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Hopfully many people will come out of this much wiser. Hopefully our govt doesn't make the situation worse for our kids.
I doubt it. Sure, this generation will remember it, but the next and the one after that? The more divorced you are from the past, the easier it is to disregard it. Some people thought housing prices would never fall simply because it hadn't happened in their personal experience.
As for the government, well, free market theory says that you can't force corporations to stay here when there are other labor markets to exploit, so what do you do if you really believe that? The solution apparently was to go into debt to the Chinese and a smattering of other nations so that we could pretend to have the same standard of living we had before we lost all of our good manufacturing jobs. The world's biggest creditor became the world's biggest debtor. What else should they have done? Worldwide, there is ultimately an oversupply of labor. A problem no one wants to address.
Instead of embracing products produced abroad by companies that offshored our jobs, we should have boycotted them. Money speaks louder than words.
Last edited by Sonnenwende; 04-08-2009 at 05:15 AM..
I agree with supernerdgirl on a lot of points. I've been poor a lot more years than I've been financially secure, and the people who have been there for a while know that you always need to save for a rainy day.
For years I've been watching people who make less than I do buy big houses, fill them full of furniture with "no interest for 3 years" deals, spend $10 a day on their lunches, go out to $50 dinners three times a week, and buy nicer cars than I could ever fit into a reasonable budget.
I still pack my lunch, drive my old beater who's sole virtue is being paid off, rarely go out to an expensive dinner, and never bought into the idea that I had to buy a McMansion when I needed a starter house. I can't reasonably afford a new Mercedes, and don't feel a whit of sympathy for the idiots who felt entitled to one on a $15/hr salary.
I do feel sympathy for people who did everything right and ran into bad luck, but then again you run into the concept of saving for a rainy day. To somebody who has never bought a new car or vacationed in the tropics, its hard to feel much sympathy for the people who made you feel like a leper for being responsible instead of keeping up with the Joneses.
I'm not much of a judgmental person, but I can't help but to believe that the people who wanted to be judged on their success also deserve to be judged on their failure.
Good post. It's nice to see frugality coming back into fashion. I had out of pocket medical and other costs of at least 10k a year for a couple of years when my wife got sick. (We had insurance but a sizable co-pay plus the stuff not covered) I was really happy that I was driving a paid off base-model corrolla instead of making a $700/month payment on a Mercedes when that stuff hit the fan.
I'm currently doing the *dumb* thing and working on paying off my house early, perhaps 5-6 years left now. (Something considered stupid in the past because you could do so much better investing the money and making higher returns.)
One thing that I think is different from the past is that some people that can afford to pay the mortgages they took out are choosing to walk away.
Several under 30 couples I know through work have good jobs and are doing at least as well, if not better financially then when they bought their homes 2 or 3 years ago.
These couples chose to walk away from their obligations reasoning, "Why keep paying for something that can be replaced for substantially less?"
I know folks from my parents and grandparents generation would never walk away from an obligation by choice... the shame would have been unbearable.
When is a promise a promise or a contract a contract?
One thing that I think is different from the past is that some people that can afford to pay the mortgages they took out are choosing to walk away.
Several under 30 couples I know through work have good jobs and are doing at least as well, if not better financially then when they bought their homes 2 or 3 years ago.
These couples chose to walk away from their obligations reasoning, "Why keep paying for something that can be replaced for substantially less?"
I know folks from my parents and grandparents generation would never walk away from an obligation by choice... the shame would have been unbearable.
When is a promise a promise or a contract a contract?
Oh well, let them walk.... the financiers and bankers will assume the house and dink their credit. It is legal to walk away on a non recourse loan.
After all, the analysts and bankers all assumed that housing will always go up, took on the risks, and if they default, they can collect on the CDOs.
So far bankers, analysts, and investors aren't taking any responsibility of the Real risks they took. They just take the bail outs and the proceeds from the CDOs from AIG and let the tax payers and marginal investors (pensions, mutual funds, etc.) take the loss and shun all blame towards the ex-homeowners.
Quote:
American International Group revealed on Sunday details of $105 billion of government funds that it paid to U.S. and international banks including Goldman Sachs, Deutsche Bank and Societe Generale.
So be it, let them walk... let homes and other prices get re-evaluated to what their true worth is and let worthy home owners come back into the mix with affordable payments. Everything has been propped up for far too long. Let the large institutions break apart.... like they should for being overly compliant with excessive risk. If everything was cheaper... cost of living cheaper... wages lower... then the US can be more better situated to compete in a globalized economy.
As for the government, well, free market theory says that you can't force corporations to stay here when there are other labor markets to exploit, so what do you do if you really believe that? The solution apparently was to go into debt to the Chinese and a smattering of other nations so that we could pretend to have the same standard of living we had before we lost all of our good manufacturing jobs. The world's biggest creditor became the world's biggest debtor. What else should they have done? Worldwide, there is ultimately an oversupply of labor. A problem no one wants to address.
Instead of embracing products produced abroad by companies that offshored our jobs, we should have boycotted them. Money speaks louder than words.
Yep. I stopped buying as much stuff as I could 'commercially' many years ago. I purchase most of my food weekly at Farmers Market, barter as many services as I can (I have auto knowledge and boyfriend has computer skills so we can barter many of our necessities off of that). We also buy/sell on craigslist for most of our furniture and household needs so we rarely step foot in a regular brick and mortar store.
Of course, locally owned and operated stores get our attention frequently.
When I read these sob stories the one I feel sorriest for is the average minimum wage worker who lost out on a job to a "displaced" corporate type.
All the coulda shoulda got a better education/job arguments aside these folks are getting pushed out of the only jobs they qualify for.
I really enjoy reading these posts, everyone has a logical thing to say. Why can't those in Washington see it this way? I am an neither a Republican or Democratic. I'm for the working man! Newt Gingrich said if you're too big to fail then you're too big to be in business, (he's refering to the auto industry). I agree with him. Just because GM files for bankruptcy doesn't mean they're history. Donald Trump has filed for bankruptcy many times and he's still in business. I don't feel sorry for the American car makers, they should've have see the writing on the wall years ago. Besides, why bail out the auto makers and financial institutions that took huge risks with our, (the taxpayers), money? The government isn't bailing me out! According to the Constitution a bailout is un-constitutional. By bailing out one company and not another it is the government showing favortism. I am not as optimistic as I used to be about our economy turning around. As stated earlier, our country is riddled with greed and corruption. It starts on Pennsylvania Ave and trickled down. What's sad is that the working people have paid the heaviest price.
Anyone know where all the money paid in PMI (Private Mortgage Insurance) premiums went? I thought the entire reason for PMI on loans greater than 80% was to protect lenders in case borrowers default...
Is PMI a scam or is it real insurance?
As far as non-recourse loans go... it is my understanding that non-recourse only applied to purchase money loans and not to refinance or home equity loans.
Living in the Bay Area, I've saw a moving truck at a neighbor a block over from me... I stopped and learned they were letting the bank have the house back... he told me of two more that I didn't know about... so in my little corner of the world, the tide of foreclosures hasn't subsided yet.
Anyone know where all the money paid in PMI (Private Mortgage Insurance) premiums went? I thought the entire reason for PMI on loans greater than 80% was to protect lenders in case borrowers default...
Is PMI a scam or is it real insurance?
As far as non-recourse loans go... it is my understanding that non-recourse only applied to purchase money loans and not to refinance or home equity loans.
Living in the Bay Area, I've saw a moving truck at a neighbor a block over from me... I stopped and learned they were letting the bank have the house back... he told me of two more that I didn't know about... so in my little corner of the world, the tide of foreclosures hasn't subsided yet.
PMI is for the protection of the lender not the borrower. When the government bailed out AIG it put the government in the PMI business.
PMI is for the protection of the lender not the borrower. When the government bailed out AIG it put the government in the PMI business.
Exactly... so why are the banks suffering such losses when many of the Bad Loans the Banks made are protected by mandatory PMI?
It is my understanding that the largest group of loan defaults consists of loans where the borrower put very little down and was required to pay extra for PMI.
Looks like PMI was sold as protection that it has not been able to deliver.
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