backwards. Low interest rates were a response to the deflationary spiral not the cause of it. Japan lowered interest rates to almost zero in an attempt to increase economic activity and get out of the deflationary spiral. Low interest rates make money worth less and tend to increase inflation.

Also it helped banks by allowing them to keep the bad loans on their books while paying almost nothing. The best action is to have a government board buy the loans, at a discounted rate, thus clearing the bad loans from the balance sheets of banks thus allowing them to restart lending. That was why the US bounced back from the 1987 liquidity crisis and why Japan suffered 12 years of stagnation when they failed to do this.

[Dinner]

Originally posted by Patroklos


Yeah, that whould be why I said this...

"you are not huring unless you pulled an Oerdin but didn't have his responsible planning, or are a bank who ****ed themselves."

OK, I am sorry. I did post in haste and drew the wrong conclusion.

You are right that people with good credit risks will still be fought over by banks who want their business. The problem is when enough people get hit in the crisis so that we have a liquidity crisis then the banks themselves have trouble getting credit and thus are forced to slash their lending. That lack of available credit effects everyone including those people who acted responsibly.

[Saras]

Bird/Fortune will cleanse your mind Oerdin