I think the blame for each problem lies with the person who has the problem. For “Joe Homeowner” who is getting foreclosed on, its his fault that he got himself into a mortgage that he couldn’t afford or didn’t understand.
For the companies going bankrupt, they have no one to blame but themselves. They know everything about the person who applies for a loan, if they approve the loan and it goes bad on them….their approvals are too lenient.
For the last 5 years I have been scratching my head saying you just can’t make loans of 110% of home value, with no money down and no income verification. Then you go throw in some interest only options, with a little negative amortization in a declining market and everyone knew where this was headed.
I don’t see how this is anyone’s fault but the homebuyers. I purchased a foreclosed home 4 years ago in a neighborhood where there were more sale signs in the yards then children playing. One by one the sale signs left and lockboxes were installed by the bank. The homebuilder told people that you could afford a new house for the price of rent. Are people this stupid? Should lenders, homebuilders or anyone else be to blame? Why? This is just another example how people want to make poor decisions and then have someone else pay for their mistakes.
And don’t laugh at the plasma TV, new car, 45K on the credit card. I would inspect mobile homes that people were paying over 20% interest on. They would have the big screen tv, pure bread dogs (multiple), new cars and everything else most people would like to have. But in the same hand they could not come up with a few hundred dollars to seal their metal roof so the thing wouldn’t leak. When the loss was not covered they wanted to claim they were getting screwed.
….concern about subprime lending has been apparent for the last few years. This should come as no suprise to any of the stakeholders in this financial mess.
The only question now is who bails out whom and by what process? Through the courts? A federal bailout? (see Sen Dodd)
As my favorite author taught me a long time ago….TANSTAAFL (there ain’t no such thing as a free lunch).
Had to sell a home in the southern USA two years ago. Houses in the area were averaging over a year to sell and prices were dropping quick. We sold our house for 5% less than we paid for it over 4 years earlier – then factor in commissions, etc and we had a seriously negative transaction.
Meanwhile, Ryland and the other major national homebuilders were literally WORKING 7 DAYS A WEEK to build new homes & new home developments keep springing up everywhere when existing stock can’t sell and people are losing $$ on their homes.
We were on the HOA board for our neighborhood – it was not uncommon for someone to buy a new home for $150k and get foreclosed within a year, meaning that they had no business buy a house and the lender also had no rationale for giving them a mortgage. If you can’t make the payment on a $150k over 30 years something must really be weak financially.
I blame the national homebuilders who won’t slow down and mortgage companies who give loan to lousy risks. It will hurt – and probably hurt all of us to some degree – but let them fail and better companies will come in.
When you go to a professional you rely on their judgement – that is why they are called “profesionals”. Given that premise, a great many people got caught in this mess and are losing a great deal in the process. The problem was that lenders would not work with the people who honestly wanted to work things thru, hence the resulting foreclosure when the homeowner was out of options.
If these people were “professionals” to begin with, they wouldn’t have loaned people the money to get into homes they couldn’t afford in the first place. Then you wouldn’t be blaming them for not helping them keep the house.
Sorry Homeowner, putting all the blame on the lenders because they won’t “work” with a borrower who is 4-6 months behind on his payments and has NO WAY of ever making them up or even paying a discounted amount is pure bull. I say the blame is spread around between the naive homebuyer who wanted 4000 sq ft instead of 1500 sf and pure greed took over as the housing market exploded and also the mortgage brokers who danced those ridiculos ARMS and interest only teaser loans out there. When I refinanced my home two years ago, it had already appreciated over 200k and the mortgage broker was begging me to do an ARM and take out the extra 200k and saying it would still be less than a 30 yr fixed. I stuck with my 30yr fixed at 5.25% and now, I am not in danger of losing my house and I bought what I could afford.
Maybe its just that I take a different approach, but as a home buyer I look at what payment I can handle and still maintain the lifestyle that I want. That being decided, I can then work with a lender to determine if they can get the payments to match my criteria.
And as for any of the variable rate loans… honestly if something looks to good to be true, it ususally is.
Don’t forget to put some blame on the Federal government and “civil rights” groups for putting the heat on lenders to loan money to people in various minorities that really did not qualify in order to avoid being charged with discrimation.
A professional loan UW would not give a loan to someone who has no means of paying it off.
The signs said “own cheaper than your rent” but they don’t tell you the other items you have to pay for – electricity, gas, garbage, water, taxes, maintenance, lawnmower, etc.
When greed comes in the front door, all reason runs out the back! This is a far more complex problem than any of you are giving it credit for but it boils down to greed. The greedy are homebuilders, realtors, mortgage brokers, financial institutions, bond underwriters, financial managers, and yes speculators (many of whom buy these homes to turn them.) If they all get burned severely it will be perfect justice! But don’t come looking to the rest of us to bail you out!
Then I gotta get back to work. I’m passionate on this because I lost over 10% of the value of a house I owned for 4 years (percentage factoring in sale price, commissions, fees, etc).
Compman, I disagree with you to a degree. Where I was the average home price was 160,000, not excessive. If you make $50k and can budget you should be able to afford that, but I guess many buyers had lots of other debt or lower incomes.
It really ticked me off that while us & others were trying to sell our relatively new homes and not getting buyers Ryland was having their crews work full days on Sundays and holidays just to keep putting up houses – even though theirs were not selling either.
Ryland stock – over $80 January of 2006, now at $32. They are getting what they deserve.
“The problem was that lenders would not work with the people who honestly wanted to work things thru, hence the resulting foreclosure when the homeowner was out of options.”
A homeowner’s options end when he chooses his loan. After that his only options are payment or forclosure.
As for losing your 10% in 4 years. That is a short time to be turning around your house, especially if you bought in an area that had a steady supply of new homes on the market. Your mortgage payments were supposed to be investments that returned income for you. They are payments that secure housing for you. If your 10% worked out to $20k, or $5k/year, that was a living expense. ( living in a house for about $400/month isn’t so bad )
1. Right wingers adore unregulated markets. Markets organize a lot of behavior productively but they also create a lot of chaos. Many on the right and left are saying that this credit crisis is a failure of regulation, and it is, whatever this week’s clever Republican talking points may say. (And here they come now, I’m sure).
2. Our economy is phony. We, as consumers, borrow on market-imagined values of houses. Now those imagined values are collapsing. AND WE DO NOT SAVE–WE JUST CONSUME MORE. The shortfall comes from Chinese investment in US debt instruments. We are on the road to being a second rate country unless we all begin to save a little, already. But we are only doing what our Republican leaders do–spend and borrow.
3. The FED is low on options. They had to cut interest rates literally to zero to overcome the tech collapse. Now, they can’t lower interest rates much because this will hurt foreign investment in US dollars which are already very weak, making them even less attractive…
4. Instead of tax and spend liberals we have suffered with not too bright spend and borrow conservies racking up record deficits giving tax breaks to the ultra-rich and fighting the wrong war in the wrong country. Foreigners have bought our debt to cover the shortfall. Trickle-down has not been driving this economy–just phony market appreciation of private homes. Now it is time for the opposite of trickle-down–UP-CHUCK. That’s where the little people pay the wealthy Republicans hard dollars for their debt or get thrown in the street or both under the new Republican personal bankruptcy laws. UPCHUCK, indeed.
This is a truly scary situation and will remain so though September and October until the leverage unwinds from bank-like institutions that are not regulated like banks–e.g. KKR Capital. Where are the regulators?–put to sleep again by the free-marketeers. Was it not Neil Bush’s Silverado S&L fiasco and failure that cost the taxpayers $1 billion a few years ago? It is hard to learn lessons when the rich and powerful, having bought themselves a presidency through the media, glue the textbook pages together so we can’t see them.
But why object to any of this?–we insurance people are all fat dumb and happy. Like the trading company in Trading Places, we win either way! I can’t wait for those higher D&O and other commissions to come rolling in! I can’t wait to find out that this or that insurer is heavy into mortgage obligations that were rated oh so highly and now simply cannot be sold! (Sure hope it isn’t one that pays big contingencies or that is writing my crummiest business that no one else will). They are going to need cash NOW. This should produce some interestig selling opportunities in the coming months.
Keep those markets free and let “me first and only” reap the benefits of the ensuing chaos.
This is just the first installment falling due from the policies of the past 7 years dominated by right wing crazies. Wait until you see the real cost of the war in Iraq and the many other shoes still to drop. America, no longer the world leader, is a serious possibility. Unwinding this Bush mess is going to make the sacrifices Carter was reviled for in the 1970s look like a picnic. As Laurel used to say to Hardy “This is a fine mess you have gotten us into.” Way to go, right wing crazies! Eight more years!
Yes, this one is the “fault” of many parties: the homeowners/borrowers who borrowed much more than they should have; the lenders who made these loans to people who they knew, or should have known, would eventually not be able to make payments, etc. But remember, this couldn’t have even started without the fiat money system that we have. Such a system gives the Fed the ability to pump up the currency based on political (i.e., criminal) considerations; the resultant money is then too cheap and sends out incorrect signals to the marketplace. Then, as is inevitable, a correction (also known as a recession or depression) must occur to balance the credit boom. But you’ll never read about this in the mainstream media. Two of the few media outlets that predicted the now-occurring housing slump are http://www.mises.org (as in Ludwig von Mises) and http://www.lewrockwell.com Von Mises by the way predicted the “Great” Depression in the 19 “teens” based on these same principles.
Incidentally, what we have right now is in no way an “unregulated” or “free” market. Oh, it might be if you remove the farm subsidies, medicare, welfare, taxes (income, tariffs, etc.), subsidizations to Archer Daniels Midland, Haliburton, etc., and let everyone-gasp!-keep their own money and let them spend it-double gasp!-in the way that they choose. Of course, that would required putting the professional parasites (every government employee) out of a job. But that would first require people to renounce the religion of statism and actually see things as they really are.
so do you think we should abandon the fiat money system ? Should we all carry around little bags of gold to trade for goods and services ? Or should the corn farmer find someone who is willing to trade a tractor for 27 bushels of corn ??
“so do you think we should abandon the fiat money system ? Should we all carry around little bags of gold to trade for goods and services ? Or should the corn farmer find someone who is willing to trade a tractor for 27 bushels of corn ??
You’ve got to be kidding.”
I don’t know that there’s any “we,” unless you think that everyone who happens to live on the same land mass is part of some unit obligated to each other. The decision to abandon it is each individual’s decision; in fact right now, there are payment methods right now that involve electronic transfers of gold and they’re being used all over the world in volumes of billions of dollars.
My main point however was that a fiat money system can not help but experience booms, busts, recessions, depressions and declines in the currency value-the dollar of today has lost 95% of its purchasing power compared to the dollar of 1913. In Zimbabwe, the inflation % is in the thousands. A fiat money system would work-if human beings were perfect. But as we don’t have any of those on this planet (and no, whenvever someone gets the label “government employee” behind their name, they don’t become morally flawless), a fiat money system will never work.
the “we” is everyone that interacts. For example I’d like to stop for a coffee on the way home tonight. Should I wire some gold bullion to my local Dunkin Donuts, or should I prepare a competitive rate study on auto insurance in the state of his choosing. Otherwise I kind of need him to accept some sort of fiat money or I don’t get my coffee.
At this point, you probably don’t have much choice but to use Federal Reserve currency/coins (which I hope everyone knows is a private business? that’s not even close to being a controversial statement). However, it is (“is” should be italicized) possible to have currency that’s backed by something of value; “our” current money is backed by nothing but political hot air (is there anything else that comes out of a politician’s mouth?). There is something called the Liberty dollar that’s backed by warehoused silver-I have a feeling that if/when the inflation rate on Federal Reserve notes reaches Weimar Republic-like levels, you’ll find more Dunkin Donut shopowners willing to accept gold coins or Liberty dollars, or pre-1964 silver coins (which were 100% silver) or whatever else has real value.
Until 1913, the dollar was 100% backed by precious metals; and guess what? Prices stayed stable and even declined in some areas. From 1913 till 1971, it was partially backed by metals. Then Nixon “closed the gold window” and there has been a wee bit of inflation since then (which is why interest rates reached as high as 18% in the early ’80’s).
It’s personal choice: people can put their faith in pieces of paper (yeah, yeah, I know-the currency doesn’t actually have any paper in it but only cotton fibers) with really cool numbers and pictures on it, which is backed by political promises (i.e., nothing or worse than nothing) or in things of real value. All those who put their faith in politicians, please line up over here for a close-out sale on some great pieces of Florida swamp land.
Incidentally, as far as “wire some gold bullion” which I assume is supposed to be a smart comment, the electronic gold purveyors do (again, “do” in italics) have debit cards that work just like other debit cards. With an electronic gold debit card, you’re wiring ownership in real gold for your Dunkin Donuts stuff. With a debit card that draws on Federal Reserve notes, you’re wiring the government’s “full faith and credit,” which we all know is priceless (that’s a sarcastic remark)
i have printed your response out and will make copies of it to pass out to anyone willing to listen to what has happened to our country due to our responsible leaders. i am a card carrying conservative republican and i have had this uneasy feeling about our leaders until i read your post at 1;57PM on 8/23/07. you said it better than i could have and it is completely understandible. thank you for taking the time to write. i am thinking about sending your article to my congressmen(republicans) so i hope you do not mind. thanks again!!! beautifully written and thought out.
i have just reread your article for the 4th time and it just hit me. i can remember having a very uneasy feeling when the republican congress passed the revised bankruptsy laws and thought how unfair it was. your article just showed me. now that bills are coming due for the spend and borrow policies of the past 7 years the less affluent cannot get out of the debt they were talked into by slick talking big business. the middle class is in danger of collapsing because they have no options.
your comments on this, if you would.
You people just don’t understand my situation. I know I don’t make much money, but we really needed that 55″ HDTV with surround sound so I put the $5,000 on my credit card. Then we needed that hot tub and that was $2,000 on my credit card. Then all the stress was just too much so we had to go on that cruise that was $7,000 on the credit card. And we also like to go out to eat and everything and before you know it our balance was $45,000. We had a hard time making the credit card payments so two years ago we refinanced our mortgage. We were able to get 100% financing and an adjustable interest rate. We had to sign a bunch of federal government disclosure documents about our loan. I don’t think they were very important so I did not really read them. It was great. We were paying $250 less that our previous mortgage and credit card payments. Since we had extra money (the $250 per month), we bought a new Chevy Tahoe. We got a good deal and were able to finance it for 72 months. Six months ago my wife got sick and since we did not have insurance we had to put that $4,000 on our credit card. My wife liked being off so much that she quit her job.
Then three months ago they told me my interest rate on the morgtage went up and my payments were being raised by $500 per month. I am sure that evil Bush is doing this just because I did not vote for him. This is not fair. We don’t have the extra money and should not be required to pay this additional amount.
Some of you are very mean and want to blame this on us, saying it was our responsiblilty due to the decisions we made. I just don’t understand that. We are entitled to a new car and to have nice things and live like we want to.
Some of you implied that the government should do something about this. I agree. Who can I contact about the government paying off our mortgage for us. Do you think they will also pay off our credit cards and our car note too? Thanks for your help.
“Some of you implied that the government should do something about this. I agree. Who can I contact about the government paying off our mortgage for us. Do you think they will also pay off our credit cards and our car note too?”
Dear sad,
I’m sure that the government would be happy to help. I suggest you contact the same department that subsidizes Archer Daniels Midland (oops! I mean invests our tax dollars wisely) to the tune of billions of dollars per year. They will most likely pay off all your bills. We all know of course that Congress is not influenced by large bribes (there I go again! I mean “campaign contributions.”) and refuses to be bought by special interests (gosh darn it! I just can’t stop! That should be “anointed souls who know what’s best for 275 million people”). The fact that you wouldn’t have millions to give to Congress wouldn’t mean anything to them of course; they’re just as willing to pay you; how many votes, power and tenure they get doesn’t enter into the equation at all. Isn’t government great?
I sympathize with your plight also. All I want to be able to do is come home from work and watch 4 hours of TV every night and never take the effort to educate myself about the real world (after all, how can anyone even live without watching Survivor, 24, American Idol, Friends, Seinfeld, Lost, Joannie Loves Chachi, House, et. al.?). I have just as much right to demand that the government do something! After all, we all know that voluntary interactions between people is not the way to go! We need to give government the power to direct our actions by violence! Why can’t everyone understand this?
You guys are right. I thought it was funny when I was posting, but after re-reading I started getting PO’d again.
To me the two biggest things wrong with society today is that people believe they are somehow entitled to something/everything and they do not want to take responsibilty for their own decisions/actions. It is always someone else’s fault and they want someone to bail them out.
No doubt there are some shady lenders/mortgage brokers out there, but even they did not hold a gun on these people and make them take this easy money.
you are right that no one held a gun to these peoples head but we all aspire to the american dream and when everyone keeps telling you there is no risk and the property will appreciate 10 percent per year, the vulnerable can be lured by the siren song of easy money. my daughter and her husband started to buy a condo in 2005 at the peak of the boom for 475,000, no money down, as an investment and the realtor stated flatly they could sell it in two years for 600,000.(exploding growth area in upper middle class suburbia). i was able to talk them out of it using the basic rationale so eloquently written by ‘media mogul’ in todays post. that condo is still on the market for 325,000 in one of the highest forclosure areas in the country. even level headed, intelligent people can be lured in by fast talking con artists.
i should also add this to my last post. the unscrupulous real estate brokers have been under no restraint by our federal watch dog agencies. the sole purpose of government should be to control the predetary nature of the capitalist society. if left free to operate, big business would crush the middle class. look what happened to big oil, the energy companies, the savings and loan of the 80’s, and no the real estate market,all left free to do as they please-free market forces at work with no restraints..
Last year I was processing 11 refinances a day. The loan amounts were so high and the property values as well. People got instant cash in their pockets. Now the housing market has depreciated. You know what happens next…
“i should also add this to my last post. the unscrupulous real estate brokers have been under no restraint by our federal watch dog agencies. the sole purpose of government should be to control the predetary nature of the capitalist society. if left free to operate, big business would crush the middle class. look what happened to big oil, the energy companies, the savings and loan of the 80’s, and no the real estate market,all left free to do as they please-free market forces at work with no restraints..”
But, big business could not do what it does without the help of government. Monopolies and oligarchies are not the product of a free market but instead must have the armed might of government behind them (e.g., Halliburton, Archer Daniels Midland, etc., etc.). Even if “we elect the right people” the nature of government (i.e., a group of men and women who do business backed by violence) will never change. Moral of the story: don’t look to government to solve any problems, only to create them and make them worse.
Moral of the story: don’t look to government to solve any problems, only to create them and make them worse.
so are you saying we should abolish the government and live in an anarchistic society ?
A truly free market will fix itself. The unscrupulous lenders and moronic borrowers will no longer be able to act the way they did….leaving the sensible customers for the well intentioned businesses.
“so are you saying we should abolish the government and live in an anarchistic society ?
A truly free market will fix itself. The unscrupulous lenders and moronic borrowers will no longer be able to act the way they did….leaving the sensible customers for the well intentioned businesses.”
To answer your first question: I’m advocating a voluntary society wherein all interaction between people is done without resorting to violence or the threat thereof. By definition, this would mean the elimination of the state (and I hope you understand that by “state” I don’t mean the “state of Missouri,” or the “state of California,” etc. but rather the more accurate definition: that group of men and women who claim and enforce a monopoly of violence over a given geographic area. In today’s world, this is synonymous with the word “government,” although it is possible to have voluntary governments, e.g., a homeowner’s association, etc.)
Secondly, your second paragraph appears to vindicate my earlier statements: that a truly free market can not exist in the presence of government because government personnel and those who control them (i.e., the ultra wealthy) will always, always, attempt to (and in most cases succeed) interfere in the markets to divert wealth and power to themselves and the only way they can do this is through “laws,” regulations, the “courts,” etc. That’s why the biggest supporters of regulations are very big businesses: because they have the resources to comply with them, while the small businesses do not and must either be absorbed by the big businesses or go out of business, thus leaving less competition for the big businesses.
think about that for a minute. You describe our current society as this heavy handed, oppressive, “backed by a monopoly of violence” system…and yet there are still people who will steal my car if I don’t lock it and have an alarm. If we have a “voluntary society” who is going to keep my car from getting stolen ? Who is going to keep the lead painted toys off the shelves ? Who is going to keep farmers from using dangerous pesticides and fertilizers on their crops ? Who is going to build and maintain the highway/rail/shipping infrastructure that keeps goods and services moving ……and who is going to pay for all that ? volunteers ?
No, not “volunteers” in the sense that they’ll work for free, but people that you’ve entered into a voluntary arrangement with, as in, “if you provide this service for me, I’ll pay you x amount. Agreed? O.K., let’s work out the details.” There are countless examples of private businesses doing things that some maintain “only the goverment can do!” such as private security firms, private mediation/arbitration firms (instead of a monopolized legal system), private business evaluation/rating firms (e.g., A.M. Best, J.D. Powers, etc.), etc. These arrangments work and do not require that people who have no interest (either financial or otherwise) be compelled to pay for them.
As far as the example of “who’s going to prevent my car from being stolen,” the police (or any other government agency) has no obligation or duty to do any such thing. And the government has admitted this in countless court decisions; their words have been (and this is almost verbatim) “government has no obligation or duty to provide services, even as elementary a duty as protection,” for example, check the case of Bowers v. DeVito. And this makes intuitive sense; suppose your car gets stolen; you won’t find a lawyer in the world (unless he wants to be disbarred) who will file a suit against the gov’t/police dept. for “failure to fullfill duty to protect and/or prevent car from being stolen.” Sure, you could try filing such a suit on your own (if you can get past the “justice system’s” hatred of non-lawyers), but it will be thrown out for “failure to state a claim for which relief can be granted.”
So, ponder that: people are forced to pay for police, etc., ostensibly under the belief that the police, etc. are obligated to “do something;” then the gov’t comes out and plainly admits, with no shame whatsoever, they are not obligated to provide anything whatsoever. Suppose that a private firm did that. How long do you think it would be before the gov’t rounded them up and put them all in jail? What do you think the mainstream media would make of that? “Private firm takes money and doen’t provide anything in return!! Kill them all!! Burn down their houses!!”
whether they are obligated to or not, the police do prevent my car from being stolen by being part of a state run judicial system. When people are caught they are punished. This keeps future car thefts down because the people who steal them get locked up, and people that consider stealing them don’t steal because they don’t want to be locked up. The fact that cars still get stolen is not proof that the system has failed, its proof that without the system, it would be much worse.
Two responses: first, you wrote “would be much worse;” that’s a hypothetical statement because it’s not been tested. Who’s to say that in the absence of a police force, private initiatives wouldn’t be introduced to reduce car thefts: high-tech security systems; private security patrol firms; customized insurance coverage (and you know that an insurance company has a greater incentive than police departments to prevent car thefts if they’re obligated to pay in the event of theft). I live in an area where, if you call the cops, you’ll be lucky to get them to respond in one week. But we’ve lived there for over 7 years and there hasn’t been one car theft or home break in or even attempted break in. That’s because most of the people in our neighborhood, and adjoining neighborhoods, have guns and there’s a gun club in the area (and, no, I’m not trying to turn this into a “gun rights” issue, but only making the point that private solutions have formed in the absence of police presence).
But the main point is that everyone is coerced into paying for the police dept. whether they want to or not, or whether they want their “services” or not. To focus in on car thefts: suppose that someone has an old junker and they don’t care if it gets stolen; or someone has the latest high-tech security system that has been shown to be invulnerable to car theft; or someone never parks their car on a public street; or indeed has no car at all. These people would most likely not want to pay for the police in relation to their cars.
Let’s take a similar situation: suppose that there was a home improvement/fix-up contractor in a town. They say, “O.K., we’re going to force everyone into paying us, whether they elect to use our services or not. With the money we receive, we’ll go around and fix up homes that need repair; if we didn’t, the town would not be as attractive as if we didn’t. True, the people who have newer homes or who are handy themselves with tools, or who don’t even want their houses fixed up will not ask for our services, but that’s too bad. ‘Society’ must pay for the upkeep of the houses that need it. Oh, and by the way, even though you paid us, we’re not obligated to you in any way” Would you put up with that?
I’ll end this with the world’s shortest political quiz: Do you think that any services should be provided at the barrel of a gun? That is, do you think people should be forced, by violence or the ultimate threat thereof either to themselves or others, to pay for something they don’t want? If your answer is “yes,” then it’s unlikely that anyone can deal with you on a rational, logical, or peaceable basis. If your answer is “no,” then we have a foundation for discussion, and the starting point should be whether or not the “service” provider is offering their services on a voluntary basis (no, not “voluntary” as in free, but voluntary as in not coerced).
Media Mogus,
Why is it that you’re always trying to make every issue a Republican vs Democrat debate. Fact is almost every politician out there that make is above a 1-term local city/town council position is out for themselves.
In this case the both parties were pushing the development/building of new houses. Dems did it to look good to the poor/middle class by creating jobs and Reps because it makes the economy look good and that helps big business. The people who are suffering because of it are the idiots who actual believe the government is here for the People today.
I think services need to be provided to society and infrastructure needs to be maintained. For example there is a bridge in Minnesota that needs replacing. That bridge is important to people in that town, and a bigger area, but its not important to me ( I live in Boston )so if I had the choice, I would choose not to pay for that bridge. But I know it needs to be replaced and someday a bridge near me will need to be replaced and those people in Minnesota will help pay for the bridge that I value.
Your example of the mandatory home improvement company is a good one, but in order for that to happen, enough people would have to implement that plan. If everyone wanted it that way, it would be that way. If most people don’t want it that way, you couldn’t implement it. I think most people agree that a police and fire department are necessary, a public school is a good thing to have, higway sigs and traffic signals are beneficial, etc.
I find it odd that you have the viewpoint that you do since you work in insurance. The whole theory of insurance is that if you get everyone to pay for it, it’s beneficial. You may not need insurance this year, but you pay for it. Some guy in Florida might get his house blown away and he gets a new $200k house for $1500 bucks a year…..it works over a long enough time frame and a big enough sample of people….just like the public services provided by our government. I think our government is rife with problems ( ineptitude, dishonesty, etc ) but until I hear a better idea, I am willing to accept the current system and strive for improvements rather than abolishing the system and hoping for peace out of the enusing anarchy.
what you are describing is a ‘utopian’ society, where there is no evil. organized religion was founded all over the world to help us strive for this utopian society. the reality is there is evil in peoples heart and that is what we must protect ourselves against. as a society we must band together in defense of this evil. the role of government must be to identify these people and help us protect ourselves from them. i would love to live in your world and not pay taxes, including federal, state and local but i know that if i do not i will leave myself open to the evil inherent in man. i am not so naive that i do not realize that some or most of the money will be wasted but, as an individual, i cannot stop the onslaught of evil by myself-i need the inefficient help of governement. they should be kept in check by our elected representatives and by our vote but this is our only protection. your utopian world is wonderful to comtemplate and we should all strive to reach it but until we reach utopia this is the next best thing.
No need to revamp the most successful economic and social experiment in the history of humankind. Home ownership in America is at an historic high, about 70%. That means more folks have achieved the American dream than ever before. That has indirect benefits that affect us all. If the foreclosure rate goes up slightly due to more participation, I am OK with that. The net benefit to society exceeds the net cost. Can any other society make the claim of 70% home ownership? And how does anyone assign a political party aspect to this topic?
Lastly, when a person calls a real estate broker or agent, isn’t it reasonable on the part of the realtor to assume the potential buyer is sophisticated enough to understand the pro’s and con’s of buying real estate? Don’t tell me that the realtor should be expected to handhold someone who wants to buy property?
I have been wanting to buy some investment property and with this happening, some of these houses will be ripe for the picking. If I can save 25-40% off the price they were 12 months ago, I might even buy a few. And with all of these people on the street from losing their homes, there will be more renters out there, hence, rental prices will go up and I can charge more for rent!. So, where is the bad news in the housing crisis.
I’m afraid what your suggesting is impossible on this earth. However, when you leave this world, assuming you are a Christian, you will find the place your looking for.
Your attitude is just what the economy needs now and if more people think like you we will pull through this crisis, but if you read todays financial papers, people are standing in line to pull their money out of Countrywide and other lenders. This is very bad-1929’s bad. It is psychological now. People are pulling out. Try getting a conventional loan today and see what happens. Even main stream lending institutions have backed off. It is next to impossible to get a loan unless you are willing to pay 22 percent interest. I hope you keep your optimism because we need more positive thinkers like you.
“Famed bond fund manager Bill Gross said the White House should bail out the millions of American homeowners who face the dreaded prospect of foreclosure this year. “If we can bail out Chrysler, why can’t we support the American homeowner?” Gross wrote in his monthly investment outlook on PIMCO’s Web site. “This rescue, which admittedly might bail out speculators who deserve much worse, would support millions of hard-working Americans whose recent hours have become ones of frantic desperation,” said Gross, a founder of the fixed-income investment firm PIMCO and a columnist for Fortune.
“Write some checks, bail ’em out, prevent a destructive housing deflation that (Fed Chairman) Ben Bernanke is unable to do. After all ‘W’, you’re ‘the Decider,’ aren’t you?” Gross wrote.
C.A., your gloomy look is very depressing and a quite a bit of an overstatement. So Countrywide is experiencing some difficulties and a few people are taking money out. I really want to find out where you bank and what area you live in as I will come there with my entire 401k and lend money all day long at 22%. The sky is not going to fall. You can still get a 30 yr fixed at 6.5% if you have really good credit. The market will correct itself and we all know that the house prices were way over inflated anyways. So, I had 400k in equity in 3 years, but that was only on paper. Now it is only 350k, but I still don’t have any more money in my pocket than if it was only 50k in equity. If you use the stance that you are not buying your home to make a quick buck, but to have a place to live and have a nest egg at retirement, those people are the ones who will make it thru this mess and probably own more properties as well.
I don’t know about the rest of you but I place total faith in government to fix everything! After all, we have seen throughout history that governments always do the right thing! Just look at Mao and the Great Leap Forward; sure, that resulted in over 30 million dead but hey, it was for the greater good. And look at that recent case in Florida where the cops broke in to the wrong house on a drug raid and ended up killing a 94-yeard old lady; just an honest mistake. I know that when someone gets into a government job, they could only get there if they know more than anyone else and can plan and direct the billions of individual market transactions that occur daily but also do it without moral flaw. How dare anyone believe that people should have a right to their own lives and property! People like that are a danger to society and should be locked away!
This is definitely going to add pressure on insurer’s underwriting dept for D&O policies and homeowners insurance. If law suits takes ugly route and situation turns out just like LTCM hedge fund or Barings bank cases, picture would be scarier.
You make some very interesting points, some of which I agree with, but your constant complaining about Republicans is getting old. Not all Republicans are rich and Democrats are not all middle income or poor. There are probably as many rich Democrats as Republicans.
Due to your blind hatred of all things Republican, you can not see that ALL politians are the same. They all want your taxes, and your vote, and they will tell you anything to get them both.
“tax breaks to the ultra-rich”? Didn’t everyone get a tax cut? I don’t care if some rich person also got a tax cut, as long as I was not excluded. Some rich guy paying more taxes does not put more money in my pocket.
Some rich guy paying more taxes doesn’t put more money in your pocket…but it means the government has to take less out of your pocket. The government is going to get it from somewhere…..if the uber-rich pay more, you pay less.
Are you kidding? Just because someone else pays more you think they are going to cut your taxes? They want every dollar they can get. At least GW cut taxes. That won’t happen when the Dems get the white house.
Sure…he cut taxes…and then increased spending and ran up the deficit.
That’s like you going out to eat and saying it was free because you put it on your credit card. Somebody’s got to pay for your dinner….and somebody’s got to pay for George’s too.
I think the blame for each problem lies with the person who has the problem. For “Joe Homeowner” who is getting foreclosed on, its his fault that he got himself into a mortgage that he couldn’t afford or didn’t understand.
For the companies going bankrupt, they have no one to blame but themselves. They know everything about the person who applies for a loan, if they approve the loan and it goes bad on them….their approvals are too lenient.
For the last 5 years I have been scratching my head saying you just can’t make loans of 110% of home value, with no money down and no income verification. Then you go throw in some interest only options, with a little negative amortization in a declining market and everyone knew where this was headed.
I don’t see how this is anyone’s fault but the homebuyers. I purchased a foreclosed home 4 years ago in a neighborhood where there were more sale signs in the yards then children playing. One by one the sale signs left and lockboxes were installed by the bank. The homebuilder told people that you could afford a new house for the price of rent. Are people this stupid? Should lenders, homebuilders or anyone else be to blame? Why? This is just another example how people want to make poor decisions and then have someone else pay for their mistakes.
And don’t laugh at the plasma TV, new car, 45K on the credit card. I would inspect mobile homes that people were paying over 20% interest on. They would have the big screen tv, pure bread dogs (multiple), new cars and everything else most people would like to have. But in the same hand they could not come up with a few hundred dollars to seal their metal roof so the thing wouldn’t leak. When the loss was not covered they wanted to claim they were getting screwed.
….concern about subprime lending has been apparent for the last few years. This should come as no suprise to any of the stakeholders in this financial mess.
The only question now is who bails out whom and by what process? Through the courts? A federal bailout? (see Sen Dodd)
As my favorite author taught me a long time ago….TANSTAAFL (there ain’t no such thing as a free lunch).
Had to sell a home in the southern USA two years ago. Houses in the area were averaging over a year to sell and prices were dropping quick. We sold our house for 5% less than we paid for it over 4 years earlier – then factor in commissions, etc and we had a seriously negative transaction.
Meanwhile, Ryland and the other major national homebuilders were literally WORKING 7 DAYS A WEEK to build new homes & new home developments keep springing up everywhere when existing stock can’t sell and people are losing $$ on their homes.
We were on the HOA board for our neighborhood – it was not uncommon for someone to buy a new home for $150k and get foreclosed within a year, meaning that they had no business buy a house and the lender also had no rationale for giving them a mortgage. If you can’t make the payment on a $150k over 30 years something must really be weak financially.
I blame the national homebuilders who won’t slow down and mortgage companies who give loan to lousy risks. It will hurt – and probably hurt all of us to some degree – but let them fail and better companies will come in.
To bad though that some of these yahoo’s are not located in ….CHINA..
They have a unique way of dealing with such imbeciles..
When you go to a professional you rely on their judgement – that is why they are called “profesionals”. Given that premise, a great many people got caught in this mess and are losing a great deal in the process. The problem was that lenders would not work with the people who honestly wanted to work things thru, hence the resulting foreclosure when the homeowner was out of options.
If these people were “professionals” to begin with, they wouldn’t have loaned people the money to get into homes they couldn’t afford in the first place. Then you wouldn’t be blaming them for not helping them keep the house.
Sorry Homeowner, putting all the blame on the lenders because they won’t “work” with a borrower who is 4-6 months behind on his payments and has NO WAY of ever making them up or even paying a discounted amount is pure bull. I say the blame is spread around between the naive homebuyer who wanted 4000 sq ft instead of 1500 sf and pure greed took over as the housing market exploded and also the mortgage brokers who danced those ridiculos ARMS and interest only teaser loans out there. When I refinanced my home two years ago, it had already appreciated over 200k and the mortgage broker was begging me to do an ARM and take out the extra 200k and saying it would still be less than a 30 yr fixed. I stuck with my 30yr fixed at 5.25% and now, I am not in danger of losing my house and I bought what I could afford.
Maybe its just that I take a different approach, but as a home buyer I look at what payment I can handle and still maintain the lifestyle that I want. That being decided, I can then work with a lender to determine if they can get the payments to match my criteria.
And as for any of the variable rate loans… honestly if something looks to good to be true, it ususally is.
Don’t forget to put some blame on the Federal government and “civil rights” groups for putting the heat on lenders to loan money to people in various minorities that really did not qualify in order to avoid being charged with discrimation.
A professional loan UW would not give a loan to someone who has no means of paying it off.
The signs said “own cheaper than your rent” but they don’t tell you the other items you have to pay for – electricity, gas, garbage, water, taxes, maintenance, lawnmower, etc.
When greed comes in the front door, all reason runs out the back! This is a far more complex problem than any of you are giving it credit for but it boils down to greed. The greedy are homebuilders, realtors, mortgage brokers, financial institutions, bond underwriters, financial managers, and yes speculators (many of whom buy these homes to turn them.) If they all get burned severely it will be perfect justice! But don’t come looking to the rest of us to bail you out!
Don’t start the minorities routine…
The heat was put on lenders to loan money to all people who generally would not have been acceptable risks…
Let’s not forget about the home buyers…
How many of us know people who went out and bought homes way above their heads simply because they could get a loan?
Heck even my 20 year old son was smart enough not to take out a loan on a motorcycle he wanted because they wanted to charge him 22%.
You really need to come out from your zone you call reality and see what the real world is like.
Then I gotta get back to work. I’m passionate on this because I lost over 10% of the value of a house I owned for 4 years (percentage factoring in sale price, commissions, fees, etc).
Compman, I disagree with you to a degree. Where I was the average home price was 160,000, not excessive. If you make $50k and can budget you should be able to afford that, but I guess many buyers had lots of other debt or lower incomes.
It really ticked me off that while us & others were trying to sell our relatively new homes and not getting buyers Ryland was having their crews work full days on Sundays and holidays just to keep putting up houses – even though theirs were not selling either.
Ryland stock – over $80 January of 2006, now at $32. They are getting what they deserve.
“The problem was that lenders would not work with the people who honestly wanted to work things thru, hence the resulting foreclosure when the homeowner was out of options.”
A homeowner’s options end when he chooses his loan. After that his only options are payment or forclosure.
As for losing your 10% in 4 years. That is a short time to be turning around your house, especially if you bought in an area that had a steady supply of new homes on the market. Your mortgage payments were supposed to be investments that returned income for you. They are payments that secure housing for you. If your 10% worked out to $20k, or $5k/year, that was a living expense. ( living in a house for about $400/month isn’t so bad )
my last post was supposed to say;
“..Your mortgage payments WEREN’T supposed to be investments……”
sorry about that.
So many items to hit on. Here are a few:
1. Right wingers adore unregulated markets. Markets organize a lot of behavior productively but they also create a lot of chaos. Many on the right and left are saying that this credit crisis is a failure of regulation, and it is, whatever this week’s clever Republican talking points may say. (And here they come now, I’m sure).
2. Our economy is phony. We, as consumers, borrow on market-imagined values of houses. Now those imagined values are collapsing. AND WE DO NOT SAVE–WE JUST CONSUME MORE. The shortfall comes from Chinese investment in US debt instruments. We are on the road to being a second rate country unless we all begin to save a little, already. But we are only doing what our Republican leaders do–spend and borrow.
3. The FED is low on options. They had to cut interest rates literally to zero to overcome the tech collapse. Now, they can’t lower interest rates much because this will hurt foreign investment in US dollars which are already very weak, making them even less attractive…
4. Instead of tax and spend liberals we have suffered with not too bright spend and borrow conservies racking up record deficits giving tax breaks to the ultra-rich and fighting the wrong war in the wrong country. Foreigners have bought our debt to cover the shortfall. Trickle-down has not been driving this economy–just phony market appreciation of private homes. Now it is time for the opposite of trickle-down–UP-CHUCK. That’s where the little people pay the wealthy Republicans hard dollars for their debt or get thrown in the street or both under the new Republican personal bankruptcy laws. UPCHUCK, indeed.
This is a truly scary situation and will remain so though September and October until the leverage unwinds from bank-like institutions that are not regulated like banks–e.g. KKR Capital. Where are the regulators?–put to sleep again by the free-marketeers. Was it not Neil Bush’s Silverado S&L fiasco and failure that cost the taxpayers $1 billion a few years ago? It is hard to learn lessons when the rich and powerful, having bought themselves a presidency through the media, glue the textbook pages together so we can’t see them.
But why object to any of this?–we insurance people are all fat dumb and happy. Like the trading company in Trading Places, we win either way! I can’t wait for those higher D&O and other commissions to come rolling in! I can’t wait to find out that this or that insurer is heavy into mortgage obligations that were rated oh so highly and now simply cannot be sold! (Sure hope it isn’t one that pays big contingencies or that is writing my crummiest business that no one else will). They are going to need cash NOW. This should produce some interestig selling opportunities in the coming months.
Keep those markets free and let “me first and only” reap the benefits of the ensuing chaos.
This is just the first installment falling due from the policies of the past 7 years dominated by right wing crazies. Wait until you see the real cost of the war in Iraq and the many other shoes still to drop. America, no longer the world leader, is a serious possibility. Unwinding this Bush mess is going to make the sacrifices Carter was reviled for in the 1970s look like a picnic. As Laurel used to say to Hardy “This is a fine mess you have gotten us into.” Way to go, right wing crazies! Eight more years!
Yes, this one is the “fault” of many parties: the homeowners/borrowers who borrowed much more than they should have; the lenders who made these loans to people who they knew, or should have known, would eventually not be able to make payments, etc. But remember, this couldn’t have even started without the fiat money system that we have. Such a system gives the Fed the ability to pump up the currency based on political (i.e., criminal) considerations; the resultant money is then too cheap and sends out incorrect signals to the marketplace. Then, as is inevitable, a correction (also known as a recession or depression) must occur to balance the credit boom. But you’ll never read about this in the mainstream media. Two of the few media outlets that predicted the now-occurring housing slump are http://www.mises.org (as in Ludwig von Mises) and http://www.lewrockwell.com Von Mises by the way predicted the “Great” Depression in the 19 “teens” based on these same principles.
Incidentally, what we have right now is in no way an “unregulated” or “free” market. Oh, it might be if you remove the farm subsidies, medicare, welfare, taxes (income, tariffs, etc.), subsidizations to Archer Daniels Midland, Haliburton, etc., and let everyone-gasp!-keep their own money and let them spend it-double gasp!-in the way that they choose. Of course, that would required putting the professional parasites (every government employee) out of a job. But that would first require people to renounce the religion of statism and actually see things as they really are.
so do you think we should abandon the fiat money system ? Should we all carry around little bags of gold to trade for goods and services ? Or should the corn farmer find someone who is willing to trade a tractor for 27 bushels of corn ??
You’ve got to be kidding.
“so do you think we should abandon the fiat money system ? Should we all carry around little bags of gold to trade for goods and services ? Or should the corn farmer find someone who is willing to trade a tractor for 27 bushels of corn ??
You’ve got to be kidding.”
I don’t know that there’s any “we,” unless you think that everyone who happens to live on the same land mass is part of some unit obligated to each other. The decision to abandon it is each individual’s decision; in fact right now, there are payment methods right now that involve electronic transfers of gold and they’re being used all over the world in volumes of billions of dollars.
My main point however was that a fiat money system can not help but experience booms, busts, recessions, depressions and declines in the currency value-the dollar of today has lost 95% of its purchasing power compared to the dollar of 1913. In Zimbabwe, the inflation % is in the thousands. A fiat money system would work-if human beings were perfect. But as we don’t have any of those on this planet (and no, whenvever someone gets the label “government employee” behind their name, they don’t become morally flawless), a fiat money system will never work.
the “we” is everyone that interacts. For example I’d like to stop for a coffee on the way home tonight. Should I wire some gold bullion to my local Dunkin Donuts, or should I prepare a competitive rate study on auto insurance in the state of his choosing. Otherwise I kind of need him to accept some sort of fiat money or I don’t get my coffee.
At this point, you probably don’t have much choice but to use Federal Reserve currency/coins (which I hope everyone knows is a private business? that’s not even close to being a controversial statement). However, it is (“is” should be italicized) possible to have currency that’s backed by something of value; “our” current money is backed by nothing but political hot air (is there anything else that comes out of a politician’s mouth?). There is something called the Liberty dollar that’s backed by warehoused silver-I have a feeling that if/when the inflation rate on Federal Reserve notes reaches Weimar Republic-like levels, you’ll find more Dunkin Donut shopowners willing to accept gold coins or Liberty dollars, or pre-1964 silver coins (which were 100% silver) or whatever else has real value.
Until 1913, the dollar was 100% backed by precious metals; and guess what? Prices stayed stable and even declined in some areas. From 1913 till 1971, it was partially backed by metals. Then Nixon “closed the gold window” and there has been a wee bit of inflation since then (which is why interest rates reached as high as 18% in the early ’80’s).
It’s personal choice: people can put their faith in pieces of paper (yeah, yeah, I know-the currency doesn’t actually have any paper in it but only cotton fibers) with really cool numbers and pictures on it, which is backed by political promises (i.e., nothing or worse than nothing) or in things of real value. All those who put their faith in politicians, please line up over here for a close-out sale on some great pieces of Florida swamp land.
Incidentally, as far as “wire some gold bullion” which I assume is supposed to be a smart comment, the electronic gold purveyors do (again, “do” in italics) have debit cards that work just like other debit cards. With an electronic gold debit card, you’re wiring ownership in real gold for your Dunkin Donuts stuff. With a debit card that draws on Federal Reserve notes, you’re wiring the government’s “full faith and credit,” which we all know is priceless (that’s a sarcastic remark)
i have printed your response out and will make copies of it to pass out to anyone willing to listen to what has happened to our country due to our responsible leaders. i am a card carrying conservative republican and i have had this uneasy feeling about our leaders until i read your post at 1;57PM on 8/23/07. you said it better than i could have and it is completely understandible. thank you for taking the time to write. i am thinking about sending your article to my congressmen(republicans) so i hope you do not mind. thanks again!!! beautifully written and thought out.
i have just reread your article for the 4th time and it just hit me. i can remember having a very uneasy feeling when the republican congress passed the revised bankruptsy laws and thought how unfair it was. your article just showed me. now that bills are coming due for the spend and borrow policies of the past 7 years the less affluent cannot get out of the debt they were talked into by slick talking big business. the middle class is in danger of collapsing because they have no options.
your comments on this, if you would.
You people just don’t understand my situation. I know I don’t make much money, but we really needed that 55″ HDTV with surround sound so I put the $5,000 on my credit card. Then we needed that hot tub and that was $2,000 on my credit card. Then all the stress was just too much so we had to go on that cruise that was $7,000 on the credit card. And we also like to go out to eat and everything and before you know it our balance was $45,000. We had a hard time making the credit card payments so two years ago we refinanced our mortgage. We were able to get 100% financing and an adjustable interest rate. We had to sign a bunch of federal government disclosure documents about our loan. I don’t think they were very important so I did not really read them. It was great. We were paying $250 less that our previous mortgage and credit card payments. Since we had extra money (the $250 per month), we bought a new Chevy Tahoe. We got a good deal and were able to finance it for 72 months. Six months ago my wife got sick and since we did not have insurance we had to put that $4,000 on our credit card. My wife liked being off so much that she quit her job.
Then three months ago they told me my interest rate on the morgtage went up and my payments were being raised by $500 per month. I am sure that evil Bush is doing this just because I did not vote for him. This is not fair. We don’t have the extra money and should not be required to pay this additional amount.
Some of you are very mean and want to blame this on us, saying it was our responsiblilty due to the decisions we made. I just don’t understand that. We are entitled to a new car and to have nice things and live like we want to.
Some of you implied that the government should do something about this. I agree. Who can I contact about the government paying off our mortgage for us. Do you think they will also pay off our credit cards and our car note too? Thanks for your help.
“Some of you implied that the government should do something about this. I agree. Who can I contact about the government paying off our mortgage for us. Do you think they will also pay off our credit cards and our car note too?”
Dear sad,
I’m sure that the government would be happy to help. I suggest you contact the same department that subsidizes Archer Daniels Midland (oops! I mean invests our tax dollars wisely) to the tune of billions of dollars per year. They will most likely pay off all your bills. We all know of course that Congress is not influenced by large bribes (there I go again! I mean “campaign contributions.”) and refuses to be bought by special interests (gosh darn it! I just can’t stop! That should be “anointed souls who know what’s best for 275 million people”). The fact that you wouldn’t have millions to give to Congress wouldn’t mean anything to them of course; they’re just as willing to pay you; how many votes, power and tenure they get doesn’t enter into the equation at all. Isn’t government great?
I sympathize with your plight also. All I want to be able to do is come home from work and watch 4 hours of TV every night and never take the effort to educate myself about the real world (after all, how can anyone even live without watching Survivor, 24, American Idol, Friends, Seinfeld, Lost, Joannie Loves Chachi, House, et. al.?). I have just as much right to demand that the government do something! After all, we all know that voluntary interactions between people is not the way to go! We need to give government the power to direct our actions by violence! Why can’t everyone understand this?
That is just too true to be a funny. The decisions that people make
What’s scary is that there are actually people out there that would really say those exact words and mean it.
Sad But True
You hit the nail on the head. Love your post
You guys are right. I thought it was funny when I was posting, but after re-reading I started getting PO’d again.
To me the two biggest things wrong with society today is that people believe they are somehow entitled to something/everything and they do not want to take responsibilty for their own decisions/actions. It is always someone else’s fault and they want someone to bail them out.
No doubt there are some shady lenders/mortgage brokers out there, but even they did not hold a gun on these people and make them take this easy money.
And if you don’t give me what I am entitled to, I’ll sue you!!!!
you are right that no one held a gun to these peoples head but we all aspire to the american dream and when everyone keeps telling you there is no risk and the property will appreciate 10 percent per year, the vulnerable can be lured by the siren song of easy money. my daughter and her husband started to buy a condo in 2005 at the peak of the boom for 475,000, no money down, as an investment and the realtor stated flatly they could sell it in two years for 600,000.(exploding growth area in upper middle class suburbia). i was able to talk them out of it using the basic rationale so eloquently written by ‘media mogul’ in todays post. that condo is still on the market for 325,000 in one of the highest forclosure areas in the country. even level headed, intelligent people can be lured in by fast talking con artists.
i should also add this to my last post. the unscrupulous real estate brokers have been under no restraint by our federal watch dog agencies. the sole purpose of government should be to control the predetary nature of the capitalist society. if left free to operate, big business would crush the middle class. look what happened to big oil, the energy companies, the savings and loan of the 80’s, and no the real estate market,all left free to do as they please-free market forces at work with no restraints..
Last year I was processing 11 refinances a day. The loan amounts were so high and the property values as well. People got instant cash in their pockets. Now the housing market has depreciated. You know what happens next…
“i should also add this to my last post. the unscrupulous real estate brokers have been under no restraint by our federal watch dog agencies. the sole purpose of government should be to control the predetary nature of the capitalist society. if left free to operate, big business would crush the middle class. look what happened to big oil, the energy companies, the savings and loan of the 80’s, and no the real estate market,all left free to do as they please-free market forces at work with no restraints..”
But, big business could not do what it does without the help of government. Monopolies and oligarchies are not the product of a free market but instead must have the armed might of government behind them (e.g., Halliburton, Archer Daniels Midland, etc., etc.). Even if “we elect the right people” the nature of government (i.e., a group of men and women who do business backed by violence) will never change. Moral of the story: don’t look to government to solve any problems, only to create them and make them worse.
Moral of the story: don’t look to government to solve any problems, only to create them and make them worse.
so are you saying we should abolish the government and live in an anarchistic society ?
A truly free market will fix itself. The unscrupulous lenders and moronic borrowers will no longer be able to act the way they did….leaving the sensible customers for the well intentioned businesses.
“so are you saying we should abolish the government and live in an anarchistic society ?
A truly free market will fix itself. The unscrupulous lenders and moronic borrowers will no longer be able to act the way they did….leaving the sensible customers for the well intentioned businesses.”
To answer your first question: I’m advocating a voluntary society wherein all interaction between people is done without resorting to violence or the threat thereof. By definition, this would mean the elimination of the state (and I hope you understand that by “state” I don’t mean the “state of Missouri,” or the “state of California,” etc. but rather the more accurate definition: that group of men and women who claim and enforce a monopoly of violence over a given geographic area. In today’s world, this is synonymous with the word “government,” although it is possible to have voluntary governments, e.g., a homeowner’s association, etc.)
Secondly, your second paragraph appears to vindicate my earlier statements: that a truly free market can not exist in the presence of government because government personnel and those who control them (i.e., the ultra wealthy) will always, always, attempt to (and in most cases succeed) interfere in the markets to divert wealth and power to themselves and the only way they can do this is through “laws,” regulations, the “courts,” etc. That’s why the biggest supporters of regulations are very big businesses: because they have the resources to comply with them, while the small businesses do not and must either be absorbed by the big businesses or go out of business, thus leaving less competition for the big businesses.
a “voluntary society” ???
think about that for a minute. You describe our current society as this heavy handed, oppressive, “backed by a monopoly of violence” system…and yet there are still people who will steal my car if I don’t lock it and have an alarm. If we have a “voluntary society” who is going to keep my car from getting stolen ? Who is going to keep the lead painted toys off the shelves ? Who is going to keep farmers from using dangerous pesticides and fertilizers on their crops ? Who is going to build and maintain the highway/rail/shipping infrastructure that keeps goods and services moving ……and who is going to pay for all that ? volunteers ?
No, not “volunteers” in the sense that they’ll work for free, but people that you’ve entered into a voluntary arrangement with, as in, “if you provide this service for me, I’ll pay you x amount. Agreed? O.K., let’s work out the details.” There are countless examples of private businesses doing things that some maintain “only the goverment can do!” such as private security firms, private mediation/arbitration firms (instead of a monopolized legal system), private business evaluation/rating firms (e.g., A.M. Best, J.D. Powers, etc.), etc. These arrangments work and do not require that people who have no interest (either financial or otherwise) be compelled to pay for them.
As far as the example of “who’s going to prevent my car from being stolen,” the police (or any other government agency) has no obligation or duty to do any such thing. And the government has admitted this in countless court decisions; their words have been (and this is almost verbatim) “government has no obligation or duty to provide services, even as elementary a duty as protection,” for example, check the case of Bowers v. DeVito. And this makes intuitive sense; suppose your car gets stolen; you won’t find a lawyer in the world (unless he wants to be disbarred) who will file a suit against the gov’t/police dept. for “failure to fullfill duty to protect and/or prevent car from being stolen.” Sure, you could try filing such a suit on your own (if you can get past the “justice system’s” hatred of non-lawyers), but it will be thrown out for “failure to state a claim for which relief can be granted.”
So, ponder that: people are forced to pay for police, etc., ostensibly under the belief that the police, etc. are obligated to “do something;” then the gov’t comes out and plainly admits, with no shame whatsoever, they are not obligated to provide anything whatsoever. Suppose that a private firm did that. How long do you think it would be before the gov’t rounded them up and put them all in jail? What do you think the mainstream media would make of that? “Private firm takes money and doen’t provide anything in return!! Kill them all!! Burn down their houses!!”
whether they are obligated to or not, the police do prevent my car from being stolen by being part of a state run judicial system. When people are caught they are punished. This keeps future car thefts down because the people who steal them get locked up, and people that consider stealing them don’t steal because they don’t want to be locked up. The fact that cars still get stolen is not proof that the system has failed, its proof that without the system, it would be much worse.
Two responses: first, you wrote “would be much worse;” that’s a hypothetical statement because it’s not been tested. Who’s to say that in the absence of a police force, private initiatives wouldn’t be introduced to reduce car thefts: high-tech security systems; private security patrol firms; customized insurance coverage (and you know that an insurance company has a greater incentive than police departments to prevent car thefts if they’re obligated to pay in the event of theft). I live in an area where, if you call the cops, you’ll be lucky to get them to respond in one week. But we’ve lived there for over 7 years and there hasn’t been one car theft or home break in or even attempted break in. That’s because most of the people in our neighborhood, and adjoining neighborhoods, have guns and there’s a gun club in the area (and, no, I’m not trying to turn this into a “gun rights” issue, but only making the point that private solutions have formed in the absence of police presence).
But the main point is that everyone is coerced into paying for the police dept. whether they want to or not, or whether they want their “services” or not. To focus in on car thefts: suppose that someone has an old junker and they don’t care if it gets stolen; or someone has the latest high-tech security system that has been shown to be invulnerable to car theft; or someone never parks their car on a public street; or indeed has no car at all. These people would most likely not want to pay for the police in relation to their cars.
Let’s take a similar situation: suppose that there was a home improvement/fix-up contractor in a town. They say, “O.K., we’re going to force everyone into paying us, whether they elect to use our services or not. With the money we receive, we’ll go around and fix up homes that need repair; if we didn’t, the town would not be as attractive as if we didn’t. True, the people who have newer homes or who are handy themselves with tools, or who don’t even want their houses fixed up will not ask for our services, but that’s too bad. ‘Society’ must pay for the upkeep of the houses that need it. Oh, and by the way, even though you paid us, we’re not obligated to you in any way” Would you put up with that?
I’ll end this with the world’s shortest political quiz: Do you think that any services should be provided at the barrel of a gun? That is, do you think people should be forced, by violence or the ultimate threat thereof either to themselves or others, to pay for something they don’t want? If your answer is “yes,” then it’s unlikely that anyone can deal with you on a rational, logical, or peaceable basis. If your answer is “no,” then we have a foundation for discussion, and the starting point should be whether or not the “service” provider is offering their services on a voluntary basis (no, not “voluntary” as in free, but voluntary as in not coerced).
Media Mogus,
Why is it that you’re always trying to make every issue a Republican vs Democrat debate. Fact is almost every politician out there that make is above a 1-term local city/town council position is out for themselves.
In this case the both parties were pushing the development/building of new houses. Dems did it to look good to the poor/middle class by creating jobs and Reps because it makes the economy look good and that helps big business. The people who are suffering because of it are the idiots who actual believe the government is here for the People today.
I think services need to be provided to society and infrastructure needs to be maintained. For example there is a bridge in Minnesota that needs replacing. That bridge is important to people in that town, and a bigger area, but its not important to me ( I live in Boston )so if I had the choice, I would choose not to pay for that bridge. But I know it needs to be replaced and someday a bridge near me will need to be replaced and those people in Minnesota will help pay for the bridge that I value.
Your example of the mandatory home improvement company is a good one, but in order for that to happen, enough people would have to implement that plan. If everyone wanted it that way, it would be that way. If most people don’t want it that way, you couldn’t implement it. I think most people agree that a police and fire department are necessary, a public school is a good thing to have, higway sigs and traffic signals are beneficial, etc.
I find it odd that you have the viewpoint that you do since you work in insurance. The whole theory of insurance is that if you get everyone to pay for it, it’s beneficial. You may not need insurance this year, but you pay for it. Some guy in Florida might get his house blown away and he gets a new $200k house for $1500 bucks a year…..it works over a long enough time frame and a big enough sample of people….just like the public services provided by our government. I think our government is rife with problems ( ineptitude, dishonesty, etc ) but until I hear a better idea, I am willing to accept the current system and strive for improvements rather than abolishing the system and hoping for peace out of the enusing anarchy.
what you are describing is a ‘utopian’ society, where there is no evil. organized religion was founded all over the world to help us strive for this utopian society. the reality is there is evil in peoples heart and that is what we must protect ourselves against. as a society we must band together in defense of this evil. the role of government must be to identify these people and help us protect ourselves from them. i would love to live in your world and not pay taxes, including federal, state and local but i know that if i do not i will leave myself open to the evil inherent in man. i am not so naive that i do not realize that some or most of the money will be wasted but, as an individual, i cannot stop the onslaught of evil by myself-i need the inefficient help of governement. they should be kept in check by our elected representatives and by our vote but this is our only protection. your utopian world is wonderful to comtemplate and we should all strive to reach it but until we reach utopia this is the next best thing.
No need to revamp the most successful economic and social experiment in the history of humankind. Home ownership in America is at an historic high, about 70%. That means more folks have achieved the American dream than ever before. That has indirect benefits that affect us all. If the foreclosure rate goes up slightly due to more participation, I am OK with that. The net benefit to society exceeds the net cost. Can any other society make the claim of 70% home ownership? And how does anyone assign a political party aspect to this topic?
Lastly, when a person calls a real estate broker or agent, isn’t it reasonable on the part of the realtor to assume the potential buyer is sophisticated enough to understand the pro’s and con’s of buying real estate? Don’t tell me that the realtor should be expected to handhold someone who wants to buy property?
I have been wanting to buy some investment property and with this happening, some of these houses will be ripe for the picking. If I can save 25-40% off the price they were 12 months ago, I might even buy a few. And with all of these people on the street from losing their homes, there will be more renters out there, hence, rental prices will go up and I can charge more for rent!. So, where is the bad news in the housing crisis.
I’m afraid what your suggesting is impossible on this earth. However, when you leave this world, assuming you are a Christian, you will find the place your looking for.
Your attitude is just what the economy needs now and if more people think like you we will pull through this crisis, but if you read todays financial papers, people are standing in line to pull their money out of Countrywide and other lenders. This is very bad-1929’s bad. It is psychological now. People are pulling out. Try getting a conventional loan today and see what happens. Even main stream lending institutions have backed off. It is next to impossible to get a loan unless you are willing to pay 22 percent interest. I hope you keep your optimism because we need more positive thinkers like you.
Scary comments from today:
“Famed bond fund manager Bill Gross said the White House should bail out the millions of American homeowners who face the dreaded prospect of foreclosure this year. “If we can bail out Chrysler, why can’t we support the American homeowner?” Gross wrote in his monthly investment outlook on PIMCO’s Web site. “This rescue, which admittedly might bail out speculators who deserve much worse, would support millions of hard-working Americans whose recent hours have become ones of frantic desperation,” said Gross, a founder of the fixed-income investment firm PIMCO and a columnist for Fortune.
“Write some checks, bail ’em out, prevent a destructive housing deflation that (Fed Chairman) Ben Bernanke is unable to do. After all ‘W’, you’re ‘the Decider,’ aren’t you?” Gross wrote.
C.A., your gloomy look is very depressing and a quite a bit of an overstatement. So Countrywide is experiencing some difficulties and a few people are taking money out. I really want to find out where you bank and what area you live in as I will come there with my entire 401k and lend money all day long at 22%. The sky is not going to fall. You can still get a 30 yr fixed at 6.5% if you have really good credit. The market will correct itself and we all know that the house prices were way over inflated anyways. So, I had 400k in equity in 3 years, but that was only on paper. Now it is only 350k, but I still don’t have any more money in my pocket than if it was only 50k in equity. If you use the stance that you are not buying your home to make a quick buck, but to have a place to live and have a nest egg at retirement, those people are the ones who will make it thru this mess and probably own more properties as well.
I don’t know about the rest of you but I place total faith in government to fix everything! After all, we have seen throughout history that governments always do the right thing! Just look at Mao and the Great Leap Forward; sure, that resulted in over 30 million dead but hey, it was for the greater good. And look at that recent case in Florida where the cops broke in to the wrong house on a drug raid and ended up killing a 94-yeard old lady; just an honest mistake. I know that when someone gets into a government job, they could only get there if they know more than anyone else and can plan and direct the billions of individual market transactions that occur daily but also do it without moral flaw. How dare anyone believe that people should have a right to their own lives and property! People like that are a danger to society and should be locked away!
This is definitely going to add pressure on insurer’s underwriting dept for D&O policies and homeowners insurance. If law suits takes ugly route and situation turns out just like LTCM hedge fund or Barings bank cases, picture would be scarier.
media mogul,
You make some very interesting points, some of which I agree with, but your constant complaining about Republicans is getting old. Not all Republicans are rich and Democrats are not all middle income or poor. There are probably as many rich Democrats as Republicans.
Due to your blind hatred of all things Republican, you can not see that ALL politians are the same. They all want your taxes, and your vote, and they will tell you anything to get them both.
“tax breaks to the ultra-rich”? Didn’t everyone get a tax cut? I don’t care if some rich person also got a tax cut, as long as I was not excluded. Some rich guy paying more taxes does not put more money in my pocket.
woah…hold on a minute there….
Some rich guy paying more taxes doesn’t put more money in your pocket…but it means the government has to take less out of your pocket. The government is going to get it from somewhere…..if the uber-rich pay more, you pay less.
Are you kidding? Just because someone else pays more you think they are going to cut your taxes? They want every dollar they can get. At least GW cut taxes. That won’t happen when the Dems get the white house.
Sure…he cut taxes…and then increased spending and ran up the deficit.
That’s like you going out to eat and saying it was free because you put it on your credit card. Somebody’s got to pay for your dinner….and somebody’s got to pay for George’s too.
I’ll give you that. I haven’t been happy with the way GW has spent, or the way he hasn’t protected (closed) our borders. GW is a moderate at best.
“…but it means the government has to take less out of your pocket”
That’s the dumbest thing I’ve ever heard!
“Oh, look, we got more taxes out of Thurston Howell III this year!!! Let’s give Gilligan a tax break so he can buy the Skipper a new boat!”