In Ladera Ranch, CA, a large number of homeowners, who have Option ARM's, are currently "stacking cash" to prepare for the date that their ARM adjusts upwards on a home which is 25-30% UNDERWATER....
at that time, these folks plan to stop making payments and wait for the bank to foreclose (6-10 months after they stop making payments)
at that point, these folks will have cash available to pay for a mover, pay 6 months rent in advance on a leased home and wait a year or two for the home prices to fall further, at which point, these folks plan to buy a house at a much lower price....
In an article titled TIPPPING POINT in the Irvine Housing Blog the writer of the blog showed graphs showing the AltA and ARM loans which will reset and/or recast in the coming years...he also suggests in the article that this behaviour is to be expected....
if so, I think this problem is going to be much worse for the banks, the govt. and you and I than the Subprime mess ever was because these mortgages are larger and these homeowners are more financially savvy than the folks in Garden Grove, CA and Santa Ana, Ca who lost their homes in the Subprime debacle of 07 and 08....
These quotes are a very similar reaction - banks want to waive cc debt to avoid total write-offs. I was sayin, might be best for me to go charge a new CL600 and then not pay. It would be like buying it at a huuggggggggeeeee discount.
dafox writes:
at least all home owners have a shot at free money. us poor renters cant default on a loan to get free monies
dafox | 10.31.08 - 12:59 am | #
I read the NY Times article and wonder is this the US or some third world country. I have no sympathy for the airline pilot if the dumb SOB didn't know he was buying a house that was inflated that is his problem. I say fuck'em all and put out in the street. I am so fucking tried of corporations/people/govt. all wanting everything for free.
Does everyone have shit for brains.
if they changed the rules in basketball to allow goaltending, and you were 7 feet tall, what would you do?
monta's ankle | 10.31.08 - 1:03 am | #
Or basketball played with checking like in hockey and tackling like in football... and the yahoos on the other team didn't KNOW... or were slow to catch on that the referee had swallowed his whistle & rules were changed or ignored.
A serious question for you folks: Should I buy a house now, pay the mortgage for 6 months, and then stop making payments? (It seems pretty clear that some sort of bailout will happen.) Or am I better off waiting for 5-7 years before I buy a house?
Why do they keep calling this a $40 billion plan? It is obviously going to cost a lot more than that. Once they go down this path, everyone is going to feel entitled to a house that is subsidized by the government.
A White House spokeswoman, Dana M. Perino, said on Thursday that the plan was not imminent and that several different proposals were being considered.
Given the obstacles, it seems clear to me that they'll just let the next guy carve this particular turkey.
"CalvinBall is a game that you never play the same way twice. Anyone can add a rule, and not all parties must agree for a change to be implemented. Score is kept in an unusual..."
"Or basketball played with checking like in hockey and tackling like in football... and the yahoos on the other team didn't KNOW... or were slow to catch on that the referee had swallowed his whistle & rules were changed or ignored."
Hey, I saw that game. Between Phoenix and the Lakers. Over and over again every year.
@Bond Girl "Why do they keep calling this a $40 billion plan? It is obviously going to cost a lot more than that."
I think you just answered your question. When was the last time you saw an accurate, all-costs-included long-term price estimate placed on a new government program?
The only firm number in the game at this point is the National Debt Ceiling, and if Congress doesn't bend over and change it next time, I imagine Treasury & Fed will find a circumvention...
Silly me. I was making plans under the assumption that I live in a capitalist country. Personal responsibility, self-correcting markets, etc.. I was going to rent for another 9 months and when housing prices came back down to earth buy myself a nice apartment with the money I saved up. Now the prices will be forecefully propped up by constricting the flow of foreclosed property into the market. The mortgage rates will rise substantially because the government will need to raise interest rates just to be able to finance the bailouts. My savings will get eaten away by the inflation that will accompany the sound of the printing machines swinging into action. I will have to pay higher taxes to insure other people's mortgages and bail out banks.
In terms this site will surely understand... I don't want to pay for other people's fat over-priced ponies. I WANT MY PONY!
Wisdom Seeker writes:
@Bond Girl "Why do they keep calling this a $40 billion plan? It is obviously going to cost a lot more than that."
I think you just answered your question. When was the last time you saw an accurate, all-costs-included long-term price estimate placed on a new government program?
It is still annoying as heck that it gets reported that way....
"To guard against fraud, an F.H.A. spokesman said, borrowers will have to certify they did not intentionally default."
Well, as long as the borrowers "certify". Makes me feel much better about my tax dollars helping these folks out. I mean the one poor guy at the end of the article TOOK OUT $200k CASH and now wants a mod since his $150k house has a $350k mortgage. My heart breaks for the poor guy. I'm just dying to send him some of my tax dollars.
The borrower, who lives in suburban Los Angeles, took nearly $200,000 in cash out of his house and then paid less than the monthly interest due on his new loan.
He now owes about $350,000 on a house that is worth only $150,000. He asked not to be identified for fear he would not get a modification, which could reduce his mortgage to $142,500.
I agree with you 100%. Why do the Media keep (tr)eating the press releases as if they were written factually, when it's clear the government is very frequently totally wrong?
Maybe that's a question that answers itself too... Hmm...
My neighbor has a Lamborghini Gallardo - a $220k car. He's 26 years old, HS diploma, and was working as a mortgage broker. He hasnt paid his mortgage in 10 months, and is still living there. Place looks like hell too - dead grass, never cleaned up, etc.
He changes his own oil on it. He parks it outside (we live near the beach). It gets washed about once a month.
I feel GREAT about him having his toy while I just paid off my $15k car that I can actually afford
The only way to restore the common good is for the commoners to take the reins of the economy away from the Wall Street financiers and the professional economists that exist for no other reason than to build a monument to themselves.
The way to make people wealthy is to give them the choice between opportunity and self-destruction.
The way to make people poor is to give them what they want.
Today we have a political system designed to grant power to the few by giving the masses what they want.
As U.S. citizens we live in and contribute to this institution of poverty.
And yet, as U.S. citizens we have distinguished ourselves in the past by our awareness of our faults and our willingness to take corrective action when confronted with our weaknesses.
Perhaps it is time to stop begging the government for more worthless paper and start asking what we can do as individuals to improve our lot in life.
Maybe mankind's ultimate achievement isn't to amass the biggest possible pile of paper promises and digital IOUs.
How are these people going to prove they can't pay? They all lied and said they pull down 350k/yr on their mortgage applications, now all of a sudden they only make 35k? That would make a great plot, income reported on mortgage application versus income reported on bailout application.
The PTB are doing everything they can to INCENTIVIZE borrowers into defaulting on their debts. They are succeeding in making it more and more attractive and less and less stigmatizing to be a deadbeat. Unintended consequences & moral hazard all around!
I'd be fine with this reworking if they prosecuted the original loan fraud at the same time as the loan mod. Lets see how many people actually apply for it now!
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship.
The gubmint has to take care of it's GOOD consumers, the ones who shop til they drop... 70% of the GDP and all that. Citizens with shit for brains don't matter.
Dumb question- why don't they apply the same laws to mortgage loans as they do to student loans? If you default on your student loan YOU WILL NEVER GET CREDIT AGAIN. When I buy a new car- I know as soon as I drive off the lot, it is worth less than what I paid. I don't stop making payments!!!
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship.
If the voters are that dumb then we might as well all shoot ourselves now.
Personally I'm not that pessimistic.
The key to our future is getting the voters to use their brains.
They're not as dumb as some people seem to think...
Has anyone figured out what kind of scripts the speciousriches spammer's website is running? With normal Firefox malware protection setting defaults turned on all it does is cycle endlessly without opening (kids, don't click his link with Explorer!). Is it just lousy programming, or malicious scripting?
View Source works anyhow; it's got a lot of economics-related text on it plus scrip5ting -- might be the weird stuff that keeps the page from loading is recognizable to someone.
Apropos neglect -- just read a story that's linking foreclosures to rise in West Nile virus (mosquitoes breeding in abandoned pools). And that California might start to get as little as 15% of its water allotment. We'd better get busy this winter on all fronts.
On bailing out everyone who overbought --- well, yeah.
The people running the country don't LIKE reasonable, thoughtful, careful citizens. They read fine print. They vote. They think.
The people running the banks, er, I mean the country, LOVE the unrestrained, overoptimistic, overtrusting, greedy, piggy, sloppy, acquisitive, nearsighted, mayflies.
They're easier to take advantage of.
Ya gotta think long term about this.
Increasing the proportion and wealth of the sucker population is good for the country, I mean the banks. Later.
it's a net asset bubble equilibrium path....in the past, early entrant prebust sellers win biggest, and the later you get in, and the later you sell past the peak, the worse off you are. At some point, everyone past a certain time is generally a loser. Eventually, the last losers turn to vultures, early birds, and win on the next cycle.
But this time around, it actually may make sense to buy in right before the peak, and layer on top of that, really crappy saving and spending habits. Then go bust badly, and get debt forgiveness. Of course, that's going to change the returns for the poor fools who are thinking to get in at the bottom. (see riverside, etc)
Cumulatively, how much did housing wealth (equity) increase nationwide during the bubble?
Just tack that figure (surely many trillions) on to the national debt. We are digging ourselves a hole too big to get out of. What is the interest payment on 11-15 trillion dollars of debt?
It's over. And no one but a small group of bloggers is even talking about it.
It's hard to imagine that this will work. And what about the millions who have already lost homes to foreclosure? The least that they can do is soften the hit on their credit reports. Roubini is right- there is a huge incentive to walk away in many states.
It's maddening. MADDENING. Sheila, please understand the following:
1) YOU CANNOT STOP FORECLOSURES WHEN PRICES ARE FALLING. It's an impossibility. Sure, you can reduce them, but that just delays the inevitable correction.
2) PRICES WILL NOT STOP FALLING, because income levels do not support current values.
I doubt the Tyler quote--I don't think dictatorship was a term yet by 1814, but someone can check the OED.
THis well verified quote from John Adams makes the point well, enough, however. And why I cringe every time I heard Bush or his democratic alternatives (it's a nonpartisan sin, sadly) the past two elections wax poetic about the alleged virtues of democracy:
"Democracy... while it lasts is more bloody than either aristocracy or monarchy. Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There is never a democracy that did not commit suicide."
Best comment I've read today (note, however, these days, I can't keep up anymore with all the comments).
I'm thinking that there has to be some business opportunities for those of us renters. (Other than maxing out our credit cards: does cash withdraws count as bailout-able debt?)
That last one is shit. People who are doing well are doing well for a reason. If people are greedy enough that they will deliberately stop paying to look worse than they are, the country deserves a much worse situation than we're in. People have to learn some values before we can solve this mess.
Danny writes:
It's maddening. MADDENING. Sheila, please understand the following:
1) YOU CANNOT STOP FORECLOSURES WHEN PRICES ARE FALLING. It's an impossibility. Sure, you can reduce them, but that just delays the inevitable correction.
2) PRICES WILL NOT STOP FALLING, because income levels do not support current values.
Mother f#c%ing yeah!
Are these "modifications" all to be done in secret?
Will these assholes pay taxes on $500G homes but pay mortgages on $200Gs?
Will these assholes pay taxes on $500G homes but pay mortgages on $200Gs?
jane in los angeles | 10.31.08 - 2:21 am
They can't even pay their mortgage. You think they're going to be forced to pay taxes too? Fuhgetaboutit. Why does everybody think these peeps aren't going to just get a free lunch? Face it, we're being f'ed and there is no stopping the f'ing. When everybody else is in debt up to their eyeballs the savers are the patsies.
1929er writes:
Has anyone figured out what kind of scripts the speciousriches spammer's website is running?
Is that the one that is a LiveJournal or "Roller" site? It is not plain HTML, but I had it open - lots of text, too much to read... (I'm on Mac OS X)
1929er | 10.31.08 - 2:24 am | #
er, check that: specious riches looks pretty legit, its a wordpress blog, musta had some link corruption.
Wall Street Journal: PNC Stands to Gain From Tax Ruling; Acquisition of National City Will Bring Billions in Deductions, Experts Say, by Jesse Drucker:
PNC Financial Services Group Inc. will receive several billion dollars in federal tax savings stemming from its purchase of National City Corp., tax experts said, significantly increasing the price tag of the federal assistance that helped spark the deal.
The tax benefit for PNC is the latest outgrowth of a ruling by the Internal Revenue Service and the Treasury Department in late September intended to give a boost to the struggling banking sector. The ruling, which gives banks the ability to quickly use up the "tax losses" of banks they acquire, is adding significantly to the overall cost of the $700 billion bailout package passed by Congress.
Robert Willens, an independent corporate tax analyst based in New York, estimated the tax savings to PNC could total as much as $5.1 billion.
Well, we're not going to get to the catharsis moment until the majority have figured out what's going on. That's the true "Wile E Coyote moment" inflection point.
The problem is that somehow stupid has become fashionable over the last decade or so. Maybe that was what was required to believe the sales pitch and pretend that everything was OK. If so, the Kool-aid drinkers are likely to "clap louder" until the bitter end.
Danny,
From memory home equity withdrawals were over $200mn per quarter up until recently.
There was over $12tn in residential mortgages in the United States.
The underlying assets were not just the homes, but the appreciating above the lending rate homes which enabled alt-a re-financings. There is no nation on earth that can artificially provide positive carry indefinitely
It is calculable, but depends on your opinion. What kinds of structures and land values do you include? Cottages, government buildings, speculative landlords... What about loans that used real estate as collateral, or 'retirement savings' and other multipliers
I can give you a short answer, at least $2 trillion but more likely $4 trillion of wealth was created in the United States residential real estate market. That would be about $80,000 to $160,000 per home on average.
That's not even the problem any more. $4tn would have been enough to recreate the entire financial system if the US were prepared to insult wealthy investors by allowing the banks, insurers, mortgage brokers, and others to default.
It's not about how much money, day by day more and more people resign themselves to the facts; it's about whose money will be lost. Without government intervention it would be the wealthiest who bore the heaviest losses.
That the AIG holding corporation was rescued is a clear example that this is not about a dollar figure, but who takes the losses.
That tax statute rewrite, which I still understand to be plainly illegal, was done by Paulson in order to get Wachovia's shareholders a higher $ per share as the Wachovia CEO happened to be Paulson's friend and had only left the Treasury one year before.
That PNC gets to take advantage of the same handout is just circumstance
Hell if reporters understood anything, they wouldn't have been barking at the FDIC for almost letting Citi buy Wachovia at a higher effective net price
Hopefully my stock inheritance is only in the market for 72 more trading hours. I think I'm gonna have a heart attack... and I suspect not being able to exit this week will cost me when we go down to 8k again tommorrow/Monday/Tuesday.
Perhaps I'm overly pessimistic, or I'm just under the influence of you over-bearish folks. I still think it's amazing we had the Dow values drop 30% in one month! And people are wondering where the crash is?!
On topic thought: we'll still be in crises as long as the President and presidential candidates believe that "falling housing values" are an economic crises. Give me a break... I don't own a house... I'd like to... so the fall in prices isn't a negative thing.
BYZ, I liked your communications theory analogy a few threads back. It mirrored an idea I had today. In the preautomation days folks were forced to design things in a simple hierarchical manner because there was no way to deal with the complexity of anything else.
Now they design things without regard to complexity, or sometimes make them complex if for no other reason than to show their cleverness. Unfortunately complex system rarely scale like regimented ones can. Ergo, some sort of systemic simplification is coming.
How long until only those with a background in non-linear control theory, adaptive filters, and graph theory are allowed to lead such important sectors?
This is really the first time in human history that the system has simultaneously broken all over the world. Even GD1 had time lags of a few months to a couple of years between different countries crashing down.
This is precisely why anything short of debt forgiveness won't work. While it might appear that everyone is gonna stick to their guns, they will soon realize that nobody will have a functional economy left.
Just saw this on the news - the lady who chained herself to the house (literally). She had a crowd of chanting supporters who turned on the reporter for asking questions.
Fifty-four-year-old June Reyno has spent the last three days chained to her front porch, saying she won't give in and lose her home to foreclosure. But documents show this isn't the first, second or even the third time she's lost a piece of property because she's defaulted on her loan.
Reyno has been buying, selling, renting and defaulting on payments for properties throughout Riverside County.
Reyno admits she has lost a total of seven homes in Riverside County to foreclosure. Homes she claims she bought as investments to start an elderly care business.
Those underwater are in the drivers seat as they can:
·\tStop paying and live rent free for 6 months to 2 years and bank the savings
·\tBuy a lower price foreclosure or short sale and then default on the property they cannot sell
·\tNegotiate for the best re-work while threatening to walk
Those who rent are in second place as they can wait to buy cheap houses in 2010-2011.
Those who have equity or have paid their mortgage better see how much mortgage debt they can load up on, for you are sitting in a depreciating asset and no one is out to help you.
SDMisfit writes:
Reyno admits she has lost a total of seven homes in Riverside County to foreclosure. Homes she claims she bought as investments to start an elderly care business.
SDMisfit | 10.31.08 - 3:00 am
Grifters of the World Unite! Get your heart wrenching stories prepared. Your time has come!
"ow they design things without regard to complexity, or sometimes make them complex if for no other reason than to show their cleverness."
Aren't we forgetting "and to rip others off?"
Some sleaze from Wachovia Securities was on the radio the other day. His brilliant addition to the discussion: "This is not a confidence game, it's a game of confidence."
The begining.. S. I won't be happy till I see 30% + unemployment and a existential meltdown- among other things
Cracks appearing in condo land
Credit turmoil, costs and threat of a recession have left several Vancouver projects stranded or on hold
Nathan VanderKlippe, Financial Post
Published: Wednesday, October 29, 2008
VANCOUVER -- Holly Wood's first hint that something was "smelling fishy" in Vancouver's champagne-infused construction market came several weeks ago, when she discovered that the presentation centre for the city's most glamorous project was strangely closed.
The Ritz-Carlton hotel and condos is among the richest development to begin construction in Vancouver, a $2,500-per-square foot, 58-storey ultra-luxury tower with an eye-catching 45-degree twist designed by Arthur Erickson.
I realized that about a decade ago. The whole system in most advanced economies is a giant ponzi scheme. They stopped growing in the mid 80s. Have you ever wondered why the FIRE economy is as big as it is today?
Uncle Billy, Better Debtor writes:
"ow they design things without regard to complexity, or sometimes make them complex if for no other reason than to show their cleverness."
Aren't we forgetting "and to rip others off?"
Not at all. I was being generous because cleverness is how it starts. Malice comes later like dusk follows dawn.
Same here. Friend owes $306K on house he paid $310K for five years ago and has dumped $50k into. Recently apprasided at $190K. He's a successful small business owner. Has negotiated a $190K FHA short re-fi and thinks the mortgage holder will take accept the offer. I asked him if he has researched potential taxes on loan forgiveness. He said yes and there will be none. I'm skeptical. I told him be prepared for a counter-offer from the mortgage holder. He will walk probably if they don't take $190k.
a more effective plan, from the point of view of a housing market in balance with median incomes, would be to let people walk away from their underwater home, give them one free pass on the credit ding on their fico score and provide some relocation assistance to a nice affordable rental...
cheaper too.
and, we are going to need the labor mobility in the coming realignment...
How long until only those with a background in non-linear control theory, adaptive filters, and graph theory are allowed to lead such important sectors?
After reading a range of comments from an amazing number of CR visitors who claim to be engineers,...I conclude not much would change.
lucifer,
The Ritz Carlton isn't cancelled yet. Construction has not stopped, deposits not returned, but apparently some design changes to the parkade and perhaps the ratio of hotel to condo floors are being done.
There are at least 2 posters from that forum which have some kind of official capacity and have leaked/clarified things weeks in advance before so I trust them.
Flattering that you are so obsessed with Vancouver, but you must not understand how the unemployment rate is calculated to suggest 30%. I will be buying a place in Vancouver a few years from now, but you might be too optimistic if you think hope your wages from working at the laundromat your dad operates will be able to get anything nice.
I definitely must agree there are stupid engineers, and I should never forget that. The only way you can trust someone is if you sit down and spend some time working with them.
However I do think that for your part you should understand that engineering is a broad field and few are competent with the subjects I mentioned. I trust those in competence through attritio
I talked with 2 friends last weekend who were seriously evaluating their walk-away options. These are people with $150k+ incomes. They've already lost their equity and are now upside down. Both have ethical concerns about walking away, but are struggling with the idea of paying for a depreciating asset now that they have nothing invested, especially when they can buy for cheaper than they owe.
My point is simply that this meme is going mainstream. A few more articles about bankers getting bonuses or rumors of a govt bailout for struggling homeowners will be enough for them to drop any ethical concerns.
Senator Schumer is openly challenging Paulson on Wells Fargo/Wachovia. Whatever you think about Schumer's personal motives, he has no problem taking his concerns public. This is a power struggle and needs public support.
People from places like scottsdale, san diego, phoenix, miami, vegas, san fransisco said the same things - two years ago.
BTW- Don't you think that vancouver has a rather large percentage of its population employed in industries that are- should we say, extremely susceptible to a recession. I mean every other person who has moved to alberta in the last few years is from BC- and not just for oil/gas jobs. I am talking about everyone from starbucks baristas to servers at earl. When people move to alberta for such jobs, that usually implies that the places they came from have no jobs.
The last Bush f u will occur at the record setting pardon party on January 19. The pardon power is given broadly to the President, but the Constitution implies checks on every power. When he pardons himself it will make for interesting debate.
lucifer,
People from all those places were predicting double digit annual nominal declines 3 years before the peak, and then called the year+season when it finally topped out?
Either respond to me, or quit building up a straw man to argue against.
Vancouver and B.C. have a huge number of people employed by construction and real estate. They will lose their jobs. There's a good track record of previous events, and migration flows that will be indispensable for predicting the upheaval this time around.
Once again, let me close by telling you that you need to read about how the separate unemployment rates are calculated. 30% is not possible, and I'm not even limiting that statement to the near future.
lucifer writes:
About the 30% rate of unemployment, it is much more likely than you think. The reason is not fundamentals per se, but attitudes in BC.
You couldn't hold off from returning towards your xenophobic and unexplainably bitter attitude for one single thread. I'm sick of you
Why don't you just post a couple of your 1,000 word, uncalled for, racist tirades instead of trying to slowly build up from your cute allusions to 'attitudes'. Perhaps they did shame you the last 3 or 4 times you pulled that crap, but not enough for you to learn a lesson apparently
I don't know who ever denied your immigration visa, but my lord did they ever have you pegged right
I am aware of different measure of unemployment, and how the numbers are games by the governments of all countries.
I was refering to an equivalent of the M6 criteria in the US. For all practical purposes, people who have stopped looking for jobs or are working part time jobs with a total of less than 30 hours per week and people who work for less than 60% of their old salary are effectively unemployed- they do not contribute to further job growth in economy. Only someone with at least 30% income beyond that required for their basic necessities is employed- as far as the real economy is concerned.
What percentage of the workforce is employed or sustained by the tourism, hospitality, retail, tv/ film, RE or RE related industries.
Can you have growth in a place where 30% of the people have almost no disposable income from any source- job or credit. And the other 40% is saving because of fear.
Would you not agree that BC has too many NIMBYs and Nannys blocking industries that would produce well paying jobs?
I have big ethical concerns about not paying my mortgage. But if the whole world is being bailed out, then I am irrational for not trying to optimize my outcome.
If all the renters and savers think they can take the high moral ground, they are mistaken. If there is a deeper financial collapse, whether it's inflationary, deflationary, or both, they will get washed away like everyone else.
The next bear market is in FICO scores. Even if you have perfect credit, like I do, we will all be marked down on the curve. You're being too prudent for your own good. Think about survival and opportunity. Don't preach, it's boring.
You will soon see that ethics (or lack thereof), FICO scores, Saving/ Borrowing money etc won't matter.
The reality is the current system of consumer debt from leverage, repayment ability to risk assessment is so badly broken that it cannot be fixed anymore. What use is a FICO score if you have no economy+social instability ? FICO scores are gonna go the way of ratings by bond agencies. They have no credibility.
Yes, something will replace them- but it cannot be like the old system because that would freeze up the economy.
Peronista: most of the people who own and breed them are icelandic. As we have discovered, icelanders are quite a proud people, and great denialists to boot.
Remember: Considering ethics in an unethical system is illogical.
Go ahead, pay your mortgage, make my day.
Never Forget | 10.31.08 - 4:21 am |
I preferred to keep my word and honor the contract I signed. Having purchased in a bubblicious state like California, there was a time or two when I was underwater, it didn't matter.
22 years later, the house is fully paid for and that makes me happy.
People who want do-overs make me sick, but that's just me.
I know too many people who chose to live high, didn't get lied to, and have kept their toys in foreclosure to feel sorry for them.
I know too many other people who follow your immoral philosophy. They're still paying their mortgage but the minute it pinches them, they're out, they discuss it freely.
I also know high income people in high dollar homes that can pay the balance due in full should they have to.
I guess it takes all kinds, but some kinds make me sick.
"Monta's ankle" damn good quote:"Im basically financing my own financial destruction"
Homeowners paying their mortgages and not getting a bailout reminds me a lot of those gangster movies where they make the victime dig their own grave.
Again - Hank Paulson - Did he know how Goldman made money?
ANY answer is disturbing.
"walking away" was a big topic a few month ago, lost focus, but is now seeming to gain momentum... Could be nice. Bloomberg reports that nearly 20% of US homeowners are under water by now. (See Bloomberg.com ) The latetst S&P/Case Shiller figures suggest that house prices are at least several months away from bottoming out... How lovely, this non-recourse law! Over here (the Netherlands), if your house is sold by the bank for less than the mortgage, you remain liable for the difference. Of course, once this has happened the bank will probably leave you alone for a few years while you pick up the pieces, but after thet they will try to retrieve what is still owed to them. Much less of moral hazard over here, I'd say.
The problem isn't 10% of people losing their home that they could never afford. The problem is 90% of people not paying because they want a principle reduction too.
While how you handled the situation is admirable, when you purchased your home eons ago, the situation was not even close to how the situation is. Moreover, mortgage renegotiations did not occur. Lastly, as much as it makes you sick, keep in mind that the people that are currently paying are going to fall with this mortgage Titanic because other people aren't. You're advocating suicide?
Gimme a break. Stop being so obtuse. And take some PeptoBismal.
oneworldcurrency yogi writes: The last Bush f u will occur at the record setting pardon party on January 19. The pardon power is given broadly to the President, but the Constitution implies checks on every power. When he pardons himself it will make for interesting debate.
Oh yeah, and just think of the trashout party they're going to have with the country between the election and the inauguration if Obama wins, what with that big fat bundle of pardons waiting at the end for everyone who participated in the looting.
Having 15 or 20% of homeowners defaulting sounds like just the ticket to rev up the economy again.
Real estate and mortgage brokers earning commissions again. Appraisers as busy as in 2006, speculators prowling the MLS looking for homes to buy, contractors busy fixing up, home improvement stores making sales.
We'd just be restarting the housing boom again at a lower level as millions of former homeowners are put out and millions of new homeowners jump in.
Bank of Japan cuts interest rates to -17%. That's right, you will receive money and an Icelandic Pony by taking up a loan. Governor Takashumi says: 'We are continuing our successful policy of the last 20 years. We hope this will lead to an even more negative birth rate, higher debt, extreme corruption and a larger wealth gap. Bad credit and a massive carry trade is what brought Iceland and Easter Islands to fame, we are barely doing best practise here.
I might add that in my business ( gas utility) we find that many delinquent
accounts are 'cured' by simply changing the name of the account owner.
If customer X can no longer pay the bill they don't do with gas service they simply put the account in Y's name. I don't see why a variant of this shell game could not also work in the housing situation.
Mr.A is delinquent on his mortgage. He simply stops paying and has Mrs.A
buy the property at the new 'reduced'
price. Alternatively Deadbeat C defaults on his house a 1234 Oak St.
and buys 1234 Pine St from Deadbeat D
and deadbeat D buys 1234 Oak st. from Deadbeat C. The real estate and finance industry generate revenue from the transaction and we just adjust downward home prices to a new
affordable level.
Grow up. Eons ago ARM's were already available and people with iffy credit paid 18% interest on 30year fixed if they didn't want to do ARM's.
California lost a huge part of its economy when the military pulled out but foreclosures never looked like they do today.
So keep drinking your "it's not my fault" kool-aid and keep telling yourself that it's the big bad banks problem that you were too stupid to not sign on to a mortgage that made no sense, it's not that you were greedy or have no sense of honor and value your word or anything.
Seriously, taking on a mortgage should smack most people right upside the head with its enourmity, but I guess the newer "vintage" home debtors never grasped that concept.
Full disclosure: one year into home debtorship my income declined by 50% and I had (to me) huge CC debt at the same time. Every creditor got paid in full and I never went into collections or bankruptcy or any kind of renegotiation. Why should I have? I signed off on all of that debt and I owed it, I repaid it and the few times I was late back then, I paid those penalties too.
You've no idea what I lived like to get through that but today I look at it as a wake up call to not be one of Jas's born and bred dopes.
As far as suicide? Please. That was a very dark period in my life and it crossed my mind more than once. Sometimes people need to dig deep instead of looking for excuses and do-overs.
I don't need pepto-bismal, I need to see some fellow Americans start digging for some pride instead of looking for excuses.
Goldenport Plunges After Saying Bulk Trade `Virtually Halted'
By Alaric Nightingale
Oct. 31 (Bloomberg) -- Goldenport Holdings Plc, a U.K-listed shipowner, fell by a record amount in London trading after saying trade in commodity shipping has ``virtually halted.'
Don't get me wrong--what you accomplished isn't minor and commendable.
All that being said, the situation today is far different than the period when you purchased your home. Home prices are much, much more inflated compared to your purchased price, even though interest rates were very high (my parents paid 12% on their mortgage).
Secondly, the ARMs you had available then are a far different, tamer monster than ones that many people are contending with.
It must be great fun justifying this swindle and then insulting some one who has the ethics to pay their debt.
Ticker Tape of Doom | 10.31.08 - 6:53 am | #
The swindle was perpetuated by the easy money and credit by the FED. It's really easy to justify; they did it to bankrupt Americans, monetarily and ethically.
I support bankruptcy reform because America needs to restore a greater sense of personal responsibility to its financial system and must act to prevent the abuses of bankruptcy law that we have witnessed in recent years. Bankruptcy relief should be available to those who are unable to pay, not to those who are simply unwilling to pay.
Combine this post with the data in the last post and tell me this isn't a recipe for disaster. Instead of slowing the decline in home prices, won't this accelerate the decline? Won't this push more people to stop paying? It's as though everyone who bought a sweater from the Gap for $100 last month can suddenly get $40 back. Now tell me, who is going to buy those sweaters for a penny more than $60? Nobody. Aside from the moral hazard issue, this is just plain dumb. We'll be throwing tax payer money to idiots and scofflaws.
Ticker Tape of Doom writes: That's why it is important to remain ethical. This is the only way we can retain dignity and honor.
5 Slaves, obey your earthly masters with respect and fear, and with sincerity of heart, just as you would obey Christ. 6 Obey them not only to win their favor when their eye is on you, but like slaves of Christ, doing the will of God from your heart. 7 Serve wholeheartedly, as if you were serving the Lord, not men, 8 because you know that the Lord will reward everyone for whatever good he does, whether he is slave or free.
fwiw
I disagreed with the reform of the bankruptcy laws. Since there are circumstances where people are not able to pay their debts due to unforeseen circumstances. Discharge of debt via debt is necessary but on a case by case basis not by a massive
handout from the government and the taxpayer.
That being said -
No one is putting a gun to peoples heads forcing them to get credit or to take out loans.
Never Forget writes: It's wonderful how Senator Cornyn is proposing bankruptcy reform, after all these corporations and banks have been bailed out.
It's a quote from back when the bankruptcy reform that bound people to their CC debt was passed.
Lots of pompous idiots bloviated about the importance of personal responsibility, ethics and honor in a system that had already been gamed to perdition. Regardless of if they were useful idiots or knowing dupes, they were still witless tools.
The Gubment has shit for brains, they should be offering twice the value for firearms buy backs and 4x for ammo. Then they might avoid the shock & awe that is right around the corner.
Like I said, I think it is foolish to consider ethics in an unethical game.
It's like a woman marrying a man who turns out to be abusive and a cheater. Should she uphold her commitment even though her life would be better served pursuing a divorce?
Lots of pompous idiots bloviated about the importance of personal responsibility, ethics and honor in a system that had already been gamed to perdition. Regardless of if they were useful idiots or knowing dupes, they were still witless tools.
Well there is a solution for a system that is gamed to perdition. Don't play the game and live outside the system as much as possible.
No one is putting a gun to peoples heads forcing them to get credit or to take out loans.
Nope, but nobody put a gun to the lender's head either. Lending entails risk. Reckless lending entails the certainty of loss.
I don't really see why anyone should feel compelled to be reduced to serfdom by their debts unless those debts are to a real and actual specific person or group.
I think you advocate an asymmetric ethical burden. None of the lenders would have acted in the ethical manner you describe. When you play fairly in a gamed system, there is a word for you, and it is not "honorable" or "ethical".
Well there is a solution for a system that is gamed to perdition. Don't play the game and live outside the system as much as possible.
Ticker Tape of Doom | 10.31.08 - 7:31 am | #
And I share that sentiment. I think taxation revolt is imminent not because people are going to not pay taxes, but moreso because they simply will not work. Why work if you'll tax half my income? Why work if the money I make will become useless due to inflation? Why work if you're subjecting me to moral hazard through paying for these unjustified wars?
What's it like to provide a fig leaf for thieves?
Byzantine_Ruins | Homepage | 10.31.08 - 7:14 am |
Byz, I read your link and I agree that it's an all around sickening situation, but where does personal responsibility for one's actions come into play?
It's a rigged game, that's always been true, at least in my lifetime.
They scale may be different but that's true on both sides of the transaction.
I personally know a couple who bought a home in California who ended up with a "short sale" after five years and $200K in HELOC'd debt. The HELOC paid for: a new SUV, an F350, a larger boat, RV, and three quads.
No furniture, no home improvements, nothing else that I know of other than these fully paid for items.
The short sale price that the bank agreed to? Nearly identical to their original loan amount, actually a couple thousand dollars more than they had paid for the original loan.
Sure the bank was at fault for lending it, but where was their internal brake on spending more than they could afford for a monthly mortgage payment?
Once they got tired of paying too much of their take home pay for the mortgage, they let it fall into default.
At the end of the day, they walked with all of the fully paid for toys. It still amazes me.
And I share that sentiment. I think taxation revolt is imminent not because people are going to not pay taxes, but moreso because they simply will not work. Why work if you'll tax half my income? Why work if the money I make will become useless due to inflation? Why work if you're subjecting me to moral hazard through paying for these unjustified wars?
Ah there are many ways to work, eat and survive reasonably well while not participating in the system though.
I foresee a rather large growth of black and grey markets as a result of what's happening.
I think you advocate an asymmetric ethical burden. None of the lenders would have acted in the ethical manner you describe. When you play fairly in a gamed system, there is a word for you, and it is not "honorable" or "ethical".
Byzantine_Ruins | Homepage | 10.31.08 - 7:32 am | #
Amen Byzantine. None of the lenders and not many of their employees considered ethics, if you honestly think about it. They thought about profit, profit, profit, above all else--and their tee times.
Considering "Honor" and "Ethics" in a dishonorable and unethical game is well...not of this world.
AnonyMiss writes: Byz, I read your link and I agree that it's an all around sickening situation, but where does personal responsibility for one's actions come into play?
When you're dealing with other people, and those other people aren't aiming to exploit you.
I don't really want to come off as an advocate for fraud but I also think the moral outrage over two thieves robbing one-another is a little overdone. Don't blame the player, blame the game.
I understand savers feel bitter -- you've been robbed most cruelly. I still gotta ask why you folks kept on stashing it away like a big fat cow waiting to get eaten when it's been obvious for a decade or more that things would end this way.
For all that people want to harangue on the American spendthrift who never wises up and changes his ways, they're really not the only people who keep doing the same stupid thing over and over again.
AnonyMiss writes:
What's it like to provide a fig leaf for thieves?
Byzantine_Ruins | Homepage | 10.31.08 - 7:14 am |
Byz, I read your link and I agree that it's an all around sickening situation, but where does personal responsibility for one's actions come into play?
Anonymiss,
It was also many of the lenders that suggested that homeowners refinance their homes and incorporate their auto loans into the mortgage. And at the time, it seemed like a sound idea considering the house they purchased was worth well above what they paid for it. People were swept into a mania that housing prices were going to stay up, up, up.
Could many people caught in this situation could've predicted that housing would go down so much, so fast? Could they have predicted that lending would tighten up so abruptly? Could they have predicted that their neighbors would up and leave and default on their mortgages?
And you suggest they stay the course? It's one thing when you purchased your home 22 years ago at 150K and it goes to 75K. It's totally another when you purchase your house for 500K and it's worth 250K.
Ticker Tape of Doom writes: Thanks for the link The Sayings of Hár Byzantine.
No problem. It's one of my favorite collections of wisdom-sayings, 'cause Glad-of-War minces no words. You might not want to fully live like him, but you have to admit he doesn't sugar-coat.
Harsh Realty writes:
A serious question for you folks: Should I buy a house now, pay the mortgage for 6 months, and then stop making payments? (It seems pretty clear that some sort of bailout will happen.) Or am I better off waiting for 5-7 years before I buy a house?
Serious question? How old are you? For that matter, how old are the people droning on about how unfair this all is.
There will be another side to this. Beyond the glass through which we see darkly is a tima and place where those who did the right thing, who paid their bills, who proved that character counts will be rewarded.
Wanna screw the pooch? Despair, default and deny responsibility. Fucking weenies. Press on. It ain't tough yet. The hill gets steeper ahead.
I can't help thinking reinstatement of judicial cramdowns on case-by-case addresses essentially all the issues here.
If anyone chooses default, then they take the bankruptcy route and the courts decide how damages are distributed. That exists now and requires nothing new beyond restoring cramdowns.
Treasury needs to get out of the legislative's bailiwick. They're no good at it.
Byz -nice link. I prefer the I Ching, but that's just me.
I think of the Book of Changes as more of a divinatory method. In this, I think its only extant peers are Ifa and the other yoruban systems.
For living my life, I think it would be quite an essay. I like the Chuang Tze but I embrace the fact that not every animal in the world has the same destiny. It is a good groundation but not everyone wants to live the long life of a crooked tree, and I find there to be a solid argument within the text that you can have a Taoist worldview but not a Taoist lifestyle. That would be me. =)
Whatev, i'm loathe to reply, but i'm assuming you are not a troll.
you are living in a glass house and throwing stones. i'm expecting this attitude to carry into the future. folks that still support bush and his failed administration blaming their past and continuing policies on obama and the liberals.
somehow i think even with four years of mccain on top of eight years of bush, you would still blame it on the left. the mantra has always been, never admit your wrong and never apologize.
serf Alan Greenspend writes:
don't know if this was posted. weird meltdown of charlie gasparinon on cnbc.
It may help to understand the background of Charlie Gasparino. He's a realreporter who gets his knuckles bruised. He's a feisty SOB who would deny being feisty.
Maybe, he couldn't reveal what he knew. He did say, 'I don't have what I got.' several times. If I were his editor I would say, 'Then go get it and quit showing off'.
There will be another side to this. Beyond the glass through which we see darkly is a time and place where those who did the right thing, who paid their bills, who proved that character counts will be rewarded.
Volker the Viking | 10.31.08 - 7:54 am |
I wanna believe you, Volker but I just can't see that far into the future. I hope you're right.
Once all laws and social contracts are thrown out and "anything goes" is the new mantra, then look out - things will get really interesting. The sheeple won't know what hit them!
I mostly stick to the Taoist-Confucian part of the Chinese triad. I don't have much concern for the hereafter or samsara. I live the way I live and the Judges of the Dead can sort out what they think of it when I go down to the Earth Prison, as they would regardless.
I love the girls and the money and the shame of life
My shallow mind is just a sign of your game of life
remember, when you think there is nothing left to loot, there always is.
our job as smartie macroecon forecasters needs to be figuring out what that is.
i must admit, every action like this mortgage bailout does twist the knife and darkens my thoughts.
but, it's halloween, and i'll be on a float surrounded by hotties, going down the streets of the village in nyc, with a million folks watching and going nuts on the sidewalk.
"Once all laws and social contracts are thrown out and "anything goes" is the new mantra, then look out"
Yes. Something I've been pondering. How can the gov't WANT to destroy the system this way?
Is Bernuuty's stoopidity so great that it has simply overwhelmed practical thought?
The dude spent his life in lala land pretending to pull levers that would avoid GDI. Now he's approaching GDII and he's pulling levers left and right...only he's simply doing what ws done before.
GIGO is for a working model with bad info. What is it when you have good data and a garbage model?
I guess they are forcing me to deliberately stop paying to look worse than I am. Crazy, dont you think?
Why increase moral hazard. Things suck beyond belief.
"Beyond the glass through which we see darkly is a time and place where those who did the right thing, who paid their bills, who proved that character counts will be rewarded."
This is the reasoning behind the Beatitudes. Note that the time and place is surely NOT in this life.
Do I think that Bush did everything right? No, but he has not done everything wrong either. Additionally I seriously believe that what we will get from Obama will be even worse than what is described in the article that CR posted. To me, it is the nature of the beast (or should I say party). IMO, Democrats programs are aimed at keeping people at the bottom so that they can stay on top. This is horrible to me.
I will be voting for McCain, however, if Obama wins, and he does a bang up job, I will definitely vote for him next time.
BTW, this is the way that I feel about Presidents. You always hate them at the end of their term.....it is the same way you feel about your builder when he/she is done building your house. Go figure.
In all honesty, the time has come for a tax strike. Think tea in the Boston harbor. Enough is enough. I'm seriously thinking about not paying my '08 taxes, and they can throw me in jail.
BTW, Whatev, next time try the front of the line when they're handing out brains. The Dems keep people on the bottom so they can stay on top? Someone who says that in unpersuadable by empirical evidence, but you might want to compare rates of poverty and job growth under Clinton and under Bush. I know nothing matters to someone like you other than a weirdly comforting pre-conception --you are one of the many very gifted people in this country who decry "socialism" even though every social indicator suggests you take far more from the government than you pay in --but maybe take your juvenile hoodoo to another site, where someone maybe cares.
leave us stick to economic topics and avoid partisanship.
on that note, hoocoodanode AIG would start arbitraging all the free money without strict oversight. this behaviour will be rampant and never punished most likely. hmmm, what's next to loot?
BondGirl's earlier well articulated rhetorical question. Always worth a read.
AC's succinct and nuanced observation on our democratic ideals, the woulds and shoulds.
CR, may have gone 24 hours without saying thank you.
Thank you.
Dryfly--Again, Calvinball Economics 2008 was poignant, and follow up remarks always worth a read.
On a relevant note: I received my Wells Fargo form letter about the TARP, Wells attempt to eat Wachovia (siting the synergy of Wachovia's best-in-breed customer service & Wells best-in-class cross sales as a win-win).
Yes, barf is disgusting when you swallow it.
And yes, the little form letter described HOPE and how I too might short my mortgage, f*** the taxpayer, and look out for number one.
I don't see why anyone should feel compelled to be reduced to serfdom by their debts unless those debts are to a real and actual specific person or group...
I understand the outrage. Heck, I feel it, but I got over it. So what. So they gamed the system. Get over it. They will never see the level of living they enjoyed again.
Same thing with gov agreeing to cover mortgages. I don't get to worked up about it because it isn't going to work. At this point nothing is. They might keep people in their houses for another year or so. Helps the neighborhod and the county/city/state.
He got his toys for free. Bank lost that money. Now they hope to keep him on the hook paying at least someting into their depleted coffers.
Meanwhile the toy makers will be laying off. If the guy who got the toys for free dosen't think it will end up not coming back on him; he just isn't paying attention.
"1) YOU CANNOT STOP FORECLOSURES WHEN PRICES ARE FALLING. It's an impossibility. Sure, you can reduce them, but that just delays the inevitable correction.
2) PRICES WILL NOT STOP FALLING, because income levels do not support current values."
Quite true. The obvious solution is to attack point 2) by inflation. Wages go up, prices can follow. However, Mr. Bernanke is finding that, all his academic theory aside, it is not in his power - try though he might. His 'solution' may work eventually, but the time frame might be years. This fix, of course, simply takes money from savers and fixed incomers... but this whole thing is simply a political battle over who gets left holding the bag. There are losses; promises made that cannot be kept. Who gets them: banks? government? savers? Investment houses? Foreign governments?
"I understand the outrage. Heck, I feel it, but I got over it. So what. So they gamed the system. Get over it. They will never see the level of living they enjoyed again."
nova,
We had a workgroup meeting last week and I brought this up. I said that for the last 6-7 years we have been fighting the assholes with borrowed money with our decent wages. That is all done now. I actually plan on going on spending spree during December. Been waiting to update a lot of shit. I noticed that all the new cars in the parking lot here at work are all owned by the frugal...
Fine, but one last comment --some people are so hopelessly free market utopians, they refuse to ever acknowledge the difference between good government and bad government. I wonder if they've ever been to Chile and Denmark, as I have, and seen the difference.
The only way to restore the common good is for the commoners to take the reins of the economy away from the Wall Street financiers and the professional economists that exist for no other reason than to build a monument to themselves.
The best way to do that is to not take out a loan. I am as guilty as anyone for actually having a mortgage, though I refi'd from a 30 to a 10 the first chance I had. Everyone else seems to cash-out refi and start all over at 30 again.
But careless debt gives Wall Street the power, and that goes for careless government debt, too.
The way to make people wealthy is to give them the choice between opportunity and self-destruction.
The way to make people poor is to give them what they want.
The typical American attitude is that education is great yet most students think school is for chumps and a kind of punishment. And everyone gets a trophy.
The reality is people already have the choice between opportunity and self-destruction and the majority choose self-destruction. One look at the economic planks of the two major POTUS candidates confirms it.
While I respect the ethics of those struggling to pay underwater loans, I feel sorry for them. I'd like to give them permission to walk away once so we can get to the bottom of this. Isn't losing your home and all the payments you made into it while you held it enough punishment to influence future buying decisions?
If lenders fail to do due diligence and sign a contract secured by collateral that falls in value, I don't feel sorry for them. If they have to take a short sale or foreclosure -- well they paid their money and they took their chances. Isn't a mortgage lender or an investor in MBS a sophisticated investor?
Assisting home owners to pay off over priced mortgages will provide little if any stimulus to the real economy. It merely funnels money to investment pools that will move to cash until this whole mess blows over...
Seems to me the country, the economy and the underwater families will be better off if that money is spent on food, medical care and college educations than funneled back into the "giant pool of money."
This is really the first time in human history that the system has simultaneously broken all over the world.
No its not. Around WWI lots o' countries were trying to change their gold stanrdards to lower weights. We're basically still fighting the same economic warfare.
I can't help thinking reinstatement of judicial cramdowns on case-by-case addresses essentially all the issues here.
If anyone chooses default, then they take the bankruptcy route and the courts decide how damages are distributed. That exists now and requires nothing new beyond restoring cramdowns.
Absolutely. The issue of how to deal with excessive debt has been hashed out over centruies in bankruptcy law. It was a really dumb idea to alter it with the cramdown ban. Society has developed, via centuries of experience, the idea that if you have excess debts, you can BK to escape, but otherwise you're basically stuck with it, and we should use that idea.
So a grocery clerk goes to the bank to get a loan, the bank tells them how much they will qualify for, then the borrower goes out an buys the house.
Are you telling me a grocery clerk has to go get an MBA to make sure the MBA at the bank is doing their job and fulfilling their Fiduciary duty?
The borrower did not set the terms of the loan to screw themselves over - the bank screwed them over and sold the risk of the loan to other in MBS in the derivatives market.
Also, the clerk might have had 20% to put down, but the bank talked them into investing it - offering them a lower rate on their first mortgage to do it (-.25%) - then sold them an 80/20 piggyback that they would never be able to refinance out of.
Their investment is gone in the stock market crash, and all they wanted to do was buy into the American Dream that the Gov and everyone else was ramming down their throats.
The job of a bank is to abate risk and mitigate losses - not the borrower.
This thread is already three hours dead, but in case any are still here: AnonyMiss - YOU GO, GIRL! -- BYZ- Awsome link. Thanks. -- Volker - When the sh*t hits the fan, I wanna be where you are! -- And Whatev - work for progress, not the forces of reaction. Peace to all-
All other things being equal, get used to the fact that the guy who is $200K upside down on his house is going to WIN if he wants to. He is ultimately going to get his principal written down or he's going to walk. Either way he is going to wipe out huge negative net worth, live for FREE for at least 6 months and maybe a YEAR, and end up with a massively reduced housing outflow under the new mortgage or as a renter. So his credit is trashed for a few years - boo hoo, he's got thousands stashed after living for FREE and his outflow is massively reduced. This guy is going to WIN and there is not a damn thing you can do about it. That is all.
2 weeks ago, my state of Virginia arbitrarily decided to impose a "dress code" on election day-- banning all political garb within 40 feet of the polls. The pollworkers are supposed to keep black trashbags on hand, so people can "cover up" anything deemed "overtly political" before we're allowed to go in and vote.
I can not begin to describe how angry I am with my government for this whole horrible mess. So as my own act of "defiance" and protest, I am simply going to beat them to the punch, and wear my own black trashbag to the polls.
Written on the front is "Taxpayers are not Trash" & on the back it says "It puts $700 Billion in the basket, and it rubs the lotion on its skin."
(The "lotion" line comes from this blog-- I think it was Rob Dawg who said it-- on the day the House voted down the first bailout bill.) I'm also bringing extra trashbags, to hand out to anyone else who wants to express their opinions about what's happenening here.
And I am not voting for any of them.
I'll write in Ron Paul, Oprah, Bill Cosby-- anybody at all-- as its better than our know-nothing-do-nothing Congress. And don't anybody tell me I'm "wasting a vote"-- the hell I am. These people don't deserve a vote, so I'll vote my conscience and send a message.
Both Obama & McCain are U.S. senators, privy to info we never see, & you know bloody well both of their economic teams knew of this upcoming financial horror-show, if not last fall, then at least by March, when Bear Sterns went down. Both of them undoubtedly prayed like mad the thing wouldn't blow up before the election, so each could avoid addressing it in their campaigns.
Well, fate stepped in, and now everybody knows the truth: Our government hasn't been "governing"-- and now its gone straight into the outright extortion business.
So as I'm now to be living in the "United States of Soprano", I don't intend to go quietly.
Wild Clydsedales could not keep me from the polls on Tuesday.
And I offer the "wear-a-trashbag to protest" idea to all here-- reporters will be trolling the polls, & it's probably the only chance average people have to get some media attention & yell purple jesus about all this.
"The problem isn't 10% of people losing their home that they could never afford. The problem is 90% of people not paying because they want a principle reduction too."
ot good
can i haz I/O 1 yr ARM NINA?
a clean sweep of the medals
Your flag . . . all three times.
CR, I actually like this quote best
"Im basically financing my own financial destruction"
hmmm, a lot of us mortgage holders feel that way right now
actually almost all of us do.
David Streitfeld and the New York Times discovers 'moral hazard'... hoocoodanode.
This is anecdotal, but, I believe the source...
In Ladera Ranch, CA, a large number of homeowners, who have Option ARM's, are currently "stacking cash" to prepare for the date that their ARM adjusts upwards on a home which is 25-30% UNDERWATER....
at that time, these folks plan to stop making payments and wait for the bank to foreclose (6-10 months after they stop making payments)
at that point, these folks will have cash available to pay for a mover, pay 6 months rent in advance on a leased home and wait a year or two for the home prices to fall further, at which point, these folks plan to buy a house at a much lower price....
In an article titled TIPPPING POINT in the Irvine Housing Blog the writer of the blog showed graphs showing the AltA and ARM loans which will reset and/or recast in the coming years...he also suggests in the article that this behaviour is to be expected....
if so, I think this problem is going to be much worse for the banks, the govt. and you and I than the Subprime mess ever was because these mortgages are larger and these homeowners are more financially savvy than the folks in Garden Grove, CA and Santa Ana, Ca who lost their homes in the Subprime debacle of 07 and 08....
Say it ain't so, CR....
at least all home owners have a shot at free money. us poor renters cant default on a loan to get free monies
CR - did you get my email?
These quotes are a very similar reaction - banks want to waive cc debt to avoid total write-offs. I was sayin, might be best for me to go charge a new CL600 and then not pay. It would be like buying it at a huuggggggggeeeee discount.
- NY Times
dafox writes:
at least all home owners have a shot at free money. us poor renters cant default on a loan to get free monies
dafox | 10.31.08 - 12:59 am | #
No ponies for YOU!
beaver,
if you were one of them what would you do?
if they changed the rules in basketball to allow goaltending, and you were 7 feet tall, what would you do?
Jubilee her we come! Yeeehaw!
I read the NY Times article and wonder is this the US or some third world country. I have no sympathy for the airline pilot if the dumb SOB didn't know he was buying a house that was inflated that is his problem. I say fuck'em all and put out in the street. I am so fucking tried of corporations/people/govt. all wanting everything for free.
Does everyone have shit for brains.
if they changed the rules in basketball to allow goaltending, and you were 7 feet tall, what would you do?
monta's ankle | 10.31.08 - 1:03 am | #
Or basketball played with checking like in hockey and tackling like in football... and the yahoos on the other team didn't KNOW... or were slow to catch on that the referee had swallowed his whistle & rules were changed or ignored.
Calvinball Economics 2008.
perhaps they should have to trade away some of their future entitlements for mortgage relief from the government today.
A serious question for you folks: Should I buy a house now, pay the mortgage for 6 months, and then stop making payments? (It seems pretty clear that some sort of bailout will happen.) Or am I better off waiting for 5-7 years before I buy a house?
Does everyone have shit for brains.
alex | 10.31.08 - 1:04 am | #
[looks around - nods head affirmative] Yup pretty much.
Does everyone have shit for brains.
You new to the US?
Dryfly...that is good!
Does everyone have shit for brains?
alex | 10.31.08 - 1:04 am | #
No... Just MOST people!
The FDIC doesn't give a damn what any of think as long as banks are healthy enough to buy failing banks. You don't count. Period. Good night.
Why do they keep calling this a $40 billion plan? It is obviously going to cost a lot more than that. Once they go down this path, everyone is going to feel entitled to a house that is subsidized by the government.
who needs ponies
houses plz
A White House spokeswoman, Dana M. Perino, said on Thursday that the plan was not imminent and that several different proposals were being considered.
Given the obstacles, it seems clear to me that they'll just let the next guy carve this particular turkey.
Oh, gee, you mean the constant stream of bailouts seems INSANE to many people?
Maybe, just maybe, it's because they ARE INSANE.
This plan smacks of desperation. Why else throw moral harzard to the wind and do something this dumb?
The real question is how can I short the FDIC?
@Dryfly - Calvinball is an excellent analogy!
All - Poll on CNN:
"Should taxpayer money be used to help delinquent homeowners avoid foreclosure"?
Last time I looked, 80% voting no!
And a link for the Calvinball-Challenged
"CalvinBall is a game that you never play the same way twice. Anyone can add a rule, and not all parties must agree for a change to be implemented. Score is kept in an unusual..."
"Or basketball played with checking like in hockey and tackling like in football... and the yahoos on the other team didn't KNOW... or were slow to catch on that the referee had swallowed his whistle & rules were changed or ignored."
Hey, I saw that game. Between Phoenix and the Lakers. Over and over again every year.
@Bond Girl "Why do they keep calling this a $40 billion plan? It is obviously going to cost a lot more than that."
I think you just answered your question. When was the last time you saw an accurate, all-costs-included long-term price estimate placed on a new government program?
Iraq? Medicare? Katrina? Subprime Containment? Fannie-Freddie?
The only firm number in the game at this point is the National Debt Ceiling, and if Congress doesn't bend over and change it next time, I imagine Treasury & Fed will find a circumvention...
National Debt up $500 Billion since September!
Funny, banks didn't have to prove anything. They got the gold plated bailout without even asking.
Oh the morality!
_
Silly me. I was making plans under the assumption that I live in a capitalist country. Personal responsibility, self-correcting markets, etc.. I was going to rent for another 9 months and when housing prices came back down to earth buy myself a nice apartment with the money I saved up. Now the prices will be forecefully propped up by constricting the flow of foreclosed property into the market. The mortgage rates will rise substantially because the government will need to raise interest rates just to be able to finance the bailouts. My savings will get eaten away by the inflation that will accompany the sound of the printing machines swinging into action. I will have to pay higher taxes to insure other people's mortgages and bail out banks.
In terms this site will surely understand... I don't want to pay for other people's fat over-priced ponies. I WANT MY PONY!
GM, Chrysler Merger on Hold as Aid Hopes Fade: Sources - Automotive * US * News * Story - CNBC.com
On second thought, the homeowners will be left to dry - you know - moral hazard and stuff.
Wisdom Seeker writes:
@Bond Girl "Why do they keep calling this a $40 billion plan? It is obviously going to cost a lot more than that."
I think you just answered your question. When was the last time you saw an accurate, all-costs-included long-term price estimate placed on a new government program?
It is still annoying as heck that it gets reported that way....
"To guard against fraud, an F.H.A. spokesman said, borrowers will have to certify they did not intentionally default."
Well, as long as the borrowers "certify". Makes me feel much better about my tax dollars helping these folks out. I mean the one poor guy at the end of the article TOOK OUT $200k CASH and now wants a mod since his $150k house has a $350k mortgage. My heart breaks for the poor guy. I'm just dying to send him some of my tax dollars.
Doc: from previous thread --
"See: Elly May"
See Jethro talking about his buddy Mickey Cohen:
Complete L.A. Noir -- latimes.com
The borrower, who lives in suburban Los Angeles, took nearly $200,000 in cash out of his house and then paid less than the monthly interest due on his new loan.
He now owes about $350,000 on a house that is worth only $150,000. He asked not to be identified for fear he would not get a modification, which could reduce his mortgage to $142,500.
This guy's about to hit the Jackpot.
@Bond Girl -
I agree with you 100%. Why do the Media keep (tr)eating the press releases as if they were written factually, when it's clear the government is very frequently totally wrong?
Maybe that's a question that answers itself too... Hmm...
I mean the one poor guy at the end of the article TOOK OUT $200k CASH and now wants a mod since his $150k house has a $350k mortgage.
If that guy got his mod, he would be looking at paying income tax on most, if not all, of the amount of his debt reduction.
I don't see them changing that part of the tax code. If they did and if word got out . . . there would be a tax revolt of immense proportions.
deb-
My neighbor has a Lamborghini Gallardo - a $220k car. He's 26 years old, HS diploma, and was working as a mortgage broker. He hasnt paid his mortgage in 10 months, and is still living there. Place looks like hell too - dead grass, never cleaned up, etc.
He changes his own oil on it. He parks it outside (we live near the beach). It gets washed about once a month.
I feel GREAT about him having his toy while I just paid off my $15k car that I can actually afford
The only way to restore the common good is for the commoners to take the reins of the economy away from the Wall Street financiers and the professional economists that exist for no other reason than to build a monument to themselves.
The way to make people wealthy is to give them the choice between opportunity and self-destruction.
The way to make people poor is to give them what they want.
Today we have a political system designed to grant power to the few by giving the masses what they want.
As U.S. citizens we live in and contribute to this institution of poverty.
And yet, as U.S. citizens we have distinguished ourselves in the past by our awareness of our faults and our willingness to take corrective action when confronted with our weaknesses.
Perhaps it is time to stop begging the government for more worthless paper and start asking what we can do as individuals to improve our lot in life.
Maybe mankind's ultimate achievement isn't to amass the biggest possible pile of paper promises and digital IOUs.
Maybe there are better ways to focus our efforts.
http://www.google.com/search?q="vote+themselves+the+treasury"
How are these people going to prove they can't pay? They all lied and said they pull down 350k/yr on their mortgage applications, now all of a sudden they only make 35k? That would make a great plot, income reported on mortgage application versus income reported on bailout application.
"My neighbor has a Lamborghini Gallardo - a $220k car"
Take photo please and send in to blog. New poster boy.
Uncle Billy-
http://home.socal.rr.com/epit/IMG00041.jpg bad cell phone pic, but thats one shot when it was new.
The PTB are doing everything they can to INCENTIVIZE borrowers into defaulting on their debts. They are succeeding in making it more and more attractive and less and less stigmatizing to be a deadbeat. Unintended consequences & moral hazard all around!
Tom Bombadil-
I'd be fine with this reworking if they prosecuted the original loan fraud at the same time as the loan mod. Lets see how many people actually apply for it now!
Bond Girl,
Can you post the list of books you recommend on bonds again....saw this in a previous post but can't find it.
Thanks.
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship.
-- attributed to Alexander Tyler, 1747-1814
The gubmint has to take care of it's GOOD consumers, the ones who shop til they drop... 70% of the GDP and all that. Citizens with shit for brains don't matter.
Dumb question- why don't they apply the same laws to mortgage loans as they do to student loans? If you default on your student loan YOU WILL NEVER GET CREDIT AGAIN. When I buy a new car- I know as soon as I drive off the lot, it is worth less than what I paid. I don't stop making payments!!!
Bush admin knows no shame. The last f u to the nation.
A Last Push To Deregulate - washingtonpost.com
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship.
If the voters are that dumb then we might as well all shoot ourselves now.
Personally I'm not that pessimistic.
The key to our future is getting the voters to use their brains.
They're not as dumb as some people seem to think...
Otherwise we simply wouldn't be here.
stoopid savers
i iz srry
next time you play dis game
iz fun akshuali
Has anyone figured out what kind of scripts the speciousriches spammer's website is running? With normal Firefox malware protection setting defaults turned on all it does is cycle endlessly without opening (kids, don't click his link with Explorer!). Is it just lousy programming, or malicious scripting?
View Source works anyhow; it's got a lot of economics-related text on it plus scrip5ting -- might be the weird stuff that keeps the page from loading is recognizable to someone.
Thank goodness for killfile, anyhow.
dafox: You can see the dead grass in the picture.
Apropos neglect -- just read a story that's linking foreclosures to rise in West Nile virus (mosquitoes breeding in abandoned pools). And that California might start to get as little as 15% of its water allotment. We'd better get busy this winter on all fronts.
I can hardly wait to hear how the taxpayer actually stands to MAKE A PROFIT from this proposed program.
On bailing out everyone who overbought --- well, yeah.
The people running the country don't LIKE reasonable, thoughtful, careful citizens. They read fine print. They vote. They think.
The people running the banks, er, I mean the country, LOVE the unrestrained, overoptimistic, overtrusting, greedy, piggy, sloppy, acquisitive, nearsighted, mayflies.
They're easier to take advantage of.
Ya gotta think long term about this.
Increasing the proportion and wealth of the sucker population is good for the country, I mean the banks. Later.
it's a net asset bubble equilibrium path....in the past, early entrant prebust sellers win biggest, and the later you get in, and the later you sell past the peak, the worse off you are. At some point, everyone past a certain time is generally a loser. Eventually, the last losers turn to vultures, early birds, and win on the next cycle.
But this time around, it actually may make sense to buy in right before the peak, and layer on top of that, really crappy saving and spending habits. Then go bust badly, and get debt forgiveness. Of course, that's going to change the returns for the poor fools who are thinking to get in at the bottom. (see riverside, etc)
Cumulatively, how much did housing wealth (equity) increase nationwide during the bubble?
Just tack that figure (surely many trillions) on to the national debt. We are digging ourselves a hole too big to get out of. What is the interest payment on 11-15 trillion dollars of debt?
It's over. And no one but a small group of bloggers is even talking about it.
It's hard to imagine that this will work. And what about the millions who have already lost homes to foreclosure? The least that they can do is soften the hit on their credit reports. Roubini is right- there is a huge incentive to walk away in many states.
It's maddening. MADDENING. Sheila, please understand the following:
1) YOU CANNOT STOP FORECLOSURES WHEN PRICES ARE FALLING. It's an impossibility. Sure, you can reduce them, but that just delays the inevitable correction.
2) PRICES WILL NOT STOP FALLING, because income levels do not support current values.
Every two income family will have one person quit. If they're not lucky enough to get laid off.
Then again, there will be no unemployment, since the gov't will hire 1,000,000 to implement the program.
It ain't gonna fly.
GW Bush and his stupid current administration need to stop mess around.
I doubt the Tyler quote--I don't think dictatorship was a term yet by 1814, but someone can check the OED.
THis well verified quote from John Adams makes the point well, enough, however. And why I cringe every time I heard Bush or his democratic alternatives (it's a nonpartisan sin, sadly) the past two elections wax poetic about the alleged virtues of democracy:
"Democracy... while it lasts is more bloody than either aristocracy or monarchy. Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There is never a democracy that did not commit suicide."
dryfly wrote Calvinball Economics 2008.
Best comment I've read today (note, however, these days, I can't keep up anymore with all the comments).
I'm thinking that there has to be some business opportunities for those of us renters. (Other than maxing out our credit cards: does cash withdraws count as bailout-able debt?)
I'm guessing suburban Los Angeles = Palmdale.
That last one is shit. People who are doing well are doing well for a reason. If people are greedy enough that they will deliberately stop paying to look worse than they are, the country deserves a much worse situation than we're in. People have to learn some values before we can solve this mess.
This sucker's goin' down.
Danny writes:
Cumulatively, how much did housing wealth (equity) increase nationwide during the bubble?
About 100% or about 5 to 6 trillion.
Danny writes:
It's maddening. MADDENING. Sheila, please understand the following:
1) YOU CANNOT STOP FORECLOSURES WHEN PRICES ARE FALLING. It's an impossibility. Sure, you can reduce them, but that just delays the inevitable correction.
2) PRICES WILL NOT STOP FALLING, because income levels do not support current values.
Mother f#c%ing yeah!
Are these "modifications" all to be done in secret?
Will these assholes pay taxes on $500G homes but pay mortgages on $200Gs?
Murder thy neighbor will be the new covenant.
Has anyone figured out what kind of scripts the speciousriches spammer's website is running?
Is that the one that is a LiveJournal or "Roller" site? It is not plain HTML, but I had it open - lots of text, too much to read... (I'm on Mac OS X)
Will these assholes pay taxes on $500G homes but pay mortgages on $200Gs?
jane in los angeles | 10.31.08 - 2:21 am
They can't even pay their mortgage. You think they're going to be forced to pay taxes too? Fuhgetaboutit. Why does everybody think these peeps aren't going to just get a free lunch? Face it, we're being f'ed and there is no stopping the f'ing. When everybody else is in debt up to their eyeballs the savers are the patsies.
1929er writes:
Has anyone figured out what kind of scripts the speciousriches spammer's website is running?
Is that the one that is a LiveJournal or "Roller" site? It is not plain HTML, but I had it open - lots of text, too much to read... (I'm on Mac OS X)
1929er | 10.31.08 - 2:24 am | #
er, check that: specious riches looks pretty legit, its a wordpress blog, musta had some link corruption.
Wall Street Journal: PNC Stands to Gain From Tax Ruling; Acquisition of National City Will Bring Billions in Deductions, Experts Say, by Jesse Drucker:
PNC Financial Services Group Inc. will receive several billion dollars in federal tax savings stemming from its purchase of National City Corp., tax experts said, significantly increasing the price tag of the federal assistance that helped spark the deal.
The tax benefit for PNC is the latest outgrowth of a ruling by the Internal Revenue Service and the Treasury Department in late September intended to give a boost to the struggling banking sector. The ruling, which gives banks the ability to quickly use up the "tax losses" of banks they acquire, is adding significantly to the overall cost of the $700 billion bailout package passed by Congress.
Robert Willens, an independent corporate tax analyst based in New York, estimated the tax savings to PNC could total as much as $5.1 billion.
I'd rather be a saver than a debtor.
Just reaping American policy sowed over the past 20 years...
Well, we're not going to get to the catharsis moment until the majority have figured out what's going on. That's the true "Wile E Coyote moment" inflection point.
The problem is that somehow stupid has become fashionable over the last decade or so. Maybe that was what was required to believe the sales pitch and pretend that everything was OK. If so, the Kool-aid drinkers are likely to "clap louder" until the bitter end.
Danny,
From memory home equity withdrawals were over $200mn per quarter up until recently.
There was over $12tn in residential mortgages in the United States.
The underlying assets were not just the homes, but the appreciating above the lending rate homes which enabled alt-a re-financings. There is no nation on earth that can artificially provide positive carry indefinitely
It is calculable, but depends on your opinion. What kinds of structures and land values do you include? Cottages, government buildings, speculative landlords... What about loans that used real estate as collateral, or 'retirement savings' and other multipliers
I can give you a short answer, at least $2 trillion but more likely $4 trillion of wealth was created in the United States residential real estate market. That would be about $80,000 to $160,000 per home on average.
That's not even the problem any more. $4tn would have been enough to recreate the entire financial system if the US were prepared to insult wealthy investors by allowing the banks, insurers, mortgage brokers, and others to default.
It's not about how much money, day by day more and more people resign themselves to the facts; it's about whose money will be lost. Without government intervention it would be the wealthiest who bore the heaviest losses.
That the AIG holding corporation was rescued is a clear example that this is not about a dollar figure, but who takes the losses.
picosec,
That tax statute rewrite, which I still understand to be plainly illegal, was done by Paulson in order to get Wachovia's shareholders a higher $ per share as the Wachovia CEO happened to be Paulson's friend and had only left the Treasury one year before.
That PNC gets to take advantage of the same handout is just circumstance
Hell if reporters understood anything, they wouldn't have been barking at the FDIC for almost letting Citi buy Wachovia at a higher effective net price
Hopefully my stock inheritance is only in the market for 72 more trading hours. I think I'm gonna have a heart attack... and I suspect not being able to exit this week will cost me when we go down to 8k again tommorrow/Monday/Tuesday.
Perhaps I'm overly pessimistic, or I'm just under the influence of you over-bearish folks. I still think it's amazing we had the Dow values drop 30% in one month! And people are wondering where the crash is?!
On topic thought: we'll still be in crises as long as the President and presidential candidates believe that "falling housing values" are an economic crises. Give me a break... I don't own a house... I'd like to... so the fall in prices isn't a negative thing.
BYZ, I liked your communications theory analogy a few threads back. It mirrored an idea I had today. In the preautomation days folks were forced to design things in a simple hierarchical manner because there was no way to deal with the complexity of anything else.
Now they design things without regard to complexity, or sometimes make them complex if for no other reason than to show their cleverness. Unfortunately complex system rarely scale like regimented ones can. Ergo, some sort of systemic simplification is coming.
About 100% or about 5 to 6 trillion.
syvanen
I'm not pulling up the numbers right now, but wouldn't cumulative residential home prices been ~$18tn going on $19tn at peak?
Perhaps you mean the residential mortgage market grew from ~$10 to ~$15tn this decade
EEnginer,
How long until only those with a background in non-linear control theory, adaptive filters, and graph theory are allowed to lead such important sectors?
I'm with the government and I'm here to help you.
eh,
It doesn't matter if you like the government to come and help or not, you should always pick a good government first
This is really the first time in human history that the system has simultaneously broken all over the world. Even GD1 had time lags of a few months to a couple of years between different countries crashing down.
This is precisely why anything short of debt forgiveness won't work. While it might appear that everyone is gonna stick to their guns, they will soon realize that nobody will have a functional economy left.
Just saw this on the news - the lady who chained herself to the house (literally). She had a crowd of chanting supporters who turned on the reporter for asking questions.
News 8 Investigation: Is She Victim Of The Economy, Or Her Own Actions?
Fifty-four-year-old June Reyno has spent the last three days chained to her front porch, saying she won't give in and lose her home to foreclosure. But documents show this isn't the first, second or even the third time she's lost a piece of property because she's defaulted on her loan.
Reyno has been buying, selling, renting and defaulting on payments for properties throughout Riverside County.
Reyno admits she has lost a total of seven homes in Riverside County to foreclosure. Homes she claims she bought as investments to start an elderly care business.
EHP, I'm not holding my breath...
Seriously, when a majority of people are hungry or fear being so. Or they loose their cable TV feed. Not a minute sooner.
Those underwater are in the drivers seat as they can:
·\tStop paying and live rent free for 6 months to 2 years and bank the savings
·\tBuy a lower price foreclosure or short sale and then default on the property they cannot sell
·\tNegotiate for the best re-work while threatening to walk
Those who rent are in second place as they can wait to buy cheap houses in 2010-2011.
Those who have equity or have paid their mortgage better see how much mortgage debt they can load up on, for you are sitting in a depreciating asset and no one is out to help you.
SDMisfit writes:
Reyno admits she has lost a total of seven homes in Riverside County to foreclosure. Homes she claims she bought as investments to start an elderly care business.
SDMisfit | 10.31.08 - 3:00 am
Grifters of the World Unite! Get your heart wrenching stories prepared. Your time has come!
No, no. It's always for the children dammit. Can't you remember you're lines...
"ow they design things without regard to complexity, or sometimes make them complex if for no other reason than to show their cleverness."
Aren't we forgetting "and to rip others off?"
Some sleaze from Wachovia Securities was on the radio the other day. His brilliant addition to the discussion: "This is not a confidence game, it's a game of confidence."
You just can't, simply can't make this stuff up.
The begining.. S. I won't be happy till I see 30% + unemployment and a existential meltdown- among other things
Cracks appearing in condo land
Credit turmoil, costs and threat of a recession have left several Vancouver projects stranded or on hold
Nathan VanderKlippe, Financial Post
Published: Wednesday, October 29, 2008
VANCOUVER -- Holly Wood's first hint that something was "smelling fishy" in Vancouver's champagne-infused construction market came several weeks ago, when she discovered that the presentation centre for the city's most glamorous project was strangely closed.
The Ritz-Carlton hotel and condos is among the richest development to begin construction in Vancouver, a $2,500-per-square foot, 58-storey ultra-luxury tower with an eye-catching 45-degree twist designed by Arthur Erickson.
(Laker, is that you?)
Timely article. Talk around the watercooler at work has been on this very subject. The mortgage paying natives are pissed and restless.
Weird. Just returned from a friend's house where he was explaining how he hadn't paid in months so he can get his free writedown.
damonthinkingaboutdoingit,
I realized that about a decade ago. The whole system in most advanced economies is a giant ponzi scheme. They stopped growing in the mid 80s. Have you ever wondered why the FIRE economy is as big as it is today?
Uncle Billy, Better Debtor writes:
"ow they design things without regard to complexity, or sometimes make them complex if for no other reason than to show their cleverness."
Aren't we forgetting "and to rip others off?"
Not at all. I was being generous because cleverness is how it starts. Malice comes later like dusk follows dawn.
Same here. Friend owes $306K on house he paid $310K for five years ago and has dumped $50k into. Recently apprasided at $190K. He's a successful small business owner. Has negotiated a $190K FHA short re-fi and thinks the mortgage holder will take accept the offer. I asked him if he has researched potential taxes on loan forgiveness. He said yes and there will be none. I'm skeptical. I told him be prepared for a counter-offer from the mortgage holder. He will walk probably if they don't take $190k.
This is picking up momentum.
Auntie Naomi has a nice article on "The Gift That Keeps On Taking"
https://www.naomiklein.org/articles/2008/10/bailout-bush-s-final-pillage
a more effective plan, from the point of view of a housing market in balance with median incomes, would be to let people walk away from their underwater home, give them one free pass on the credit ding on their fico score and provide some relocation assistance to a nice affordable rental...
cheaper too.
and, we are going to need the labor mobility in the coming realignment...
EEnginer,
How long until only those with a background in non-linear control theory, adaptive filters, and graph theory are allowed to lead such important sectors?
After reading a range of comments from an amazing number of CR visitors who claim to be engineers,...I conclude not much would change.
lucifer,
The Ritz Carlton isn't cancelled yet. Construction has not stopped, deposits not returned, but apparently some design changes to the parkade and perhaps the ratio of hotel to condo floors are being done.
There are at least 2 posters from that forum which have some kind of official capacity and have leaked/clarified things weeks in advance before so I trust them.
Flattering that you are so obsessed with Vancouver, but you must not understand how the unemployment rate is calculated to suggest 30%. I will be buying a place in Vancouver a few years from now, but you might be too optimistic if you think hope your wages from working at the laundromat your dad operates will be able to get anything nice.
sdtfs,
I definitely must agree there are stupid engineers, and I should never forget that. The only way you can trust someone is if you sit down and spend some time working with them.
However I do think that for your part you should understand that engineering is a broad field and few are competent with the subjects I mentioned. I trust those in competence through attritio
I talked with 2 friends last weekend who were seriously evaluating their walk-away options. These are people with $150k+ incomes. They've already lost their equity and are now upside down. Both have ethical concerns about walking away, but are struggling with the idea of paying for a depreciating asset now that they have nothing invested, especially when they can buy for cheaper than they owe.
My point is simply that this meme is going mainstream. A few more articles about bankers getting bonuses or rumors of a govt bailout for struggling homeowners will be enough for them to drop any ethical concerns.
Moral hazard on an epic scale.
Senator Schumer is openly challenging Paulson on Wells Fargo/Wachovia. Whatever you think about Schumer's personal motives, he has no problem taking his concerns public. This is a power struggle and needs public support.
EvilHenryPaulson,
People from places like scottsdale, san diego, phoenix, miami, vegas, san fransisco said the same things - two years ago.
BTW- Don't you think that vancouver has a rather large percentage of its population employed in industries that are- should we say, extremely susceptible to a recession. I mean every other person who has moved to alberta in the last few years is from BC- and not just for oil/gas jobs. I am talking about everyone from starbucks baristas to servers at earl. When people move to alberta for such jobs, that usually implies that the places they came from have no jobs.
About the 30% rate of unemployment, it is much more likely than you think. The reason is not fundamentals per se, but attitudes in BC.
The last Bush f u will occur at the record setting pardon party on January 19. The pardon power is given broadly to the President, but the Constitution implies checks on every power. When he pardons himself it will make for interesting debate.
lucifer,
People from all those places were predicting double digit annual nominal declines 3 years before the peak, and then called the year+season when it finally topped out?
Either respond to me, or quit building up a straw man to argue against.
Vancouver and B.C. have a huge number of people employed by construction and real estate. They will lose their jobs. There's a good track record of previous events, and migration flows that will be indispensable for predicting the upheaval this time around.
Once again, let me close by telling you that you need to read about how the separate unemployment rates are calculated. 30% is not possible, and I'm not even limiting that statement to the near future.
lucifer writes:
About the 30% rate of unemployment, it is much more likely than you think. The reason is not fundamentals per se, but attitudes in BC.
You couldn't hold off from returning towards your xenophobic and unexplainably bitter attitude for one single thread. I'm sick of you
Why don't you just post a couple of your 1,000 word, uncalled for, racist tirades instead of trying to slowly build up from your cute allusions to 'attitudes'. Perhaps they did shame you the last 3 or 4 times you pulled that crap, but not enough for you to learn a lesson apparently
I don't know who ever denied your immigration visa, but my lord did they ever have you pegged right
EHP,
I am aware of different measure of unemployment, and how the numbers are games by the governments of all countries.
I was refering to an equivalent of the M6 criteria in the US. For all practical purposes, people who have stopped looking for jobs or are working part time jobs with a total of less than 30 hours per week and people who work for less than 60% of their old salary are effectively unemployed- they do not contribute to further job growth in economy. Only someone with at least 30% income beyond that required for their basic necessities is employed- as far as the real economy is concerned.
lucifer,
That's why I told you to educate yourself. You might find the "employment ratio" to be what your looking for
And in the US it's U6 not M6
EHP,
Three things
There is NO BANK or government backing that will be able to survive when EVERY homeowner defaults to get in on this deal.
Why would any homeowner in their right mind NOT default and ask for a better mortgage/lower balance???? Are you f*ing kidding me?
This is what happens when you let the idiots run the country.
I am using an iTouch.. Hence the spelling issues!
The Icelandic horse is considered a horse, not a pony, by those who own and breed them.
A note about apple's auto-correct feature in iphone/itouch- it works well until you start writing technical stuff. I miss a real keyboard.
I have big ethical concerns about not paying my mortgage. But if the whole world is being bailed out, then I am irrational for not trying to optimize my outcome.
If all the renters and savers think they can take the high moral ground, they are mistaken. If there is a deeper financial collapse, whether it's inflationary, deflationary, or both, they will get washed away like everyone else.
The next bear market is in FICO scores. Even if you have perfect credit, like I do, we will all be marked down on the curve. You're being too prudent for your own good. Think about survival and opportunity. Don't preach, it's boring.
This is cute. Zinger is at the end: The Hippaccountants Oath
YouTube - Carl Reiner & Mel Brooks
I read CR every day. I think this might be the most prolific post ever. This the harbinger of the moral hazard floodgates. Prepare for the deluge.
Remember: Considering ethics in an unethical system is illogical.
Go ahead, pay your mortgage, make my day.
J Cauchy,
You will soon see that ethics (or lack thereof), FICO scores, Saving/ Borrowing money etc won't matter.
The reality is the current system of consumer debt from leverage, repayment ability to risk assessment is so badly broken that it cannot be fixed anymore. What use is a FICO score if you have no economy+social instability ? FICO scores are gonna go the way of ratings by bond agencies. They have no credibility.
Yes, something will replace them- but it cannot be like the old system because that would freeze up the economy.
Peronista: most of the people who own and breed them are icelandic. As we have discovered, icelanders are quite a proud people, and great denialists to boot.
btw, that was the best late sequitur I've seen on CR ever! hehe
Mel Brooks is worth his weight in glod. The first line had me on the floor.
Complain all you want.. this mortgage relief thing is a done deal.
Just wait until they concoct some sort of bailout of investors whose 401k or other retirement plan has been decimated!
japan cuts rates to .3%
========================
Bloomberg: Jan 15, 2011:
Bank of Japan cut its already low interest rate to 0.000125% in order to stem the ongoing global financial crisis......
Remember: Considering ethics in an unethical system is illogical.
Go ahead, pay your mortgage, make my day.
Never Forget | 10.31.08 - 4:21 am |
I preferred to keep my word and honor the contract I signed. Having purchased in a bubblicious state like California, there was a time or two when I was underwater, it didn't matter.
22 years later, the house is fully paid for and that makes me happy.
People who want do-overs make me sick, but that's just me.
I know too many people who chose to live high, didn't get lied to, and have kept their toys in foreclosure to feel sorry for them.
I know too many other people who follow your immoral philosophy. They're still paying their mortgage but the minute it pinches them, they're out, they discuss it freely.
I also know high income people in high dollar homes that can pay the balance due in full should they have to.
I guess it takes all kinds, but some kinds make me sick.
"Monta's ankle" damn good quote:"Im basically financing my own financial destruction"
Homeowners paying their mortgages and not getting a bailout reminds me a lot of those gangster movies where they make the victime dig their own grave.
Again - Hank Paulson - Did he know how Goldman made money?
ANY answer is disturbing.
"walking away" was a big topic a few month ago, lost focus, but is now seeming to gain momentum... Could be nice. Bloomberg reports that nearly 20% of US homeowners are under water by now. (See Bloomberg.com ) The latetst S&P/Case Shiller figures suggest that house prices are at least several months away from bottoming out... How lovely, this non-recourse law! Over here (the Netherlands), if your house is sold by the bank for less than the mortgage, you remain liable for the difference. Of course, once this has happened the bank will probably leave you alone for a few years while you pick up the pieces, but after thet they will try to retrieve what is still owed to them. Much less of moral hazard over here, I'd say.
The problem isn't 10% of people losing their home that they could never afford. The problem is 90% of people not paying because they want a principle reduction too.
This is my line, but you guys can use it.
AnonyMiss,
While how you handled the situation is admirable, when you purchased your home eons ago, the situation was not even close to how the situation is. Moreover, mortgage renegotiations did not occur. Lastly, as much as it makes you sick, keep in mind that the people that are currently paying are going to fall with this mortgage Titanic because other people aren't. You're advocating suicide?
Gimme a break. Stop being so obtuse. And take some PeptoBismal.
oneworldcurrency yogi writes:
The last Bush f u will occur at the record setting pardon party on January 19. The pardon power is given broadly to the President, but the Constitution implies checks on every power. When he pardons himself it will make for interesting debate.
Oh yeah, and just think of the trashout party they're going to have with the country between the election and the inauguration if Obama wins, what with that big fat bundle of pardons waiting at the end for everyone who participated in the looting.
Having 15 or 20% of homeowners defaulting sounds like just the ticket to rev up the economy again.
Real estate and mortgage brokers earning commissions again. Appraisers as busy as in 2006, speculators prowling the MLS looking for homes to buy, contractors busy fixing up, home improvement stores making sales.
We'd just be restarting the housing boom again at a lower level as millions of former homeowners are put out and millions of new homeowners jump in.
Bank of Japan cuts interest rates to -17%. That's right, you will receive money and an Icelandic Pony by taking up a loan. Governor Takashumi says: 'We are continuing our successful policy of the last 20 years. We hope this will lead to an even more negative birth rate, higher debt, extreme corruption and a larger wealth gap. Bad credit and a massive carry trade is what brought Iceland and Easter Islands to fame, we are barely doing best practise here.
I might add that in my business ( gas utility) we find that many delinquent
accounts are 'cured' by simply changing the name of the account owner.
If customer X can no longer pay the bill they don't do with gas service they simply put the account in Y's name. I don't see why a variant of this shell game could not also work in the housing situation.
Mr.A is delinquent on his mortgage. He simply stops paying and has Mrs.A
buy the property at the new 'reduced'
price. Alternatively Deadbeat C defaults on his house a 1234 Oak St.
and buys 1234 Pine St from Deadbeat D
and deadbeat D buys 1234 Oak st. from Deadbeat C. The real estate and finance industry generate revenue from the transaction and we just adjust downward home prices to a new
affordable level.
Never Forget | 10.31.08 - 6:17 am |
Grow up. Eons ago ARM's were already available and people with iffy credit paid 18% interest on 30year fixed if they didn't want to do ARM's.
California lost a huge part of its economy when the military pulled out but foreclosures never looked like they do today.
So keep drinking your "it's not my fault" kool-aid and keep telling yourself that it's the big bad banks problem that you were too stupid to not sign on to a mortgage that made no sense, it's not that you were greedy or have no sense of honor and value your word or anything.
Seriously, taking on a mortgage should smack most people right upside the head with its enourmity, but I guess the newer "vintage" home debtors never grasped that concept.
Full disclosure: one year into home debtorship my income declined by 50% and I had (to me) huge CC debt at the same time. Every creditor got paid in full and I never went into collections or bankruptcy or any kind of renegotiation. Why should I have? I signed off on all of that debt and I owed it, I repaid it and the few times I was late back then, I paid those penalties too.
You've no idea what I lived like to get through that but today I look at it as a wake up call to not be one of Jas's born and bred dopes.
As far as suicide? Please. That was a very dark period in my life and it crossed my mind more than once. Sometimes people need to dig deep instead of looking for excuses and do-overs.
I don't need pepto-bismal, I need to see some fellow Americans start digging for some pride instead of looking for excuses.
Gimme a break. Stop being so obtuse. And take some PeptoBismal.
Says the pick pocket as he deftly removes the money from my wallet.
Unit472 | 10.31.08 - 6:37 am
If you don't think this is already happening, you don't live in California.
AnonyMiss,
Who said I was someone who participated in the moral hazard that will occur en masse?
You're seriously too easily to bait. Easier than catching trout at Mammoth.
Who said I was someone who participated in the moral hazard that will occur en masse?
You're seriously too easily to bait. Easier than catching trout at Mammoth.
It must be great fun justifying this swindle and then insulting some one who has the ethics to pay their debt.
AnonyMiss,
Who said I was someone who participated in the moral hazard that will occur en masse?
You're seriously too easily to bait. Easier than catching trout at Mammoth.
Never Forget | 10.31.08 - 6:50 am
Well good for you, you are a Master Baiter. Excellent use of your time, can you go back to PoE now?
Goldenport Plunges After Saying Trade Almost `Halted' (Update2) - Bloomberg.com
Goldenport Plunges After Saying Bulk Trade `Virtually Halted'
By Alaric Nightingale
Oct. 31 (Bloomberg) -- Goldenport Holdings Plc, a U.K-listed shipowner, fell by a record amount in London trading after saying trade in commodity shipping has ``virtually halted.'
Anonymiss,
Don't get me wrong--what you accomplished isn't minor and commendable.
All that being said, the situation today is far different than the period when you purchased your home. Home prices are much, much more inflated compared to your purchased price, even though interest rates were very high (my parents paid 12% on their mortgage).
Secondly, the ARMs you had available then are a far different, tamer monster than ones that many people are contending with.
Thirdly, we're all complicit. We're all fracked.
It must be great fun justifying this swindle and then insulting some one who has the ethics to pay their debt.
Ticker Tape of Doom | 10.31.08 - 6:53 am | #
The swindle was perpetuated by the easy money and credit by the FED. It's really easy to justify; they did it to bankrupt Americans, monetarily and ethically.
That's why it is important to remain ethical. This is the only way we can retain dignity and honor.
Lest we allow the Fed to rob us of that as well.
People are able to be ethical facing far more difficult circumstances than losing their homes.
It must be great fun justifying this swindle and then insulting some one who has the ethics to pay their debt.
Houston's Clear Thinkers: "Senator Cornyn, take your canned response and stuff it."
I support bankruptcy reform because America needs to restore a greater sense of personal responsibility to its financial system and must act to prevent the abuses of bankruptcy law that we have witnessed in recent years. Bankruptcy relief should be available to those who are unable to pay, not to those who are simply unwilling to pay.
[...]
Sincerely,
JOHN CORNYN
United States Senator
What's it like to provide a fig leaf for thieves?
Combine this post with the data in the last post and tell me this isn't a recipe for disaster. Instead of slowing the decline in home prices, won't this accelerate the decline? Won't this push more people to stop paying? It's as though everyone who bought a sweater from the Gap for $100 last month can suddenly get $40 back. Now tell me, who is going to buy those sweaters for a penny more than $60? Nobody. Aside from the moral hazard issue, this is just plain dumb. We'll be throwing tax payer money to idiots and scofflaws.
SpeciousRiches
Specious Riches
SpeciousRiches
It's wonderful how Senator Cornyn is proposing bankruptcy reform, after all these corporations and banks have been bailed out.
Hmmm...yeah, keep banging us hard.
Ticker Tape of Doom writes:
That's why it is important to remain ethical. This is the only way we can retain dignity and honor.
5 Slaves, obey your earthly masters with respect and fear, and with sincerity of heart, just as you would obey Christ. 6 Obey them not only to win their favor when their eye is on you, but like slaves of Christ, doing the will of God from your heart. 7 Serve wholeheartedly, as if you were serving the Lord, not men, 8 because you know that the Lord will reward everyone for whatever good he does, whether he is slave or free.
5 Slaves, obey your earthly masters with respect and fear, and with sincerity of heart, just as you would obey Christ.
Yeah, sounds like propaganda written by men of power to coddle the masses. Stay slaves then.
fwiw
I disagreed with the reform of the bankruptcy laws. Since there are circumstances where people are not able to pay their debts due to unforeseen circumstances. Discharge of debt via debt is necessary but on a case by case basis not by a massive
handout from the government and the taxpayer.
That being said -
No one is putting a gun to peoples heads forcing them to get credit or to take out loans.
Never Forget writes:
It's wonderful how Senator Cornyn is proposing bankruptcy reform, after all these corporations and banks have been bailed out.
It's a quote from back when the bankruptcy reform that bound people to their CC debt was passed.
Lots of pompous idiots bloviated about the importance of personal responsibility, ethics and honor in a system that had already been gamed to perdition. Regardless of if they were useful idiots or knowing dupes, they were still witless tools.
The Gubment has shit for brains, they should be offering twice the value for firearms buy backs and 4x for ammo. Then they might avoid the shock & awe that is right around the corner.
gamed to perdition...that's a great phrase.
Like I said, I think it is foolish to consider ethics in an unethical game.
It's like a woman marrying a man who turns out to be abusive and a cheater. Should she uphold her commitment even though her life would be better served pursuing a divorce?
"If that guy got his mod, he would be looking at paying income tax on most, if not all, of the amount of his debt reduction.
I don't see them changing that part of the tax code. If they did and if word got out . . . there would be a tax revolt of immense proportions."
Didn't they already suspend that provision in one of the many earlier bailout/stimulus bills? I'm losing track of them all...
SpeciousRiches
Specious Riches
SpeciousRiches
Lots of pompous idiots bloviated about the importance of personal responsibility, ethics and honor in a system that had already been gamed to perdition. Regardless of if they were useful idiots or knowing dupes, they were still witless tools.
Well there is a solution for a system that is gamed to perdition. Don't play the game and live outside the system as much as possible.
Ticker Tape of Doom:
No one is putting a gun to peoples heads forcing them to get credit or to take out loans.
Nope, but nobody put a gun to the lender's head either. Lending entails risk. Reckless lending entails the certainty of loss.
I don't really see why anyone should feel compelled to be reduced to serfdom by their debts unless those debts are to a real and actual specific person or group.
I think you advocate an asymmetric ethical burden. None of the lenders would have acted in the ethical manner you describe. When you play fairly in a gamed system, there is a word for you, and it is not "honorable" or "ethical".
Like I said, I think it is foolish to consider ethics in an unethical game.
Don't play the game and remain ethical.
Well there is a solution for a system that is gamed to perdition. Don't play the game and live outside the system as much as possible.
Ticker Tape of Doom | 10.31.08 - 7:31 am | #
And I share that sentiment. I think taxation revolt is imminent not because people are going to not pay taxes, but moreso because they simply will not work. Why work if you'll tax half my income? Why work if the money I make will become useless due to inflation? Why work if you're subjecting me to moral hazard through paying for these unjustified wars?
"speciousriches spammer's"
Hey, I'm not a spammer, just a guy with a Wordpress blog. I don't think I'm running any scripts.
SpeciousRiches
Ticker Tape of Doom:
Don't play the game and remain ethical.
That's certainly one response.
HÁVAMÁL
45
If you deal with another you don't trust
But wish for his good-will,
Be fair in speech but false in thought
And give him lie for lie.
46
Even with one you ill-trust
And doubt what he means to do,
False words with fair smiles
May get you the gift you desire.
What's it like to provide a fig leaf for thieves?
Byzantine_Ruins | Homepage | 10.31.08 - 7:14 am |
Byz, I read your link and I agree that it's an all around sickening situation, but where does personal responsibility for one's actions come into play?
It's a rigged game, that's always been true, at least in my lifetime.
They scale may be different but that's true on both sides of the transaction.
I personally know a couple who bought a home in California who ended up with a "short sale" after five years and $200K in HELOC'd debt. The HELOC paid for: a new SUV, an F350, a larger boat, RV, and three quads.
No furniture, no home improvements, nothing else that I know of other than these fully paid for items.
The short sale price that the bank agreed to? Nearly identical to their original loan amount, actually a couple thousand dollars more than they had paid for the original loan.
Sure the bank was at fault for lending it, but where was their internal brake on spending more than they could afford for a monthly mortgage payment?
Once they got tired of paying too much of their take home pay for the mortgage, they let it fall into default.
At the end of the day, they walked with all of the fully paid for toys. It still amazes me.
And I share that sentiment. I think taxation revolt is imminent not because people are going to not pay taxes, but moreso because they simply will not work. Why work if you'll tax half my income? Why work if the money I make will become useless due to inflation? Why work if you're subjecting me to moral hazard through paying for these unjustified wars?
Ah there are many ways to work, eat and survive reasonably well while not participating in the system though.
I foresee a rather large growth of black and grey markets as a result of what's happening.
I think you advocate an asymmetric ethical burden. None of the lenders would have acted in the ethical manner you describe. When you play fairly in a gamed system, there is a word for you, and it is not "honorable" or "ethical".
Byzantine_Ruins | Homepage | 10.31.08 - 7:32 am | #
Amen Byzantine. None of the lenders and not many of their employees considered ethics, if you honestly think about it. They thought about profit, profit, profit, above all else--and their tee times.
Considering "Honor" and "Ethics" in a dishonorable and unethical game is well...not of this world.
Thanks for the link The Sayings of Hár Byzantine.
AnonyMiss writes:
Byz, I read your link and I agree that it's an all around sickening situation, but where does personal responsibility for one's actions come into play?
When you're dealing with other people, and those other people aren't aiming to exploit you.
I don't really want to come off as an advocate for fraud but I also think the moral outrage over two thieves robbing one-another is a little overdone. Don't blame the player, blame the game.
I understand savers feel bitter -- you've been robbed most cruelly. I still gotta ask why you folks kept on stashing it away like a big fat cow waiting to get eaten when it's been obvious for a decade or more that things would end this way.
For all that people want to harangue on the American spendthrift who never wises up and changes his ways, they're really not the only people who keep doing the same stupid thing over and over again.
I blame the players and the game.
don't know if this was posted. weird meltdown of charlie gasparinon on cnbc.
Update On Gasparino v. Ratigan (Clip Included) - Dealbreaker - A Wall Street Tabloid - Business News Headlines and Financial Gossip
Thank dog Misean has gone to bed.
Byz -nice link. I prefer the I Ching, but that's just me.
Thread muse for the daytraders, TGIF!
YouTube - Sonic Youth - Shadow of a Doubt
CC
AnonyMiss writes:
What's it like to provide a fig leaf for thieves?
Byzantine_Ruins | Homepage | 10.31.08 - 7:14 am |
Byz, I read your link and I agree that it's an all around sickening situation, but where does personal responsibility for one's actions come into play?
Anonymiss,
It was also many of the lenders that suggested that homeowners refinance their homes and incorporate their auto loans into the mortgage. And at the time, it seemed like a sound idea considering the house they purchased was worth well above what they paid for it. People were swept into a mania that housing prices were going to stay up, up, up.
Could many people caught in this situation could've predicted that housing would go down so much, so fast? Could they have predicted that lending would tighten up so abruptly? Could they have predicted that their neighbors would up and leave and default on their mortgages?
And you suggest they stay the course? It's one thing when you purchased your home 22 years ago at 150K and it goes to 75K. It's totally another when you purchase your house for 500K and it's worth 250K.
Ticker Tape of Doom writes:
Thanks for the link The Sayings of Hár Byzantine.
No problem. It's one of my favorite collections of wisdom-sayings, 'cause Glad-of-War minces no words. You might not want to fully live like him, but you have to admit he doesn't sugar-coat.
Wow, why is everyone mad about this?
Usually CR is full of liberals and this type of program seems to be right up your alleymuch like welfare.
Count on more of this type of thing after next Tuesday.
One good thing--it is going to be great to be able to "bama bash". It is going to be a fun 4 years!
Harsh Realty writes:
A serious question for you folks: Should I buy a house now, pay the mortgage for 6 months, and then stop making payments? (It seems pretty clear that some sort of bailout will happen.) Or am I better off waiting for 5-7 years before I buy a house?
Serious question? How old are you? For that matter, how old are the people droning on about how unfair this all is.
There will be another side to this. Beyond the glass through which we see darkly is a tima and place where those who did the right thing, who paid their bills, who proved that character counts will be rewarded.
Wanna screw the pooch? Despair, default and deny responsibility. Fucking weenies. Press on. It ain't tough yet. The hill gets steeper ahead.
Sheesh!
When money is involved, do not assume you will not be exploited. When the act is done, check your ass and see if it bleeds.
Walk it off.
In crisis, a marketing oppo:
`New Bretton Woods' Rendezvous Beckoned by Old One's Host Hotel - Bloomberg.com
But the Nov 15 meeting is happening in DC. As Setser suggests, the system may well have been rebooted by then anyway.
CC
This is a cake walk. I have personally lived through much worse.
Even if it gets 100 times worse I am not too worried.
I can't help thinking reinstatement of judicial cramdowns on case-by-case addresses essentially all the issues here.
If anyone chooses default, then they take the bankruptcy route and the courts decide how damages are distributed. That exists now and requires nothing new beyond restoring cramdowns.
Treasury needs to get out of the legislative's bailiwick. They're no good at it.
CC:
Byz -nice link. I prefer the I Ching, but that's just me.
I think of the Book of Changes as more of a divinatory method. In this, I think its only extant peers are Ifa and the other yoruban systems.
For living my life, I think it would be quite an essay. I like the Chuang Tze but I embrace the fact that not every animal in the world has the same destiny. It is a good groundation but not everyone wants to live the long life of a crooked tree, and I find there to be a solid argument within the text that you can have a Taoist worldview but not a Taoist lifestyle. That would be me. =)
Whatev, i'm loathe to reply, but i'm assuming you are not a troll.
you are living in a glass house and throwing stones. i'm expecting this attitude to carry into the future. folks that still support bush and his failed administration blaming their past and continuing policies on obama and the liberals.
somehow i think even with four years of mccain on top of eight years of bush, you would still blame it on the left. the mantra has always been, never admit your wrong and never apologize.
allow me, i'm sorry for you.
serf Alan Greenspend writes:
don't know if this was posted. weird meltdown of charlie gasparinon on cnbc.
It may help to understand the background of Charlie Gasparino. He's a realreporter who gets his knuckles bruised. He's a feisty SOB who would deny being feisty.
Maybe, he couldn't reveal what he knew. He did say, 'I don't have what I got.' several times. If I were his editor I would say, 'Then go get it and quit showing off'.
When money is involved, do not assume you will not be exploited. When the act is done, check your ass and see if it bleeds.
Walk it off.
lol
Suck it up. Rub some dirt on it.
Byz - I like ol Chuang. Can think it, can't do it. Conundrum.
Like even more the Diamond Cutter Sutra.
CC
There will be another side to this. Beyond the glass through which we see darkly is a time and place where those who did the right thing, who paid their bills, who proved that character counts will be rewarded.
Volker the Viking | 10.31.08 - 7:54 am |
I wanna believe you, Volker but I just can't see that far into the future. I hope you're right.
All is going as planned.
Once all laws and social contracts are thrown out and "anything goes" is the new mantra, then look out - things will get really interesting. The sheeple won't know what hit them!
Comrade Counterpointer,
"Thank dog Misean has gone to bed."
Not sure what I did to offend but
Nostrovia,
CC:
Like even more the Diamond Cutter Sutra.
I mostly stick to the Taoist-Confucian part of the Chinese triad. I don't have much concern for the hereafter or samsara. I live the way I live and the Judges of the Dead can sort out what they think of it when I go down to the Earth Prison, as they would regardless.
I love the girls and the money and the shame of life
My shallow mind is just a sign of your game of life
remember, when you think there is nothing left to loot, there always is.
our job as smartie macroecon forecasters needs to be figuring out what that is.
i must admit, every action like this mortgage bailout does twist the knife and darkens my thoughts.
but, it's halloween, and i'll be on a float surrounded by hotties, going down the streets of the village in nyc, with a million folks watching and going nuts on the sidewalk.
we all need to find our stress relief.
volker, LOL, "rub some dirt on it". nice.
Comrade Pondering the Mess,
"Once all laws and social contracts are thrown out and "anything goes" is the new mantra, then look out"
Yes. Something I've been pondering. How can the gov't WANT to destroy the system this way?
Is Bernuuty's stoopidity so great that it has simply overwhelmed practical thought?
The dude spent his life in lala land pretending to pull levers that would avoid GDI. Now he's approaching GDII and he's pulling levers left and right...only he's simply doing what ws done before.
GIGO is for a working model with bad info. What is it when you have good data and a garbage model?
I guess they are forcing me to deliberately stop paying to look worse than I am. Crazy, dont you think?
Why increase moral hazard. Things suck beyond belief.
Nostrovia,
"Beyond the glass through which we see darkly is a time and place where those who did the right thing, who paid their bills, who proved that character counts will be rewarded."
This is the reasoning behind the Beatitudes. Note that the time and place is surely NOT in this life.
the meek shall inherit the earth after the strong hath looted and pillaged it to devastation. leaving a bill for the destruction with a smiley face.
Serf Alan,
Do I think that Bush did everything right? No, but he has not done everything wrong either. Additionally I seriously believe that what we will get from Obama will be even worse than what is described in the article that CR posted. To me, it is the nature of the beast (or should I say party). IMO, Democrats programs are aimed at keeping people at the bottom so that they can stay on top. This is horrible to me.
I will be voting for McCain, however, if Obama wins, and he does a bang up job, I will definitely vote for him next time.
BTW, this is the way that I feel about Presidents. You always hate them at the end of their term.....it is the same way you feel about your builder when he/she is done building your house. Go figure.
In all honesty, the time has come for a tax strike. Think tea in the Boston harbor. Enough is enough. I'm seriously thinking about not paying my '08 taxes, and they can throw me in jail.
BTW, Whatev, next time try the front of the line when they're handing out brains. The Dems keep people on the bottom so they can stay on top? Someone who says that in unpersuadable by empirical evidence, but you might want to compare rates of poverty and job growth under Clinton and under Bush. I know nothing matters to someone like you other than a weirdly comforting pre-conception --you are one of the many very gifted people in this country who decry "socialism" even though every social indicator suggests you take far more from the government than you pay in --but maybe take your juvenile hoodoo to another site, where someone maybe cares.
Whatev, fair enough, agree to disagree.
leave us stick to economic topics and avoid partisanship.
on that note, hoocoodanode AIG would start arbitraging all the free money without strict oversight. this behaviour will be rampant and never punished most likely. hmmm, what's next to loot?
AIG Arbitrages the Fed Via Its New Commercial Paper Program « naked capitalism
Do I think that Bush did everything right? No, but he has not done everything wrong either.
You are right. 99% wrong is not everything.
Am sure everyone else was glad and thankful for that 1%.
Good morning all. catching up quickly.
A few lauds:
BondGirl's earlier well articulated rhetorical question. Always worth a read.
AC's succinct and nuanced observation on our democratic ideals, the woulds and shoulds.
CR, may have gone 24 hours without saying thank you.
Thank you.
Dryfly--Again, Calvinball Economics 2008 was poignant, and follow up remarks always worth a read.
On a relevant note: I received my Wells Fargo form letter about the TARP, Wells attempt to eat Wachovia (siting the synergy of Wachovia's best-in-breed customer service & Wells best-in-class cross sales as a win-win).
Yes, barf is disgusting when you swallow it.
And yes, the little form letter described HOPE and how I too might short my mortgage, f*** the taxpayer, and look out for number one.
I don't see why anyone should feel compelled to be reduced to serfdom by their debts unless those debts are to a real and actual specific person or group...
I understand the outrage. Heck, I feel it, but I got over it. So what. So they gamed the system. Get over it. They will never see the level of living they enjoyed again.
Same thing with gov agreeing to cover mortgages. I don't get to worked up about it because it isn't going to work. At this point nothing is. They might keep people in their houses for another year or so. Helps the neighborhod and the county/city/state.
He got his toys for free. Bank lost that money. Now they hope to keep him on the hook paying at least someting into their depleted coffers.
Meanwhile the toy makers will be laying off. If the guy who got the toys for free dosen't think it will end up not coming back on him; he just isn't paying attention.
AnonAnon
Good grief, the problem goes beyond so much more than just jobs!
Open your eyes!!!!!
HaHa--that was a good one:)
"1) YOU CANNOT STOP FORECLOSURES WHEN PRICES ARE FALLING. It's an impossibility. Sure, you can reduce them, but that just delays the inevitable correction.
2) PRICES WILL NOT STOP FALLING, because income levels do not support current values."
Quite true. The obvious solution is to attack point 2) by inflation. Wages go up, prices can follow. However, Mr. Bernanke is finding that, all his academic theory aside, it is not in his power - try though he might. His 'solution' may work eventually, but the time frame might be years. This fix, of course, simply takes money from savers and fixed incomers... but this whole thing is simply a political battle over who gets left holding the bag. There are losses; promises made that cannot be kept. Who gets them: banks? government? savers? Investment houses? Foreign governments?
serf Alan Greenspend,
"Whatev, fair enough, agree to disagree.
leave us stick to economic topics and avoid partisanship."
Yes please. People who write so intelligently, revert to "My party Rah! Rah! your part caused everything to go to shit!"
Truly annoying. There isn't the depth of a piece of tin foil difference between either party. Get over it.
Nostrovia,
blackhat --
like the brief summary of thread comments.
We need a volunteer blog archivist who can wrap up a few-hundred-comment thread with a summary of the best posts.
Makes a good capper for anyone who wants to go back and review.
"I understand the outrage. Heck, I feel it, but I got over it. So what. So they gamed the system. Get over it. They will never see the level of living they enjoyed again."
nova,
We had a workgroup meeting last week and I brought this up. I said that for the last 6-7 years we have been fighting the assholes with borrowed money with our decent wages. That is all done now. I actually plan on going on spending spree during December. Been waiting to update a lot of shit. I noticed that all the new cars in the parking lot here at work are all owned by the frugal...
Chris
I feel GREAT about him having his [Lamborghini] while I just paid off my $15k car that I can actually afford
Welcome to Chumpville. Join the crowd.
Fine, but one last comment --some people are so hopelessly free market utopians, they refuse to ever acknowledge the difference between good government and bad government. I wonder if they've ever been to Chile and Denmark, as I have, and seen the difference.
The only way to restore the common good is for the commoners to take the reins of the economy away from the Wall Street financiers and the professional economists that exist for no other reason than to build a monument to themselves.
The best way to do that is to not take out a loan. I am as guilty as anyone for actually having a mortgage, though I refi'd from a 30 to a 10 the first chance I had. Everyone else seems to cash-out refi and start all over at 30 again.
But careless debt gives Wall Street the power, and that goes for careless government debt, too.
The way to make people wealthy is to give them the choice between opportunity and self-destruction.
The way to make people poor is to give them what they want.
The typical American attitude is that education is great yet most students think school is for chumps and a kind of punishment. And everyone gets a trophy.
The reality is people already have the choice between opportunity and self-destruction and the majority choose self-destruction. One look at the economic planks of the two major POTUS candidates confirms it.
While I respect the ethics of those struggling to pay underwater loans, I feel sorry for them. I'd like to give them permission to walk away once so we can get to the bottom of this. Isn't losing your home and all the payments you made into it while you held it enough punishment to influence future buying decisions?
If lenders fail to do due diligence and sign a contract secured by collateral that falls in value, I don't feel sorry for them. If they have to take a short sale or foreclosure -- well they paid their money and they took their chances. Isn't a mortgage lender or an investor in MBS a sophisticated investor?
Assisting home owners to pay off over priced mortgages will provide little if any stimulus to the real economy. It merely funnels money to investment pools that will move to cash until this whole mess blows over...
Seems to me the country, the economy and the underwater families will be better off if that money is spent on food, medical care and college educations than funneled back into the "giant pool of money."
This is really the first time in human history that the system has simultaneously broken all over the world.
No its not. Around WWI lots o' countries were trying to change their gold stanrdards to lower weights. We're basically still fighting the same economic warfare.
I'm underwater on my car. Does that mean I need a bailout?
monta's ankle writes:
"CR, I actually like this quote best
'Im basically financing my own financial destruction'
hmmm, a lot of us mortgage holders feel that way right now
actually almost all of us do."
Hll, what has the Bush administration been except 8 years of fcking us and then looting us to pay for the privilege?
I can't help thinking reinstatement of judicial cramdowns on case-by-case addresses essentially all the issues here.
If anyone chooses default, then they take the bankruptcy route and the courts decide how damages are distributed. That exists now and requires nothing new beyond restoring cramdowns.
Absolutely. The issue of how to deal with excessive debt has been hashed out over centruies in bankruptcy law. It was a really dumb idea to alter it with the cramdown ban. Society has developed, via centuries of experience, the idea that if you have excess debts, you can BK to escape, but otherwise you're basically stuck with it, and we should use that idea.
AnonyMiss
Word!
So a grocery clerk goes to the bank to get a loan, the bank tells them how much they will qualify for, then the borrower goes out an buys the house.
Are you telling me a grocery clerk has to go get an MBA to make sure the MBA at the bank is doing their job and fulfilling their Fiduciary duty?
The borrower did not set the terms of the loan to screw themselves over - the bank screwed them over and sold the risk of the loan to other in MBS in the derivatives market.
Also, the clerk might have had 20% to put down, but the bank talked them into investing it - offering them a lower rate on their first mortgage to do it (-.25%) - then sold them an 80/20 piggyback that they would never be able to refinance out of.
Their investment is gone in the stock market crash, and all they wanted to do was buy into the American Dream that the Gov and everyone else was ramming down their throats.
The job of a bank is to abate risk and mitigate losses - not the borrower.
Sorry everyone, the blame is on the banks.
No Hope for Homeowners – Foreclosure Prevention Program Falters « Your Mortgage or Your Life…
If the lunch truly is free, the demand for free lunches will be large.
Paul McCulley, PIMCO
Trust me, McCulley speaks from experience. If I ever get to sit on his jury...Guilty.
This thread is already three hours dead, but in case any are still here: AnonyMiss - YOU GO, GIRL! -- BYZ- Awsome link. Thanks. -- Volker - When the sh*t hits the fan, I wanna be where you are! -- And Whatev - work for progress, not the forces of reaction. Peace to all-
All other things being equal, get used to the fact that the guy who is $200K upside down on his house is going to WIN if he wants to. He is ultimately going to get his principal written down or he's going to walk. Either way he is going to wipe out huge negative net worth, live for FREE for at least 6 months and maybe a YEAR, and end up with a massively reduced housing outflow under the new mortgage or as a renter. So his credit is trashed for a few years - boo hoo, he's got thousands stashed after living for FREE and his outflow is massively reduced. This guy is going to WIN and there is not a damn thing you can do about it. That is all.
2 weeks ago, my state of Virginia arbitrarily decided to impose a "dress code" on election day-- banning all political garb within 40 feet of the polls. The pollworkers are supposed to keep black trashbags on hand, so people can "cover up" anything deemed "overtly political" before we're allowed to go in and vote.
I can not begin to describe how angry I am with my government for this whole horrible mess. So as my own act of "defiance" and protest, I am simply going to beat them to the punch, and wear my own black trashbag to the polls.
Written on the front is "Taxpayers are not Trash" & on the back it says "It puts $700 Billion in the basket, and it rubs the lotion on its skin."
(The "lotion" line comes from this blog-- I think it was Rob Dawg who said it-- on the day the House voted down the first bailout bill.) I'm also bringing extra trashbags, to hand out to anyone else who wants to express their opinions about what's happenening here.
And I am not voting for any of them.
I'll write in Ron Paul, Oprah, Bill Cosby-- anybody at all-- as its better than our know-nothing-do-nothing Congress. And don't anybody tell me I'm "wasting a vote"-- the hell I am. These people don't deserve a vote, so I'll vote my conscience and send a message.
Both Obama & McCain are U.S. senators, privy to info we never see, & you know bloody well both of their economic teams knew of this upcoming financial horror-show, if not last fall, then at least by March, when Bear Sterns went down. Both of them undoubtedly prayed like mad the thing wouldn't blow up before the election, so each could avoid addressing it in their campaigns.
Well, fate stepped in, and now everybody knows the truth: Our government hasn't been "governing"-- and now its gone straight into the outright extortion business.
So as I'm now to be living in the "United States of Soprano", I don't intend to go quietly.
Wild Clydsedales could not keep me from the polls on Tuesday.
And I offer the "wear-a-trashbag to protest" idea to all here-- reporters will be trolling the polls, & it's probably the only chance average people have to get some media attention & yell purple jesus about all this.
Erik writes:
"The problem isn't 10% of people losing their home that they could never afford. The problem is 90% of people not paying because they want a principle reduction too."
'Principle' reduction it is.
"Principal reduction."
Zuzu, I hope to see you on the news. Ron Paul and Oprah, they wouldn't be half bad!