Here we go again

[Abdullah the Butcher]

 

 

What are you talking about, carlfense? The economy is a shambles, jobs are in the toilet, and the economy has ground to a halt.Thanks, Obama!

 

A record 92,898,000 Americans 16 years and older did not participate in the labor force last month, according to data released by the Bureau of Labor Statistics.

Why?

Layoffs, unemployed giving up on looking for work, early retirements due to job market, normal retirements, college grads can't find work etc etc. A record number of women aren't working anymore either.

 

http://www.dailyjobcuts.com

[tschu]

Yeah this lending thing is not good.

 

I get trying to encourage lenders to throw a bone to struggling people and families, but I also think that long-term this leads to those people and families dealing with foreclosure and bankruptcy instead of just trying to get by in a small apartment or whatever.

[T_O_Bull]

Yeah this lending thing is not good.

 

I get trying to encourage lenders to throw a bone to struggling people and families, but I also think that long-term this leads to those people and families dealing with foreclosure and bankruptcy instead of just trying to get by in a small apartment or whatever.

With the low interest rates we have house payments are on a per with apartment rent. If something could be done to lower down payments many families could perhaps afford to own.

 

I also know that there are a lot of families out there that are not responsible enough to own property.

 

Sounds like a problem for bank loan officers.

 

T_O_B

[BigRedBuster]

Yeah this lending thing is not good.

 

I get trying to encourage lenders to throw a bone to struggling people and families, but I also think that long-term this leads to those people and families dealing with foreclosure and bankruptcy instead of just trying to get by in a small apartment or whatever.

Exactly.

 

I get the sentiment that politicians want to get as many people owning their own home as possible. It sounds good. If I'm someone who couldn't afford a home before and then the government does something that now allows me to buy a home...I'm happy and probably are going to vote to keep those people in power. That works for some people who really can afford the home.

However, it doesn't work for the people who squeak by in the application process. Get into a home that they are barely being able to afford and then something little changes in their life and now they can't make that payments. It's a disaster waiting to happen for those people. That segment of the population is best off renting. They have no risk. They make their payments. If they get to a situation where they can't make the rent payment, they downsize to something they can afford. If it is someone who is looking at buying a $500,000 home under this, hey....you need to stick with that $250,000 home.

 

The first time the government tried this it was a horrible horrible ploy by politicians (in both parties) to buy votes by allowing people to buy homes. It's a brutally stupid thing to do and ultimately, it is not fair to the actual people they think they are helping.

 

When I first bought a home. We were required to have 20% down. We were required to show we could afford pretty easily those payments and on top that, we were required to have mortgage insurance in case we couldn't make payments.

 

I don't understand why we would want to go away from that thought process.

[carlfense]

The first time the government tried this it was a horrible horrible ploy by politicians (in both parties) to buy votes by allowing people to buy homes. It's a brutally stupid thing to do and ultimately, it is not fair to the actual people they think they are helping.

It wasn't the government that pushed and pulled and scratched to approve riskier and riskier loans.

 

This podcast from npr in 2008 does the best job that I've seen of summarizing the main factors in about an hour. All in all, it's pretty damn infuriating.

http://m.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money

[BigRedBuster]

Both Bill Clinton and George Bush talked in speeches about these "wonderful" things the government was doing to make mortgages more available to people.

 

Very similar to what Obama is saying and pushing for now.

[carlfense]

Both Bill Clinton and George Bush talked in speeches about these "wonderful" things the government was doing to make mortgages more available to people.

Very similar to what Obama is saying and pushing for now.

That's all well and good but it was the mortgage originators who drove the race to the bottom. Not the government. They had a good reason to do so... they were making mountains of money.

[BigRedBuster]

 

Both Bill Clinton and George Bush talked in speeches about these "wonderful" things the government was doing to make mortgages more available to people.

Very similar to what Obama is saying and pushing for now.

That's all well and good but it was the mortgage originators who drove the race to the bottom. Not the government. They had a good reason to do so... they were making mountains of money.

 

OH...I agree. But, it was a push to deregulate the mortgage industry (that both Clinton and Bush pushed for) that allowed that race to the bottom. They both gained political clout from it also.

[BigRedBuster]

If you are riding a horse and the horse is one that just loves to run but running is dangerous, why would you drop your hands and loosen there reigns letting the horse do what ever it wants? But...hey....there is always the chance you get to where you are going faster.

 

The horse running is the reason the rider fell off and broke his neck. But...who allowed the horse to run?

[tschu]

 

 

Both Bill Clinton and George Bush talked in speeches about these "wonderful" things the government was doing to make mortgages more available to people.

Very similar to what Obama is saying and pushing for now.

That's all well and good but it was the mortgage originators who drove the race to the bottom. Not the government. They had a good reason to do so... they were making mountains of money.

 

OH...I agree. But, it was a push to deregulate the mortgage industry (that both Clinton and Bush pushed for) that allowed that race to the bottom. They both gained political clout from it also.

 

 

Eventually you'd think we'd learn from the finance deregulation nightmares that we've been through but I guess not... Pure economics always mean that individuals and corporations will always do what drives profits, and when all of a sudden they figured out they could just securitize and pool all of the mortgage obligations, sell it and trade them as an investment security, and then either insuring or hedging against them using synthetic CDOs and credit default swaps (RIP, AIG)...the high finance bullsh#t that was allowed to go on was insane. And literally nothing has changed; there are no new regulations preventing any of that despite the fact that there is no financial or social value to many of the things that were going on, and the fact that it resulted in the worst recession in 80 years. People ended up so far removed from the thing that gave all these financial securities their value - THE DAMN MORTGAGES THEMSELVES - that it didn't matter to them whether people could afford their homes or not and what happened when these people could no longer pay. In fact, many people and companies made billions essentially betting that people would default on their loans. SMH.

 

Unfortunately the big money in finance lobbying is pretty powerful...we'll see what happens. But at some point we're going to have to do something about it. Same with high frequency trading and other scary new financial instruments of the 21st century. Pretty scary stuff where a few glitches could tank the economy. Or a few greedy, poor decisions.

[deedsker]

I don't always agree with tschu, but when I do, it is poetic to read his posts.

[krill]

I for one welcome a return to the heady days of buying a McMansion and two full size SUVs with no down payment, no credit, and no verifiable income. Then you need to fill that house with stuff from big box stores using a home equity loan on a home you have no equity in. It says right in our constitution that the pursuit of happiness is a right, and I can't be happy without all that.

 

I'm being wildly sarcastic of course, but here's a thought. Last time we did this (circa 2003-2007'ish), the economy was red hot. Why do bubbles burst? Why does the party have to end? What if we just had like, a reset button for all the shady moneylending that takes place with cheap money during growth periods? Who's losing when there's effectively zero unemployment to make / service stuff, and lots of fake (borrowed) money to buy stuff? The way I see it, since we clearly have no hope of stewarding this planet long term as a species, we should be racing towards consuming every resource and destroying the place as quickly, and joyously as possible.

 

Had a long shower this morning.

[strigori]

I think this is a bit of an over reaction, and a lack of understanding of a large part of the 'whys' on the crash. This is the angle that "The poor people were at fault" which is a gross misrepresentation of the facts. This by itself does nothing to recreate the problems that crashed the economy. Key problems from before included the banks pushing people into taking variable rate loans, overstating what people should qualify for(sometimes even outright lying on the paper work). What amounted to collusion between banks and real estate to artificially inflate housing prices, sinking homebuyers into homes that were underwater before they even moved in. Or the giant cluster of how they pooled mortgages, then broke them up and sold the 'slices' as investments, and didnt have a way to prove who owed whom money when the defaults started. This has next to nothing to do with adding risk.

 

So much for Vox being a 'just the facts' publication.

[BigRedBuster]

First off....who is saying it's the poor's fault?

 

What you just described was what happened when the mortgage industry was deregulated. That was sold to us by Clinton and Bush as helping the economy and allowing people who couldn't buy a home to do so.

 

What happened then is the mortgage industry went full retard mode on steroids. Everyone jumped on board from poor to very wealthy living in homes they couldn't afford. Gas prices skyrocket and drains everyone's accounts and the house of cards fall.

 

When it fell, we were able to see really how screwed up the industry was.

 

But...hey...might as well start the madness all over again, right?

[strigori]

And that article was about a half a percentage point change in mortgage insurance on loans that are not available to everyone. Not the entire industry. There are plenty of issues with the whole banking, investment, real estate industries in general. And a whole problem of lateral integration of those industries. But none of that is focused in that article. That article was about something only the poor and middle class even have access to, and does not amount to a hill of beans in the long run.