Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
No, you're out of date on this issue. Several decades ago, when mortgages where issued by insurance companies rather than banks, they were short-term demand loans usually requiring 50% down or so. That was long ago, before the government got into the mortgage business, and before long-term fixed-rate mortgages even existed. IIRC that was pre-1930 or so.
The whole point of long-term mortgages was to allow middle-class families without a large lump sum to buy a house and have lots and lots of time to pay for it, without the bank demanding their money. It was viewed as a way of stimulating the economy to recover from the Great Depression.
Commercial loans are, of course, another matter. Many of them are demand notes, even today.
Several decades ago most residential loans were issued by banks. I know because I worked in one. I sincerely hope that demand notes are not common today. As I said, I can't see the government giving the banks (and investment banks) another bailout and that is really going to make the banks become inventive about getting their money back, however they have to do it. I know calling in loans is hardly ever done today, but then, no one expected millions of people to default on their mortgages either.
As concise an analysis as I've ever read. Well done.
Quote:
Originally Posted by rruff
Consumer capitalism requires that productivity gains are shared. Eventually. Productivity gains have been going to only a tiny fraction since ~1980. If you go back far enough you can see that imbalances between wages and productivity built up until the '29 crisis, and from then til the '70s it was corrected. Since then we've had an unprecedented nearly flat wage while productivity and GDP/capita have kept rising at the 200 year normal pace.
I hadn't been aware of the imbalance before the Great Depression but worker compensation being flat and the gains being rolled over into the top I've been very aware of.
Quote:
Originally Posted by rruff
So you may expect a long period of "correction" to happen again. But it isn't, and I don't believe it will. The paradigm since 1980 has been deficit trade (globalization), and debt escalation to fill the consumption hole. By now all the big corporations have a large global presence, and they no longer care about US consumers, but rather global consumption. The developing world is the low hanging fruit. Screw the US public.
That depends. If we can just get everyone to pay US minimum wage or more then it will on a global level at least correct the imbalance, and then we can up the minimum wage by the amount of inflation plus gains in worker productivity plus the percent that the top goes up each year.
Quote:
Originally Posted by rruff
Fixing our problems is no-brainer easy. The issue is that the solutions involve changes that do not fit in with our overlords' plans, and so they won't happen. None of this would have happened in the first place if the people running things cared about the US public. All these policies have given us is a load of debt and flat wages.
Let us vote on it.
Quote:
Originally Posted by rruff
If you want to figure out what will happen, ponder the steps that will result in the super rich being able to keep getting richer. I doubt they want a massive crisis since I don't see how they'd profit from it collectively. And they *have* been acting collectively since ~1980.
Yes, 2008 got their attention. They will do everything they can to avoid a repeat. My money is on them failing. We can muddle along indefinitely, but a correction that gets too much momentum will be very difficult to stop.
Quote:
Originally Posted by rruff
More likely we'll keep stumbling along until AI makes consumer-capitalism obsolete.
my split on this is 35/65. There is a 35% chance of us just bumbling through this mess and a 65% chance of a major correct/depression.
my split on this is 35/65. There is a 35% chance of us just bumbling through this mess and a 65% chance of a major correct/depression.
The money all went to China. About $30 trillion worth, and it's all stashed away somewhere in mattresses and its being used to buy up real estate and other core assets. The Chinese government doesn't have it. In fact they are rapidly running out of reserves. It is in the hands of 10s of thousands corrupt government officials and industry executives. There is nothing that anyone can do to control these crooks. The money is gone. There will be massive defaults. And some of these crooks will "disappear". How the European and U.S. Banks will be recapitalized is anyone's guess, but it's going to be quite painful. Maybe get those offshore bank accounts opened up?
Several decades ago most residential loans were issued by banks. I know because I worked in one. I sincerely hope that demand notes are not common today. As I said, I can't see the government giving the banks (and investment banks) another bailout and that is really going to make the banks become inventive about getting their money back, however they have to do it. I know calling in loans is hardly ever done today, but then, no one expected millions of people to default on their mortgages either.
That was the unraveling Of Japan's housing bubble. There were properties that were solvent lots of positive cash flow, the bank would call in the note and then it would go under.
Bottom up recapitalization this time. Print a trillion dollars maybe two. Hand it out as grants for starting small businesses or keeping them going.
Once the defaults start it is hard to stop them. And then if the notes get called in... dominos.
The money all went to China. About $30 trillion worth, and it's all stashed away somewhere in mattresses and its being used to buy up real estate and other core assets. The Chinese government doesn't have it. In fact they are rapidly running out of reserves. It is in the hands of 10s of thousands corrupt government officials and industry executives. There is nothing that anyone can do to control these crooks. The money is gone. There will be massive defaults. And some of these crooks will "disappear". How the European and U.S. Banks will be recapitalized is anyone's guess, but it's going to be quite painful. Maybe get those offshore bank accounts opened up?
I'm not talking about foreclosed-on loans. I'm talking about every day loans you take out when you want to buy a house or a car or what have you.
It used to be in the loan agreements and I think it still is in a lot of them. Banks reserve the right to demand all or partial payment whenever they want during the life of a loan. If that's in the contract you sign, then you don't have to be behind in your loan or a bad risk or anything. It's just a clause in the contract, but you both signed it and the fact that it never happens doesn't mean it can't.
This is the point I used to try to send home with people when they were blaming all the people who got loans for "more house than they could afford" for the 2008 crash and everyone was saying those people deserved to lose their houses. I would point out that unless your house is paid in full to the bank, no one owns their house and no one is immune to losing it until the loan is paid off and the title is in their hands.
I don't believe that demand loans are all that common on primary mortgages. I've never seen one for a car I've purchased either. Isn't it mostly used on loans where the asset being purchased is not the collateral and/or there is a reasonable expectation that the borrower has enough cash to purchase the asset outright?
Lets assume for a minute that all primary residence loans had a demand clause. How would it serve banks to start requesting large percentage repayment from borrowers when most borrowers would not be able to meet the demand? Banks are still sitting on a significant number of foreclosure assets from the past several years.
I don't see the scenario you are painting playing out in reality in any sort of way for the typical consumer borrower.
What is the typical ratio of demand/non-demand assets maintained by banks?
I hadn't been aware of the imbalance before the Great Depression but worker compensation being flat and the gains being rolled over into the top I've been very aware of.
Too lazy to look up the charts right now, but it's obvious from worker compensation and GDP per capita going back to the mid 1800s. Prior to '29 worker compensation still rose at more than half the GDP/capita rate on average. Nothing like we've seen in the last 40 years. But it was enough to eventually create a major imbalance.
Quote:
If we can just get everyone to pay US minimum wage or more then it will on a global level at least correct the imbalance, and then we can up the minimum wage by the amount of inflation plus gains in worker productivity plus the percent that the top goes up each year.
Wages need to vary by productivity, else investment in poor countries would never occur. We *want* to trade with poor countries who have a comparative advantage in cheap labor. The poor countries specialize in labor intensive activities while the rich ones specialize in high value added higher tech production.
The issue isn't foreign trade but rather the persistent and high trade *deficit*. In theory this should be self correcting. The value of the US$ would decline to close the trade gap. But it is also easy to prevent this (keep the value of the US$ high) via policy and currency manipulation.
We have a high trade deficit and debt precisely because the overlords wish it. They wish it because they've grown powerful and rich at an unprecedented rate because of it. The scenario we've been living in for the last 40 years has been a scheme to drain wealth from the US middle class and put it in their own pockets. Globalization and finance made it possible. Previously as you correctly pointed out, they were dependent on the buying power of US consumers, which resulted in us all getting rich at about the same rate.
Quote:
Let us vote on it.
It seems to me that the propaganda has reached a level of sophistication where it's easy to keep the public divided and confused and powerless. I wish it wasn't so...
Too lazy to look up the charts right now, but it's obvious from worker compensation and GDP per capita going back to the mid 1800s. Prior to '29 worker compensation still rose at more than half the GDP/capita rate on average. Nothing like we've seen in the last 40 years. But it was enough to eventually create a major imbalance.
I believe you. I just hadn't looked it up myself.
Quote:
Originally Posted by rruff
Wages need to vary by productivity, else investment in poor countries would never occur. We *want* to trade with poor countries who have a comparative advantage in cheap labor. The poor countries specialize in labor intensive activities while the rich ones specialize in high value added higher tech production.
What I'd like to see is a limit on what they can get paid if they export to the US. We need inflation and we need it bad. The cheapest way to get it is in the third world.
Quote:
Originally Posted by rruff
The issue isn't foreign trade but rather the persistent and high trade *deficit*. In theory this should be self correcting. The value of the US$ would decline to close the trade gap. But it is also easy to prevent this (keep the value of the US$ high) via policy and currency manipulation.
Yes but...
Quote:
Originally Posted by rruff
We have a high trade deficit and debt precisely because the overlords wish it. They wish it because they've grown powerful and rich at an unprecedented rate because of it. The scenario we've been living in for the last 40 years has been a scheme to drain wealth from the US middle class and put it in their own pockets. Globalization and finance made it possible. Previously as you correctly pointed out, they were dependent on the buying power of US consumers, which resulted in us all getting rich at about the same rate.
2x on GDP from 1980 until now. Male worker compensation flat adjusted for inflation. The growth went into the top end.
Quote:
Originally Posted by rruff
It seems to me that the propaganda has reached a level of sophistication where it's easy to keep the public divided and confused and powerless. I wish it wasn't so...
As long as they remember to feed us. A bit ago I read that child obesity was on the decline. That was 5 years ago. It should be very chilling for the top. The bottom was starting to get hungry. Keep them fat and happy and they aren't a problem.
What I'd like to see is a limit on what they can get paid if they export to the US. We need inflation and we need it bad. The cheapest way to get it is in the third world.
It isn't necessary. There are better and easier ways to do this with momentary policy. Print money, give it to citizens. The US$ exchange value declines and inflation goes up. Done.
Won't happen though. That isn't the plan.
Quote:
As long as they remember to feed us. A bit ago I read that child obesity was on the decline. That was 5 years ago. It should be very chilling for the top. The bottom was starting to get hungry. Keep them fat and happy and they aren't a problem.
Fat, dumb, confused, distracted, neurotic. Prescribe meds for the later. No worries.
It isn't necessary. There are better and easier ways to do this with momentary policy. Print money, give it to citizens. The US$ exchange value declines and inflation goes up. Done.
We lack unleveraged income. The cheapest place to get that income is in the third world. It also is a for of US protectionism that benefits all. And I'm not sure that we can print and hand out enough money to get inflation. One Idea I had was debt repayment vouchers. Only good on existing debts and having a negative interest rate. Controlled deleveraging.
Quote:
Originally Posted by rruff
Won't happen though. That isn't the plan.
Fat, dumb, confused, distracted, neurotic. Prescribe meds for the later. No worries.
The only thing they want people to learn in public school is to get up walk to the next class and sit down when the bell rings. That is it. Back in the day they used the Church of England to control the masses. Now they use the school system. More effective and it doesn't violate the separation of church and state. Except that Darwinism is a religion.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
