PJD - Sorry about that last comment. I now see that you were responding to "davebee's" note. Sometimes it can be a challenge to keep track of all that is being said in these excellent discussions.

As an aside, I'd like to re-post the link provide by "Rick May" above. It is a somewhat lengthy article from Richard C. Cook (worked for Carter administration, NASA, then in the Treasury Dept) regarding monetary reform ideas. I've started to read it and it seems most informative. The video link from MA_Matriarch was also very informative, so I've posted it again too.

http://www.informationclearinghouse.info/article17635.htm

http://video.google.com/videoplay?docid=-9050474362583451279&q=money+as+debt

Peace,
buffalo_ken

PJD - Budget more effectively for what?

buffalo_ken

Boo hoo. I'm sorry, but if this woman makes $50,000 a year and can't afford a $1500 mortgage payment, then she needs to budget more effectively.

Huh?

After tax and other deductions, $1500 per month would be well more than half of her months pay! Whatever happened to the basic rule never to pay one-quarter of a months pay on a house or rent?

My, how expectations of USAns have declined! No wonder so many of them work 70 hour weeks and weekends, and are so angry and sullen all the time, and have no time to get involved in their communiites.

Thank goodness that here in Pittsburgh there never was a bubble - no need to ever go much more than one-years salary in debt on a house.

You are totally 100% correct Moonlit!

I've been pondering the title of this article since it was syndicated, and still can't quite see how a crash of the market will hurt "the American dream." On the contrary, the dream isn't to live in a McMansion with a subprime mortgage and pass nothing onto your children. The real dream is to never be more than 2-3 times in debt with a mortgage in relation to your salary, so you can get on top of the payments, maybe pay it off within 15-20 years. Building real equity.

So a crash in the market is going to HELP people in the under-40 crowd immensely. They might actually be able to quit renting, and start building equity. Or buy into a starter home that's not a quarter million off the bat. I found this nugget here, the National Housing Conference (http://www.nhc.org/chp/p2p/) and it turns out that huge numbers of occupations in perhaps most metropolitan areas of the US are woefully inadequate to afford a home. Takes 2-3+ salaries, and even then you're barely making it.

I can't think of too many things, except housing, in which supply/demand supposedly pushes the commodity so far out of reach. It's not normal. It's the friggin' banks, the lenders. The more people can borrow, and the larger the percentage of people who care only about monthly payments -- and not building equity -- the more the sensible (minority?) of us must suffer.

afghanistan saying
"when blood runs in the street it is time to buy property"

Just because it's for sale doesn't mean you should buy it. Just because it's advertised doesn't mean it' good information. I live in the Denver area. Jst go to the furniture section and see the unbelieveable amount of stuff these people are unloading every single day.

I think it's going to be a very bad crash unless the Chinese can give the US a subprime loan the way it has with Iraq. Yikes.

Boo hoo. I'm sorry, but if this woman makes $50,000 a year and can't afford a $1500 mortgage payment, then she needs to budget more effectively. I bet she's making $400-500 payments on a car she bought new. I make the same amount of money she does, and I pay $1500 a month in rent, which goes up every year, thank you very much. I don't see anyone looking to bail my a** out.

The housing bust has NOTHING to with people not being responsible. It has to do with our fraudulent "fiat" money system. Our country has been completely bankrupt since 1933. Woodrow Wilson signed into action the Fraudulent "Federal" Reserve Act in 1913 and doomed us all! Nothing will change unless this corrupt fraud is abolished! These foreign bankers who control our money (who by the way create this money out of thin air)have to go if we are ever to see any kind of resolution to this tradegy. We need to ask our corrupt government why they borrow money from these foreign bankers when they can create it themselves intrest free! The Federal Reserve are the ones who decide what our interest rates will be on the fake money we all borrow! WAKE UP people we are all being screwed even if you are able to make your monthly mortgage payments because we are ALL being charged interest on this fraudulent money that is backed by NOTHING but our own faith to pay it back!

I'm more inclined to favor a partial restoration of the Commons. A place where anyone might go and legally squat, and use the land sustainably (corporations need not apply). No taxes, no landlords, no banks, no interest. You can toss up a shack there, and work your ordinary job. Or maybe keep your regular house, and use the resources (sustainably) to augment your home larder, etc. Some people might drop off the grid entirely, some only halfway or just partially. Each to his own.

To PDFee I would like to point our that most of the resources used to generate personal wealth come from the "commonwealth", those things like land, water, oil, the airwaves. I would propose that taxing income to provide the services that our society requires is just plain wrong. Instead I advocate that a fee should be issued on all use of the commonwealth. This would enable society to capture the wealth from the front end of the production equation instead of the back end, and provide all the revenues needed to provide the services required by the society. For more info please see http://www.progress.org/geonomy/ or google Henry George.

I agree with the uselessness of comparing apples with oranges. However, the lady that 'took equity out' of her home did so with consent of the lender that gave her the loan. 'Taking out equity' is a widespread practice of financing any kind of expenses from consumerism to medical bills. It is as common as it is to 'have' to buy a house in the first place. Many times the ridicule was on me because I steadfast refused to buy into a market that was overinflated and unsustainable. I don't like capitalism I prefer 'Social Free Market'. Regulation where necessary, because some people if unchecked will exploit others to death. Slavery is the most efficient form of capitalism...
My thoughts about housing are simple. Housing is not a commodity and thus cannot be traded in stock market fashion. E.g. I live in Hawai'i where the housing data is easy to oversee. Ten years ago a median SFH was $ 250,000 on Maui. Today the same house is about $ 750,000. Supply and demand are not the most important factor here. People 'invested' in real estate. Houses were bought not to dwell in, but to make money quick. Everybody in the chain takes some profit but the last one is the loser. Because the house is now ten years old and decreased in real value. The land the house sits on is still of the same size. So why is the house more expensive than ten years ago? Because of scam artists that took over an entire nation. They are everywhere from the bottom to the White House. Cons, scammers, liars and deceivers, the victims are not to be blamed for more than being obedient, subservient an naive. Now if we talking about bail out and such, I would suggest that the ones who let it get that far will have to pay for it. Loan corporations, financial institutions and the real estate agencies/brokers. Nobody needs to be a financial genius to figure out how to get that money back from them.
To prevent similar disasters like this in the future we need to make sure that whoever buys a house will not be able to sell it for ten years without being taxed excessively. E.g. bought for $250,000 sold for $ 275,000 after two years makes $25,000 times 50% tax is $12,500 tax. Whereas it would be certainly a good idea to prevent that kind of tax money to be spent for Iraq or other wasteful endeavors.
This administration is fully responsible for the present misery. The main perpetrators need to be impeached, indicted and locked up for good, the fortune they made on the expenses of John and Jane Average need to be confiscated and fed back into public wealth. And in case of bush, cheney and greenspan the gallows will do nicely.

We are caught in a cycle (possibly downward) of fractional reserve banking. We can not buy significant necessities (home, car, health care) without getting a loan from a bank and the banks are lending more money than they have in reserve.

50 sub-prime lenders have gone out of business since the housing bubble's decline.

Did you know that over 50% of collections (unpaid bills) in the U.S. is in the health care industry?

Bankers are (partially) responsible for the rise of tuition because of the profitability of the student loan industry.

About 500,000 real estate licenses have been issued in California. California's population is approx 35 million, that's about 1 real estate agent (active in the market or not) for 70 people in California (able to buy a home or not).

A home is a basic necessity that has been turned into a commodity by a system of greed. Sorry, strike "greed" and use capitalism instead. California is experiencing its second housing bubble in 10 years.

We are all living beyond our means, war, a stumbling economy, corporate irresponsibility, peak oil, global warming, etc. and so on...

Consume, consume, consume... Things are not getting better. The "American Dream" should be called the "American Struggle" with the majority of Americans just one to two paychecks away from being homeless. After our financial institutions crash under the weight of fractional reserve banking we might all be homeless.

Do you see a trend beginning here?

Ken,

So true. We have a criminal crony capitalist economy and a criminal government run by crooks for crooks. And we need to figure out what we are going to do about it.

I think we all should try to better understand some of Adam Smith's ideas:

1. Buyers and sellers must be too small to influence the market price.
2. Complete information must be available to all participants and there can be no trade secrets.
3. Sellers must bear the full cost of the products they sell.
4. Investment capital must remain within national borders and trade between countries must be balanced.
5. Savings must be invested in the creation of productive capital.

(A thanks to David Korten)

Our current "capitalist economy" is not even close to the above ideas, yet if you listened to the "right wing", some of them would say: "Adam Smith would be smiling today". I say: No way (would he be smiling ! ).

Ken Hausle "aka buffalo_ken"

It seems that too may posters neglect to analyze the utility of assigning blame. Every event that occurs is a function of innumerable preceding events and thus has innumerable causes and, without analysis, could be blamed on any one of those innumerable preceding events. For example, you certainly could blame your sunburn on the activity of the sun, and, instead of putting on sunscreen, you could shake your fist at that cursed sun that continues to shower you with harmful radiation.

So a reasoned assignment of blame would involve a focus on links in the chain of causality that could be foreseeably broken through some plan of action with at least some minimal chance of succeeding. Contributing to some organization working towards public financing of political campaigns or to media reform might be such a plan of action. However, complaining about the action of other consumers in general or governments in general is akin to shaking one's fist at the sun.

Speaking as a "losertarian" I oughta point out that real economists, ie those of the Austrian School/libertarian, said quite some time ago that having over-inflated the stock market the money was moving. It was moving into the housing market ("safe as houses!") and would cause a housing bubble and subsequent flubbering fart of a deflation.

Note I say was and would, not vague prediction of might do, possibly or perhaps.

Those of the Austrian school of economics predicted the 30's crash too, while everyone else denied the bubble.

Someone earlier mentioned the dollar being defacto world currency.

Yep.

And constantly inflated, leading to "cheap money" (as G North put it, "Cheap money always sells). The Greenspan brigade (Fed) made it cheaper still with artifical rates.

Tip - The interest rate is the price of cash and capital, and like rents it should be left alone.

But noooo, far too sensible. If you've got a government, might as well use it! So you had cheap cash, and people bought it, too dumb to figure that nothing, not even "Safe as" houses are immune to bubbles.

Bear in mind much of the "money" that shifted into housing does not exist, it's debt leveraged upon debt. So if it does actually burst, there goes your entire economy. Let's hope it deflates slowly and only speculators get burned.

The single mother in the article is, or was, a speculator. She tried to be smart with money, ignoring the fundamental economics of it. Future goods are worth less than present goods, hence the entire point of "interest". She borrowed the value of a present good against the value of a future good - the same good, in the future, ie her house.

Amazingly, the future house is not worth as much as it was back then.

That's normal, housing only tends to escape that because people like to crowd together and properties increase in value over time - but there is no economic rule to that. But there IS an economic rule to the future/present goods value thing.

In short, she gambled, and lost.

Sympathy? Sure, can't blame the gal for trying but deserving of a bailout? Nope.

As for "predatory" lending, don't be ridiculous. You're grown-ups and responsible for what you borrow.

It's sad and ironic - this is one of the few places I can find open criticism of Bush, neocons, Iraq and corporatism - and yet I have to wade through so much gibberish and ignorance of capitalism and economics.

:(

S.

PDFee,

Re: TAXING ME TO DEATH IS NOT SHARING! CONFISCATING MY INCOME IS NOT SHARING! REQUIRING ME TO PAY FOR THE LAZINESS AND IGNORANCE OF OTHERS IS NOT SHARING!

You're being taxed to death? Quite frankly, that's a little hard for me to believe.

Taxes are the price we pay for civilization. And right now, given the size of the federal deficit, the price appears to be set a bit too low. Which is why flagrantly wasteful government programs such as the war in Iraq can continue. If your typical family of four had to fork over the additional $1650 in hard cash to fund the $124 billion supplemental spending bill that Bush just vetoed because it might stand in the way of other similar spending bills in the future, I might hear a little more squawking from conservatives about the way their children's money is being squandered.

As it is, I just keep hearing about hypothetical lazy people sponging off society. Wanna hear about someone sponging off society? How about hedge fund manager Jim Simons creaming off $1.7 billion last year for throwing around other peoples' money? And guess what? The guy's tax bill is probably going to be lower than yours on a percentage basis. Particularly if your income doesn't exceed the cap on payroll tax.

Actually, what we really need here is to sunset the Bush tax cuts, with the exception of the 10% rate on the lowest tier, tax dividends as regular income, and repeal of the lid on social security taxes -- the latter given that the government has long since abandoned even the pretense that the social security tax is anything other than a general tax with a little extra bookkeeping to determine peoples' benefits.

Your income is being confiscated? Let me ask you this: do you, or did you, drive to work on a road? Did you go to school and receive 12 years of education at public expense? Do you like being able to buy food at the local store and be reasonably sure that it isn't going to sicken or poison you? Do you enjoy an orderly society where you can live in reasonable security? Do you like having a military force that protects you from being invaded by conquering armies such as the one we sent to Iraq? Do you like a system of courts, that will settle disputes and will remove criminal elements from your neighborhood?

How about Polio? Maybe you don't remember when summers were not greeted by mothers with quite the enthusiasm that they are nowadays because of the very real risk of their child being afflicted with a crippling disease. Perhaps you would you rather have polio than have your income "confiscated" to provide the funds needed to develop a vaccine.

The bottom line is that our problem is not "government waste". Our problem is misguided policy due to greed masquerading as conservative ideology and the corruption that goes with it. Wise up, PDFee. The only people who would rather live under the law of the jungle rather than the rules of civilization are predators. Keep pushing for the law of the jungle and you may someday find yourself living in one. And there are a thousand ways to die in the jungle.

From the article: "Home owners' losses will total an estimated $164 billion (£82 billion), according to the Centre for Responsible Lending, an independent research group."
Does this mean that homeowners have lost that much in equity that they had invested in the property? If they lost it, I'd like to know who found it. I think whoever found it should give it back. I bet the mortgage companies and the banks and the brokers found it!
But here's another part I don't understand: If someone takes out a loan for $170,000 then basically they've already gotten their money out of the house and spent it. Now they're sad that they've spent it and they can't pay it back to the sharks? Dang. I'd like to borrow $170,000, spend it, then get off the hook. Sweet. :o)

THIS is why I get most of my information via internet. This is the only place where one can voice opinion and not get interrupted. Rather interesting isn't it. Enjoy. The powers that be would love to shut this discussion down.

When you make capitalism your religion; money is your god.

I am not against capitalism it has its place.

I am ashamed that public airwaves are used to push predatory lending and debt relief while listening to how to get rich schemes disguised as normal programming.

scottdw ~

It depends on how you measure what you think is a fair measure. When you think of the strength of the economy, do you think GDP? Do you think DJIA? Do you think of disposable income? Do you think of M1?

It's like any statistical data, there are multiple prisms that you can view the data through to come up with whatever conclusion you wish to promote.

If I want to, I can look at the gains or losses in the percentage of disposable income in specific geographic areas, focusing on a segment of the socioeconomic strata ~ and tell you the world is collapsing around us.

If I want to, I can look at the stratospheric valuations on the widely held common stock of America and tell you that everything is wonderful.

It is just a matter of where you want to look and what you want to see.

Personally, my local housing market is holding pretty firm, not going up by leaps and bounds like it has been the last 5-10 years, but it's by no means "collapsing" like some would have me believe. It's a healthy and normal pattern of gains and losses that happens in an organic financial system.

Anyone who's been around the block a time or two will have seen more than a couple of these cycles. No need for panic or rioting in the streets.

Geez ...

According to Sean Hannity, this really isn't happening. The housing market and the economy are as strong as ever, according to him and the right-wingnuts.

JCRUMB

What you have described is the classic pyramid scheme in yet another form, and on a scale previously unheard of.

With the American dollar as the defacto world currency, don't concern yourself too much - the entire world ends up having to pay for it, not just the American taxpayer, when the federal government dilutes the currency by printing even more money.

Here is a link to an article, that describes an alternative to our current economic system.

http://www.informationclearinghouse.info/article17635.htm

Spiny-thanks for the correction on the name.
To PDFee-oh I actually felt better responding to you and in turn to the few on this post who belittle those searching for answers to a better shared future. I know the word share is anethema to neocons-but try it sometime-it's actually more fullfilling than greed.
Now saying I was pontificating really hurts because I'm a happily lapsed Catholic.
P.S. How did you assume I am a male? And do you think that Mr. Atwater's story has any relevance for you?

Spiny ~

Struth! What are you trying to do? Make sense? I think you're labouring under the misapprehension that Mr. Klever actually understood that which he pontificates. No, he just wanted to get out his feelings on the subject.

Klever ~ what about my commentary raised your blood pressure?

I just think we are each responsible for our own lot in life.

What's wrong with that idea?

People need to buy what they can afford.

The first example in this article is a "47-year-old hospital administrator.

Having been a RN for 24 years, I can tell you that all of the hospital administrators of hospitals that I worked at got paid VERY WELL.

One even got a FREE LUXURY car, rented for him by the hospital, maintained for him at the hospital's expense.

In other words, a hospital adminstrator SHOULD have EXCELLENT credit, ENOUGH money SAVED for DOWNPAYMENT, and in NO way, shape, or form, need a "sub-prime" mortgage loan.

I had a 25 year old mobile home on an acre of land. I traded it in. It was ready, repeatedly needing floor repairs, plumbing problems, dry rot in the windows, etc.

I have had a 1999 Horton double wide since...1999.

I have 3 bedrooms, 2 full bathrooms, central heat and air, a breakfast nook area that is part of the kitchen, and a dining room area that is part of the living room. It also has a ceiling fan.

It's not luxurious, but it's nice. It's on a brick foundation, just like a house. There's no tacky "under pinning" as an ugly eye sore.

It has a long brick porch with a roof at the front door, with ample space for many people to sit on a cool evening, and listen to the crickets and other sounds around here. It has a full wooden porch at the back (side) door, which actually leads into the utility room first, and then into the breakfast nook area, from there.

The drawbacks? Wiring and insurance.

I elected to keep my Trane heat pump, instead of the cheaper one that came with the place. Installing the Trane proved a challenge for my A/C man, because the original wiring only ran 3 wires. The Trane brand used 5 wires. It had to be rewired.

Some time later, a roommate accidentally shorted out an entire wall, from the kitchen sink past the stove, all the way to the counter top end. It required rewiring by an electrician, who spent a great deal of time reading the schematics of the place, and mumbling that he had to first figure out what the Horton company had done, because, he said, they did odd things, and didn't do wiring schemes the normal way.

Several hundred dollars later, and several hours later, he did get it done.

My insurance on this place runs about $2,000.00 a year, now.

I am not "coastal" at all. I live just outside of Loris, about 25 miles inland as the crow flies (further by winding roads). I am not in a flood area.

Eight years ago, my insurance stared out around $1,200.00 a year. And it just kept going up and up and up.

Their excuse? "Statistics show that after five years claims increase in mobile homes." I countered, "You and I both know that you can make statistics say anything you want them to say." The man did not disagree.

SC has been hard hit BEFORE Katrina/New Orleans by insurance carrier after insurance carrier upping and existing FAST.

People on my street with wooden frame houses (non-mobile homes) have annual insurance costs of well under $1,000.00 a year.

Those are the drawbacks.

Wiring, and insurance.

But still, it's what I could afford. My mortgage is slightly under $600.00 a month. My insurance runs about $164.00 a month.

How are these people getting into payments of $1,000.00 or $2,000.00 or more, a month?

Am I happy with my home? So so, yes. I don't like how much it costs to insure it. No. Otherwise, yes.

But again, it's what I could afford.

I could not afford to build a new home on this land. I could not afford to sell what I had, and try to buy a "real" house. The only thing I could afford, post-bankruptcy, was that old mobile home on that acre of land. The only way I had of upgrading and getting rid of it was to trade it in on this one.

Buy what you can afford, and you don't have the suffering that people have.

My mortgage is fixed rate. And this from having left exited a bankruptcy in 1990!

To klever:

David Stockman is not dead. He got indicted for some accounting fraud a few months ago. You might be thinking of Lee Atwater, who regretted his sleazy campaign tactics as he was dying of cancer, see http://en.wikipedia.org/wiki/Lee_Atwater#Atwater_repents

"Housing should not be a luxury commodity."

It shouldn't be but it is. And what's really funny is that people act like a failure if you don't own your own home. People ask me all the time, "When you buyin' that house?" I dunno what to tell them. When CAN I afford my own home? I was pre-approved for a loan and was told that my monthly payment would be $730 a month. That's over 80% of one of my paychecks. Then there's closing costs, home inspection, etc. And of course, you have to have a healthy savings account first to show that you're "ready". I can't afford to save a damn thing. I already help my parents out with their bills. The house they live in is falling apart. Maybe they should just watch a Suze Orman DVD? Or a Carleton Sheets seminar? Anthony Robbins?

The guy I rode to work with almost got his house taken from him because he was late on his mortgage payments. His minimum payment went up. This man works two jobs, his wife works part-time, and his daughter, who still lives with them, is a paralegal and he almost lost his house because he basically couldn't afford it.

Yeah, I know. Take "personal responsibility". Mmmhhmmm. You can manage your money and do all the "right things". You know, go to school, get a "good job", make "sacrifices", etc. But what happens when the rug is pulled out from under you?

If capitalism supposedly rewards "hard work", why is it that I've known so many people who worked hard and now really don't have a dime to show for it? Didn't they work hard enough? Were they just dumb?

To PDFee:
I'm reluctant to respond to your posting because high blood pressure and a heart condition are two of the reasons I'm permanently disabled. But here goes. This is a reply to those few posters on this site like you who consider others whiners-"those in Africa have far less '-etc. Partially true like most blowhards-however-a bit of personal history.
My disability pension is far below the poverty level because like many others I was denied the first time and it took 3 years to get another hearing. Your benefits are figured based on recemt earnings thus you are screwed for life. This is not my computer [I'm sure you had that rebuttal ready] and if it were not for family help I couldn't survive.Other "developed nations" don't permit this.I understand I'm only one of millions who are cast aside in the US-the trillions of dollars wasted in wars-banking scandals-etc.-could have made lives more bearable.
I'll close mentioning David Stockman-prime architect of "trickle-down" economics.During his terminal illness he saw the error of his ways and apologized for his part in it. My hunch is when he turned for solace in his lament-it was to people like most on this site-those with at least a bit of empathy.

Absolutely right, whyzowl! It's a great time not to own ANYTHING!

There are a lot of confused opinions here, but hiding the truth about how US elites prey upon us is what the well-oiled propaganda machine of the MSM does for a living. No surprise there.

What we're seeing now is the collapse of a real estate bubble. Alan Greenspan was the great bubblemeister in this case, driving interest rates down to one percent at one point to inflate the bubble, at least partially in response to the collapse of the dot com bubble on Wall Street. It's junk economics, of course: fueling a "recovery" from the collapse of one bubble by inflating another. And there's going to be hell to pay -- for the "little people," natch, the insiders have already walked away with their ill-gotten gains and won't pay any price at all for what amounts to racketeering. It's said that Greenspan was "creating wealth," but all he really created was an unsupportable burden of debt.

The subprime market is all about saddling people with mortgages the lender knows they can't repay, using "creative" financial instruments like no down payment, interest only loans, ARMS, and so on. The lenders get their fees up front and walk away, or, if they think the borrower can make the payments, they can secure the loan by buying default insurance for 3/4 percent and charge a higher interest rate on the loan.

US financial elites and their government representatives are talking about a "bailout" because they're scared. Any bailout plan could only be partial and only designed to provide a "soft landing" for the economy. The bubble is deflating too fast; and it threatens to take the whole US and global economy down with it. We're talking about a 4.2 trillion -- with a "T" -- real estate bubble here. There isn't going to be any easy way down from the top of this house of cards.

Hang onto your hats, we're in for a wild -- and extremely unpleasant -- ride.

"Housing should not be a luxury commodity."

Well ... I'd argue that luxury housing should be a luxury commodity. "Housing" does not nessesarily mean "a house", or "a two-storey house with a garage".

So capitalism consumes itself again! What a freaking surprise! You know, we may be the first nation on earth to die from fear of ' isms'! We loathe Communism, Socialism, Islamism, and individualism! Hell, we loathe them so much we would rather go down under a pile of sick and dying people than institute
Universal Health Care! And all because of one reason. We left Europe to get away from this kind of abuse...only to install it here! Many countries in Europe have went to UHC with no ill effects. But we are terrified of it because of only one glaring fact! The rich in America are TERRIFIED that they have to pay their fair share for the privilege of being American and, by God!, since they control the
law makers on Capitol Hill, they WILL, by God, get it the way they want it! It's the bleeding same as what they left Europe to escape! The poor fight their wars. The poor support the government. We've got a lot of potential here in America that is being preyed on by fools! Maybe a Parliamentary form of government would be a little more RESPONSIBLE!

I agree with the first comment 100%..completely..here in California..Eureka to be exact..we have seen an UNBELIEVABLE take-over of the city, the city council, and virtually every other board and institution...from the Zoo to the Art Councilll BY REAL ESTATE DEVELOPERS..
THE GAME IS REAL SIMPLE..IT'S CALLED "WALKING THE PAPER" AND HAS MADE ALLOT OF SCUMBAGS VERY RICH.
WE HAVE THREE "SCHOOL BOND" MEASURES IN THIS TOWN..THANK GOD FOR PROP 13 OR WE WOULD ALL BE OUT OF THE STATE (KEEPS PROPERTY TAX'S AT 1% OF PURCHASE PRICE...) AND THEY STILL ASK FOR MORE...
We bought our home 10 years ago..grew up here..got it for 80K..and now it is "worth" 300K..but it is a SHAM..and we..fortunately..know it..and knew it..and have not fallen ito the trap..
In the article above..there are quotes from the people WAITING IN THE WINGS TO BUY THE REPOED HOMES..THIS IS DISGUSTING AND IS ACTUALLY TH WHOLE PROBLEM..THE "FLIP" MENTALITY IS EXACTLY WHAT HAS DRIVINE THE PRICES UP AND THE LOAN GAME INTO CORRUPT PRACTICES..THEY ARE BLAMING THE "SUB PRIME" MARKET..BUT IT IS THE APPRAISLA GAME AND THE "FLIP" MENTALITY THAT HAS AND IS...CAUSEING THE PROBLEM..
To say NOTHING OF THE COMING RENT CRISIS..HOW WILL PEOPLE BE ABLE TO AFFORD RENTS BASED ON INFLATED HOME PRICES AND THE CONSEQUENT MORTGAGES??????? THEY SIMPLY WON'T..IF THEY CAN'T AFFORD TO MAKE A HOUSE PAYMENT OF $1000 PLUS..HOW WILL THEY AFFORD RENT OF $1000 PLUS????
BLAME THE "FLIPPERS" IT IS THEY WHO HAVE SCREWED UP THE MARKET SO BADLY..ALONG WITH REAL ESTATE AGENTS AND LOCAL CITY COUNCILS WHO CANNOT FIGURE OUT HOW TO MAKE THE BUDGET ANY OTHER WAY..
THIS IS REALLY A BIG DEAL FOLKS! AND SOONER THAN LATER THE "SUB-PRIME" PROBLEM IS GOING TO BE SEEN FOR WHAT IT IS..A SMOKE SCREEN TO "WALKING THE PAPER" AND THE "FLIPPERS"..FOR AGAIN..IT IS THEY WHO CONTINUE TO DESTROY...FOR GREED AND NOTHING MORE...THE HOUSING MARKET IN THIS COUNTRY..FROM COAST TO COAST...

Paul Bramscher May 6th, 2007 8:11 pm

Gail: I did a little research why several townhomes in my community have remained vacant since their construction like two years ago, prices have barely come down to meet genuine market realities, the owner is delinquent on their taxes, etc.

Apparently the trick is to set up an LLC or some other corporation, run the business from your McMansion on a gated estate. If you can't juggle the books long enough, you just declare bankruptcy, dissolve your little corporation, and shortly form a new one. The sad part is that most/all of it is fully legal.

Paul: I worked for a real estate law firm for many years and understand the workings of developers, banks/lenders and their relationships. It is also clear that the bankruptcy reform bill of 2006 was designed to devastate the lives of individuals and not corporations.

PDFee: I was being sarcastic there.

But look at the discussion that led up to my commentary, how the government bailed out the S&L collapse -- rather than figuring out the "disappearing money trick" and going after the magicians who pulled it off. It goes back at least to 1933, when the government "solved" the last Great Depression and early banking fiascos.

Namely, they created federal programs like FDIC so that taxpayers (via the IRS and their own expense) protected themselves against bank fraud.

Wouldn't it be a tad more cost-effective, and more exemplary of justice, to simply jail the fraudsters, follow the money trail, and return it? Oops, I forgot -- that requires rule of law...

Default on it and wait for "the government" to bail you out??

Fine thinking, as long as you remove "government" and replace it with "the people of America".

Does anyone here actually think that the government is responsible for our livelihood? Are the beaurocrats in Washington D.C. there to give YOU free housing? Free food? Free clothing?

If that is YOUR economic view of our world, then you live in a very selfish and very ignorant world.

YOU are responsible for YOU! Your food! Your clothing! YOUR HOUSING!

And by the way, NO; it isn't a right! You make the bed you sleep in ~ be it a beachfront estate in Malibu or a rat-filled dumpster in Jersey City. If you are looking for a helping hand; look at the end of your own arm!

What's the matter with you people??

Gail: I did a little research why several townhomes in my community have remained vacant since their construction like two years ago, prices have barely come down to meet genuine market realities, the owner is delinquent on their taxes, etc.

Apparently the trick is to set up an LLC or some other corporation, run the business from your McMansion on a gated estate. If you can't juggle the books long enough, you just declare bankruptcy, dissolve your little corporation, and shortly form a new one. The sad part is that most/all of it is fully legal.

Paul Bramscher May 6th, 2007 7:07 pm

"If the Dems see this is an opportunity to send a whole bunch of money the way of the banks, rather than tighten lending laws, and send to jail the offenders, it'll be a pretty sad day.
Hell, if that's the way it's going to go — then it might not be a bad idea, now, to buy a second property under an ARM loan as an investment, default on it, and wait for the government to bail you out?"

Paul, I like the way you think. Good plan! As long as Congress is willing to accommodate banks, the rest of us might as well take advantage of this give-away at taxpayers expense. After all, aren't we all capable of being hands-on predators?

I have to blame our educational system in part. It's not teaching people to THINK. It's pretty clear that what goes up must go down. If you have an asset like a home, it's pretty important to be informed about it's value and where it's going. I had a large home I really couldn't afford to maintain, refinanced it in 2004 when interest rates had plummeted, but only because I had the hospital threatening to put a lien on it to pay my medical bills. So I ended up with a lower monthly rate, free of medical debt and a new roof. Then I sold it last year and bought a small home in the country for cash from the equity. That was my plan, for I've been watching the storm clouds on the economic horizon, and wanting a small home with no mortgage and a garden where I can grow my own food.

I too would like to know just who the Dems are talking about bailing out. The homeowners whose homes have already lost a quarter of their value and it's not over, or the banks going bellyup? Some people tried to buy a home and are getting slammed, others refinanced to pay medical bills or college loans (which our society shouldn't be dumping on them anyway) and some, in order to "live the good life". So where do you draw lines? Do you treat everyone equally? Some tried to be responsible and got caught in the net, some tried to get away with everything they could, some got redlined because of racism. Unlike Reagan's simplistic view of life, things can be very complicated.

Exactly -- all predatory lending (along with investment/real estate speculators) has resulted in is artificially inflated prices. The downside is that this affects everyone, and huge numbers of people were silly enough to refinance and eat into their own equity, thinking the reassessed value had a genuine rationale behind it. The name of the game is equity, equity, equity. Better to own a 2-room bungalow outright than be servicing some jumbo loan on a McMansion or paying a permanent tithe to a skimming townhome "association" for maintenance.

If the Dems see this is an opportunity to send a whole bunch of money the way of the banks, rather than tighten lending laws, and send to jail the offenders, it'll be a pretty sad day.

Hell, if that's the way it's going to go -- then it might not be a bad idea, now, to buy a second property under an ARM loan as an investment, default on it, and wait for the government to bail you out?

So much of the financial woes of people in this country is due to the insistence of living beyond their means. This desire is fed and encouraged by lenders of all stripes. I don't understand why anyone would take an interest-only mortgage and not have a strategy to pay it down early. How is it smart to continue to roll over your debt year after year and pay interest on the never-never? The consumer needs to assume the lenders are out there to get them. It is their aim to make you pay the most interest over the longest period of time, gambling that you won't go under, and thus, neither will they. It seems in the current market, many of these lenders have lost their gamble as their customers lose their houses. These predaatory practices should be curtailed, but consumers also need to become smarter, and realize that banks and mortgage brokers, etc are not our friends.

I like David Bailey's comment,"...People are bombarded with advertisements for loans. Advertisers use all their skills to persuade people to do things that are stupid.

If such ads were banned, I am sure far fewer people would get into trouble."

I put this under the category of MEDIA REFORM. The housing crisis argument like many other arguments invariabely comes down to the fact that we need to be better informed.

MEDIA REFORM is more important than the war on terror. MEDIA REFORM is more important than global warming. And yes MEDIA REFORM is more important than collapsing housing markets.
Think about it.
It's so simple it's celabratory.

adamwestfakey@yahoo.ca

No, don't give any money to the scam artists, but provide fair federal loans to homeowners in trouble. Better than blowing billions in Iraq.

I used to get 15 calls a day from lenders wanting me to refinance, they said at 1% or 2%, and of course it was what they didn't say. These were variable rate loans on the interest, not fixed, not on the principle amount. It's a scam to offer a lot of money at super low rates (initially) and not tell people the truth. There should be some kind of truth in lending laws where people are told what possible outcomes will occur if interest rates go up or housing prices down. This scandal has just begun, and its going to work havoc on the economy. Maybe Bu$h will take a hit here at home on this one.

"In February, HSBC issued the first profit warning in its 142-year history as a result of losses incurred by its American wing on subprime loans."

"First" profit warning in 142 years! That simply indicates that their shareholders won't be reaping the profits (predatory or otherwise) they've become accustomed to over the years. One must realize that if HSBC or any other lender had a profit margin of 50 billion last year and their profit margin this year is only 45 billion, they consider it a loss.

In reality, a loss is when an investor loses their initial investment, not the interest they've made or hope to make. And let's not forget all the tax loopholes designed for those losses.

Frankly, I'm tired of hearing of how these lenders are taking a loss - it's total BS. It's the borrowers who make a down payment (principal investment) on a house that are taking a loss.

"The crisis will also play a role in the race for the White House as Democrats call for a federal bail-out plan while Republicans say that would be a waste of taxpayers' money."

If this is another bail-out like the one taxpayers picked-up with the "Savings and Loan" scandal to the tune of over $500 billion, we're getting screwed again from a government willing to cover the ass' of their corporate masters.

A bailout so that we're mandated, by law (taxes), to bail out the very industries that have caused the problem in the first place?!

The LAST thing we should do is throw good money after bad. Let the predatory lenders, investment groups, and land speculators eat the loss.

If the Dems toss billions at this I'll be pretty irked. I borrowed responsibly, bought a fixer-upper, and have been living within my means. If there was a white-collar crime committed, toss the perpetrators into jail and re-regulate the various industries. But under no circumstances should we bail out poor consumer choices, by tossing money at the exploitive industries.

Let the market fall, let it collapse. When prices get reasonable again, people can buy back in at down-to-earth prices.

My friend calls real estate people "pimps" why ? well he gives this example, "Hey Bill its a good time to list I can probably get $ 250,000 right now--an hour later its-- "Hi George there's a new property on the market, want to get an offer in early " Like stock brokers, bankers and other middle men they primarily make it, whether you are going up or down, except when the game completely collapses, and then its a tiny majority that make a real killing. Selling money is where its at, profits from Big Box Stores credit cards often exceeds profits from goods sold by them.!!!

More on the subject at this link.
http://www.informationclearinghouse.info/article17627.htm

What should we expect from a unregulated, free market economy? Sounds a lot like the Building and Loan crisis of the Reagan era. Again, a few make millions at the expense of the working folks who want to own their own homes. Once again, the feds will have to bail out the program - while the free market goes merrily along.

People are bombarded with advertisements for loans. Advertisers use all their skills to persuade people to do things that are stupid.

If such ads were banned, I am sure far fewer people would get into trouble.

This is, indeed, a sad story, but the emphasis in this case may be on the wrong points. These people took out very large home equity loans. There was nothing wrong with their original mortgages. The problem lies with whatever reasons they needed these very large loans, long after they had purchased their homes. The great majority of Amercians who will lose their homes will do so because they bought a house with an ARM recently, just before the boom turned to a bust. These people had significant equity in their homes. The problem is that they took it out.

http://e-tabitha.com/timeline.htm

Sounds a lot worse than the Chinese resettlement deal to me. Housing should not be a luxury commodity. A problem that undermines affordable housing and promotes the real estate and banking scams that lead to these kind of disasters is that many localities base their economy on property taxes. This leads to policies that push for inflated values from which to reap more tax revenue. Real estate people ususally work themselves into powerful positions of influence or even positions on city councils and they reap the benefit of spiraling values -- as do the banks. It's a scam that is leaving more and more of us on the streets as our salaries can't keep up with the inflated prices. Annual personal property taxes on housing should be abolished. This would eliminate the incentive for inflating values. We also need more regulation of banking practices. Housing is a right.

This is the beginning of the end of the system the way we know it.Good riddens!

http://video.google.com/videoplay?docid=-9050474362583451279&q=money+as+debt

It would help if I gave the link!

In my mind this video says it all!