Let the "good" times roll!

[Flubber]

Originally posted by faded glory




Situations change. I really hope nothing bad ever happens to you.

The problem is too widespread to be explained away by "something bad" happening to someone. Your "situations change" is entirely accurate and if a person with a variable rate cannot handle rates say 5% higher than those common when they get the loan, they shouldn't have a variable rate.

Far too many people assumed

1. housing values always go up and
2. Rates are not going to go up

Both assumptions are stupid ones to make and while I have some general sympathy with the people caught up in all this (particulary people caught with teaser rates), a fall in housing values or an increase in interest rates are not exactly unexpected . They are things that will happen from time to time . In fact I would say in most markets , they will almost inevitably occurr from time to time.


Bottom line is that America was on a credit binge and inevitably those things end. IT has to hurt a bit

[Arrian]

to PLATO's ideas.

I'm in the "small bailout, ok, holding my nose" group. It's irritating, no doubt, but bailing out stupid/greedy people seems to me to be the smart play.

-Arrian

[Patroklos]

Yes, because that sure happened with the Panic of 1873 and then 1893 and 1907... all crippling recessions in the US economy. But I'm sure they learned their lessons, as they continued the same crap.

When we are in a situation even 10% as bad as those, let me know. Since we are not your strawman fails.

You guys do realize that despite a year of this already we are NOT in a recession, right?

[Agathon]

Originally posted by aneeshm

Point is, if the government decides to bail fools out, someone has to pay for it (TANSTAAFL), and it's usually the people who are the least to blame for the crisis in the first place.

?

The government and the market are not really separate. One bribes the other to look the other way. There's no point in claiming that regulation will solve the problem, because once the problem is solved, capital will lobby for regulations to be lifted, and the whole sorry business will start again.

[Imran Siddiqui]

Originally posted by Patroklos
When we are in a situation even 10% as bad as those, let me know. Since we are not your strawman fails.

Do keep up, will you? I was responding to aneeshm's post saying that businesses learn from hard falls.

You guys do realize that despite a year of this already we are NOT in a recession, right?

The crap is hitting the fan now. The housing slump has hit some areas quicker than others. It's just hit Georgia, for one.

[aneeshm]

Originally posted by Imran Siddiqui

One good market crash where the government doesn't bail anyone out, and the institutions and individuals will stay on the straight and narrow for a long, long time.

Yes, because that sure happened with the Panic of 1873 and then 1893 and 1907... all crippling recessions in the US economy. But I'm sure they learned their lessons, as they continued the same crap.

There is a reason there was such a groundswell of support for action by the government in 1932 (well, aside from the fact if FDR didn't do something, socialist revolution may have been right around the corner). Because people were sick and tired of having a crippling downturn in the economy (makes our recessions look like nothing... double digit unemployment was the norm in these panics) every 10-20 or so years.

Did that "action by the government" do what it was supposed to? Or, as is the dominant opinion today among economists, did it actually prolong the depression?



Anyway - government regulation should be process oriented, not goal oriented.

So, for instance, regulation which mandates greater amounts of transparency in dealings such as the creation of SIVs, and so on and so forth, is the right way of dealing with the problem, IMO, instead of trying to affect the results of the process under consideration.

[faded glory]

[SIZE=1]


Bottom line is that America was on a credit binge and inevitably those things end. IT has to hurt a bit

Actually its much simpler than that. We need to face it. Payrolls are not growing. Pay is remaining pretty level these days. thats what I mean by things change. Most people who took these loans out years ago are surviving on the same pay scale they were when they took them out. Nobody in the middle class could of really predicted the word RAISE would be wiped from the corporate vocabulary. Which it pretty much is nonexstant.

Stop simplifying ****. These people knew what they were getting into. But most didnt foresee the dramatic cost of living increase which quickly outpaced there lousy pay..


Oh, and actually you guys need to get your frikken facts together. Most of these loans werent taken out by lower income people, they were taken by people who had bad credit. Lower income people have the government to lean on.

Which sadly, this whole thing effects more middle class people than we would like to believe. I live amongst what is left of the middle class.

This is only the begining. There kids are lousy slackers, there wives are pill popping cheating lunatics, and there jobs make saturdays mandatory. We pay into a tax system that if isnt increased is going to go bankrupt in 15 years. And Bankrupt regardless in 30.

Were about to see **** snap on a very national level very soon. Watch.

Be very afraid, get your money out of stock market. Quote this for truth. The Domino's are falling people and materialism has put us too far in debt in our personal lives.

And our government is in even worse shape. It can never hope to pay off its own committments. There just increasing there borrowing limits everyday. The government is following in our footsteps

Imagine if we could keep calling Capital one for credit limit increases so we could keep surviving, keep sipping latte's, keep living the life hoping our pay would one day get better.

[Imran Siddiqui]

Did that "action by the government" do what it was supposed to? Or, as is the dominant opinion today among economists, did it actually prolong the depression?

The "dominant opinion" is that the New Deal prolonged the Depression? That's definitely a minority viewpoint. Which weird economic circles do you frequent?

I shall go to Wiki with this:

http://en.wikipedia.org/wiki/New_Deal

A 1995 survey of economic historians and economists asked "Taken as a whole, government policies of the New Deal served to lengthen and deepen the Great Depression." Of the economists 27% agreed and 51% disagreed. Of the economic historians, only 6% agreed and 74% disagreed. (The rest were in the partly agree/disagree group). [3]

So no... not dominant opinion. Not even close really.

[DanS]

Originally posted by Imran Siddiqui
The crap is hitting the fan now. The housing slump has hit some areas quicker than others. It's just hit Georgia, for one.

It should be noted that Georgia is very late to the game on this cycle. Most other areas of the country have already been in it a year or three and the economy is still expanding.

San Diego's prices have been dropping since November '05, f.e.

[DanS]

Looks like we're very roughly about 1/3rd the way through this correction on a national basis. Here's an excerpt from the WSJ about rents versus mortgage payments.

http://online.wsj.com/article/SB119931831334463571.html?mod=hps_us_whats_news

Home Prices Must Fall Far
To Be In Sync With Rents
By GREG IP
January 3, 2008; Page A2

U.S. house prices "likely would have to fall considerably" to return to a normal relationship with rents, says a study by one former and two current Federal Reserve economists.

The study, which doesn't necessarily reflect the views of Fed policy makers, suggests prices would have to fall 15% over five years, assuming rents rose 4% a year. House prices would have to fall further if the adjustment took place more quickly.

The study tracks rents and home prices back to 1960 and found annual rents fluctuated at around 5% to 5.25% of home prices until 1995. At the end of that year, the average monthly rent was about $553 (or about $6,600 a year) and the average home price was about $134,000.

But starting in 1996, home prices started to grow much more rapidly than rents. By the end of 2006, they had more than doubled to an average of $282,000, while the average rent had risen 48% to $818. That drove the annual rent/price ratio down to 3.48%.

That means the rent/price ratio is about a third below its long-term average. To return to normal would require some combination of falling prices and rising rents. The paper suggests house prices would need to fall about 3% a year, if rents grew in line with their 4% average annual growth this decade.

[DirtyMartini]

So, just theoretically, if I were renting in an upper midwest town awash in new vacant new construction, when might I reasonably expect the housing market to hit bottom? Year? Two?

[Flubber]

Originally posted by faded glory




Stop simplifying ****. These people knew what they were getting into. But most didnt foresee the dramatic cost of living increase which quickly outpaced there lousy pay..

First assuming raises is not exactly the smartest plan. I know I have "direct deposited " away my last two raises so that my take home pay that goes in my main bank account hardly changed. I'll do the same with my next raise-- ITs a nice pot of money and its remarkable how easily you can continue to live on the same income if you don't have additional cash in your main account . I recommend it to anyone . Its amazing how the simple device of having to access even a separate bank account can give pause.


Second . . do you have a source talking about these dramatic cost of living increases? I know oil has gone up a lot and impacted lots of producst but I thought that inflation in the US had been relatively modest in the last 5-10 years and given that most of these loans are not THAT old it is tough to see that inflation would have eaten away the purchasing power of their paycheque THAT much. It probably just gets back to the fact that people took on loans that were too much for their income and when interest rates rose, they were unable to make the payments. A lack of raises might have had an impact but I get the impression that people were running things too tight anyway

[DanS]

Originally posted by DirtyMartini
So, just theoretically, if I were renting in an upper midwest town awash in new vacant new construction, when might I reasonably expect the housing market to hit bottom? Year? Two?

What the closest major city? Chicago?