You are going to bail-out sub-prime lenders.

[Charon]

Funny. We bought our appropriately sized house with 40 percent down from the boom sale of my small city condo, got a good flat rate, refinanced for a better one, 15 year mortgage, no credit card debt, sensible spending & cars, more money in the bank than actually should be there, living comfortably within our means. All these big McMansions popping up. Always tempting. But then I would have had to do some stupid things.

DUH!

Use my tax dollars to pay for your lack of common sense?

1. If you are sub prime, guess what, maybe its not time for a house YET. Maybe you should worry about figuring out how this whole financial responsibility thing works.

2. An ARM? Guess what. Here's a big dot-com bubble insight for ya. There's no free ride folks. You don't get a payment the same as mine for twice the house without them making it up somewhere. Guess what, 8 or 12 percent interest (or more) can be a reality. Not ALL that long ago either.

This does start to seem like one big economic house of cards.

Charon

[crockett]

Originally posted by rpm
Dallas/Ft.Worth is pretty much the epicenter of the foreclosure zone. The majority of these have been McMansions. If these idiots would stop living beyond their means and the bigger idiot lenders quit making those loans there wouldn't be a problem.

You know, I don't understand that either. I was shopping for real estate last year in Texas and Dallas/Ft Worth was one of the areas I looked at.

Houses were dirt cheap there, so I can't understand why that was among the highest in foreclosures. I looked at a hell of a nice house was 3/2/2 with a screened in porch a cement in ground pool fenced in backyard that butted up to a school. House was $99k.. Here the same house would easily be $300k.

I just don't get the issues in Dallas a friend of mine just moved there and he had no issue at all getting a good paying job. So what is the deal there, because just for the life of me can't understand why Dallas is so bad off on the forclosure lists.

The houses are damn cheap there so I had thought of investing there but just not sure what is going on. Is it lack of jobs?

[rpm]

It's not the $99K houses being foreclosed. It the Republican voting idiots who should have bought the $99K house but chose the $450K McMansion instead. (The Bush/Cheney '04 sign in front of anything less would have been offensive.)

[LePaul]

Originally posted by Hortlund
You seem much more intent on hyperbole and pointless libertarian grandstanding.

Originally posted by Thrawn
..says the fellow who has so far posted nothing by ridicule, ad hominem in this thread.

Wow, Hortlund nailed ya.

I'm forever amazed how a Canadian is so, so mesmerized by the issues of the USA which won't affect him in the least.  Further, had you actually *read* the article, you'd see this isn't a free handout.

Your veiled dislike of the USA/President once again jumps out.  Do be sure to bash your country in here sometime.  Fair is fair, eh?

[Momus--]

Originally posted by LePaul
Wow, Hortlund nailed ya.

I'm forever amazed how a Canadian is so, so mesmerized by the issues of the USA which won't affect him in the least.  Further, had you actually *read* the article, you'd see this isn't a free handout.

Your veiled dislike of the USA/President once again jumps out.  Do be sure to bash your country in here sometime.  Fair is fair, eh?

Notwithstanding your fairly obvious jingoism in suggesting that a non-american can't have an opinion on this, I suppose you missed the effect this issue has been having on global markets in the last few weeks?

That said, I'm pretty sure that Thrawn isn't anti-american, just anti-stupid, which is probably why he gets such a rise out of mooks like you and Hortlund.

[Holden McGroin]

Originally posted by Kaw1000
All comes down to greed!! greed by the seller of the loans and greed from the folks that bought the loans!

"Greed is good... greed works"

[Stott]

The problem is not the price but the variable rate mortgage that is the problem. The credit crunch, force house notes higher, what was affordable to someone even subprime can easily increase by 50%. Higher rates, tighter credit and the house equity dries up, you cannot refinace against a cheaper house to pay a higher note. Uncle Ben needs to drive the Fed Rate lower by at least 50 pts. Money is tight, credit is tighter and it the subprimes on variable could get a per cent or two break this slump will go away.

[FrodeMk3]

Originally posted by crockett
The problem is, the idiots bought more house than they could ever afford and the mortgage companies let them do it. You really think the average Joe can afford a $300k house? Nope but that didn't stop them from buying them. So even if you put them in a "real loan" that's low intrest it will still cost more than the intrest only BS.

Everyone is at fault in this, the buyers for being idiots, the banks for being stupid and the govt for not stepping in and setting up more regulations to stop this kind of thing from happening.

You're partly right, Crockett. Only...The real problem is that the average Joe can't afford an average house, anymore.

I'll use my own home as an example: It's a 3/2, 1450 sqf., built in '82, I bought it in '96, for $84,500.

Now, Due to the unrestricted market, this same house, on a 1/4 acre tract lot in a nice neighborhood, hit a High-point value of $312,000. In an area with a median income of $11-15 dollars an hour.

Figure the payments' on 312k, even with a 7% fixed, like my own. How the hell is someone gonna afford even an average house?

Plus, keep in mind that Rents' go up with mortgage payments. 2-bedroom apartments that at one time rented for $450 are now $1,000+ a month. So, there's alot of incentive to buy.

On a different tack, I don't think that the Fed realizes' how much money they will be using in any kind of bailout. Hell, Ameriquest closed it's doors' today, and Citigroup bought they're assets. When you have big lenders going under like that, you know that the market slump is in the Billions, and maybe Trillions, range.

[FrodeMk3]

Originally posted by Stott
The problem is not the price but the variable rate mortgage that is the problem. The credit crunch, force house notes higher, what was affordable to someone even subprime can easily increase by 50%. Higher rates, tighter credit and the house equity dries up, you cannot refinace against a cheaper house to pay a higher note. Uncle Ben needs to drive the Fed Rate lower by at least 50 pts. Money is tight, credit is tighter and it the subprimes on variable could get a per cent or two break this slump will go away.

That's almost right, but not quite, as well.

The real problem was the ridiculous loan schemes' that allowed people to actually buy houses' for 200-300K$ more than what they could actually afford. It was caused by things like Zero-principal loans(where all you ever pay is the interest, never on the principal), Seedy refinance deals' that let people get a lower interest rate, but only if they took out all of they're equity...The real culprits' were the Financial companies' themselves, and the Gov't. for not doing a damn thing to regulate it.

[Hortlund]

Originally posted by Mickey1992
So you think it is a good idea for American homeowners to live beyond their means with a mortgage they should not have been approved for, coupled with maxed-out credit cards?
 

They have to. Understand this: the moment they stop, the western world will hit a huge recession.

[LePaul]

Dont forget Home Equity.  I've seen people have homes soar in value, so they dip into their Home Equity and quickly over-spend.  The borrowers make it very easy to borrow more and more.  It takes wise credit discipline, and living within ones means, to avoid such temptations.  

[Rolex]

The Fed lent $2 billion to the four largest banks in the US about a week ago, using the discount window. Those loans are used as reserves (back to the Fed) to allow them to lend 10X ($200 billion) to subsidiaries to cover losses.

They will have to borrow more to lend more to pay back the original.
Those banks are exposed to loans and credit given to the holders of just the sub-prime debt. Their plan was to consolidate and sell that debt further down the food chain, but there is no market now.

Probably $300 billion worth of those loans are now sitting on balance sheets without a snowballs chance in hell of being sold and reducing the ability of all those institutions to lend.

The Fed accepted the bad loans as collateral for the loans to those banks. (note: there are no smilies available that are strong enough to highlight and emphasize this astounding point)

The calmness you see in the stock market and rosey GDP numbers are like looking at light from a distant star. Things are going get "interesting" after next quarter.

If a Fed chairman says he's willing to "do whatever it takes," you better batten down the hatches because there is a storm heading your way sooner or later. The difference between this storm others past is that the massive debt isn't owed to yourself; it's owed to foreign nations who have financed so much of the debt. You can get away with writing off some debt to yourself, but you can't do it to others.

Actually, it's all good news. The sooner the lights start to go on, the higher the chance there is that the debt increase will slow. Not likely, but a higher chance. It would be better to have a good old-fashioned recession like we haven't seen in 30 years sooner than later. Borrowing to put it off until later will only make it worse.

You can't grow your way out of this anymore. The overall debt load and unfunded obligations are too massive to not start fixing soon. We're (you're) only about 20 years away from reaping what has been sown.

Chew on this a little:

- 43% of Americans between the ages of 45 and 54 have no retirement account.

- The median amount in retirement accounts of those who have them is $2,000. The bulk of those having retirement accounts are government workers.

- The average American has no savings.

- 4.8 American workers now support each Social Security and Medicare recipient. In 20 years, there will be ony 2.8 workers to support each recipient.

- Between 1995 and today, the median household income has fallen 6% across the board in every state except Montana, Wyoming and North Dakota.

- The total debt (private, government and unfunded retirement, medical and other obligations) per person is now over $300,000 per person.

You should hear what the pessimists are saying.

Probably the worst job in America to be applying for now is to be the next President of the United States.

[Eagler]

Originally posted by Rolex
It would be better to have a good old-fashioned recession like we haven't seen in 30 years sooner than later. Borrowing to put it off until later will only make it worse.

depending on who's running the show here and world events, war may/should be used to avert that. I think the masses would go nuts with a deep recession quickly escalting into a full blown depression as Katrina showed us there are too many out there that can't tie their own shoes, forget about peace and order when they're tested.

[VWE]

Originally posted by Sixpence
There does not have to be a bail out, just rewrite the loans so they are fixed low rates and the handsomehunkes will be able to pay the loan.

Nope, sorry... fixed low rates are for those of us who are responsible, pay our bills on time and don't buy things we cannot afford. When your making the largest purchase of your life you read the fine print and know what you are signing. If you are unable to comprehend it then you'll learn by your mistakes. There will not be a bailout, there will be some good bargains in the housing market though... assuming you have credit!:aok

[Rolex]

It better be a darn big war, because the little wars are killing us.

I think you'll find that the theory that a war can prop up an economy was abandoned decades ago. Diverting capital from the private sector for more than three years for a "limited" engagement can give you a bump, but after that, all you're doing is adding more debt. Unless you acquire assets from the outcome. Flags have always followed businesses to acquire assets.