1 currency sooner [yogi], most foreclosures in this cycle haven't been related to job losses - although I'm sure that is picking up. The problem has been that people bought homes they couldn't afford - and were so far underwater there was no other choice.
TOLEDO (WTOL) - From the House floor, Kaptur told the American people to become squatters in their own homes. Later, she told CNN's Lou Dobbs that Americans should take a stand against banks who just received an enormous bailout by refusing to leave their foreclosed home.
the great irony of CDS contracts is that this phony protection sold by bankster stankster frauds is protecting the criminals who used these CDS and weapons of mass destruction.
lets call the banksters what they are financial terrorists and apply all the new anti-terror laws against them.
we are so scared what will happen if we unravel their fraud.
Force Majeure for CDS! Let's push the reset button on them before they push it on us.
The bad bank should be an offshore bank.
i'm thinking of a special place in cuba where there are no human rights, civil rights, or habeas corpus for this bad bank.
i think the bad bankers should be installed there to run this bad bank with one dial up connection and a MySpace account.
Unless the public presses for the burning of MBS by rich people who hold them. This process will simply get crazier and increasingly illogical and corrupt
Just got threw squatting for thirty years paying my mortgage off.
It appears the frontal lobe of a generation or two of America's finest never developed, Most tried to live above their means and the rest got jobs on Wallstreet.
Even idiot Schumer I hope doesn't want to keep people in grossly inappropriate houses. But at some point mass reshuffling (dislocation) is foolish. Intervention could help some people if executed wisely, as with rent-controlled public housing for returning WWII vets in the big cities.
Please forgive me for stating the obvious, but the object of the loan mod is not to help the homeowner. It's to keep the default from being written down in the bank's books.
It makes infinite more sense for someone underwater/upside-down to walk away. If they have any income, they might arrange to buy a comparable house for a lot less than any adjustment is going to give them. Even renting is less than they have to pay now.
I've been a bankruptcy attorney for 25 years, and I'm telling 90% of my new clients to walk --- very slowly of course --- from their homes. Here's why:
Most of them are hopelessly underwater.
Real estate is falling even as rates fall, not a good sign.
Real estate always stays down for several years AFTER it stops falling.
As boomers start retiring with 20+ years remaining on the loans they refied within the past decade, they will be forced to sell because their income will dramatically drop from lack of pension income and collapsing IRA/401k balances
As long as renting v. owning is cash flow positive, I tell them to rent.
The TARP and stimulus plans protect the rent seekers and further enslave the majority under crushing debts. No way will our eCONomy grow while it is burdened by so much non-liquidating debt.
Take matters into your own hands. Give yourself a personal debt JUBILEE. Your gain (shedding un-payable debt) is their loss.
Walkaways are the real worry for the fed and rent seekers.
Look at it this way - business men like Trump walk away from debt all the time.
One of the reasons people in my neck of the woods went to great lengths to buy a house -- dodgy financing, high payments, whatever -- was the real fear that they would be priced out forever if they didn't buy now. That, and the fact that rents are high here and have gone up precipitously in the last ten years.
Remove the fear of pricing-out, and factor in the oversupply of houses in many areas. And you may convert a great many people to the idea of lifetime renting.
As a country we built houses we couldn't afford. We sacrificed our factories and our progeny's dollars. Everyone must pay. It does me no good to own ten houses if there are tent cities.
The biggest fallacy perpetrated by the media is that people actually want to save their home. Most people do not want to save the alligator eating them alive because it's like a noose around their neck strangling the financial life right out of them.
Agree with the premise of the article and most posters. Say you get a mortgage refinanced and by some miracle you even get some principal knocked off (thats why I said MIRACLE)
Highly unlikely the prinical reduction will be anywhere close to the actual market fall in value of the home. Helps the banks, the "home owner" pays more than the house is worth and still takes a loss 2, 5, or even 10 years from now (look at Japan, still haven't got back to where they were)
I have been advising this exact strategy for 2 years to anyone in a jam, insisting that prices will continue to decline and any mod will just be more excrutiatingly painful in the long run. Everyone that took the advice has thanked me.
I hope this catches on, finally. The bad bank will be a total write-off in a few years. And there are still shills in DC an wall st claiming it will be a money maker. Maybe, for the lenders that get relieved of their worthless assets.
mattdog, you are absolutely right. What's been coming out of Washington is bank bailouts poorly disguised as homeowner bailouts. If we want government policy to reward the prudent and punish the reckless we should be encouraging savings and investment in productive enterprises, not more debt and investment in unproductive things like homes, cars and consumption. If we keep people in underwater homes and cars, and "stimulate" consumers into sending more money to China, we only benefit lenders and Chinese manufacturers, not the American middle class.
In addition, to help move this along and help any economic recovery, legislators should concentrate on efforts to prevent foreclosure from affecting credit scores. That should clear up most of the overhang so we can actually spend money on things that advance society rather than holding it back.
You ever watch a movie about when you die you look the same in heaven as you did when you died?
The path going forward favors debt forgiveness with very limited credit afterward. What you own now is what you will have for quite a few years going forward. You get to keep the house, the car, the electronics but take care of them, might be a while until you get a new one.
Just a thought.
Last week I was hopeful. This week seems cataclysmic and you all are seriously harshing my mellow. Government isn't helping to reassure me either. Bondguy and his bond lessons also illustrated the true power in our economy.
The bond market is the loan shark and the four horsemen are it's enforcers.
Adverse possession is nothing new; it's good old fashioned English common law.
Use it or lose it. \t lawyerliz | \t \t \t \t01.31.09 - 5:35 pm | # I'm guessing many squatters can't afford the taxes, which will shoot up quickly when renters are again the majority.
I, by the way, paid off my house about a year ago. It was the long time goal of the hub and I. lawyerliz | 01.31.09 - 5:40 pm | #
Congrats. I know you all are thinking about retirement one of these years. How good to have the mortgage out of the way.
Back 30-40 years ago it was a given that everyone would be mortgage-free in their 50s at latest, unless they were doing something wrong. No longer. I know a guy in his late '60s who won't finish paying off until his early 70s. At earliest. And he's owned the place for 20 years. Well, the cash-out refi didn't help. It rarely does.
I've been trying to think of the answer to depressed or relieved, and realized that nobody I've defended in their house foreclosure has actually been kicked out yet. One will be soon, but hasn't yet.
Some have been there, ummm, 2 years.
Put in a little defense, and the foreclosure mills can't cope.
People who are losing investments (but haven't yet) are sad, but it's not like losing your house. we are territorial animals, as well as herding animals.
This has been my feeling too. What's the big deal with losing a house you can't afford?
But the flip side is the 55-year-old in Cleveland who owned her house out-right and got talked into taking a mortgage and now faces foreclosure. That really sucks.
The tax payers don't like the idea of owning a bad bank full of toxic assets. They are now threatening to walk away from their underwater homes in mass if that happens.
I'm guessing many squatters can't afford the taxes, which will shoot up quickly when renters are again the majority. 1 currency sooner [yogi] | 01.31.09 - 5:45 pm | #
Even if everybody rents, somebody owns the rental property and is paying taxes on it. Now if you're talking about houses that renters have walked away from, that's different.
Implicit in the modification initiative is the idea that home prices will return to "normal" once we stop foreclosures. If you really believe that the new price levels are temporary, then keeping people in houses is the best course. If you believe that the new price levels are reality, then you have to explain how to handle all the insolvent banks.
The taxes WILL shoot up when homestead is lost. But then they will come down, as they are reappraised, or forced to by protesting owners. In Florida.
Taxes in Fla are bad, but not that bad. What kills you is insurance. If you don't own the house, and have been only paying taxes, well, if a hurricane comes along, you haven't got much in it and can just leave.
When I worked in the New York City Civil Court in the 90's, there were 400,000 index numbers purchased per year. The most conservative law and order judge would never grant fewer than 3 stays of eviction ("orders to show cause") on the following sworn statement "I don't owe the money. I wasn't served notice (again). No one wants to be on the front page of the tabloid the rare time when the tenant, typically a single mother, really didn't owe the money, and the slumlord used "sewer service".
If a landlord got tenants out in less than 4 months after default, he probably shot them.
I wonder if a coordinated mortgageholder revolt would disrupt the banks' cash flow projections? Hmmm. I hope Mr. Su is writing under a pen name and owns a Kevlar suit.
Even if everybody rents, somebody owns the rental property and is paying taxes on it. Now if you're talking about houses that renters have walked away from, that's different. \t bobn | \t \t \tHomepage | \t01.31.09 - 5:56 pm | #
That is so, but many renters live in public housing or soon-to-be-nationalized-bank owned. You can realize great windfalls from the time it takes a producer to pass along costs to a consumer, especially with rent-control or any long-term lease.
I'm a renter. As long as my landlord does not try to exploit rent / mortgage differentials with me, and she hasn't, I'm quite fine bout renting. Then again, I'm a furriner and have my own house / rent / expenditure back home. Seems to be fine so far. In a sagging market my tenants bought back in at initial offering because of the premium looking out over the Pacific Ocean on a great public trans route.
Erm, which is why I bought the place back in 2000.
We have finite resources and exponential use of those resources.
The world is shutting down because it has to. The trick was to have everyone put all their eggs in the basket of the United States and then drop the basket. A few carefully prepared eggs will survive and continue.
Finally a journalist that has some COMMON SENSE! Angry Saver | 01.31.09 - 5:33 pm | #
Ramsey is a retired REO broker. Good for him to get to write a WSJ opinion piece. He was one of the few who very early on wrote about the dangers of the housing bubble.
"Neo-liberalism and the free-market fundamentalism it has produced has been revealed as little more than personal greed dressed up as an economic philosophy. And, ironically, it now falls to social democracy to prevent liberal capitalism from cannibalising itself."
Yup. Just walk away! Let the prices settle somewhere where I can afford a nice place. Some more or less reasonable prices are starting to pop up in northern NJ close to the city. I have a stable job and a down payment but I'll still wait 6-9 months to see what happens to house prices. I think they are going down by another 15-20% because I am guessing people in my position are doing the same as me.
I like this phrase. I'm "mortgage-free at 50" instead of a homeless freeloader. Broward Horne | Homepage | 01.31.09 - 6:02 pm | #
I read in the Gulistan, or Flower Garden, of Sheik Sadi of Shiraz,(18) that "they asked a wise man, saying: Of the many celebrated trees which the Most High God has created lofty and umbrageous, they call none azad, or free, excepting the cypress, which bears no fruit; what mystery is there in this? He replied, Each has its appropriate produce, and appointed season, during the continuance of which it is fresh and blooming, and during their absence dry and withered; to neither of which states is the cypress exposed, being always flourishing; and of this nature are the azads, or religious independents. — Fix not thy heart on that which is transitory; for the Dijlah, or Tigris, will continue to flow through Bagdad after the race of caliphs (19) is extinct: if thy hand has plenty, be liberal as the date tree; but if it affords nothing to give away, be an azad, or free man, like the cypress." (From Walden)
"The message was reinforced in Davos yesterday when the Trade Minister, Simon Crean, described the "buy American" provisions of the new Obama stimulus package as "very worrying". "On the face of it, it looks like it contravenes commitments made to the World Trade Organisation," he said."
Why would anyone be surprised the US is ignoring international law and trade agreements? Don't they understand our leaders are elected and have to throw bones to their constituents?
We have abrogated our own basic contract law and they think we will give anything but lipservice to what they want.
We have finite resources and exponential use of those resources.
anon | 01.31.09 - 6:26 pm | # Don't forget multiple, if not exponential, re-use. We waste so much we could deflate 20% and only Ponzibankster would really feel it. My mother (b. 1935) dries out paper towels, donates many thousands of dollars every year to charity.
It is my understanding that adverse possession does not wipe out any existing mortgages \t Some Investor Guy | \t \t \t \t01.31.09 - 6:27 pm | #
## Abandonment does.
Ponyless in NJ(Unrated) writes: Yup. Just walk away! Let the prices settle somewhere where I can afford a nice place. Some more or less reasonable prices are starting to pop up in northern NJ close to the city. I have a stable job and a down payment but I'll still wait 6-9 months to see what happens to house prices. I think they are going down by another 15-20% because I am guessing people in my position are doing the same as me. \t Ponyless in NJ | \t \t \t \t01.31.09 - 6:32 pm | # ## I'd be eally reeeeaaaaallllllllllllly slow to pull the trigger. It's not unlike cooking meat. Time takes time. We're not even close yet.
Let the prices settle somewhere where I can afford a nice place.
No, let's take the opportunity to destroy the real estate investment play. Think it through. If the banks hold toxic MBS then your home is just as worthless as the MBS.
When everyone comes to terms with the fact that a mortgage is nothing but a rent payment, we will recover from this mess.
Our jobless recovery in 2011 will prove it out. Home "ownership" is an illusion. If you can't move to a new city and start the new job to replace the one you lost because you would take a huge loss on your mortgage, you'll soon realize that you are nothing but a renter.
And of course, all the baby boomers in their 50's and 60's are stuck until death in their current houses.
Yup. Just walk away! Let the prices settle somewhere where I can afford a nice place. Some more or less reasonable prices are starting to pop up in northern NJ close to the city. I have a stable job and a down payment but I'll still wait 6-9 months to see what happens to house prices. I think they are going down by another 15-20% because I am guessing people in my position are doing the same as me. \t Ponyless in NJ | \t \t \t \t01.31.09 - 6:32 pm | # Ponyless, I think your calculations are correct. I did a quick survey of my own house, which ran up 250% during the bubble. It has since dropped back about 40% from the top, but my best guess is there is another 20% to go, and I think it will happen in the time frame you mentioned. I bought near a previous bottom, and it has made all the difference to me. Of course, the whole "financial situation" is on the verge of blowing up, but that is not a situation you can master. You can only move forward, planning for a reasonable scenario, while recognizing that plans may go out the window as well.
Why is everyone acting like our government has any legitimacy? As far as I'm concerned, last week was another nail in the coffin.
First our great new President who is all about "change" nominates a tax-cheater to run the Treasury department that has authority over the IRS. Then our Senate confirms this joker. I think the American people should be reminded of this daily, or at least whenever Geithner comments on anything. Its why we have journalists to report on the truth. Both the Senate and President illegtimized themselves by such action... yet I'm sure most think I'm crazy by thinking so.
It's the same way Bush should've been illigitmized with the whole Iraq fiasco... same thing with Colin Powell. Wait, Colin Powell has been in the news recently, why?! He's the one guy who could've blown the whistle on trumped up evidence to start a war.
I know which side I'll be working for if there is some type of revolution. Frauds aren't limited to bankers. Why do we even bother anymore?
If housing prices in my area dropped a mere 30 percent from where they are not, it'd still be cheaper to rent in my area. I think "at least" is the correct modifier.
reptillian writes:
"Some of our countrymen at GS have said as much: the gov't might buy the assets on margin."
My understanding of the leverage was this: the TARP money would be used to create a new entity to buy assets. The Fed can then loan money to that entity, as the Fed is apparently prohibited by law from taking a first-loss position (i.e., the Fed needs someone else to provide the equity).
It's a way of allowing the Fed to monetize risky assets. Neglecting some legal issues, it's the same thing as the Treasury buying the risky assets, and financing part of the purchase by selling bonds to the Fed (which is also referred to as "monetization of Treasurys").
Back to general comments--Two examples of why the lowered spending problems would persist...
My son, very polite and uncontroversial unlike his dad, is suddenly an investment genius among his friends. Yesterday, he visited two of his friends and old classmates in accounting, married to each other, and they are in financial bind despite both having jobs with combined annual wage income of $250K (having bought a bigger home, in San Fernando Valley, in June 2007, and spending $300 on renovations is one reason behind the problem). They gave all their credit cards to my son to keep and decided to go on financial diet. They will not spend like they used to despite not losing their jobs and very high income.
My ex-Marine neighbor and his 12-year old daughter (they both like me very much and he addresses me as big brother) stopped by to show me their latest possessions -- three brand new guns that they picked up today. They spent ALL their savings, including his daughter's $200, and his latest check (he is on disability) to pay for two brand new guns and a third military assault rifle (banned recently for public use but he "purchased" before the ban and it is something to look and hold) on a payment schedule. He says that he placed orders for the guns before Jan 1 because of the changes in the laws that took effect. (Yes, our neighborhood is very well armed). I can say that they wouldn't be spending money on anything but necessities for a while.
And of course, all the baby boomers in their 50's and 60's are stuck until death in their current houses. Paul | 01.31.09 - 6:39 pm | #
Except me and some friends of mine who own outright, and could sell and walk anytime that the market stabilized. But why do that when total expenses for owning the home (including taxes and amortized cost of periodic major repairs, including roof), come in at 600 a month.
You can blame boomers as a generation if it makes you feel better. Some inherent character flaw in a generation, you think? Or do you think that if all the souls in Gen Y were actually born 50 -60 years ago things would actually be different now? I try to stay polite here, but that's nonsense.
And, yes, they are totally screwed, and completely and utterly deserve it as a generation.
Don't Cry for Me Tehachapi | 01.31.09 - 6:42 pm | #
Please, as a thirty something guy, I beg you to let the "blame an entire generation" meme die. It is not fair nor accurate. I blame everyone over 16 yo for this mess. We as citizens have the right and duty to assemble for change and we didn't. Feel pity for the boomers. They will suffer far worse simply because of age and health related issues.
Personally blaming my parents for all the ills of the world went away with some real world experience and maturity.
which part of CA are you in, Bob? Don't Cry for Me Tehachapi | 01.31.09 - 6:44 pm | #
Santa Cruz County. Tourist and second-home destination, and a bedroom community for the Silicon Valley. But the local economy is actually pretty weak; pay is low compared to housing prices. Very high proporttion of renters here, and not just because of the UC students.
a friend of mine told me that people are selling stuff to pay the bills in CA is that true ? Ju | 01.31.09 - 6:48 pm | #
Yes, made a purchase off Craigslist from a woman who was facing three day's notice from her landlord. She'd been more or less privileged financially 5-10 years ago. Have a bookseller friend who regularly has people coming in selling "family treasures" as he calls them, really good books, just to get by another month.
It's not like this is all over the news, or really obvious on a daily basis. But it's happening.
"Some inherent character flaw in a generation, you think? "
more or less.
clinton, W, bernanke, paulson, dimon, ken lewis, john roberts, tom delay, jack abramoff, grover norquist, karl rove - all fit the census definition of a boomer, and they all share the same kind of narcissistic hubris.
walks like a duck, quacks like a duck, tens of trillions in debt and entitlements later...
And of course, all the baby boomers in their 50's and 60's are stuck until death in their current houses. Paul | 01.31.09 - 6:39 pm | #
Only those who don't have the courage to make a change are stuck. And of course, there are those rare individuals who like to call some place home, and choose to stay in their home.
very familiar with it. that's where the bubble started, along with the noe valley 'hood in SF, in 1998. extremely pricey rental housing thanks to developerphobia and the school. the poppy fields and redwoods facing the ocean near the school may be the most beautiful place on earth.
Oh my- maybe letting the market work and clear on the inventory is the way to go to the bottom. Hopefully the market clears just in time for the new mortgage rules.
Contra Jas Jain and other dopes, those of us with good sense and clear eyes will see the opportunities for improvements both domestically and internationally in the coming years. That we are in global crisis is utterly obvious, and only the facile and insecure will continue to harp on that. The creative will, instead, look ahead to what areas are emerging and what sectors will be growing.
Jas is beloved here, I realize; however, his statements about the social integrity of the US and his antisemitism, etc. are laughable. It is depressing to see such a great site as this get bogged down by anti-social people like him and several others--even though, I admit, they have insight into smaller issues.
Full disclosure: Long Western Civilization and Justice.
of course, any kind of generalizing is stupid around the margins. but without broader definitions there is no narrative, and the narrative of our present time is quite clear. that story is that the boomers wrecked the country. this is only important, insofar as we need to politically remove them as a group so they don't suck every last federal dime out of everyone younger in the future. I'm not pushing the meme from a mean-spirited place: it is a desperate cry for the country to come to its senses before the kinds of entitlements passed in the donut bill 6 years or so ago REALLY make us into argentina. they've already wrecked their own retirement, and probably those of the generation immediately younger, but it may not be too late to keep them from wrecking their great-grandkids' country.
"Some inherent character flaw in a generation, you think? "
more or less.
clinton, W, bernanke, paulson, dimon, ken lewis, john roberts, tom delay, jack abramoff, grover norquist, karl rove - all fit the census definition of a boomer, and they all share the same kind of narcissistic hubris.
walks like a duck, quacks like a duck, tens of trillions in debt and entitlements later... Don't Cry for Me Tehachapi | 01.31.09 - 6:57 pm | #
Don't worry, your generation is raising its own crop. I see them daily, flacking for their elders on Fox, MSNBC, and so on. Not to mention all the young studs pushing toxic mortgages on people who couldn't afford them, nor the happily-coopted younger generation at the investment banks. Your generation owns subprime and toxic MBS as much as any others -- your people were just the footsoldiers. But those commissions and bonuses made their eyes shine. Greed is good, they whispered to themselves, greed is good.
What was it somebody wrote here last year -- a staff appraiser at some mortgage company. And when she wouldn't give the mortgage salesman the inflated number they needed to make the deal, they -- 20-something males -- would come across the office at her with baseball bats, slamming them into the metal desks as they approached. In an office.
Your generation is no better or worse than any other. Get used to it. I'm just waiting for the student loan forgiveness campaign to start up.
"his statements about the social integrity of the US"
I find them obnoxious in terms of their source, i.e., someone not born-and-bred here, but his points are largely true. i also think he has an absurd amount of faith in treasuries as an investment vehicle when he correctly sees the intellectual and moral vacuum behind the institutions that stand behind their value. we have let a criminal financial class hoodwink us out of the lion's share of our national prosperity. that truly is obvious to anyone but a dope.
“If we keep people in underwater homes and cars, and "stimulate" consumers into sending more money to China, we only benefit lenders and Chinese manufacturers, not the American middle class.”
Dumb Luck | 01.31.09 - 5:42 pm | #
You must not have received the memo that it is not the American way to be responsible, save, and do the right thing and live within your means.
Oh no, Americans are entitled to have it all now and pay later.
I want to know what the hell theyÂ’re going to do when it comes time to retire?
He makes a lot of sense from a pro forma / spreadsheet perspective.
But we willfully allowed TV and ill-trained Realtors to turn transmogrify homeownership into an emotion-laden things with all decisions driven by emotions (lifestyle! status symbols! housing as a fashion accessory! condos for meeting guys/gals! homeownership as a 'value' as in baseball/apple pie and chevrolet,etc).
To do a 180 turn and evaluate ownership or even foreclosure purely financially is now beyond the mental ability of most journalists, politicians, and consumers, who have been trained to use only emotions.
Which is what I said, anyway...actually, only an idiot would feel it necessary to point out the flamingly obvious failure all around us. Should we give cookies to morons who point out the sun? Perhaps so.
truly is obvious to anyone but a dope.
Don't Cry for Me Tehachapi | 01.31.09 - 7:07 pm | #
Jas is beloved here, I realize; however, his statements about the social integrity of the US and his antisemitism, etc. are laughable. jeff | 01.31.09 - 7:01 pm | #
I don't think I have ever seen Jas make any antisemitic remarks. Hopefully you don't equate criticism of State of Israel policies with antisemitism.
"Your generation is no better or worse than any other."
my generation is much, much smaller than the boomers are in numbers. and, as you reference, we're just a pale echo of the fraudulent culture best perfected and espoused by them. in terms of 'greed is good' - the savvy and talented michael douglas, of course, has the kind of class and artistry that few boomers have, and guess what, he isn't. poor oliver stone, talented but lost in drugs and self-obsession, is, of course. it will be hard to 'get over it' when i'll obviously be cleaning up the boomer mess in many ways with every dollar i declare until my final days, hopefully many decades from now. i'm just trying to raise some consciousness to keep that from also happening to the next few generations.
Home Expo next to us is closing. We went buy and they were packed. Hummer parked in front loading up. Everything was 10 to 30 percent off. My wife said it had been marked up 10 to 30 percent pre sale. Yet they were selling like it was 80 percent off.
I don't think I have ever seen Jas make any antisemitic remarks. Hopefully you don't equate criticism of State of Israel policies with antisemitism.
RE | 01.31.09 - 7:10 pm | #
Nope, not at all. Jas has blamed American Jewry for the current status of affairs in the past few weeks. I don't know how to retrieve the comments, though, so you'll have to take my word, I guess.
Dude, you don't get to be a Roubini by calling disaster NOW! I should not have to remind anyone that the economy is utterly screwed at this point, should I?
somewhere, couched in polyanna apologia, i suppose
Don't Cry for Me Tehachapi | 01.31.09 - 7:12 pm | #
Why not let the the mortgage holder rent the same house? Helps the family and helps the bank with positive cash flow. A whole industry of house mangers will develop to oversee these homes.
so he was significantly less stupid than his contemporaries. way to go out on a limb with predicting that a global economy based on real estate at twice rental value was fragile...
he's still just another CEA stooge who made tim geithner's coffee for a living. ugly, too.
sue, volker, Yeah.. I think I'll try to wait until we start seeing prices stabilize. I am hoping that happens sooner rather than later because I do want to buy a place. The more meddling there is with the market by the feds the longer that will take.
everyone including the boomers knows they suck. boomer baiting will get you nowhere because their culture is a culture of denial born of 40+ years of saturation marketing. these folks are media victims whose reasoning ability in general has been subsumed under a constant barrage of trivial entertainments and enticements.
they are getting theirs anyway, and history will hate them for the geological scale of their consumption. they should repent so we can forgive them. they are going to need the help of younger generations for survival since on average they have less that two years worth of retirement funds.
i am much more interested these days in the 20 something generation. someone called them the "look at me generation". this generation knows nothing but the internets. they seem completely insular and blocked by their toys. the disconnect between cause and effect is even more striking with these kids. i have a hard time seeing them giving a shit about their elders.
I have been reading this site for over a year, maybe more. I have luked, but never commented. Now, I feel the need to join in. I am a retired legal services lawyer and retired college professor.I now work (yes, I'm still retired) as a mortgage foreclosure prevention specialist at a nonprofit in South Florida.
Those who say that we must allow foreclosures to happen don't see the horrible impact it has on families, heads of households, and neighborhoods.
I see hundreds of people each month who are facing foreclosure.Their stories are different, but too many were given loans that should have never been approved.
Yes, I believe in moral hazard and markets. I've made a significant amount of money in the market over the years. But, I have seen loans offered to be that could have never understood the terms of the loans. Sometimes I have a hard time understanding them and I am an attorney with years of experience in financial transactions.
What is my point? Don'tavocate foreclosure as a policy. The negative impact on comunities, families and the rest of us is too great.
CA will have to recover first. It is one of the engines that power this plane.
Oh ack. Do we need to hear more Californi-centric blather again? there is no reason that California must lead us out of this problem nor is there any reason why it must (or should) recover first.
It is one of the biggest problems that we have. It is equally likely that the rest of the country will have to recover and rescue California, just as what happened in the California 1987-93 downturn.
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Jas is an asshole. Does that work for you? nova | Homepage | 01.31.09 - 7:17 pm | #
I am not a Jas fan but give him his due. He was one of the early public observers of the current problems. It is no accident that he made the New Yorker:
A corollary, peak debt, was coined in 2006 by a former Cisco employee named Jaswant Jain, who calls himself the Prophet of Doom and Gloom, and who first observed the deleterious effects of unrestrained borrowing as an eight-year-old in a village near the city of Jodhpur, where debt-ridden Brahmins appeared worse off than solvent untouchables.
He also has a public record of his opinions. And let's not forget he has been right with quite a few of them.
"Do we need to hear more Californi-centric blather again?"
yup. we've been leading the country in every way for the past hundred years. it all starts here, whether you like it or not. our recent past is your recent future. we also have the only tolerable weather in the country, BTW.
--
The use of the label "anti-Semite," or "anti-Semitic," by some is laughable. To me, someone must wish and want harm to the innocent Jews, or Jews in general, to be called an anti-Semite. Otherwise, the term is used to suppress free speech and valid criticism.
All groups have some tendencies that are fair subject of criticism. Criticism is very healthy! As a matter of fact, some 80-100 years ago, some very public criticism of Jews in New York City was very healthy and helpful and positive for the Jews (I have read more Jewish history, in America and outside, than vast majority of Jews; it was part of my general reading of history to understand the American system and the economy). Suppressing valid criticism is the worst thing that anyone can do for himself, or the group that he belongs to.
Jas
PS: My mother told me, when I was below 10, that her “stomach burns” every time that she criticizes me but she does because only people who love and care take the time to criticize. I became a born-and-bred critic!
Gawd. I go to Bonsall, California for overnight and instead enter a time warp. Three or more years ago when these exact same issues were discussed here theoretically the responses were exactly the same except those of us who predicted exactly what has come to pass were excoriated for being extreme fringe unrealists. On one level I'm glad CR's friend is validating everything I said/predicted back then but on another I'm sorry it has taken so long.
As briefly as possible: Foreclosures are not a problem. Foreclosures are a time tested solution to the problem of unservicable housing debt.
What made the Jesse Cafe post is what I see him alluding to between the lines...
nova | Homepage | 01.31.09 - 7:26 pm | #
Much respect to Jesse's site. Read the article and it pointed towards the fact we all are looking at the same problem but taking a different approach to stabilizing the economy.
Everyone's working at cross purposes and making the problems worse?
yup. we've been leading the country in every way for the past hundred years. it all starts here, whether you like it or not. our recent past is your recent future.
I say this as a born and bred Californian. It's time for California to get over itself. usually it's not native Californians who state this sort of tripe anyway, it's people from the armpit of America who transplanted there a few years ago who blather such banality so loudly.
California hasn't "led" us anywhere for some time. It is part of our country, and there are trends and countertrends within that country.
California to the US is like Legs to the Body. Legs are good. they get you from A to B. Life would be more difficult without them. But they're not essential. You could lose them and still go on, with difficulty.
You wanna talk about leading? Perhaps California is led by Detroit? After all, a lot of what California has seen has been present in Detroit for many years prior.
You know, if Detroit catches a cold, California gets pneumonia.
We are our brothers keeper. I agree wholeheartedly. A large percentage of the population who feel they have nothing left to lose can cause us all to lose everything.
A whole bunch of people borrowed a whole bunch of money to buy a whole bunch of housing which was a whole bunch overpriced.
Now either the borrowers are going to lower their standard of living a whole bunch, or the lenders are going to lower their standard of living a whole bunch.
And the taxpayer shouldn't raise either one of thier standards of living a penny. No payin' for mortgage losses and no subsidising buyers.
And if that means China has to eat some losses on some MBS and Treasurys, then so be it.
Load up the nukes. They're gettin' old and need to be used up anyway.
Our resources are not finite. New technology will find new resources. "Use of resources" is not exponential. "Exponential" growth or whatever is temporary. Just ask Bernie Madoff's clients.
I've finally come to the conclusion that there really is no moral component to the mortgage instrument. If the borrower fails (or refuses) to pay, then there is appropriate consequence via foreclosure and impact upon credit history. I believe that the WSJ writer is entirely correct.
As to "quiet title"? I do believe that there is a moral component there and I don't believe that I agree with it. The idea is that the lender "deserves it" and that the squatter can take advantage of the logistical mess to potentially profit. No rent and just tax payments and if they're fortunate, then the house is there's for a pittance.
Sorry, but my sense is that if there's overtly taking advantage of another entity's situation, then there is a moral break.
I spent years as a claims adjuster/manager and negotiated tons -literally thousands of settlements - both large and small and the idea is to find a "win/win". I and others knew some adjusters who took pride in screwing others because they could, and we didn't think highly of them as people.
I blame everyone over 16 yo for this mess. anon | 01.31.09 - 6:49 pm | #
That seems somewhat unfair. I would find it hard to believe that anyone under 28 had much to do with the creation or continuation of this mess. You would fault those who have little control or power for the mishaps of those who do?
20 somethings remind me of the see no, speak no, hear no evil monkeys except they have their ears plugged with ipods, their mouths plugged with cell phones and their eyes blocked by screens.
where are they?
how will they cope with what is coming?
who will they blame for the false hope of the american dream?
Bob Doobs: Remove the fear of pricing-out, and factor in the oversupply of houses in many areas. And you may convert a great many people to the idea of lifetime renting.
Bob, when I moved to CA in 1992 (Fresno) -- the echoes of the housing bust were still reverberating off the walls of the Sierras the the Diablos.
Whenever a co-worker would open the idea of buying a house... as in "What should I do with this money I've accumulated?" it would be met with a chorus of naysayers. Perilous warnings from people stuck with houses in other parts of CA, and underwater mortgages. Those that did purchase, had to overcome the negativity of their associates.
Nanotechnology and nanoengineering. 20 years ago when I first read about these fields the future seemed limitless and exciting. The scifi stories written about what could be done by microscopic machines manipulating molecules from thin air or garbage were amazing. Still waiting for this to happen.
How do you make people remember? The last time the Conservatives were in power, we had Prohibition, the 20's that Roared into Depression, and WWII.
Now we have Con 2.0 and another abyss to stare into, so it seems humanity simply cannot remember.
I don't care what we call it, but somehow we have to be able to remember, as a society, that those at the top have leverage and grow corrupt, that greed is NOT good, that a commonwealth is stronger than fighting islands of homogeneous enclaves.
I don't necessarily take the darkest view, because we still have a system of laws that CAN be enforced. My fear, which I express here, is that the same dishonest element of humanity that brought us to this place will continue to bawl and spin and deny until we all crash in a heap of squabbling misery.
Conservative qualities are wonderful in an adult's personal life, but they DO NOT translate into politics. Conservatism as a serious political ideology is a seductive lie. It actually died with fascism, but was resurrected by the modern "Conservative" movement as a sheepskin to steal with.
If politicos and the corporate media have made the word liberal too toxic to use, then we'd better find another one pretty fast. America was born in liberty and dissent and it needs to find that heritage again.
I mostly agree with allowing more foreclosures to happen, from the financial standpoint of the individual families. HOWEVER, this is going to lead to a more rapid increase in blighted suburban neighborhoods, IMO. More perfectly good houses are going to sit unoccupied, with no maintenance or landscaping, and further drag down the value of everything around them. ... So while I don't give a rat's butt what happens to the banks as foreclosures skyrocket, I think it will simply accelerate the process of destroying perfectable acceptable neighborhoods. Maybe that's a necessary-evil middle step as we reinvent cities and suburbia? I don't know.
We are all in the same boat and each generation has a different perspective and set of tools. The misallocation and control of capital by the boomer generation is the true culprit but self interest was the guiding force.
The need to see humanity as a single entity needing care and compassion from one and all is the necessary evolution. Hasn't happened yet and the human dilemma rolls on.
Any generation can take a stand and gather power to itself to force change but it will require cooperation of all age groups. But if no age group takes on this responsibility and lets the cards fall where they may then we are all in for a wild ride.
Sorry you feel that way. I still value your opinion the same as before
@Mugabe:
I'm being too harsh today. My patience is too thin and I'm taking it out on others (e.g. you). My apologies.
there are some posters who push my buttons, and I transferred those feelings to you based on one single post that you wrote that in the end was unrelated to my ire.
I don't want CR to devolve like Mish's site did (IMO) and thus we must be vigilant with our posts. The commentary is generally more important to me than the post headings (sorry CR).
but in the end I'm irritated with my day, and shouldn't have posted in this mood.
My apologies to you specifically, and to others. (i.e. the Californians... although I still maintain you're not THAT special).
i'd better sign of now for the night before I insult anybody else.
The need to see humanity as a single entity needing care and compassion from one and all is the necessary evolution. anon | 01.31.09 - 7:56 pm | #
I still do not see why the younger generatons should be expected to fund the avirace of the one in power. Any solution to the economic problems we now face should put the bulk of the hardship on the boomers.
thanks to you and anon for those kind and highly evolved comments.
i too find it hard to tone my comments down.
i think most of us "are mad as hell and are not going to take it anymore"
this is an inflection point in history.
try hard not to get paralyzed by fear and indignation. now is the time to make moves to protect you and yours while the rest of the world is staring into the headlights.
Jas:
if that were the question, then yes. But California isn't the heart, and NYC isn't the brain.
A better analogy would be like an invertebrate with multiple areas of "control". you can cut the Starfish in two and it just regrows into 2 starfish (although I'm sure it's quite painful for the starfish)
When 911 happened NYC was paralyzed, but the country was not. We pulled them through, not the other way around. Likewise the US pulled CA out of its recession in the 1990s. Not the other way around. yes, 911 caused NYC to pull the US down, but the US overcame NYc to pull it up. Yes, the downturn in the 1990s devastated CA and they pulled the US down somewhat, but we pulled them back up.
I don't disagree that NY and CA are important. I disagree that they're somehow "more" important than other areas. Just as we as a country survived the devastation that is the rustbelt, we can and will survive the devastation that is CA. And it will likely be the country that pulls CA up, not the other way around.
I walked away October '07 after trying for months to sell my home on the fringes of Phx. I was already slightly underwater and knew, via this blog mainly, that things were not going to improve for years. I could afford the mortgage but hataed the house by then. The bank sold the house around August '08 for less than I paid for it. No, I don't regret leaving. I bought a cheaper place closer to work before I bailed and even tho I'm surely underwater in it by now, I don't care as I am content and plan to stay. The only thing that bothers me is that when I get my bank stmt each month from Chase (my checking and mtg is with them) they still show the entire loan amount as outstanding, even tho they sold my house already. I shouldn't owe them the entire amount...just the 80k difference.
"If a loan modification leaves the homeowner hopelessly underwater, what is the point?"
The point, of course, is to bleed as much money a possible out of the individual. This is the same as the goals of TARP, of the "Main Street pays Wall Street" ideology...
That seems somewhat unfair. I would find it hard to believe that anyone under 28 had much to do with the creation or continuation of this mess. You would fault those who have little control or power for the mishaps of those who do?
Blackhalo | 01.31.09 - 7:41 pm | #
At least from my experience, under-30s made up a huger percentage of loan "officers". While their elders and superiors bear the greater responsibility, the young ones were complicit as well.
Because they are our parents, teachers, uncles and aunts...they are us.
Target the guilty in charge but not a way of life proven unsustainable by time. What good will come of taking everyone over 60 and stripping their wealth. Where is the humanity?
I hope the Feds can fix this but I don't believe they can. The only real solution is de facto destruction of promises held by many, mostly rich, people and in entitlements.
But Congress doesn't have the integrity to make that decision.
For the past fifteen years, "globalization" has acted more like the Federal gov't than a free market.
A free market should, in theory, produce a closer mapping of "benefit" to "cost".
The Feds and globalization are engines for DISASSOCIATING costs from benefits.
Ergo, bad things happen at some point.
I'd have my rifle clean and new ammo in place. I expect an unhappy ending, although having a good idea of what that looks like, I hope to avoid it.
" Any solution to the economic problems we now face should put the bulk of the hardship on the boomers."
Come on, that's nuts. Technically, I'm a boomer, born in '59. I'm not in debt, don't own a house, haven't sold anyone a house, haven't created a bad financial product, haven't screwed up the life of anyone younger than me.
Painting "boomers" with a broad brush, just like saying all gen x-ers are slackers, all gen y-ers are self centered introverts who can't handle losing 'cuz everyone gets a trophy, is divisive, counterproductive, and wrong.
We're all in this together boys and girls, let's see if we can't work to fix it. Calling each other names ain't gonna help.
computers are compartmentalization machines and outcome limiting devices.
otishertz | 01.31.09 - 7:37 pm | #
mass media feeds the same propagandized reality to all. computers represent at the least the ability to filter and select amongst a large variety of alternative types of propaganda. it also increases the feasibility of high-quality "niche" creative media productions, since the need for mass appeal is diminished in favor of communities of interest that cross national borders.
but these are only possibilities. still there exists great opportunity for propaganda, but also far more opportunity to find quality beyond mainstream marketing. many youth also seem surprisingly wise to more obvious marketing ploys that still dupe their elders. my own take on the matter is that we'll see far more tribalism around communities of interest and an inclination toward flexible focused businesses and against bureaucracy. we will have our own alpha-males and trophy wives trained for their roles in the beast by mass education and mainstream media, rest assured, but also a lot of alternatives that didn't exist for many in previous generations, especially at the lower end of the socioeconomic spectrum. between that and the awareness of the present eras of crisis and widespread governmental corruption and malfeasance, there is at least a chance a larger segment of the mass consciousness gets a bit wiser.
computers are compartmentalization machines and outcome limiting devices.
otishertz | 01.31.09 - 7:37 pm | #
mass media feeds the same propagandized reality to all. computers and the internet represent at the least the ability to filter and select amongst a large variety of alternative types of propaganda. it also increases the feasibility of high-quality "niche" creative media productions, since the need for mass appeal is diminished in favor of communities of interest that cross national borders.
but these are only possibilities. still there exists great opportunity for propaganda, but also far more opportunity to find quality beyond mainstream marketing. many youth also seem surprisingly wise to more obvious marketing ploys that still dupe their elders. my own take on the matter is that we'll see far more tribalism around communities of interest and an inclination toward flexible focused businesses and against bureaucracy. we will have our own alpha-males and trophy wives trained for their roles in the beast by mass education and mainstream media, rest assured, but also a lot of alternatives that didn't exist for many in previous generations, especially at the lower end of the socioeconomic spectrum. between that and the awareness of the present eras of crisis and widespread governmental corruption and malfeasance, there is at least a chance a larger segment of the mass consciousness gets a bit wiser.
@YLSP 6:42
"Then our Senate confirms this joker. I think the American people should be reminded of this daily, or at least whenever Geithner comments on anything. Its why we have journalists to report on the truth. Both the Senate and President illegtimized themselves by such action"
The point is for the LENDER (or owner of the MBS associated with the mortgage) to take the loss.
The point is for the lender to minimize his loss. In fact if Tanta were here I'm sure she would point out a phrase or two buried somewhere in the contractual relationships that explicitly prohibits mods unless it can be demonstrated that the lender/investor will take a worse loss without the mod.
You can't just give away money because a borrower is having a hard time.
I'm relieved that we deleveraged on our house in CA. AIG insured the purchase money second, and are trying to collect. We have a lawyer and we will fight it. The house is on the market for 270k, and we paid 360k in 2004. When I was trying to short sale it last year, I got offers in the range of 220-240k but banks wouldn't work. Wife was ill so I have to pick up and move across country grapes of wrath style.
Bob DobbsYou can blame boomers as a generation if it makes you feel better. Some inherent character flaw in a generation, you think? Or do you think that if all the souls in Gen Y were actually born 50 -60 years ago things would actually be different now? I try to stay polite here, but that's nonsense.
I'm 45, in theory a boomer, but I've never identified as such but growing up those kids were older and somehow different than people my age and younger. Part of it I think is that the older baby boom generations life expectations were shaped by 1950's and early 1960's with it's futures so bright I have to wear shades (except for the commies) aura. Compare that to myself, 1970/80's oil shocks weak labor market, birth of the rust belt, etc. I tend to think that is how life is, the boomers I think ran into that and felt like they'd been robbed. But that's only a general feeling which doesn't apply across the board.
I'm 1935 and the wife is 1946. At least I am not responsible for the great depression, WW2, Korea but I guess I get some blame for Viet Nam and what followed. I did serve in Viet Nam, very short time and civilian.
I am not as tight with money as the boomer wife even though I grew up poor.
I think the broad brush blame of generations for things that most of us had no control over is not useful.
I'm late on this thread......just spent the day at farmer school, thanks to the county extension. I was worried the world had ended without me knowing it, but I see we're still kicking
Loan mods are not about the borrower but about maximizing the cash flow to the institutions during a time where they can't afford the losses. As they recapitalize they will be able to make either better loans mods or foreclose depending on which brings them the higher net present value.
Take matters into your own hands. Give yourself a personal debt JUBILEE. Your gain (shedding un-payable debt) is their loss.
Walkaways are the real worry for the fed and rent seekers.
Look at it this way - business men like Trump walk away from debt all the time. \t Angry Saver | \t \t \t \t01.31.09 - 5:33 pm | # Angry Saver | 01.31.09 - 5:33 pm | #
I don't know if you meant this sarcastically or not, but I agree, once I got over my outrage at being screwed over for being a prudent house buyer.
Two themes I hear alot are how we need some kind of mass expression of "outrage", and how ignorant and gullible the masses are. If these masses, en masse, start walking away from their bad mortgages, it starts the rebalancing like Su says. And it sticks one to the people responsible. Unless I'm missing something....
I've never been forclosed on, but I had to file BK in 2001 (never marry a sociopath) and now my credit score is nearly perfect. I got my mortgage in 2005 (with a partner who has perfect credit), and a refi last year, with absolutely no effort & incredibly good terms. So it can be done, with a bit of work, and decent financial habits. Lots of peopel get in trouble because of a job loss or medical expense. Not because they are financially ignorant. If you lose your house because you're in too deep, that might be different.
I don't think I have ever seen Jas make any antisemitic remarks. Hopefully you don't equate criticism of State of Israel policies with antisemitism. \t RE | \t \t \t \t01.31.09 - 7:10
I've called him on it several times. Nothing to do State of Israel policies. He has intimated that Bush, Paulson et al are stooges of the real crooks, you know who. I'm a New York City Jew and no one in my family has ever held a Wall Street job. Doctors, dentists, lawyers, programmers, and a former squash pro turned speculator.
Don't Cry for Me Tehachapi writes:
"It is not fair nor accurate."
You are on target, Me Tehachapi. I am a boomer. I knew your generation didn't have the balls to stop me and my cohorts. Your entire generation is a bunch of weak kneed appeasears. When I was in UNC they drafted my ass and said go kill the yellow man. And by God I killed everyone I saw. Now you think I am your devil. You are such a patsy, Tehachapi, if you don't have the balls to squeeze the trigger and put a round through my head then shut the hell up.
joanna, this generation of americans are nothing but deadbeats. When will we hear the cries of the evil government tricked me into these student loans and I should be able to walk away or I am underwater on my taxes and the greedy government wants my money. No one in their right mind should ever loan money to americans. Try this walk away crap in any other country of the world.
The "struggling homeowner" myth needs to be debunked once and for all. These people were just as guilty as any of the loan brokers...they bought with the intent of unloading the overpriced POS on some other greater fool, often lied about their income/assets to get the coveted house, and were stupid enough just a few years ago to pay tens of thousands above asking price to buy a pile of wood rotting in the rain. These people deserve to be shackled and taken to debtor's prisons.
These people deserve to be shackled and taken to debtor's prisons.
Mark | 02.01.09 - 12:49 am | #
And work in the salt mines alongside the wife and kids. Fed one meal a day and allowed to die when they weaken.
A weekly parade through town would be good to remind the others what happens if you don't pay your bills. The economic crisis will be solved overnight.
speculating with land or houses must be forbidden or significantly limited. the land belongs to all of us and the future generations. What happened now is that greedy stupid people (and the professional liars) damaged the life of the current and the next generation just because they were also allowed to speculate with the heart of the economy:the people. the success of the economy was made by the people and not by the crooky CEO's of the (ex-)top ranking banks!!
I believe Dr. Elizabeth Warren pretty well documented the average house as going from a 5 room home in the seventies to slightly bigger than a 6 room home in 2005. So to catagorize these homes as McMansions when most Americans live in much smaller homes than what is being portrayed is a tad disingenuous. However, a 6 room home in NYC, LA, and Chicago is a expensive as compared to Peoria, Grand Rapids, or Souix City.
It is my understanding that it was not mortgages-to-buy-homes that were the prime issue in default, it was the "Alt-A" loans that are creating the issue over the last year and today. Where a person who nornally could get a prime loan could not get a prime loan they; were offered a subprime loan at a slightly higher rate, to increase substantially in 1-2 years, and could be refinanced at a lower rate later. Again, I believe Ramsey misses the mark here.
Rather than chase people out of their homes, why not adjust the interest rate to something doable which is what Fannie and Freddie are doing with the mortgages they control. The only issue you have is the original CDO investors suing in court over the change in rate of return. Bankruptcy or lower rate? Banruptcy of lower rate? I think I will take the lower rate.
The abandonment of homes in neighborhoods does little for the city or the neighborhood in which the house is. In the end, it will cost more to recoup the house abandoned.
The "struggling homeowner" myth needs to be debunked once and for all.
How about those stuggling to pay and sacrificing, etc. but still managing to make their fucking payments? We don't hear much about them.
If you interview people foreclosed a year ago, they are most likely subprime and didn't wind up with much of a change in lifestyle pre- versus post "homeownership" experience.
Now, if you interview people being foreclosed a year from now, I suspect that'll be an entirely different ballgame.
Sister and her deadbeat hubby bought a humungeous house with a IO loan 4 years ago. The mortgage eats up 65% of their after tax income. The mortgage has consumed all their savings and then some. They effectively put themselves into bankruptcy the day they signed the mortgage. They are still employed,have no health issues. They just bought way too much house on the assumption they could always refi or sell and get out with a profit.
I have been encouraging them to walk away from the house for a year now. Finally they are doing it. They have rented a much smaller house and are greatly relieved.
Ramsey is spot on with his plea not to make these people mortgage slaves. That is exactly what happened in Japan in the early 1990s.
on the Jesse's Cafe link from above-- so the takeaway is we need to be prepared for some sort of joint announcement from UK, USA, & Eurozone on simultaneous "bank holiday(s)"?
I dunno- maybe. Another possibility--while the Stimulus Plan is being debated this week, the UK or somebody else does do a bank holiday, to panic everybody and thus "stimulate" passage of the Stimulus Plan-- any Stimulus Plan.
Over 10 million american families took up excessive mortgage/helocs etc between 2000 and 2007. Most of these folks still have a job or some form of income. So I find it totally sickening that Congress and many active bloggers, out of either a totally academic inclination to find a problem for the banking crisis, or out of ignorance, are suggesting ways to forestall foreclosure. Ramsey Su makes a point that neither the banks, creditors or stockholders want - ie let the folks walk away and the process to run its course, that is the only market solution that would quickly reset the system and let the system have a chance to start again. And if Citi or BoA or Wells Fargo goes bankrupt, I bet my last dollar that some entrepreneurs would step upto the plate and start new banks and lend again, if only Congress listen less to lobbysists employed by Citi etc
Excellent advice. I call it deleveraging. The banks will get bailed out for it, so you might as well take advantage of the opportunity. I hope that you never refinanced tho. You give up rights when you do this.
With no job, one can't pay rent or mortgage. More semantics.
First?
Bad banks...mortgage slaves..has this blog gotten a bit saucy?
Nope...but close!
All we need now is some comments about bitter renters.
1 currency sooner [yogi], most foreclosures in this cycle haven't been related to job losses - although I'm sure that is picking up. The problem has been that people bought homes they couldn't afford - and were so far underwater there was no other choice.
best wishes.
Deflated market rents won't keep the banks solvent.
Well, so much for death before dishonor....
I'm totally oldschool. no CRbot (whatever that is) and no Ken's Companion.
that said: did you see this?
Kaptur urges, 'Don't leave' if home foreclosed - WTOL.com, Toledo's News Leader, News 11 |
TOLEDO (WTOL) - From the House floor, Kaptur told the American people to become squatters in their own homes. Later, she told CNN's Lou Dobbs that Americans should take a stand against banks who just received an enormous bailout by refusing to leave their foreclosed home.
the great irony of CDS contracts is that this phony protection sold by bankster stankster frauds is protecting the criminals who used these CDS and weapons of mass destruction.
lets call the banksters what they are financial terrorists and apply all the new anti-terror laws against them.
we are so scared what will happen if we unravel their fraud.
Force Majeure for CDS! Let's push the reset button on them before they push it on us.
The bad bank should be an offshore bank.
i'm thinking of a special place in cuba where there are no human rights, civil rights, or habeas corpus for this bad bank.
i think the bad bankers should be installed there to run this bad bank with one dial up connection and a MySpace account.
But how would that help the Oligarchy? Oh...it won't?
What's that about a bad bank again?
Unless the public presses for the burning of MBS by rich people who hold them. This process will simply get crazier and increasingly illogical and corrupt
We all know buying a house is a good thing. what's the use of interviewing a bunch of born losers(renters)?
hope i'm not disappeared for that last one. i know bankers are sacred and untouchable and i'm nobody.
Just got threw squatting for thirty years paying my mortgage off.
It appears the frontal lobe of a generation or two of America's finest never developed, Most tried to live above their means and the rest got jobs on Wallstreet.
Even idiot Schumer I hope doesn't want to keep people in grossly inappropriate houses. But at some point mass reshuffling (dislocation) is foolish. Intervention could help some people if executed wisely, as with rent-controlled public housing for returning WWII vets in the big cities.
Please forgive me for stating the obvious, but the object of the loan mod is not to help the homeowner. It's to keep the default from being written down in the bank's books.
It makes infinite more sense for someone underwater/upside-down to walk away. If they have any income, they might arrange to buy a comparable house for a lot less than any adjustment is going to give them. Even renting is less than they have to pay now.
Wow - the point of loan mods is not to leave the "homeowners" hopelessley underwater!!!!!
The point is for the LENDER (or owner of the MBS associated with the mortgage) to take the loss.
OMG!!!
Get a grip people.
PS - we need a new word to describe folks who have a mortgage costing more than the value of the property.
Oh wait. How about RENTER!
I've been a bankruptcy attorney for 25 years, and I'm telling 90% of my new clients to walk --- very slowly of course --- from their homes. Here's why:
Most of them are hopelessly underwater.
Real estate is falling even as rates fall, not a good sign.
Real estate always stays down for several years AFTER it stops falling.
As boomers start retiring with 20+ years remaining on the loans they refied within the past decade, they will be forced to sell because their income will dramatically drop from lack of pension income and collapsing IRA/401k balances
As long as renting v. owning is cash flow positive, I tell them to rent.
Finally a journalist that has some COMMON SENSE!
The TARP and stimulus plans protect the rent seekers and further enslave the majority under crushing debts. No way will our eCONomy grow while it is burdened by so much non-liquidating debt.
Take matters into your own hands. Give yourself a personal debt JUBILEE. Your gain (shedding un-payable debt) is their loss.
Walkaways are the real worry for the fed and rent seekers.
Look at it this way - business men like Trump walk away from debt all the time.
One of the reasons people in my neck of the woods went to great lengths to buy a house -- dodgy financing, high payments, whatever -- was the real fear that they would be priced out forever if they didn't buy now. That, and the fact that rents are high here and have gone up precipitously in the last ten years.
Remove the fear of pricing-out, and factor in the oversupply of houses in many areas. And you may convert a great many people to the idea of lifetime renting.
Goodbye capitalist ownership society, hello socialist renter's society?
The problem has been that people bought homes they couldn't afford - and were so far underwater there was no other choice.
Calculated Risk | Homepage | 01.31.09 - 5:18 pm | #
As a country we built houses we couldn't afford. We sacrificed our factories and our progeny's dollars. Everyone must pay. It does me no good to own ten houses if there are tent cities.
The biggest fallacy perpetrated by the media is that people actually want to save their home. Most people do not want to save the alligator eating them alive because it's like a noose around their neck strangling the financial life right out of them.
Well, yearning, the sheriff might have something to say about squatting in your (former) home.
Not a good idea. You squat in your across the street neighbor's house--wait until after the foreclosure until your houses are both boarded up.
In some cases the bank will notice; in some it won't.
Then switch houses, send out that adverse possession notice, and hope you don't get kicked out for 7 years.
Quiet title. And pay your taxes.
Voila'!
Adverse possession is nothing new; it's good old fashioned English common law.
Use it or lose it.
Agree with the premise of the article and most posters. Say you get a mortgage refinanced and by some miracle you even get some principal knocked off (thats why I said MIRACLE)
Highly unlikely the prinical reduction will be anywhere close to the actual market fall in value of the home. Helps the banks, the "home owner" pays more than the house is worth and still takes a loss 2, 5, or even 10 years from now (look at Japan, still haven't got back to where they were)
But that would be the logical thing to do.. and logical things are so real.
I have been advising this exact strategy for 2 years to anyone in a jam, insisting that prices will continue to decline and any mod will just be more excrutiatingly painful in the long run. Everyone that took the advice has thanked me.
I hope this catches on, finally. The bad bank will be a total write-off in a few years. And there are still shills in DC an wall st claiming it will be a money maker. Maybe, for the lenders that get relieved of their worthless assets.
I, by the way, paid off my house about a year ago. It was the long time goal of the hub and I.
And I hope we call the owners cramdown--ees, soon.
mattdog, you are absolutely right. What's been coming out of Washington is bank bailouts poorly disguised as homeowner bailouts. If we want government policy to reward the prudent and punish the reckless we should be encouraging savings and investment in productive enterprises, not more debt and investment in unproductive things like homes, cars and consumption. If we keep people in underwater homes and cars, and "stimulate" consumers into sending more money to China, we only benefit lenders and Chinese manufacturers, not the American middle class.
In addition, to help move this along and help any economic recovery, legislators should concentrate on efforts to prevent foreclosure from affecting credit scores. That should clear up most of the overhang so we can actually spend money on things that advance society rather than holding it back.
You ever watch a movie about when you die you look the same in heaven as you did when you died?
The path going forward favors debt forgiveness with very limited credit afterward. What you own now is what you will have for quite a few years going forward. You get to keep the house, the car, the electronics but take care of them, might be a while until you get a new one.
Just a thought.
Last week I was hopeful. This week seems cataclysmic and you all are seriously harshing my mellow. Government isn't helping to reassure me either. Bondguy and his bond lessons also illustrated the true power in our economy.
The bond market is the loan shark and the four horsemen are it's enforcers.
And pay your taxes.
Voila'!
Adverse possession is nothing new; it's good old fashioned English common law.
Use it or lose it.
\t lawyerliz | \t \t \t \t01.31.09 - 5:35 pm | #
I'm guessing many squatters can't afford the taxes, which will shoot up quickly when renters are again the majority.
I, by the way, paid off my house about a year ago. It was the long time goal of the hub and I.
lawyerliz | 01.31.09 - 5:40 pm | #
Congrats. I know you all are thinking about retirement one of these years. How good to have the mortgage out of the way.
Back 30-40 years ago it was a given that everyone would be mortgage-free in their 50s at latest, unless they were doing something wrong. No longer. I know a guy in his late '60s who won't finish paying off until his early 70s. At earliest. And he's owned the place for 20 years. Well, the cash-out refi didn't help. It rarely does.
Yes, the bankers are lining us up to address us:
"Honourable pilots of the Kamikaze Air Force...."
I've been trying to think of the answer to depressed or relieved, and realized that nobody I've defended in their house foreclosure has actually been kicked out yet. One will be soon, but hasn't yet.
Some have been there, ummm, 2 years.
Put in a little defense, and the foreclosure mills can't cope.
People who are losing investments (but haven't yet) are sad, but it's not like losing your house. we are territorial animals, as well as herding animals.
Foreclosures are not bad for homeowners. Why shoud it be?
Stick it to the SOB bankers. After all, they (includeing the FEDs) are the ones who promoted this maddnes.
This has been my feeling too. What's the big deal with losing a house you can't afford?
But the flip side is the 55-year-old in Cleveland who owned her house out-right and got talked into taking a mortgage and now faces foreclosure. That really sucks.
Thread music
YouTube - [MusicVideo] Run DMC ft. Aerosmith - Walk This Way
The tax payers don't like the idea of owning a bad bank full of toxic assets. They are now threatening to walk away from their underwater homes in mass if that happens.
I'm guessing many squatters can't afford the taxes, which will shoot up quickly when renters are again the majority.
1 currency sooner [yogi] | 01.31.09 - 5:45 pm | #
Even if everybody rents, somebody owns the rental property and is paying taxes on it. Now if you're talking about houses that renters have walked away from, that's different.
Implicit in the modification initiative is the idea that home prices will return to "normal" once we stop foreclosures. If you really believe that the new price levels are temporary, then keeping people in houses is the best course. If you believe that the new price levels are reality, then you have to explain how to handle all the insolvent banks.
Adam Smith said the no country had ever paid off its national debt.
I would add that corporations never pay off their debts either. They either refinance, add debt to pay previous debt or default.
With that in mind, why shouldn't individuals saddled with severely underwater mortgages just walkaway?
It's good for many of the homedebtors and ultimately it is good for our country.
In that
http://www.newsoftheworld.co.uk/news/150832/14-times-Olympic-gold-medal-winner-Michael-Phelps-caught-with-bong-cannabis-pipe.html
14-times Olympic gold medal winner Michael Phelps caught with cannabis pipe
THIS is the astonishing picture which could destroy the career of the greatest competitor in Olympic history. In our exclusive photo Michael Phelps, who won a record EIGHT gold medals for swimming at the Beijing games last summer, draws from a bong.
Good news is everyone living the rat race might be getting a break.
Bad news is the cheese we all were chasing tasted good but ran out quickly.
The taxes WILL shoot up when homestead is lost. But then they will come down, as they are reappraised, or forced to by protesting owners. In Florida.
Taxes in Fla are bad, but not that bad. What kills you is insurance. If you don't own the house, and have been only paying taxes, well, if a hurricane comes along, you haven't got much in it and can just leave.
So why does anybody buy the debt?
1 currency sooner [yogi] writes:
Even idiot Schumer ...
At one time I thought Schumer was OK. The financial crisis exposed a lot of them. In the beginning of the crisis I thought he was an idiot. Looks like he is actually closer to a crook
Charles E Schumer: Campaign Finance/Money - Summary - Senator 2008 | OpenSecrets
it was a given that everyone would be mortgage-free in their 50s
I like this phrase. I'm "mortgage-free at 50" instead of a homeless freeloader.
FFDIC | 01.31.09 - 5:59 pm | #
All part of the plan to legalize marijuana. Direct endorsement of a product by THE American hero.
Thousands of pot growers ramping up production to meet demand. MGA announces a job creation plan of 1 million.(Marijuana Growers Association)
When I worked in the New York City Civil Court in the 90's, there were 400,000 index numbers purchased per year. The most conservative law and order judge would never grant fewer than 3 stays of eviction ("orders to show cause") on the following sworn statement "I don't owe the money. I wasn't served notice (again). No one wants to be on the front page of the tabloid the rare time when the tenant, typically a single mother, really didn't owe the money, and the slumlord used "sewer service".
If a landlord got tenants out in less than 4 months after default, he probably shot them.
"So why does anybody buy the debt?"
Greater fool theory. Same theory that created the housing bubble. Is Uncle Sam the greatest fool?
Angry Saver,
I think headstrong Russia broke the rule in 2006.
I wonder if a coordinated mortgageholder revolt would disrupt the banks' cash flow projections? Hmmm. I hope Mr. Su is writing under a pen name and owns a Kevlar suit.
I think headstrong Russia broke the rule in 2006
How so?
Taking from those that work and invest responsibly to give to those that chose to speculate is wrong on many different levels.
Funny, how those willing to give handouts with our tax dollars are the same people that cheated the system.
Tim Geithner, Barney Frank, Tom Daschel
did you heard Keneth Rogoff blasting the plan ?
Even if everybody rents, somebody owns the rental property and is paying taxes on it. Now if you're talking about houses that renters have walked away from, that's different.
| \t01.31.09 - 5:56 pm | #
\t bobn | \t \t \tHomepage
That is so, but many renters live in public housing or soon-to-be-nationalized-bank owned. You can realize great windfalls from the time it takes a producer to pass along costs to a consumer, especially with rent-control or any long-term lease.
"If you believe that the new price levels are reality"
we're still 30% or more above "reality" in pricier coastal markets
So let me get this straight: I get to pay for damage caused by Bush and Obama's finance criminal buddies?
I'm a renter. As long as my landlord does not try to exploit rent / mortgage differentials with me, and she hasn't, I'm quite fine bout renting. Then again, I'm a furriner and have my own house / rent / expenditure back home. Seems to be fine so far. In a sagging market my tenants bought back in at initial offering because of the premium looking out over the Pacific Ocean on a great public trans route.
Erm, which is why I bought the place back in 2000.
C
did you heard Keneth Rogoff blasting the plan ?
Yes, I did.
Rogoff has also been advocating inflation. What a great idea - replace financial fraud with financial theft.
Where do we get these "experts?"
Act now! $7500 tax credit for buying a new house!
Didn't over subsidizing housing and debt get us into this mess?
Act now! $7500 tax credit for buying a new house!
adsfdasf | 01.31.09 - 6:18 pm | #
This one is fraud at all levels: it's actually a 5 year LOAN!
Isn't our government grand?
"Adam Smith said the no country had ever paid off its national debt. "
Oil income helps Russia pay off entire debt to Paris Club - Business - International Herald Tribune - The New York Times
"Act now! $7500 tax credit for buying a new house!"
Wait awhile and the price may have dropped more than the tax credit. Is it still a loan?
Roubini and Rogoff are calling for a nationalization do you think it's a solution ?
Not to overlook the tax deductibility of martgage interest. An annual $80 billion bailout of the rich. (I know that's too close to home here)
Am I the only one who is getting a "site not found" message when I type in calculatedriskblog.com?
what about adding lever to the package
making $700b into $5T ?
i'am having troubles with the hostname too
Time for a new world order: PM - National - smh.com.au
## This is how it's done. Some news from somewhere noone is looking, seldom reported on and always what happens. These guys are not thinking.
We have finite resources and exponential use of those resources.
The world is shutting down because it has to. The trick was to have everyone put all their eggs in the basket of the United States and then drop the basket. A few carefully prepared eggs will survive and continue.
The rest, well look out once the omelet is eaten.
"what about adding lever to the package
making $700b into $5T ?"
Some of our countrymen at GS have said as much: the gov't might buy the assets on margin.
Finally a journalist that has some COMMON SENSE!
Angry Saver | 01.31.09 - 5:33 pm | #
Ramsey is a retired REO broker. Good for him to get to write a WSJ opinion piece. He was one of the few who very early on wrote about the dangers of the housing bubble.
"Adverse possession is nothing new; it's good old fashioned English common law.
Use it or lose it.
lawyerliz"
It is my understanding that adverse possession does not wipe out any existing mortgages
reptillian writes:
making $700b into $5T ?"
"what about adding lever to the package
Some of our countrymen at GS have said as much: the gov't might buy the assets on margin.
Ha, ha, ha. GS knows who the greatest fool is.
From Volker's link:
"Neo-liberalism and the free-market fundamentalism it has produced has been revealed as little more than personal greed dressed up as an economic philosophy. And, ironically, it now falls to social democracy to prevent liberal capitalism from cannibalising itself."
unfortunately, I agree.
the gov't might buy the assets on margin. ? rotfl
those bastards never runs out of good ideas
(interesting that in Australia "free marketism" is considered a liberal ideal, whereas in the States it's a conservative or neo-con ideal.
Yup. Just walk away! Let the prices settle somewhere where I can afford a nice place. Some more or less reasonable prices are starting to pop up in northern NJ close to the city. I have a stable job and a down payment but I'll still wait 6-9 months to see what happens to house prices. I think they are going down by another 15-20% because I am guessing people in my position are doing the same as me.
I like this phrase. I'm "mortgage-free at 50" instead of a homeless freeloader.
Broward Horne | Homepage | 01.31.09 - 6:02 pm | #
I read in the Gulistan, or Flower Garden, of Sheik Sadi of Shiraz,(18) that "they asked a wise man, saying: Of the many celebrated trees which the Most High God has created lofty and umbrageous, they call none azad, or free, excepting the cypress, which bears no fruit; what mystery is there in this? He replied, Each has its appropriate produce, and appointed season, during the continuance of which it is fresh and blooming, and during their absence dry and withered; to neither of which states is the cypress exposed, being always flourishing; and of this nature are the azads, or religious independents. — Fix not thy heart on that which is transitory; for the Dijlah, or Tigris, will continue to flow through Bagdad after the race of caliphs (19) is extinct: if thy hand has plenty, be liberal as the date tree; but if it affords nothing to give away, be an azad, or free man, like the cypress."
(From Walden)
"The message was reinforced in Davos yesterday when the Trade Minister, Simon Crean, described the "buy American" provisions of the new Obama stimulus package as "very worrying". "On the face of it, it looks like it contravenes commitments made to the World Trade Organisation," he said."
Why would anyone be surprised the US is ignoring international law and trade agreements? Don't they understand our leaders are elected and have to throw bones to their constituents?
We have abrogated our own basic contract law and they think we will give anything but lipservice to what they want.
We have finite resources and exponential use of those resources.
anon | 01.31.09 - 6:26 pm | #
Don't forget multiple, if not exponential, re-use. We waste so much we could deflate 20% and only Ponzibankster would really feel it.
My mother (b. 1935) dries out paper towels, donates many thousands of dollars every year to charity.
i am already foreseeing a run to the hill from the bond market,
they won't restore confidence this plan is stinking miles away
It is my understanding that adverse possession does not wipe out any existing mortgages
\t Some Investor Guy | \t \t \t \t01.31.09 - 6:27 pm | #
## Abandonment does.
Ponyless in NJ(Unrated) writes:
Yup. Just walk away! Let the prices settle somewhere where I can afford a nice place. Some more or less reasonable prices are starting to pop up in northern NJ close to the city. I have a stable job and a down payment but I'll still wait 6-9 months to see what happens to house prices. I think they are going down by another 15-20% because I am guessing people in my position are doing the same as me.
\t Ponyless in NJ | \t \t \t \t01.31.09 - 6:32 pm | # ## I'd be eally reeeeaaaaallllllllllllly slow to pull the trigger. It's not unlike cooking meat. Time takes time. We're not even close yet.
Let the prices settle somewhere where I can afford a nice place.
No, let's take the opportunity to destroy the real estate investment play. Think it through. If the banks hold toxic MBS then your home is just as worthless as the MBS.
When everyone comes to terms with the fact that a mortgage is nothing but a rent payment, we will recover from this mess.
Our jobless recovery in 2011 will prove it out. Home "ownership" is an illusion. If you can't move to a new city and start the new job to replace the one you lost because you would take a huge loss on your mortgage, you'll soon realize that you are nothing but a renter.
And of course, all the baby boomers in their 50's and 60's are stuck until death in their current houses.
Maybe Yogi. My internal doomer is in charge of posting today and the hope for change guy has been shuttled to a dark corner for the afternoon.
CR's graphoganza was sobering.
We have abrogated our own basic contract law and they think we will give anything but lipservice to what they want.
anon | 01.31.09 - 6:34 pm | #
They hope that somebody remembers that Smoot-Hawley may very well have significantly contributed to the worsening of the Great Depression worldwide.
Yup. Just walk away! Let the prices settle somewhere where I can afford a nice place. Some more or less reasonable prices are starting to pop up in northern NJ close to the city. I have a stable job and a down payment but I'll still wait 6-9 months to see what happens to house prices. I think they are going down by another 15-20% because I am guessing people in my position are doing the same as me.
\t Ponyless in NJ | \t \t \t \t01.31.09 - 6:32 pm | #
Ponyless, I think your calculations are correct. I did a quick survey of my own house, which ran up 250% during the bubble. It has since dropped back about 40% from the top, but my best guess is there is another 20% to go, and I think it will happen in the time frame you mentioned. I bought near a previous bottom, and it has made all the difference to me. Of course, the whole "financial situation" is on the verge of blowing up, but that is not a situation you can master. You can only move forward, planning for a reasonable scenario, while recognizing that plans may go out the window as well.
"And of course, all the baby boomers in their 50's and 60's are stuck until death in their current houses."
"Fifties babies" may be a more accurate term. If you're currently older than 61 or younger than 48, you're not really in the same cultural group.
And, yes, they are totally screwed, and completely and utterly deserve it as a generation.
Why is everyone acting like our government has any legitimacy? As far as I'm concerned, last week was another nail in the coffin.
First our great new President who is all about "change" nominates a tax-cheater to run the Treasury department that has authority over the IRS. Then our Senate confirms this joker. I think the American people should be reminded of this daily, or at least whenever Geithner comments on anything. Its why we have journalists to report on the truth. Both the Senate and President illegtimized themselves by such action... yet I'm sure most think I'm crazy by thinking so.
It's the same way Bush should've been illigitmized with the whole Iraq fiasco... same thing with Colin Powell. Wait, Colin Powell has been in the news recently, why?! He's the one guy who could've blown the whistle on trumped up evidence to start a war.
I know which side I'll be working for if there is some type of revolution. Frauds aren't limited to bankers. Why do we even bother anymore?
RE | 01.31.09 - 6:40 pm | #
Run it by Ben B. and see what his expertise of the depression tells us. My guess his response will be;"F*ck if I know."
If housing prices in my area dropped a mere 30 percent from where they are not, it'd still be cheaper to rent in my area. I think "at least" is the correct modifier.
"in my area "
which part of CA are you in, Bob?
Change from a politician who seeks compromise ?
Obama is not a revolutionary, he is an appeaser.
He won't roll the dice he will hedge his bets.
reptillian writes:
"Some of our countrymen at GS have said as much: the gov't might buy the assets on margin."
My understanding of the leverage was this: the TARP money would be used to create a new entity to buy assets. The Fed can then loan money to that entity, as the Fed is apparently prohibited by law from taking a first-loss position (i.e., the Fed needs someone else to provide the equity).
It's a way of allowing the Fed to monetize risky assets. Neglecting some legal issues, it's the same thing as the Treasury buying the risky assets, and financing part of the purchase by selling bonds to the Fed (which is also referred to as "monetization of Treasurys").
a friend of mine told me that people
are selling stuff to pay the bills in CA is that true ?
14-times Olympic gold medal winner Michael Phelps caught with cannabis pipe
FFDIC | 01.31.09 - 5:59 pm
i swim much better after a bong hit.
cannabis has value for a lot of things.
--
I agree with Su.
Back to general comments--Two examples of why the lowered spending problems would persist...
Jas
And of course, all the baby boomers in their 50's and 60's are stuck until death in their current houses.
Paul | 01.31.09 - 6:39 pm | #
Except me and some friends of mine who own outright, and could sell and walk anytime that the market stabilized. But why do that when total expenses for owning the home (including taxes and amortized cost of periodic major repairs, including roof), come in at 600 a month.
You can blame boomers as a generation if it makes you feel better. Some inherent character flaw in a generation, you think? Or do you think that if all the souls in Gen Y were actually born 50 -60 years ago things would actually be different now? I try to stay polite here, but that's nonsense.
And, yes, they are totally screwed, and completely and utterly deserve it as a generation.
Don't Cry for Me Tehachapi | 01.31.09 - 6:42 pm | #
Please, as a thirty something guy, I beg you to let the "blame an entire generation" meme die. It is not fair nor accurate. I blame everyone over 16 yo for this mess. We as citizens have the right and duty to assemble for change and we didn't. Feel pity for the boomers. They will suffer far worse simply because of age and health related issues.
Personally blaming my parents for all the ills of the world went away with some real world experience and maturity.
The cypress gives shade and beauty.
The homeless freeloader might open the door for you, clean your windshield, might have fought in Viet Nam, or he might be the next Jimi Hendrix.
which part of CA are you in, Bob?
Don't Cry for Me Tehachapi | 01.31.09 - 6:44 pm | #
Santa Cruz County. Tourist and second-home destination, and a bedroom community for the Silicon Valley. But the local economy is actually pretty weak; pay is low compared to housing prices. Very high proporttion of renters here, and not just because of the UC students.
Absolutly!
Where was this sentiment pre-election? Would've helped in some of the debates regarding housing policy...
a friend of mine told me that people
are selling stuff to pay the bills in CA is that true ?
Ju | 01.31.09 - 6:48 pm | #
Yes, made a purchase off Craigslist from a woman who was facing three day's notice from her landlord. She'd been more or less privileged financially 5-10 years ago. Have a bookseller friend who regularly has people coming in selling "family treasures" as he calls them, really good books, just to get by another month.
It's not like this is all over the news, or really obvious on a daily basis. But it's happening.
"Some inherent character flaw in a generation, you think? "
more or less.
clinton, W, bernanke, paulson, dimon, ken lewis, john roberts, tom delay, jack abramoff, grover norquist, karl rove - all fit the census definition of a boomer, and they all share the same kind of narcissistic hubris.
walks like a duck, quacks like a duck, tens of trillions in debt and entitlements later...
And of course, all the baby boomers in their 50's and 60's are stuck until death in their current houses.
Paul | 01.31.09 - 6:39 pm | #
Only those who don't have the courage to make a change are stuck. And of course, there are those rare individuals who like to call some place home, and choose to stay in their home.
"Santa Cruz County. "
very familiar with it. that's where the bubble started, along with the noe valley 'hood in SF, in 1998. extremely pricey rental housing thanks to developerphobia and the school. the poppy fields and redwoods facing the ocean near the school may be the most beautiful place on earth.
Oh my- maybe letting the market work and clear on the inventory is the way to go to the bottom. Hopefully the market clears just in time for the new mortgage rules.
Contra Jas Jain and other dopes, those of us with good sense and clear eyes will see the opportunities for improvements both domestically and internationally in the coming years. That we are in global crisis is utterly obvious, and only the facile and insecure will continue to harp on that. The creative will, instead, look ahead to what areas are emerging and what sectors will be growing.
Jas is beloved here, I realize; however, his statements about the social integrity of the US and his antisemitism, etc. are laughable. It is depressing to see such a great site as this get bogged down by anti-social people like him and several others--even though, I admit, they have insight into smaller issues.
Full disclosure: Long Western Civilization and Justice.
"It is not fair nor accurate."
of course, any kind of generalizing is stupid around the margins. but without broader definitions there is no narrative, and the narrative of our present time is quite clear. that story is that the boomers wrecked the country. this is only important, insofar as we need to politically remove them as a group so they don't suck every last federal dime out of everyone younger in the future. I'm not pushing the meme from a mean-spirited place: it is a desperate cry for the country to come to its senses before the kinds of entitlements passed in the donut bill 6 years or so ago REALLY make us into argentina. they've already wrecked their own retirement, and probably those of the generation immediately younger, but it may not be too late to keep them from wrecking their great-grandkids' country.
I am long wind turbines, a solar etf, and 10% of my absurd capital gains (before taxes) are going to skin cancer research.
"Some inherent character flaw in a generation, you think? "
more or less.
clinton, W, bernanke, paulson, dimon, ken lewis, john roberts, tom delay, jack abramoff, grover norquist, karl rove - all fit the census definition of a boomer, and they all share the same kind of narcissistic hubris.
walks like a duck, quacks like a duck, tens of trillions in debt and entitlements later...
Don't Cry for Me Tehachapi | 01.31.09 - 6:57 pm | #
Don't worry, your generation is raising its own crop. I see them daily, flacking for their elders on Fox, MSNBC, and so on. Not to mention all the young studs pushing toxic mortgages on people who couldn't afford them, nor the happily-coopted younger generation at the investment banks. Your generation owns subprime and toxic MBS as much as any others -- your people were just the footsoldiers. But those commissions and bonuses made their eyes shine. Greed is good, they whispered to themselves, greed is good.
What was it somebody wrote here last year -- a staff appraiser at some mortgage company. And when she wouldn't give the mortgage salesman the inflated number they needed to make the deal, they -- 20-something males -- would come across the office at her with baseball bats, slamming them into the metal desks as they approached. In an office.
Your generation is no better or worse than any other. Get used to it. I'm just waiting for the student loan forgiveness campaign to start up.
"his statements about the social integrity of the US"
I find them obnoxious in terms of their source, i.e., someone not born-and-bred here, but his points are largely true. i also think he has an absurd amount of faith in treasuries as an investment vehicle when he correctly sees the intellectual and moral vacuum behind the institutions that stand behind their value. we have let a criminal financial class hoodwink us out of the lion's share of our national prosperity. that truly is obvious to anyone but a dope.
“If we keep people in underwater homes and cars, and "stimulate" consumers into sending more money to China, we only benefit lenders and Chinese manufacturers, not the American middle class.”
Dumb Luck | 01.31.09 - 5:42 pm | #
You must not have received the memo that it is not the American way to be responsible, save, and do the right thing and live within your means.
Oh no, Americans are entitled to have it all now and pay later.
I want to know what the hell theyÂ’re going to do when it comes time to retire?
I guess they canÂ’t. To bad so sad.
Sorry folks, shipping is skrood.
But we have some accompaniment:
YouTube - Nick Cave - The Ship Song
C
He makes a lot of sense from a pro forma / spreadsheet perspective.
But we willfully allowed TV and ill-trained Realtors to turn transmogrify homeownership into an emotion-laden things with all decisions driven by emotions (lifestyle! status symbols! housing as a fashion accessory! condos for meeting guys/gals! homeownership as a 'value' as in baseball/apple pie and chevrolet,etc).
To do a 180 turn and evaluate ownership or even foreclosure purely financially is now beyond the mental ability of most journalists, politicians, and consumers, who have been trained to use only emotions.
Which is what I said, anyway...actually, only an idiot would feel it necessary to point out the flamingly obvious failure all around us. Should we give cookies to morons who point out the sun? Perhaps so.
truly is obvious to anyone but a dope.
Don't Cry for Me Tehachapi | 01.31.09 - 7:07 pm | #
Every generation eventually takes up the reins of power and makes the same mistakes.
The problem isn't generational it is human nature and the type of person that seeks to have power and control over others.
Can an entire generation break free from the human dilemma?
Jas is beloved here, I realize; however, his statements about the social integrity of the US and his antisemitism, etc. are laughable.
jeff | 01.31.09 - 7:01 pm | #
I don't think I have ever seen Jas make any antisemitic remarks. Hopefully you don't equate criticism of State of Israel policies with antisemitism.
"Your generation is no better or worse than any other."
my generation is much, much smaller than the boomers are in numbers. and, as you reference, we're just a pale echo of the fraudulent culture best perfected and espoused by them. in terms of 'greed is good' - the savvy and talented michael douglas, of course, has the kind of class and artistry that few boomers have, and guess what, he isn't. poor oliver stone, talented but lost in drugs and self-obsession, is, of course. it will be hard to 'get over it' when i'll obviously be cleaning up the boomer mess in many ways with every dollar i declare until my final days, hopefully many decades from now. i'm just trying to raise some consciousness to keep that from also happening to the next few generations.
"Which is what I said, anyway"
somewhere, couched in polyanna apologia, i suppose
Jesses Cafe has a post(s) worth reading.
Home Expo next to us is closing. We went buy and they were packed. Hummer parked in front loading up. Everything was 10 to 30 percent off. My wife said it had been marked up 10 to 30 percent pre sale. Yet they were selling like it was 80 percent off.
I don't think I have ever seen Jas make any antisemitic remarks. Hopefully you don't equate criticism of State of Israel policies with antisemitism.
RE | 01.31.09 - 7:10 pm | #
Nope, not at all. Jas has blamed American Jewry for the current status of affairs in the past few weeks. I don't know how to retrieve the comments, though, so you'll have to take my word, I guess.
. I don't know how to retrieve the comments, though, so you'll have to take my word, I guess.
jeff | 01.31.09 - 7:13 pm | #
In that case I will take your word for it.
Yogis comment has a great deal of merit. No job = no anything. People will propably be squatting in homes until the power is turned off.
Dude, you don't get to be a Roubini by calling disaster NOW! I should not have to remind anyone that the economy is utterly screwed at this point, should I?
somewhere, couched in polyanna apologia, i suppose
Don't Cry for Me Tehachapi | 01.31.09 - 7:12 pm | #
"so you'll have to take my word, I guess"
you're probably referring to a single instance of a third party quote by niall ferguson of a third party quote.
that seems like par for the course. you knowing the work of ferguson, however, would be shocking.
Jas is an asshole. Does that work for you?
Look for California to recover about 12 months before the rest of the country.
Why not let the the mortgage holder rent the same house? Helps the family and helps the bank with positive cash flow. A whole industry of house mangers will develop to oversee these homes.
Oh no, Americans are entitled to have it all now and pay later.
I want to know what the hell theyÂ’re going to do when it comes time to retire?
I guess they canÂ’t. To bad so sad.
Topher | 01.31.09 - 7:08 pm | #
Wait a minute, silly me. ItÂ’s not American to pay later.
"Dude, you don't get to be a Roubini"
so he was significantly less stupid than his contemporaries. way to go out on a limb with predicting that a global economy based on real estate at twice rental value was fragile...
he's still just another CEA stooge who made tim geithner's coffee for a living. ugly, too.
plz don't turn this place into a battleground soonly there will be streefights for everybody
CA will have to recover first. It is one of the engines that power this plane.
"Look for California to recover about 12 months before the rest of the country."
I'll make a note of that when 2025 rolls around, sue
Jas is a caricature given form by the person behind it to make a point.
Whoever the person behind the Jas avatar is far different then what is portrayed. Probably a little sadder and definably lonely.
Never forget the freedom of expression allowed by being anonymous.
Yes I have read the homepage essays his name is linked too and my point still stands. More anonymity.
sue, volker, Yeah.. I think I'll try to wait until we start seeing prices stabilize. I am hoping that happens sooner rather than later because I do want to buy a place. The more meddling there is with the market by the feds the longer that will take.
Coming soon to most homeowners--2 and 3 generations under one roof--and that alone is enough to use the term "severe depression."
CR: I'm only an occasional commenter, though over a long period. The comments on this site have devolved into:
Sucks, and I'll miss the very good commentary of lawyerliz and a half-dozen others.
Intere3sting take.
Jesse's Café Américain: Notes from Underground
As the Irish would say.."Whale Oil Beef Hooked."
rt
everyone including the boomers knows they suck. boomer baiting will get you nowhere because their culture is a culture of denial born of 40+ years of saturation marketing. these folks are media victims whose reasoning ability in general has been subsumed under a constant barrage of trivial entertainments and enticements.
they are getting theirs anyway, and history will hate them for the geological scale of their consumption. they should repent so we can forgive them. they are going to need the help of younger generations for survival since on average they have less that two years worth of retirement funds.
i am much more interested these days in the 20 something generation. someone called them the "look at me generation". this generation knows nothing but the internets. they seem completely insular and blocked by their toys. the disconnect between cause and effect is even more striking with these kids. i have a hard time seeing them giving a shit about their elders.
jeff | 01.31.
Then comment. Otherwise it, this blog will die, when that percentage hits a certain point of continous posts.
The more meddling there is with the market by the feds the longer that will take.
\t Ponyless in NJ | \t \t \t \t01.31.09 - 7:21 pm | #
## These are patient bastards. Wait. You might just have a cash deal at the right time.
yes the last entry of jesse café is vewy vewy interesting
I have been reading this site for over a year, maybe more. I have luked, but never commented. Now, I feel the need to join in. I am a retired legal services lawyer and retired college professor.I now work (yes, I'm still retired) as a mortgage foreclosure prevention specialist at a nonprofit in South Florida.
Those who say that we must allow foreclosures to happen don't see the horrible impact it has on families, heads of households, and neighborhoods.
I see hundreds of people each month who are facing foreclosure.Their stories are different, but too many were given loans that should have never been approved.
Yes, I believe in moral hazard and markets. I've made a significant amount of money in the market over the years. But, I have seen loans offered to be that could have never understood the terms of the loans. Sometimes I have a hard time understanding them and I am an attorney with years of experience in financial transactions.
What is my point? Don'tavocate foreclosure as a policy. The negative impact on comunities, families and the rest of us is too great.
jeff | 01.31.09 - 7:22 pm | #
Arrow down, just like the US!
"i have a hard time seeing them giving a shit about their elders."
i think they would take about five seconds if they had to choose between:
1 - letting boomer granny starve
2 - getting to play a sneak preview of the next WoW expansion pack
What made the Jesse Cafe post is what I see him alluding to between the lines...
CA will have to recover first. It is one of the engines that power this plane.
Oh ack. Do we need to hear more Californi-centric blather again? there is no reason that California must lead us out of this problem nor is there any reason why it must (or should) recover first.
It is one of the biggest problems that we have. It is equally likely that the rest of the country will have to recover and rescue California, just as what happened in the California 1987-93 downturn.
Hillarious...Bye Bye California dream.....The reality of the matter is CA is now a $43B in the hole basket case.
California's U6 unemployment is likely 15% ( the second or third-highest in the nation ) and it is expected to get worse.
Look forward to more IOU's, higher taxes, cuts in education, cuts in services and a lower standard of living there.
i have a hard time seeing them giving a shit about their elders.
otishertz | 01.31.09 - 7:24 pm | #
Or each other. Start the "carousel" while we all chant.
New Thread: NYC: Rents "Falling Fast" ( 0 comments ...You could be FIRST! )
I also post comments to an irc channel as they appear on haloscan. Click for a web irc interface: Mibbit IRC client widget (Or join the irc server directly: irc.realize.org:9996 #calculatedrisk)
What others have said about CRBot:
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Thank god CRbot spared me from that dead thread.
Hoopajoops writes: Posting a test message from the IRC Channel... THIS THING ROCKS
CRBot: Killing dead threads deader since last week.
Jas is an asshole. Does that work for you?
nova | Homepage | 01.31.09 - 7:17 pm | #
I am not a Jas fan but give him his due. He was one of the early public observers of the current problems. It is no accident that he made the New Yorker:
A corollary, peak debt, was coined in 2006 by a former Cisco employee named Jaswant Jain, who calls himself the Prophet of Doom and Gloom, and who first observed the deleterious effects of unrestrained borrowing as an eight-year-old in a village near the city of Jodhpur, where debt-ridden Brahmins appeared worse off than solvent untouchables.
He also has a public record of his opinions. And let's not forget he has been right with quite a few of them.
"Do we need to hear more Californi-centric blather again?"
yup. we've been leading the country in every way for the past hundred years. it all starts here, whether you like it or not. our recent past is your recent future. we also have the only tolerable weather in the country, BTW.
--
The use of the label "anti-Semite," or "anti-Semitic," by some is laughable. To me, someone must wish and want harm to the innocent Jews, or Jews in general, to be called an anti-Semite. Otherwise, the term is used to suppress free speech and valid criticism.
All groups have some tendencies that are fair subject of criticism. Criticism is very healthy! As a matter of fact, some 80-100 years ago, some very public criticism of Jews in New York City was very healthy and helpful and positive for the Jews (I have read more Jewish history, in America and outside, than vast majority of Jews; it was part of my general reading of history to understand the American system and the economy). Suppressing valid criticism is the worst thing that anyone can do for himself, or the group that he belongs to.
Jas
PS: My mother told me, when I was below 10, that her “stomach burns” every time that she criticizes me but she does because only people who love and care take the time to criticize. I became a born-and-bred critic!
Gawd. I go to Bonsall, California for overnight and instead enter a time warp. Three or more years ago when these exact same issues were discussed here theoretically the responses were exactly the same except those of us who predicted exactly what has come to pass were excoriated for being extreme fringe unrealists. On one level I'm glad CR's friend is validating everything I said/predicted back then but on another I'm sorry it has taken so long.
As briefly as possible: Foreclosures are not a problem. Foreclosures are a time tested solution to the problem of unservicable housing debt.
The ONLY reason why California improving will pull us out of this problem is because CALIFORNIA is one of the biggest problems
Kind of like my family. My family dynamics will improve SIGNIFICANTLY once my druggie brother gets a life and stops jerking us all around (or dies).
Not because we "need" him to pull us out of our despair, but because he is CAUSING the despair. Thus him improving will improve our family!
Hooray for California... I mean, my brother.
California... last one filled, first one emptied!
I speet on your mangy Golden Bear!
What made the Jesse Cafe post is what I see him alluding to between the lines...
nova | Homepage | 01.31.09 - 7:26 pm | #
Much respect to Jesse's site. Read the article and it pointed towards the fact we all are looking at the same problem but taking a different approach to stabilizing the economy.
Everyone's working at cross purposes and making the problems worse?
Full disclosure: Long Western Civilization and Justice.
jeff | 01.31.09 - 7:01 pm | #
That is so cute!!
yup. we've been leading the country in every way for the past hundred years. it all starts here, whether you like it or not. our recent past is your recent future.
I say this as a born and bred Californian. It's time for California to get over itself. usually it's not native Californians who state this sort of tripe anyway, it's people from the armpit of America who transplanted there a few years ago who blather such banality so loudly.
California hasn't "led" us anywhere for some time. It is part of our country, and there are trends and countertrends within that country.
California to the US is like Legs to the Body. Legs are good. they get you from A to B. Life would be more difficult without them. But they're not essential. You could lose them and still go on, with difficulty.
You wanna talk about leading? Perhaps California is led by Detroit? After all, a lot of what California has seen has been present in Detroit for many years prior.
You know, if Detroit catches a cold, California gets pneumonia.
Rediculous.
Nothing Left To Lose | 01.31.09 - 7:26 pm | #
We are our brothers keeper. I agree wholeheartedly. A large percentage of the population who feel they have nothing left to lose can cause us all to lose everything.
for 20 somethings
repetition has replaced melody.
voyeurism and exhibitionism has replaced privacy and dignity.
all their thoughts are filtered through the same machine.
hierarchical thought structure is replaced by automatic computer tagging.
organization is not a skill but a service.
real world relationships are replaced by links to online acquaintances.
the list goes on and on but the main point is their entire world is filtered and shaped by one largely external and homogenizing force, the internet.
at least with the boomers and their television they knew they were something separate from the glowing blue box.
the "look at me" generation sees themselves as part of, or joined with, their brand of glowing screen reality.
computers are compartmentalization machines and outcome limiting devices.
A whole bunch of people borrowed a whole bunch of money to buy a whole bunch of housing which was a whole bunch overpriced.
Now either the borrowers are going to lower their standard of living a whole bunch, or the lenders are going to lower their standard of living a whole bunch.
And the taxpayer shouldn't raise either one of thier standards of living a penny. No payin' for mortgage losses and no subsidising buyers.
And if that means China has to eat some losses on some MBS and Treasurys, then so be it.
Load up the nukes. They're gettin' old and need to be used up anyway.
Our resources are not finite. New technology will find new resources. "Use of resources" is not exponential. "Exponential" growth or whatever is temporary. Just ask Bernie Madoff's clients.
I've finally come to the conclusion that there really is no moral component to the mortgage instrument. If the borrower fails (or refuses) to pay, then there is appropriate consequence via foreclosure and impact upon credit history. I believe that the WSJ writer is entirely correct.
As to "quiet title"? I do believe that there is a moral component there and I don't believe that I agree with it. The idea is that the lender "deserves it" and that the squatter can take advantage of the logistical mess to potentially profit. No rent and just tax payments and if they're fortunate, then the house is there's for a pittance.
Sorry, but my sense is that if there's overtly taking advantage of another entity's situation, then there is a moral break.
I spent years as a claims adjuster/manager and negotiated tons -literally thousands of settlements - both large and small and the idea is to find a "win/win". I and others knew some adjusters who took pride in screwing others because they could, and we didn't think highly of them as people.
last entry of jesse café is vewy vewy interesting
"A group of twenty somethings with little or no adult supervision developed ideas for 'financial products'"
Likely true. I've seen this in software the past few years. Complex solutions in search of a problem.
"the Fed simply cannot handle another mega-catastrophe"
Hardly a rumor?
Preposterously obvious.
"we've [CA} been leading the country in every way for the past hundred years"
Yes.
California is likely to lead us.
Right into the black hole.
America, Flame On!
Ho ho!
.
I blame everyone over 16 yo for this mess.
anon | 01.31.09 - 6:49 pm | #
That seems somewhat unfair. I would find it hard to believe that anyone under 28 had much to do with the creation or continuation of this mess. You would fault those who have little control or power for the mishaps of those who do?
YTL, (last thread)
Sorry you feel that way. I still value your opinion the same as before.
20 somethings remind me of the see no, speak no, hear no evil monkeys except they have their ears plugged with ipods, their mouths plugged with cell phones and their eyes blocked by screens.
where are they?
how will they cope with what is coming?
who will they blame for the false hope of the american dream?
will they loot first?
will the boomers loot alongside them?
Bob Doobs: Remove the fear of pricing-out, and factor in the oversupply of houses in many areas. And you may convert a great many people to the idea of lifetime renting.
Bob, when I moved to CA in 1992 (Fresno) -- the echoes of the housing bust were still reverberating off the walls of the Sierras the the Diablos.
Whenever a co-worker would open the idea of buying a house... as in "What should I do with this money I've accumulated?" it would be met with a chorus of naysayers. Perilous warnings from people stuck with houses in other parts of CA, and underwater mortgages. Those that did purchase, had to overcome the negativity of their associates.
"New technology will find new resources."
I believe in magic and wish fulfillment as well.
Nanotechnology and nanoengineering. 20 years ago when I first read about these fields the future seemed limitless and exciting. The scifi stories written about what could be done by microscopic machines manipulating molecules from thin air or garbage were amazing. Still waiting for this to happen.
How do you make people remember? The last time the Conservatives were in power, we had Prohibition, the 20's that Roared into Depression, and WWII.
Now we have Con 2.0 and another abyss to stare into, so it seems humanity simply cannot remember.
I don't care what we call it, but somehow we have to be able to remember, as a society, that those at the top have leverage and grow corrupt, that greed is NOT good, that a commonwealth is stronger than fighting islands of homogeneous enclaves.
I don't necessarily take the darkest view, because we still have a system of laws that CAN be enforced. My fear, which I express here, is that the same dishonest element of humanity that brought us to this place will continue to bawl and spin and deny until we all crash in a heap of squabbling misery.
Conservative qualities are wonderful in an adult's personal life, but they DO NOT translate into politics. Conservatism as a serious political ideology is a seductive lie. It actually died with fascism, but was resurrected by the modern "Conservative" movement as a sheepskin to steal with.
If politicos and the corporate media have made the word liberal too toxic to use, then we'd better find another one pretty fast. America was born in liberty and dissent and it needs to find that heritage again.
I mostly agree with allowing more foreclosures to happen, from the financial standpoint of the individual families. HOWEVER, this is going to lead to a more rapid increase in blighted suburban neighborhoods, IMO. More perfectly good houses are going to sit unoccupied, with no maintenance or landscaping, and further drag down the value of everything around them. ... So while I don't give a rat's butt what happens to the banks as foreclosures skyrocket, I think it will simply accelerate the process of destroying perfectable acceptable neighborhoods. Maybe that's a necessary-evil middle step as we reinvent cities and suburbia? I don't know.
--
"Full disclosure: Long Western Civilization and Justice."
jeff,
DELUSIONAL AND IN DENIAL. The Modern "Western Civilization" had peaked and now is in serious decline, or shall I say, Cliff Diving!
Your intolerance is obvious and I can see why.
Jas
Blackhalo | 01.31.09 - 7:41 pm | #
We are all in the same boat and each generation has a different perspective and set of tools. The misallocation and control of capital by the boomer generation is the true culprit but self interest was the guiding force.
The need to see humanity as a single entity needing care and compassion from one and all is the necessary evolution. Hasn't happened yet and the human dilemma rolls on.
Any generation can take a stand and gather power to itself to force change but it will require cooperation of all age groups. But if no age group takes on this responsibility and lets the cards fall where they may then we are all in for a wild ride.
Sorry you feel that way. I still value your opinion the same as before
@Mugabe:
I'm being too harsh today. My patience is too thin and I'm taking it out on others (e.g. you). My apologies.
there are some posters who push my buttons, and I transferred those feelings to you based on one single post that you wrote that in the end was unrelated to my ire.
I don't want CR to devolve like Mish's site did (IMO) and thus we must be vigilant with our posts. The commentary is generally more important to me than the post headings (sorry CR).
but in the end I'm irritated with my day, and shouldn't have posted in this mood.
My apologies to you specifically, and to others. (i.e. the Californians... although I still maintain you're not THAT special).
i'd better sign of now for the night before I insult anybody else.
A good night to you all.
--
"California to the US is like Legs to the Body."
YTL,
What if california were to be the heart and NYC being the head?
We, or US, are screwed, wouldn't you say?!
Jas
The need to see humanity as a single entity needing care and compassion from one and all is the necessary evolution.
anon | 01.31.09 - 7:56 pm | #
I still do not see why the younger generatons should be expected to fund the avirace of the one in power. Any solution to the economic problems we now face should put the bulk of the hardship on the boomers.
Yearning To Learn
thanks to you and anon for those kind and highly evolved comments.
i too find it hard to tone my comments down.
i think most of us "are mad as hell and are not going to take it anymore"
this is an inflection point in history.
try hard not to get paralyzed by fear and indignation. now is the time to make moves to protect you and yours while the rest of the world is staring into the headlights.
Jas:
if that were the question, then yes. But California isn't the heart, and NYC isn't the brain.
A better analogy would be like an invertebrate with multiple areas of "control". you can cut the Starfish in two and it just regrows into 2 starfish (although I'm sure it's quite painful for the starfish)
When 911 happened NYC was paralyzed, but the country was not. We pulled them through, not the other way around. Likewise the US pulled CA out of its recession in the 1990s. Not the other way around. yes, 911 caused NYC to pull the US down, but the US overcame NYc to pull it up. Yes, the downturn in the 1990s devastated CA and they pulled the US down somewhat, but we pulled them back up.
I don't disagree that NY and CA are important. I disagree that they're somehow "more" important than other areas. Just as we as a country survived the devastation that is the rustbelt, we can and will survive the devastation that is CA. And it will likely be the country that pulls CA up, not the other way around.
and with that, je vous dire au revoir...
I walked away October '07 after trying for months to sell my home on the fringes of Phx. I was already slightly underwater and knew, via this blog mainly, that things were not going to improve for years. I could afford the mortgage but hataed the house by then. The bank sold the house around August '08 for less than I paid for it. No, I don't regret leaving. I bought a cheaper place closer to work before I bailed and even tho I'm surely underwater in it by now, I don't care as I am content and plan to stay. The only thing that bothers me is that when I get my bank stmt each month from Chase (my checking and mtg is with them) they still show the entire loan amount as outstanding, even tho they sold my house already. I shouldn't owe them the entire amount...just the 80k difference.
"If a loan modification leaves the homeowner hopelessly underwater, what is the point?"
The point, of course, is to bleed as much money a possible out of the individual. This is the same as the goals of TARP, of the "Main Street pays Wall Street" ideology...
That seems somewhat unfair. I would find it hard to believe that anyone under 28 had much to do with the creation or continuation of this mess. You would fault those who have little control or power for the mishaps of those who do?
Blackhalo | 01.31.09 - 7:41 pm | #
At least from my experience, under-30s made up a huger percentage of loan "officers". While their elders and superiors bear the greater responsibility, the young ones were complicit as well.
Communal living is the way to go.
Blackhalo | 01.31.09 - 8:07 pm | #
Because they are our parents, teachers, uncles and aunts...they are us.
Target the guilty in charge but not a way of life proven unsustainable by time. What good will come of taking everyone over 60 and stripping their wealth. Where is the humanity?
I hope the Feds can fix this but I don't believe they can. The only real solution is de facto destruction of promises held by many, mostly rich, people and in entitlements.
But Congress doesn't have the integrity to make that decision.
For the past fifteen years, "globalization" has acted more like the Federal gov't than a free market.
A free market should, in theory, produce a closer mapping of "benefit" to "cost".
The Feds and globalization are engines for DISASSOCIATING costs from benefits.
Ergo, bad things happen at some point.
I'd have my rifle clean and new ammo in place. I expect an unhappy ending, although having a good idea of what that looks like, I hope to avoid it.
Oh, well.
Off to my singles meeting and pool.
.
" Any solution to the economic problems we now face should put the bulk of the hardship on the boomers."
Come on, that's nuts. Technically, I'm a boomer, born in '59. I'm not in debt, don't own a house, haven't sold anyone a house, haven't created a bad financial product, haven't screwed up the life of anyone younger than me.
Painting "boomers" with a broad brush, just like saying all gen x-ers are slackers, all gen y-ers are self centered introverts who can't handle losing 'cuz everyone gets a trophy, is divisive, counterproductive, and wrong.
We're all in this together boys and girls, let's see if we can't work to fix it. Calling each other names ain't gonna help.
computers are compartmentalization machines and outcome limiting devices.
otishertz | 01.31.09 - 7:37 pm | #
mass media feeds the same propagandized reality to all. computers represent at the least the ability to filter and select amongst a large variety of alternative types of propaganda. it also increases the feasibility of high-quality "niche" creative media productions, since the need for mass appeal is diminished in favor of communities of interest that cross national borders.
but these are only possibilities. still there exists great opportunity for propaganda, but also far more opportunity to find quality beyond mainstream marketing. many youth also seem surprisingly wise to more obvious marketing ploys that still dupe their elders. my own take on the matter is that we'll see far more tribalism around communities of interest and an inclination toward flexible focused businesses and against bureaucracy. we will have our own alpha-males and trophy wives trained for their roles in the beast by mass education and mainstream media, rest assured, but also a lot of alternatives that didn't exist for many in previous generations, especially at the lower end of the socioeconomic spectrum. between that and the awareness of the present eras of crisis and widespread governmental corruption and malfeasance, there is at least a chance a larger segment of the mass consciousness gets a bit wiser.
computers are compartmentalization machines and outcome limiting devices.
otishertz | 01.31.09 - 7:37 pm | #
mass media feeds the same propagandized reality to all. computers and the internet represent at the least the ability to filter and select amongst a large variety of alternative types of propaganda. it also increases the feasibility of high-quality "niche" creative media productions, since the need for mass appeal is diminished in favor of communities of interest that cross national borders.
but these are only possibilities. still there exists great opportunity for propaganda, but also far more opportunity to find quality beyond mainstream marketing. many youth also seem surprisingly wise to more obvious marketing ploys that still dupe their elders. my own take on the matter is that we'll see far more tribalism around communities of interest and an inclination toward flexible focused businesses and against bureaucracy. we will have our own alpha-males and trophy wives trained for their roles in the beast by mass education and mainstream media, rest assured, but also a lot of alternatives that didn't exist for many in previous generations, especially at the lower end of the socioeconomic spectrum. between that and the awareness of the present eras of crisis and widespread governmental corruption and malfeasance, there is at least a chance a larger segment of the mass consciousness gets a bit wiser.
sorry about the dual post folks. I got the error message "an internal server error has occurred" on the first submission attempt.
@YLSP 6:42
"Then our Senate confirms this joker. I think the American people should be reminded of this daily, or at least whenever Geithner comments on anything. Its why we have journalists to report on the truth. Both the Senate and President illegtimized themselves by such action"
Think, act, do
The point is for the LENDER (or owner of the MBS associated with the mortgage) to take the loss.
The point is for the lender to minimize his loss. In fact if Tanta were here I'm sure she would point out a phrase or two buried somewhere in the contractual relationships that explicitly prohibits mods unless it can be demonstrated that the lender/investor will take a worse loss without the mod.
You can't just give away money because a borrower is having a hard time.
Jeez. Get a grip.
What made the Jesse Cafe post is what I see him alluding to between the lines...
I'm supposing it to mean that, if it happens in Britain, it really has to be coordinated across Europe and the US at the same time.
I'm relieved that we deleveraged on our house in CA. AIG insured the purchase money second, and are trying to collect. We have a lawyer and we will fight it. The house is on the market for 270k, and we paid 360k in 2004. When I was trying to short sale it last year, I got offers in the range of 220-240k but banks wouldn't work. Wife was ill so I have to pick up and move across country grapes of wrath style.
Bob DobbsYou can blame boomers as a generation if it makes you feel better. Some inherent character flaw in a generation, you think? Or do you think that if all the souls in Gen Y were actually born 50 -60 years ago things would actually be different now? I try to stay polite here, but that's nonsense.
I'm 45, in theory a boomer, but I've never identified as such but growing up those kids were older and somehow different than people my age and younger. Part of it I think is that the older baby boom generations life expectations were shaped by 1950's and early 1960's with it's futures so bright I have to wear shades (except for the commies) aura. Compare that to myself, 1970/80's oil shocks weak labor market, birth of the rust belt, etc. I tend to think that is how life is, the boomers I think ran into that and felt like they'd been robbed. But that's only a general feeling which doesn't apply across the board.
I'm 1935 and the wife is 1946. At least I am not responsible for the great depression, WW2, Korea but I guess I get some blame for Viet Nam and what followed. I did serve in Viet Nam, very short time and civilian.
I am not as tight with money as the boomer wife even though I grew up poor.
I think the broad brush blame of generations for things that most of us had no control over is not useful.
This sounds revolutionary.....in a good way.
I'm late on this thread......just spent the day at farmer school, thanks to the county extension. I was worried the world had ended without me knowing it, but I see we're still kicking
Loan mods are not about the borrower but about maximizing the cash flow to the institutions during a time where they can't afford the losses. As they recapitalize they will be able to make either better loans mods or foreclose depending on which brings them the higher net present value.
They are simply buying time.
Take matters into your own hands. Give yourself a personal debt JUBILEE. Your gain (shedding un-payable debt) is their loss.
Walkaways are the real worry for the fed and rent seekers.
Look at it this way - business men like Trump walk away from debt all the time.
\t Angry Saver | \t \t \t \t01.31.09 - 5:33 pm | #
Angry Saver | 01.31.09 - 5:33 pm | #
I don't know if you meant this sarcastically or not, but I agree, once I got over my outrage at being screwed over for being a prudent house buyer.
Two themes I hear alot are how we need some kind of mass expression of "outrage", and how ignorant and gullible the masses are.
If these masses, en masse, start walking away from their bad mortgages, it starts the rebalancing like Su says. And it sticks one to the people responsible. Unless I'm missing something....
I've never been forclosed on, but I had to file BK in 2001 (never marry a sociopath) and now my credit score is nearly perfect. I got my mortgage in 2005 (with a partner who has perfect credit), and a refi last year, with absolutely no effort & incredibly good terms.
So it can be done, with a bit of work, and decent financial habits. Lots of peopel get in trouble because of a job loss or medical expense. Not because they are financially ignorant. If you lose your house because you're in too deep, that might be different.
I don't think I have ever seen Jas make any antisemitic remarks. Hopefully you don't equate criticism of State of Israel policies with antisemitism.
\t RE | \t \t \t \t01.31.09 - 7:10
I've called him on it several times. Nothing to do State of Israel policies. He has intimated that Bush, Paulson et al are stooges of the real crooks, you know who. I'm a New York City Jew and no one in my family has ever held a Wall Street job. Doctors, dentists, lawyers, programmers, and a former squash pro turned speculator.
Don't Cry for Me Tehachapi writes:
"It is not fair nor accurate."
You are on target, Me Tehachapi. I am a boomer. I knew your generation didn't have the balls to stop me and my cohorts. Your entire generation is a bunch of weak kneed appeasears. When I was in UNC they drafted my ass and said go kill the yellow man. And by God I killed everyone I saw. Now you think I am your devil. You are such a patsy, Tehachapi, if you don't have the balls to squeeze the trigger and put a round through my head then shut the hell up.
joanna, this generation of americans are nothing but deadbeats. When will we hear the cries of the evil government tricked me into these student loans and I should be able to walk away or I am underwater on my taxes and the greedy government wants my money. No one in their right mind should ever loan money to americans. Try this walk away crap in any other country of the world.
I've been saying it for ages: turn these houses into rentals, and turn the banks into landlords. Problem solved.
The "struggling homeowner" myth needs to be debunked once and for all. These people were just as guilty as any of the loan brokers...they bought with the intent of unloading the overpriced POS on some other greater fool, often lied about their income/assets to get the coveted house, and were stupid enough just a few years ago to pay tens of thousands above asking price to buy a pile of wood rotting in the rain. These people deserve to be shackled and taken to debtor's prisons.
These people deserve to be shackled and taken to debtor's prisons.
Mark | 02.01.09 - 12:49 am | #
And work in the salt mines alongside the wife and kids. Fed one meal a day and allowed to die when they weaken.
A weekly parade through town would be good to remind the others what happens if you don't pay your bills. The economic crisis will be solved overnight.
Try this walk away crap in any other country of the world.
americansRdeadbeats | 01.31.09 - 11:38 pm | #
Wow. Ignorance is strong in that statement.
speculating with land or houses must be forbidden or significantly limited. the land belongs to all of us and the future generations. What happened now is that greedy stupid people (and the professional liars) damaged the life of the current and the next generation just because they were also allowed to speculate with the heart of the economy:the people. the success of the economy was made by the people and not by the crooky CEO's of the (ex-)top ranking banks!!
CR:
I believe Dr. Elizabeth Warren pretty well documented the average house as going from a 5 room home in the seventies to slightly bigger than a 6 room home in 2005. So to catagorize these homes as McMansions when most Americans live in much smaller homes than what is being portrayed is a tad disingenuous. However, a 6 room home in NYC, LA, and Chicago is a expensive as compared to Peoria, Grand Rapids, or Souix City.
It is my understanding that it was not mortgages-to-buy-homes that were the prime issue in default, it was the "Alt-A" loans that are creating the issue over the last year and today. Where a person who nornally could get a prime loan could not get a prime loan they; were offered a subprime loan at a slightly higher rate, to increase substantially in 1-2 years, and could be refinanced at a lower rate later. Again, I believe Ramsey misses the mark here.
Rather than chase people out of their homes, why not adjust the interest rate to something doable which is what Fannie and Freddie are doing with the mortgages they control. The only issue you have is the original CDO investors suing in court over the change in rate of return. Bankruptcy or lower rate? Banruptcy of lower rate? I think I will take the lower rate.
The abandonment of homes in neighborhoods does little for the city or the neighborhood in which the house is. In the end, it will cost more to recoup the house abandoned.
The "struggling homeowner" myth needs to be debunked once and for all.
How about those stuggling to pay and sacrificing, etc. but still managing to make their fucking payments? We don't hear much about them.
If you interview people foreclosed a year ago, they are most likely subprime and didn't wind up with much of a change in lifestyle pre- versus post "homeownership" experience.
Now, if you interview people being foreclosed a year from now, I suspect that'll be an entirely different ballgame.
Isn't creating mortage slaves the whole point?
Sister and her deadbeat hubby bought a humungeous house with a IO loan 4 years ago. The mortgage eats up 65% of their after tax income. The mortgage has consumed all their savings and then some. They effectively put themselves into bankruptcy the day they signed the mortgage. They are still employed,have no health issues. They just bought way too much house on the assumption they could always refi or sell and get out with a profit.
I have been encouraging them to walk away from the house for a year now. Finally they are doing it. They have rented a much smaller house and are greatly relieved.
Ramsey is spot on with his plea not to make these people mortgage slaves. That is exactly what happened in Japan in the early 1990s.
on the Jesse's Cafe link from above-- so the takeaway is we need to be prepared for some sort of joint announcement from UK, USA, & Eurozone on simultaneous "bank holiday(s)"?
I dunno- maybe. Another possibility--while the Stimulus Plan is being debated this week, the UK or somebody else does do a bank holiday, to panic everybody and thus "stimulate" passage of the Stimulus Plan-- any Stimulus Plan.
Over 10 million american families took up excessive mortgage/helocs etc between 2000 and 2007. Most of these folks still have a job or some form of income. So I find it totally sickening that Congress and many active bloggers, out of either a totally academic inclination to find a problem for the banking crisis, or out of ignorance, are suggesting ways to forestall foreclosure. Ramsey Su makes a point that neither the banks, creditors or stockholders want - ie let the folks walk away and the process to run its course, that is the only market solution that would quickly reset the system and let the system have a chance to start again. And if Citi or BoA or Wells Fargo goes bankrupt, I bet my last dollar that some entrepreneurs would step upto the plate and start new banks and lend again, if only Congress listen less to lobbysists employed by Citi etc
Excellent advice. I call it deleveraging. The banks will get bailed out for it, so you might as well take advantage of the opportunity. I hope that you never refinanced tho. You give up rights when you do this.